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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10/A
(AMENDMENT NO. 1)
GENERAL FORM FOR
REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR 12(G) OF
THE SECURITIES EXCHANGE ACT OF 1934
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ADVANCED DIGITAL
INFORMATION CORPORATION
(Exact name of registrant as specified in its charter)
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WASHINGTON 91-1618616
(State or other jurisdiction (I.R.S. employer identification number)
of incorporation or organization)
10201 WILLOWS ROAD
REDMOND, WASHINGTON 98052
(Address of principal (Zip code)
executive offices)
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(206) 881-8004
(Registrant's telephone number, including area code)
Securities to be registered
pursuant to Section 12(b) of the Act:
NONE
Securities to be registered
pursuant to Section 12(g) of the Act:
COMMON STOCK, NO PAR VALUE
PREFERRED STOCK PURCHASE RIGHTS
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ADVANCED DIGITAL INFORMATION CORPORATION
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ITEM NO. ITEM CAPTION
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Item 15(b) Exhibits
2.1 Form of Separation Agreement between ADIC and Interpoint Corporation
3.1 Restated Articles of Incorporation of ADIC
3.2 Restated Bylaws of ADIC
4.1 Form of Common Stock Certificate*
4.2 Rights Agreement, dated as of August 12, 1996, between ADIC and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent
4.3 Certificate of Designation of Rights and Preferences of Series A
Participating Cumulative Preferred Stock, incorporated by reference
to Exhibit A to Exhibit 4.2
4.4 Form of Right Certificate, incorporated by reference to Exhibit B to
Exhibit 4.2
10.1 Lease Agreement between K-M Properties and Advanced Digital
Information Corporation, dated as of May 11, 1995 (incorporated by
reference to Exhibit 10.3 of the Interpoint Corporation Annual
Report on Form 10-K for the fiscal year ended October 31, 1995)
10.2 Form of Tax Allocation Agreement between ADIC and Interpoint
Corporation
10.3 ADIC 1996 Stock Option Plan
10.4 ADIC 1996 Transition Plan
21.1 Subsidiaries of the Registrant
27.1 Financial Data Schedule**
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* to be filed by amendment
** previously filed
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INDEX TO EXHIBITS
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EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
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2.1 Form of Separation Agreement between ADIC and Interpoint Corporation...
3.1 Restated Articles of Incorporation of ADIC.............................
3.2 Restated Bylaws of ADIC................................................
4.1 Form of Common Stock Certificate*......................................
4.2 Rights Agreement, dated as of August 12, 1996, between ADIC and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent..............
4.3 Certificate of Designation of Rights and Preferences of Series A
Participating Cumulative Preferred Stock, incorporated by reference to
Exhibit A to Exhibit 4.2...............................................
4.4 Form of Right Certificate, incorporated by reference to Exhibit B to
Exhibit 4.2............................................................
10.1 Lease Agreement between K-M Properties and Advanced Digital Information
Corporation, dated as of May 11, 1995 (incorporated by reference to
Exhibit 10.3 of the Interpoint Corporation Annual Report on Form 10-K
for the fiscal year ended October 31, 1995)............................
10.2 Form of Tax Allocation Agreement between ADIC and Interpoint
Corporation............................................................
10.3 ADIC 1996 Stock Option Plan............................................
10.4 ADIC 1996 Transition Plan..............................................
21.1 Subsidiaries of the Registrant.........................................
27.1 Financial Data Schedule**..............................................
</TABLE>
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* to be filed by amendment
** previously filed
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Exhibit 2.1
SEPARATION AGREEMENT
This SEPARATION AGREEMENT (this "Agreement"), dated as of August __,
1996, is made by and between INTERPOINT CORPORATION, a Washington corporation
("Interpoint") and ADVANCED DIGITAL INFORMATION CORPORATION, a wholly owned
subsidiary of Interpoint and a Washington corporation ("ADIC").
RECITALS
A. Interpoint has entered into an Agreement and Plan of Merger
among Crane Co., a Delaware corporation ("Crane"), Crane Acquisition Corp., a
Washington corporation and a wholly owned subsidiary of Crane ("Acquisition
Sub"), and Interpoint dated as of July 1, 1996 (the "Merger Agreement"),
providing for the merger of Interpoint with Acquisition Sub. It is a condition
precedent to the closing of the Merger that Interpoint spinoff ADIC to
Interpoint shareholders. B. The Board of Directors of Interpoint has determined
that it is appropriate and desirable to separate ADIC from Interpoint by
distributing as a dividend to the holders of shares of common stock, no par
value per share, of Interpoint (the "Interpoint Common Stock") immediately prior
to the effective time of the Merger all outstanding shares of common stock, no
par value per share, of ADIC (the "ADIC Common Stock"). C. Interpoint and ADIC
have determined that it is necessary and desirable to set forth the principal
corporate transactions required to effect such separation and dividend
distribution and to set forth other agreements that will govern certain other
matters following such distribution. This Agreement together with the Tax
Allocation Agreement (as defined below) constitute the "Spinoff Agreements" as
such term is used in the Merger Agreement. NOW, THEREFORE, in consideration of
the mutual agreements, provisions and covenants contained in this Agreement, the
parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
Action: any action, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
ADIC 1996 Transition Plan: the ADIC 1996 Transition Plan to be adopted
by ADIC pursuant to which shares of ADIC Common Stock may be issued to holders
of Adjusted
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ADIC Options and which is expected to provide substantially identical benefits
to the Interpoint Stock Option Plans.
ADIC Business: the data storage business and any other businesses
conducted by ADIC or any ADIC Subsidiary in the past, at the date hereof or in
the future. ADIC Employee: any individual employed (or retained as a consultant,
agent, advisor or independent contractor) by ADIC or any ADIC Subsidiary on,
before or following the Distribution Date, including Peter van Oppen, but only
during the time such individual was or is employed (or retained) by ADIC or a
ADIC Subsidiary.
ADIC Europe: ADIC Europe SARL, a wholly owned subsidiary of Interpoint
organized under the laws of France.
ADIC Holder: any holder of an Interpoint Stock Option who (i) is an
employee of ADIC or an ADIC Subsidiary, (ii) whose last employment prior to the
Distribution Date was with ADIC or an ADIC Subsidiary and (iii) any beneficiary
of any individual specified in clauses (i) or (ii) above.
ADIC Liabilities: collectively, (i) all the Liabilities of ADIC under
this Agreement, (ii) all the Liabilities, whenever arising (whether prior to, on
or following the Effective Time), arising out of or in connection with or
otherwise relating to the management or conduct of the ADIC Business, including
without limitation, the products made, sold or distributed by ADIC or any ADIC
Subsidiary prior to, on or following the Distribution Date, the former, present
or future assets of ADIC or any ADIC Subsidiary or the former, present or future
ADIC Employees (but only with respect to the time any such individual was a ADIC
Employee), and (iii) all the Liabilities arising out of or based upon any untrue
statement of material fact contained in the Information Statement or in the
portion of the Proxy Statement/Prospectus describing the ADIC Business or
otherwise relating to ADIC, or the omission or alleged omission to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, but excluding all Liabilities relating to matters
described in the Disclosure Letter.
ADIC Subsidiary: ADIC Europe, ADIC International, any other Subsidiary
of ADIC on or before the Distribution Date, and any Subsidiary of ADIC which may
thereafter be organized or acquired.
Adjusted ADIC Option: an Interpoint Stock Option, adjusted as provided
in Section 3.03(a).
Adjusted Interpoint Option: an Interpoint Stock Option, adjusted as
provided in Section 3.03(a)
Affiliate: as defined in Rule 12b-2 promulgated under the Exchange Act,
as such Rule is in effect on the date hereof.
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Code: the Internal Revenue Code of 1986, as amended, and the Treasury
Regulations promulgated thereunder, including any successor legislation.
Commission: the Securities and Exchange Commission.
Disclosure Letter: the Disclosure Letter delivered by Interpoint to
Crane pursuant to the Merger Agreement
Distribution: the distribution prior to the effective time of the
Merger on the Distribution Date to holders of record of shares of Interpoint
Common Stock as of that time of the shares of ADIC Common Stock owned by
Interpoint on the basis of one share of ADIC Common Stock for each outstanding
share of Interpoint Common Stock.
Distribution Agent: First Interstate, N.A., or other entity appointed
by Interpoint to distribute shares of ADIC Common Stock pursuant to the
Distribution.
Distribution Date: the date determined by Interpoint's Board of
Directors as of which the Distribution will be effected, which will be the date
on which the Merger is effective.
Distribution Record Date: the date determined by Interpoint's Board of
Directors as the record date for the Distribution, which will be the same date
as the Distribution Date.
Effective Time: the time on the Distribution Date when Interpoint
delivers to the Distribution Agent instructions directing the Distribution Agent
to effect the Distribution.
ERISA: the Employee Retirement Income Security Act of 1974, as amended,
or any successor legislation.
Exchange Act: the Securities Exchange Act of 1934, as amended.
Indemnifiable Losses: any and all losses, Liabilities, claims, damages,
costs or expenses (including, without limitation, reasonable attorney's fees and
any and all expenses whatsoever reasonably incurred in investigating, preparing
or defending against any Actions or threatened Actions), but excluding any taxes
covered by the Tax Allocation Agreement.
Information Statement: the information statement containing information
about ADIC and the ADIC Business to be distributed to Interpoint shareholders in
connection with the Distribution.
Insurance Proceeds: those monies (i) received by an insured from an
insurance carrier or (ii) paid by an insurance carrier on behalf of the insured,
in either case net of any applicable premium adjustment, retrospectively rated
premium, deductible, retention, cost or reserve paid or held by or for the
benefit of such insured.
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Insured Claims: those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Interpoint
Policies, whether or not subject to deductibles, co-insurance, uncollectability
or retrospectively rated premium adjustments, but only to the extent that such
Liabilities are within applicable policy limits, including aggregates.
Interpoint 401(k) Plan: the Interpoint Corporation Savings and
Investment Plan.
Interpoint Business: the custom microelectronics and power products
business and any other businesses conducted by Interpoint or any Interpoint
Subsidiary other than the ADIC Business, in the past, at the date hereof or in
the future.
Interpoint Employee: any individual employed (or retained as a
consultant, agent, advisor or independent contractor) by Interpoint (not
including any subsidiaries) or a Interpoint Subsidiary on, before or following
the Distribution Date, but only during the time such individual was or is
employed (or retained) by Interpoint (not including any subsidiaries) or a
Interpoint Subsidiary.
Interpoint Holder: any holder of an Interpoint Stock Option (i) who is
an employee at Interpoint or an Interpoint Subsidiary, (ii) whose last
employment prior to the Distribution Date was with Interpoint (not including
ADIC or any ADIC Subsidiary) or a Interpoint Subsidiary and (iii) any
beneficiary of any individual specified in clauses (i) and (ii) above.
Interpoint Liabilities: collectively, (i) all the Liabilities of
Interpoint under this Agreement, (ii) all the Liabilities, whenever arising
(whether prior to, on or following the Effective Time), arising out of or in
connection with or otherwise relating to the management or conduct of the
Interpoint Business, including, without limitation, the products made, sold or
distributed by any Interpoint Subsidiary prior to, on or following the
Distribution Date, the former, present or future assets of Interpoint or any
Interpoint Subsidiary (other than assets of ADIC or any ADIC Subsidiary) or the
former, present or future Interpoint Employees (but only with respect to the
time any such individual was a Interpoint Employee) and (iii) all the
Liabilities arising out of or based upon any untrue statement of material fact
contained in the Proxy Statement/Prospectus , or the omission or alleged
omission to state a material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading, other than liabilities arising out of or
based upon the incorporation of the Information Statement in the Proxy
Statement/Prospectus and the description of the ADIC Business or otherwise
relating to ADIC in the Proxy Statement/Prospectus.
Interpoint MIP Plan: the Interpoint Management Incentive Plan.
Interpoint Policies: all insurance policies and insurance contracts of
any kind, including, without limitation, primary and excess policies,
comprehensive general liability policies, workers' compensation insurance
policies, and self-insurance and captive insurance company arrangements,
together with the rights, benefits and privileges thereunder, in effect for
periods prior to the Effective Time which are owned or maintained by or on
behalf of
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Interpoint or any of its predecessors which relate to both the Interpoint
Business and the ADIC Business.
Interpoint Profit Sharing Plan: the Interpoint Profit Sharing Plan for
the fiscal year ending October 31, 1996.
Interpoint Stock Option Plans: the Interpoint 1995 Stock Option and
Award Plan, 1985 Incentive Stock Option Plan, 1981 Amended Incentive Stock
Option Plan and Nonqualified Stock Option Plan.
Interpoint Stock Option: an option to purchase shares of Interpoint
Common Stock granted pursuant to any of the Interpoint Stock Option Plans.
Interpoint Subsidiary: any subsidiary of Interpoint on or before the
Distribution Date and any subsidiary of Interpoint which may thereafter be
organized or acquired, other than ADIC or any ADIC Subsidiary.
IRS: the Internal Revenue Service.
Liabilities: any and all debts, liabilities and obligations, absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including, without limitation,
those debts, liabilities and obligations arising under any law, rule,
regulation, Action, threatened Action, order or consent decree of any court, any
governmental or other regulatory or administrative agency or commission or any
award of any arbitration tribunal, and those arising under any contract,
commitment or undertaking, but excluding any taxes covered by the Tax Allocation
Agreement.
Merger: the merger of Acquisition Sub with and into Interpoint pursuant
to the Merger Agreement.
Nasdaq National Market: the National Association of Securities Dealers,
Inc., Nasdaq National Market.
New ADIC 401(k) Plan: a Qualified Plan to be sponsored or maintained by
ADIC which will provide benefits for ADIC Employees, including former ADIC
Employees, who, as of the Effective Time, are participants in or otherwise
entitled to benefits under the Interpoint 401(k) Plan and which is expected to
provide substantially identical benefits to the Interpoint 401(k) Plan.
Opinions: the opinions of Perkins Coie and Milbank, Tweed, Hadley and
McCloy, counsel to Interpoint and Crane, respectively, as to certain tax aspects
of the Distribution.
Option Cash Out Program: the program to cash out certain Interpoint
Stock Options described in Section 3.03.
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Plan: any plan, policy, arrangement or contract providing benefits for
any group of employees or former employees or individual employee or former
employee, or the beneficiary or beneficiaries of any such employee or former
employee, whether formal or informal, written or unwritten and whether or not
legally binding, including, without limitation, any means, whether or not
legally required, pursuant to which any benefit is provided by an employer or
any employee or former employee to the beneficiary or beneficiaries of any such
employee or former employee.
Proxy Statement/Prospectus: the proxy statement/prospectus to be sent
to the holders of shares of Interpoint Common Stock in connection with the
Special Meeting of Shareholders of Interpoint to be held to vote on the approval
of the Merger Agreement.
Qualified Plan: a Plan which is an employee pension benefit plan
(within the meaning of Section 3(2) of ERISA) and which constitutes or is
intended in good faith to constitute a qualified plan under Section 401(a) of
the Code, including, without limitation, the Plans listed on Schedule A.
Securities Act: the Securities Act of 1933, as amended.
Subsidiary: any entity at least 51% of the total outstanding voting
interests of which are owned, directly or indirectly, by another entity.
Tax Allocation Agreement: the Tax Allocation Agreement dated as of the
date of this Agreement between Interpoint and ADIC.
Welfare Plan: any Plan, including, without limitation, the Plans listed
on Schedule B, which is not a Qualified Plan and which provides medical, health,
disability, accident, life insurance, death, dental, severance or any other
welfare benefit within the meaning of Section 3(1) of ERISA.
References to an "Exhibit" or to a "Schedule" are, unless otherwise
specified, to one of the Exhibits or Schedules attached to this Agreement, and
references to a "Section" are, unless otherwise specified, to one of the
Sections of this Agreement.
ARTICLE II
DISTRIBUTION AND RELATED TRANSACTIONS
2.01 INTERPOINT BOARD ACTION
The Board of Directors of Interpoint shall, in its discretion,
establish the Distribution Record Date and the Distribution Date and any
procedures necessary or appropriate to effect the Distribution. Such action
shall not create any obligation on the part of Interpoint to effect the
Distribution or in any way limit Interpoint's power of termination set forth in
Section 7.07 or alter the consequences of any such termination from those
specified in such Section.
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2.02 THE DISTRIBUTION
Immediately prior to the Effective Time on the Distribution Date, ADIC
shall issue to Interpoint as a stock dividend a number of shares of ADIC Common
Stock such that, at the Effective Time, Interpoint will own that number of
shares of ADIC Common Stock equal to the number of shares of Interpoint Common
Stock outstanding at the Effective Time. At the Effective Time, subject to the
conditions and rights of termination set forth in this Agreement, Interpoint
shall deliver to the Distribution Agent a share certificate representing all the
then outstanding shares of ADIC Common Stock and shall deliver to the
Distribution Agent instructions to distribute, on or as soon as practicable
following the Distribution Date, one share of ADIC Common Stock for each share
of Interpoint Common Stock held by holders of record of shares of Interpoint
Common Stock on the Distribution Record Date. ADIC shall provide all share
certificates that the Distribution Agent requires in order to effect the
Distribution. The Distribution will, for all purposes, be deemed to have been
effected at the time Interpoint delivers such instructions to the Distribution
Agent.
2.03 ELIMINATION OF INTERCOMPANY ACCOUNTS
The net amounts of all intercompany receivables, payables and
indebtedness between ADIC or any ADIC Subsidiary, on the one hand, and
Interpoint or any Interpoint Subsidiary, on the other hand as of the Effective
Time, will be satisfied in full by dividend or capital contribution, as
appropriate, and without the need for any further documentation, as of the
Effective Time.
2.04 TRANSFER OF ASSETS
Prior to the Effective Time, Interpoint shall transfer to ADIC all of
its interest in ADIC Europe and in Visual Technologies, Limited.
2.05 ASSUMPTION AND SATISFACTION OF LIABILITIES
Except as otherwise set forth herein, from and after the Effective
Time, (a) Interpoint shall, and shall cause the Interpoint Subsidiaries to
assume and pay, perform or discharge in due course all Interpoint Liabilities
and (b) ADIC shall, and shall cause the ADIC Subsidiaries to, assume and pay,
perform or discharge in due course all the ADIC Liabilities.
2.06 RESIGNATIONS
Interpoint shall use its best efforts to cause all Interpoint
Employees, except for Peter van Oppen, to resign, effective as of the Effective
Time, from all positions as officers or directors of ADIC or as officers or
directors of any ADIC Subsidiary in which they serve. ADIC shall use its best
efforts to cause all ADIC Employees to resign, effective as of the Effective
Time, from all positions as directors or officers of Interpoint or any
Interpoint Subsidiary in which they serve.
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2.07 FURTHER ASSURANCES
In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest
Interpoint or ADIC with full title to all properties, assets, rights, approvals,
immunities and franchises pertaining to the Interpoint Business or the ADIC
Business, as the case may be, the proper officers and each party to this
Agreement shall take all such necessary action. Without limiting the foregoing,
Interpoint and the Interpoint Subsidiaries and ADIC and the ADIC Subsidiaries
shall use their best efforts to obtain all consents and approvals, to enter into
all amendatory agreements and to make all filings and applications and take all
other actions which may be required for the consummation of the transactions
contemplated by this Agreement, including, without limitation, all applicable
regulatory filings.
2.08 NO REPRESENTATIONS OR WARRANTIES
Each of the parties hereto understands and agrees that no party hereto
is, in this Agreement or in any other agreement or document contemplated by this
Agreement or otherwise, making any representation or warranty whatsoever,
including, without limitation, as to title, value or legal sufficiency.
2.09 GUARANTEES
Except as otherwise provided in Article III hereof with respect to
employee benefit matters, Interpoint and ADIC shall each use their best efforts
to have, on or prior to the Distribution Date, or as soon as practicable
thereafter, Interpoint or any Interpoint Subsidiary removed as guarantor of or
obligor for indebtedness or obligations for which ADIC or any ADIC Subsidiary is
primarily liable and ADIC or any ADIC Subsidiary removed as guarantor of or
obligor for indebtedness or obligations for which Interpoint or any Interpoint
Subsidiary is primarily liable. Without limiting the generality of the
foregoing, Interpoint shall use its best efforts to have the assets of ADIC and
any ADIC Subsidiary released as collateral under Interpoint's bank line of
credit and ADIC shall use its best efforts to have Interpoint released as a
guarantor of the lease relating to ADIC's principal office. Interpoint shall
indemnify, defend and hold harmless ADIC from and against any and all
Liabilities of ADIC arising from a guarantee or other obligation of ADIC in
respect of indebtedness or obligations for which Interpoint (or any Interpoint
Subsidiary) is primarily liable. ADIC shall indemnify and hold harmless
Interpoint from and against any and all Liabilities of Interpoint arising from a
guarantee or other obligation of Interpoint in respect of indebtedness or
obligations for which ADIC (or any ADIC Subsidiary) is primarily liable.
2.10 LITIGATION
(a) With respect to all Actions now pending or which may hereafter
be commenced or threatened which may result in an Interpoint Liability,
Interpoint and ADIC shall each use their best efforts to have Interpoint or an
Interpoint Subsidiary substituted as parties to such Action in the place of and
for ADIC, any ADIC Subsidiary or any ADIC
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Employee and to have ADIC, any ADIC Subsidiary and any ADIC Employee removed as
parties to such Action following the Distribution Date.
(b) With respect to all Actions now pending or which may hereafter
be commenced or threatened which may result in a ADIC Liability, Interpoint and
ADIC shall each use their best efforts to have ADIC or an ADIC Subsidiary
substituted as parties to such Action in the place of and for Interpoint, any
Interpoint Subsidiary or any Interpoint Employee and to have Interpoint, any
Interpoint Subsidiary and any Interpoint Employee removed as parties to such
Action following the Distribution Date.
(c) At all times from and after the Distribution Date, each of
ADIC and Interpoint shall use reasonable efforts to make available to the other
upon written request its and its Subsidiaries' officers, directors, employees
and agents as witnesses to the extent that such persons may reasonably be
required in connection with any Actions in which the requesting party may from
time to time be involved (without reimbursement for such persons' salaries).
(d) The provisions of this Section 2.10 shall be in addition to,
and not in limitation of, the provisions of Article V, and compliance with the
provisions of this Section 2.10 shall not affect the obligations of the parties
under Article V.
2.11 COMPLIANCE WITH TAX OPINIONS REPRESENTATIONS
Interpoint shall, and shall cause each Interpoint Subsidiary to, comply
with each representation and statement made, or to be made, to Perkins Coie and
Milbank, Tweed, Hadley & McCloy in connection with the Opinions. ADIC shall, and
shall cause each ADIC Subsidiary to, comply with each representation and
statement made, or to be made, to Perkins Coie and Milbank, Tweed, Hadley &
McCloy in connection with the Opinions. Interpoint represents and warrants to
ADIC, and ADIC represents and warrants to Interpoint, that it has no present
intention to take any action inconsistent with the representations and
statements referred to in this Section 2.11.
2.12 PUBLICITY
Any existing printed material implicitly or explicitly showing any
affiliation or connection between Interpoint and ADIC as of the date such
material is used may be used by Interpoint and ADIC only for a period ending
six months after the Distribution Date. After the Distribution Date, neither
party hereto shall otherwise represent to third parties that it has a present
business affiliation with the other.
2.13 PARKING
For so long as Interpoint and ADIC are utilizing the facilities located
at 10301 Willows Road and 10201 Willows Road, respectively, Interpoint agrees to
allow ADIC Employees, and ADIC agrees to allow Interpoint Employees, to utilize
excess employee parking capacity at such facilities. The agreement contained in
this Section 2.13 is subject to
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the availability of such excess parking capacity and may be terminated at any
time by Interpoint or ADIC if there is no excess parking capacity at the
applicable facility. Any claims or other liabilities relating to the use of such
excess parking capacity at ADIC by Interpoint Employees, or at Interpoint by
ADIC Employees, as the case may be, constitute Interpoint Liabilities and ADIC
Liabilities, respectively, and are subject to the provisions of Article 5 of
this Agreement.
ARTICLE III
EMPLOYEE BENEFITS
3.01 401(K) PLAN
(a) As soon as practicable after the date hereof and effective as
of the Effective Time, ADIC shall take, or cause to be taken, all action
necessary and appropriate to establish and administer the New ADIC 401(k) Plan,
which will be a Qualified Plan, and to provide benefits thereunder for all ADIC
Employees, including former ADIC Employees, who, as of the Effective Time, were
participants in or otherwise entitled to benefits under the Interpoint 401(k)
Plan. ADIC agrees that each such ADIC Employee will be, to the extent
applicable, entitled, for all purposes under the new ADIC 40l(k) Plan, to be
credited with the term of service credited to such ADIC Employee as of the
Effective Time under the terms of the Interpoint 401(k) Plan.
(b) Interpoint agrees to prepare and provide to ADIC, as soon as
practicable after the Effective Time, a list of the ADIC Employees, including
former ADIC Employees, who were participants in or otherwise entitled to
benefits under the Interpoint 401(k) Plan as of the Effective Time, together
with a listing of each such ADIC Employee's term of service for eligibility and
vesting purposes under such Plan and a listing of each such ADIC Employee's
"Estimated Account Balance" thereunder. An ADIC Employee's "Estimated Account
Balance" is his or her account balances under the Interpoint 401(k) Plan as of
the last day of the quarter immediately preceding the quarter in which the
Distribution occurs plus employee salary deferral contributions, loan payments,
employer matching contributions and any other contributions made to the
Interpoint 401(k) Plan by or on behalf of such ADIC Employee during the quarter
in which the Distribution occurs, less any withdrawals or new loans made from
such accounts during such quarter, plus estimated earnings allocable to such
accounts for such quarter. Interpoint and ADIC agree to provide one another with
such additional information in the possession of one company and not already in
the possession of the other as may be reasonably requested by either of them and
necessary in order for ADIC to establish and administer effectively the New ADIC
401(k) Plan. For purposes of this Section 3.01, "quarter" means any of the three
month periods ending on the last day of August, November, February or May.
(c) Interpoint agrees to direct the trustee of the trust funding
the Interpoint 401(k) Plan to transfer, on the first business day of the quarter
commencing after the quarter in which
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the Distribution occurs, to the trustee or other funding agent of the New ADIC
401(k) Plan, an amount equal to the total Estimated Account Balances of all ADIC
Employees, including former ADIC Employees. As soon as administratively
practicable after the reconciliation of the Interpoint 401(k) Plan trust to
participant accounts for the quarter in which the Distribution occurs has been
completed by the recordkeeper of the Interpoint 401(k) Plan, Interpoint shall
direct the trustee of that trust to transfer any amounts remaining in the
Interpoint 401(k) Plan accounts of ADIC Employees, including former ADIC
Employees, to the trustee or other funding agent of the New ADIC 401(k) Plan and
shall provide ADIC with a listing of the account balances of each ADIC Employee,
including each former ADIC Employee, under the Interpoint 401(k) Plan as of the
last day of the quarter in which the Distribution occurs. ADIC agrees that,
following such transfer, each ADIC Employee on whose behalf assets were
transferred will be credited with an account balance under the New ADIC 401(k)
Plan equal to the amount transferred from the Interpoint 401(k) Plan to the New
ADIC 401(k) Plan on behalf of such ADIC Employee (adjusted, as necessary, for
any investment gains or losses incurred (and for any other transaction
occurring) with respect to such account under the New ADIC 401(k) Plan from the
date of the initial transfer of assets through the date of the final transfer of
assets to the New ADIC 401(k) Plan from the Interpoint 401(k) Plan).
(d) Interpoint and ADIC shall, in connection with the transfers
described in this Section 3.01, cooperate in making any and all appropriate
filings required under the Code or ERISA, and the regulations thereunder, and
any applicable securities laws, and take all such action as may be necessary and
appropriate to cause such transfers to take place at the times specified in this
Section 3.01.
(e) Except for liabilities and obligations arising under ERISA or
the Code (including, but not limited to, Sections 409, 502(i) and 502(l) of
ERISA and Sections 4972 and 4975 of the Code) with respect to events, actions or
inactions occurring prior to the final transfer referred to in Section 3.01(c)
(other than liabilities and obligations relating to events, actions or inactions
occurring with respect to the Advanced Digital Information Corporation 401(k)
Retirement Plan prior to the June 8, 1996 transfer of such plan's assets to the
Interpoint 401(k) Plan) and liabilities and obligations arising out of, related
to or in any way connected with matters disclosed in the Disclosure Letter,
after the final transfer referred to in Section 3.01(c) occurs, Interpoint and
the Interpoint Subsidiaries shall cease to have any liability or obligation
whatsoever with respect to ADIC Employees under the Interpoint 401(k) Plan, and
ADIC shall assume or retain, as the case may be, and shall be solely responsible
for, all liabilities and obligations whatsoever with respect to ADIC Employees
under the Interpoint 401(k) Plan and shall be solely responsible for all
liabilities or obligations whatsoever under the New ADIC 401(k) Plan; provided,
however, that if as a result of the IRS audit disclosed in the Disclosure
Letter, the IRS requires that any action(s) be taken with respect to the ADIC
Employees' account balances transferred to the New ADIC 401(k) Plan from the
Interpoint 401(k) Plan to retain the Interpoint 401(k) Plan's and/or the New
ADIC 401(k) Plan's tax-qualified status, then Interpoint will take (or will
direct the trustee of the Interpoint 401(k) Plan to take) such action(s) with
respect to the Interpoint 401(k) Plan and
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ADIC will direct the trustee of the New ADIC 401(k) Plan to make such
distributions from ADIC Employees' account balances under the New ADIC 401(k)
Plan as the IRS may require to retain the Interpoint 401(k) Plan's and the New
ADIC 401(k) Plan's tax-qualified status with respect to the account balances
transferred to the New ADIC 401(k) Plan from the Interpoint 401(k) Plan. ADIC
shall either be responsible for or make all required contributions, no later
than the later of the Effective Time and the date such contributions are legally
required to be made, in respect of ADIC Employees with respect to the Interpoint
401(k) Plan to the extent not previously made.
3.02 WELFARE PLANS
(a) Interpoint and the Interpoint Subsidiaries shall assume or
retain all Liabilities and obligations whatsoever for benefits of Interpoint
Employees and their spouses and dependents under any Welfare Plan. Except as
provided in Section 3.02(b), as of the Effective Time or as soon thereafter as
may be agreed upon by Interpoint, ADIC and the applicable insurance carriers,
but no later than December 31, 1996, ADIC shall cease to co-sponsor any Welfare
Plans with Interpoint or any Interpoint Subsidiary; provided, however, that ADIC
Employees and their spouses and dependents participating in Interpoint Welfare
Plans co-sponsored by ADIC or an ADIC Subsidiary shall remain entitled to
benefits under (and in accordance with the terms of) such Welfare Plans for
covered expenses incurred and benefits accrued prior to the time at which their
participation in such Welfare Plans ceases. With respect to the insured medical
and dental plan(s) co-sponsored by Interpoint and ADIC for eligible employees
and their spouses and dependents, ADIC agrees to pay a pro rata share (based on
number of participants) of any claims runoff for benefits incurred prior to
the time ADIC Employees and their spouses and dependants cease to participate
in such plan(s) that requires additional payments to the insurance company
over and above the amount reserved on Interpoint's books for such purpose at
the Effective Time, and Interpoint agrees that it will refund to ADIC, at such
time as such reserve is no longer subject to runoff claims for benefits
incurred prior to the time ADIC Employees and their spouses and dependants
cease to participate in such plan(s), a pro rata share (based on number of
participants) of any portion of such reserve that is not utilized to pay such
benefits. ADIC shall also be responsible for providing COBRA coverage under
Code Section 4980B for former ADIC Employees and their covered dependents who
are entitled to COBRA coverage on and after the date ADIC ceases to co-sponsor
the Interpoint medical and dental plan(s). ADIC shall also be liable for any
retiree medical coverage liabilities to retired ADIC Employees and their
dependents, and for any severance benefits payable to any ADIC Employee under
an severance pay plan or policy.
(b) Interpoint shall permit ADIC and any ADIC Subsidiaries to
co-sponsor any Interpoint Welfare Plan(s) (except for any severance pay plan)
for such period following the Effective Time as may be agreed upon by
Interpoint, ADIC and the applicable insurance carriers, but not later than
December 31, 1996; provided that ADIC and any ADIC Subsidiaries shall pay the
costs associated with such co-sponsorship for ADIC Employees and their spouses
and dependants on the same basis as Interpoint pays the costs associated with
such co-sponsorship for Interpoint Employees and their spouses and dependants.
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3.03 STOCK OPTION PLANS
(a) Interpoint shall take, or cause to be taken, all actions
necessary and appropriate to effect the Option Cash Out Program, pursuant to
which (i) each Interpoint Stock Option held by an Interpoint Holder will be
cancelled and in exchange therefor the Interpoint Holder will receive a cash
payment equal to the difference between the exercise price of such option and
the average of the high and low sale prices of the Interpoint Common Stock on
each of the 10 trading days prior to (but not including the date of) the
Effective Time (the "Interpoint Average Stock Price") and (ii) each Interpoint
Stock Option held by an ADIC Holder will be adjusted by Interpoint so as to
represent two separate options, one to purchase Interpoint Common Stock and the
other to purchase ADIC Common Stock (an "Adjusted Interpoint Option" and an
"Adjusted ADIC Option," respectively). Each Adjusted Interpoint Option will be
cancelled and in exchange therefor the ADIC Holder will receive a cash payment
equal to the difference between (1) the exercise price of such Adjusted
Interpoint Option (determined as described below) and (2) the Aggregate Share
Distribution Amount (as defined in the Merger Agreement) divided by the number
of shares of Interpoint Common Stock outstanding immediately prior to the
Merger. Each Adjusted ADIC Option will be exercisable for the same number of
shares as was originally covered by the related Interpoint Stock Option prior to
the Effective Time, and will have substantially the same other terms as such
Interpoint Stock Option except for the exercise price and except that Adjusted
ADIC Options will be administered pursuant to the ADIC 1996 Transition Plan. The
exercise price of each Adjusted Interpoint Option will be determined by
multiplying the per share exercise price of the original option by a fraction
the numerator of which is the Aggregate Share Distribution Amount and the
denominator of which is the Interpoint Average Stock Price . The exercise price
per share of the Adjusted ADIC Option will be the difference between the
exercise price of the original Interpoint Stock Option and the exercise price of
the Adjusted Interpoint Option.
(b) For purposes of this Section 3.03, all members of Interpoint's
Board of Directors who are not Interpoint Employees will be deemed to be ADIC
Holders.
3.04 INTERPOINT MIP AND PROFIT SHARING
Interpoint and ADIC will, to the extent practicable, each continue
accruing for payments under, and shall make payments in accordance with, the
Interpoint MIP and Interpoint Profit Sharing Plan for the fiscal year ended
October 31, 1996. Each of ADIC and Interpoint shall be responsible for the
determination and payment of awards to their respective employees for the fiscal
year ended October 31, 1996. The payments to be made to Peter van Oppen under
the Interpoint MIP and Interpoint Profit Sharing Plan will be made by
Interpoint.
3.05 OTHER BALANCE SHEET ADJUSTMENTS
To the extent not otherwise provided in this Agreement, Interpoint and
ADIC shall take such action as is necessary to effect an adjustment to the books
of Interpoint and ADIC so that, as of the Effective Time, the prepaid expense
balances and accrued employee liabilities
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with respect to any employee liability or obligation assumed or retained as of
the Effective Time (except to the extent a later time is agreed upon as provided
in this Agreement) by Interpoint and the Interpoint Subsidiaries, on the one
hand, and ADIC and the ADIC Subsidiaries, on the other hand, are appropriately
reflected on the respective consolidated balance sheets as of the Effective
Time, respectively, of Interpoint and ADIC.
3.06 PRESERVATION OF RIGHTS TO AMEND OR TERMINATE PLANS
No provision of this Agreement, including, without limitation, the
agreement of Interpoint or ADIC that it, or any Interpoint Subsidiary or ADIC
Subsidiary, will make a contribution or payment to or under any Plan herein
referred to for any period, shall be construed as a limitation on the right of
Interpoint or ADIC or any Interpoint Subsidiary or ADIC Subsidiary to amend or
terminate such Plan which Interpoint or ADIC or any Interpoint Subsidiary or
ADIC Subsidiary would otherwise have under the terms of such Plan or otherwise,
and no provision of this Agreement shall be construed to create a right in any
employee or former employee or beneficiary of such employee or former employee
under a Plan which such employee or former employee or beneficiary would not
otherwise have under the terms of the Plan itself.
ARTICLE IV
INSURANCE
4.01 CONTINUATION OF ADIC RIGHTS UNDER INTERPOINT POLICIES
Interpoint and ADIC agree that, following the Effective Time, ADIC
shall retain all rights of an insured party (to the extent ADIC is an insured
party) under each of the Interpoint Policies with respect to any injury, loss,
liability, damage or expense incurred or claimed to have been incurred prior to
the Effective Time by any party in or in connection with the conduct of the ADIC
Business or against ADIC or any ADIC Subsidiary, to the extent that such injury,
loss, liability, damage or expense may arise out of insured or insurable
occurrences or events under one or more of the Interpoint Policies. If,
subsequent to the Effective Time, any person, corporation, firm or entity shall
assert such a claim against ADIC or any ADIC Subsidiary, Interpoint shall at the
time such claim is asserted be deemed to assign, without need of further
documentation, to ADIC any and all rights of an insured party under the
applicable Interpoint Policy with respect to such asserted claim, specifically
including rights of indemnity, if any, and the right, if any, to be defended by
or at the expense of the insurer; provided, however, that nothing in this
paragraph shall be deemed to constitute (or to reflect) the assignment of the
Interpoint Policies, or any of them, to ADIC.
4.02 ADMINISTRATION AND ALLOCATIONS
(a) Administration. From and after the Effective Time, Interpoint
shall be responsible for accounting for premiums,indemnity payments, deductibles
and retentions, as appropriate under the terms and conditions of each of the
Interpoint Policies; distributing
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Insurance Proceeds as contemplated by this Agreement; reporting to insurers its
own Insured Claims and those Insured Claims which ADIC has reported to it; and
processing and managing Insured Claims made under the Interpoint Policies based
upon supporting information and documentation provided by the party submitting
such Insured Claim; provided that Interpoint's retention of the administrative
responsibilities for the Interpoint Policies listed in this paragraph (a) will
not relieve the party submitting any Insured Claim of the primary responsibility
for reporting such Insured Claim accurately, completely and in a timely manner.
Each of Interpoint and ADIC shall administer and pay any costs related to
defending its respective Insured Claims under the Interpoint Policies to the
extent such defense costs are not covered under such policies, and will be
responsible for obtaining or reviewing the appropriateness of releases upon
settlement of its respective Insured Claims under the Interpoint Policies. The
retention of the Interpoint Policies by Interpoint is in no way intended to
limit, inhibit or preclude any right to insurance coverage for any Insured Claim
of a named insured under the Interpoint Policies, including, but not limited to,
ADIC and any of its operations, and any ADIC Subsidiary or Affiliate.
(b) Insurance Premiums.
(i) Prepaid Premiums. Upon the written request of ADIC,
Interpoint shall promptly direct the insurance carrier for each Interpoint
Policy on which premiums will be prepaid as of the Effective Time to credit the
amount of each such prepayment made by ADIC against the premiums to be paid by
ADIC on the comparable policy to be effective for ADIC following the
Distribution. ADIC shall not receive such credit for any such prepaid premium
that was not paid by ADIC prior to the Effective Time.
(ii) Premium Adjustment for Package Policy. In the event
that upon the cancellation or termination of the "package policy" there are
additional premiums payable, or entitlement to return of premiums previously
paid, with respect to such policy as a result of the actual sales of Interpoint
and ADIC, then such amounts shall be paid by, or refund paid to, Interpoint
and/or ADIC, as the case may be, to the extent that such additional payment or
refund arises due to sales of that party..
(c) Allocation of Policy Limits. Interpoint and ADIC agree that
where ADIC Liabilities are specifically covered under Interpoint Policies in
effect for periods prior to the Effective Time, then from and after the
Effective Time ADIC may claim for Insured Claims under each such Interpoint
Policy as and to the extent that such insurance is available up to the full
extent of the applicable fixed dollar coverage limits of the policy, subject to
the terms of this Section 4.02(c). Except with respect to Interpoint Policies
providing for directors and officers liability insurance coverage which are not
be subject to the remainder of this Section 4.02(c), in the event that the
aggregate of Insured Claims by Interpoint and ADIC have exhausted the fixed
dollar coverage limits under a particular Interpoint Policy, taking into account
defense costs to the extent such costs are applied against such limits of such
policy, then the party that has utilized more than its "allocable portion" (as
defined below) of the fixed dollar coverage limits under such Policy (the
"benefitted party") shall indemnify the party
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which utilized less than its allocable portion of such fixed dollar coverage
limits (the "nonexceeding party") for any subsequent claim by the nonexceeding
party (including, without limitation, defense costs related to such claim)
arising out of an insured or insurable occurrence or event under such Interpoint
Policy which would have been an Insured Claim but for the fact that the limits
of such Interpoint Policy were exceeded, up to the difference between such
parties allocable portion of the fixed dollar coverage limits under such
Interpoint Policy and the amount of such fixed dollar coverage limits (excluding
defense costs to the extent such costs are not applied against the fixed dollar
coverage limits) actually utilized by the nonexceeding party (the "maximum
reimbursement amount"). The nonexceeding party shall submit to the benefitted
party the same information and documentation that it would have been required to
submit to the insurance carrier under the applicable Interpoint Policy within
the same time frames provided for in such Interpoint Policy, and the benefitted
party shall, within 30 days of receipt of documentation supporting such claim,
either pay such claim or give written notice denying the claim to the
nonexceeding party. ADIC's "allocable portion" is the percentage of consolidated
Interpoint sales attributable to the ADIC business for the 1996 fiscal year
prior to the Merger, and Interpoint's "allocable portion" is the percentage of
consolidated Interpoint sales attributable to the Interpoint Business for the
same period.
In the event the benefitted party denies any claim, then the parties
shall select an independent insurance coverage expert within 30 days of the
notice of denial. If the parties are unable to agree on an independent insurance
coverage expert, then each party shall select one independent insurance coverage
expert within 45 days of the notice of denial, and a third independent insurance
coverage expert shall be selected by mutual agreement of the first two
independent insurance coverage experts within 60 days of the notice of denial.
If the parties agree on the selection of an independent insurance coverage
expert, such expert so selected, or if the parties do not so agree, the third
independent insurance coverage expert so selected, shall interpret the terms,
provisions and conditions of the applicable Interpoint Policy and shall
determine, within 45 days of being selected, whether the claim would have been
an Insured Claim under such Interpoint Policy and the amount of reimbursement
that the nonexceeding party will receive in settlement of such claim; provided,
however, that the aggregate amount of claims paid by a benefitted party under
this paragraph (c) shall not exceed the maximum reimbursement amount.
The decision of the independent insurance coverage expert will be final
and binding on the parties, and no appeal may be taken from that decision. Fees
and costs for attorneys, experts and all independent insurance coverage experts
will be borne equally by the parties. This agreement of the parties to submit
disputes between them to the procedures set forth in this paragraph (c) will not
be deemed a waiver of legal defenses, including, but not limited to, statutes of
limitations, that either party may have.
Except as set forth in this paragraph (c) or in paragraph (d) of this
Section 4.02, Interpoint and ADIC will not be liable to one another for claims
by the other not reimbursed by insurers for any other reason whatsoever not
within the control of Interpoint or ADIC, as
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the case may be, including, but not limited to, coinsurance provisions,
deductibles, quota share deductibles, self-insured retentions, bankruptcy or
insolvency of an insurance carrier, Interpoint Policy limitations or
restrictions, any coverage disputes, any failure to timely claim by ADIC or
Interpoint or any defect in such claim or its processing.
(d) Allocation of Insurance Deductibles. Insured Claims by both
Interpoint and ADIC shall be subject to, and shall apply toward the satisfaction
of, the full amount of applicable deductibles or self-insured retentions under
the Interpoint Policies; provided that, if the aggregate deductibles or
self-insured retentions under any Interpoint Policy (other than a Interpoint
Policy providing for directors and officers liability coverage) are exceeded and
one company benefits from the deductibles or retentions paid by the other, then
the benefitted company shall reimburse the other company to the extent of such
benefit up to its allocable portion of such aggregate deductible or retention
within 30 days of receipt of such benefit.
(e) Allocation of Insurance Proceeds. Interpoint shall direct the
insurance carriers to pay Insurance Proceeds with respect to claims, costs and
expenses under the Interpoint Policies directly to ADIC with respect to ADIC
Insured Claims and directly to Interpoint with respect to Interpoint's Insured
Claims. The parties agree to use their best efforts to cooperate with respect to
insurance matters.
4.03 AGREEMENT FOR SHARED DEFENSE
In the event that Insured Claims of both ADIC and Interpoint exist
relating to the same occurrence, ADIC and Interpoint agree to jointly defend
such Insured Claim; provided, that, if, in the reasonable judgment of one party,
a conflict of interest between Interpoint and ADIC exists in respect of such
Insured Claim or if the other party assumes responsibility for such Insured
Claim with any reservations or exceptions, the party which concludes that a
conflict exists or that has not assumed responsibility for such Insured Claim
will have the right to employ separate counsel reasonably satisfactory to the
other party. In that event, the fees and expenses of such separate counsel will
be paid by the party retaining such counsel unless the other party shall have
indemnified such party against such fees and expenses pursuant to this Agreement
or otherwise. Nothing in this Section 4.03 shall be construed to limit or
otherwise alter in any way the indemnity obligations of the parties to this
Agreement, by operation of law or otherwise.
4.04 DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICIES
Interpoint shall comply with its obligations as set forth in Section
6.10 of the Merger Agreement with respect to Interpoint Policies providing for
directors and officers liability coverage.
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ARTICLE V
INDEMNIFICATION
5.01 INDEMNIFICATION BY INTERPOINT
Except as otherwise set forth herein, Interpoint shall indemnify,
defend and hold harmless ADIC, each of its directors, officers, employees and
agents, each Affiliate of ADIC and each of the heirs, executors, successors and
assigns of any of the foregoing (the "ADIC Indemnitees") from and against any
and all Indemnifiable Losses of the ADIC Indemnitees arising out of, by reason
of or otherwise in connection with the Interpoint Liabilities.
5.02 INDEMNIFICATION BY ADIC
Except as otherwise set forth herein, ADIC shall indemnify, defend and
hold harmless Interpoint, each of its directors, officers, employees and agents,
each Affiliate of Interpoint and each of the heirs, executors, successors and
assigns of any of the foregoing (the "Interpoint Indemnitees") from and against
any and all Indemnifiable Losses of the Interpoint Indemnitees arising out of,
by reason of or otherwise in connection with the ADIC Liabilities.
5.03 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS
The amount which any party (an "Indemnifying Party") is or may be
required to pay to any other party (an "Indemnitee") pursuant to Section 5.01 or
Section 5.02 shall be reduced (retroactively or prospectively) by any insurance
proceeds or other amounts actually recovered by or on behalf of such Indemnitee,
in reduction of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party in
respect of an Indemnifiable Loss and shall subsequently actually receive
insurance proceeds or other amounts in respect of such Indemnifiable Loss, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount
of such insurance proceeds or other amounts actually received, up to the
aggregate amount of any payments received from such Indemnifying Party pursuant
to this Agreement in respect of such Indemnifiable Loss.
5.04 PROCEDURE FOR INDEMNIFICATION
(a) If an Indemnitee shall receive notice or otherwise learn of
the assertion by a person (including, without limitation, any governmental
entity) who is not a party to this Agreement or the Merger Agreement of any
claim or of the commencement by any such person of any Action (a "Third Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof promptly after becoming aware of such
Third Party Claim; provided, however, that the failure of any Indemnitee to give
notice as provided in this Section 5.04 shall not relieve the applicable
Indemnifying Party of its obligations under this Article V, except to the extent
that such Indemnifying Party is
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prejudiced by such failure to give notice. Such notice shall describe the Third
Party Claim in reasonable detail and shall indicate the amount (estimated if
necessary) of the Indemnifiable Loss that has been or may be sustained by such
Indemnitee.
(b) Subject to the proviso of the following sentence, an
Indemnifying Party shall defend or seek to settle or compromise, at such
Indemnifying Party's own expense and by such Indemnifying Party's own counsel,
any Third Party Claim. Within 30 days of the receipt of notice from an
Indemnitee in accordance with Section 5.04(a) (or sooner, if the nature of such
Third Party Claim so requires), the Indemnifying Party shall notify the
applicable Indemnitee whether the Indemnifying Party will assume responsibility
for defending such Third Party Claim, which notice must specify any reservations
or exceptions with respect to such assumption of responsibility; provided,
however, that an Indemnifying Party may elect not to assume responsibility for
defending a Third Party Claim only in the event of a good faith dispute that a
claim was appropriately tendered under Section 5.01 or 5.02, as the case may be,
in which case the Indemnitee may defend or seek to compromise or settle such
Third Party Claim. After notice from an Indemnifying Party to an Indemnitee of
its election to assume the defense of a Third Party Claim, such Indemnifying
Party will not be liable to such Indemnitee under this Article V for any legal
or other expenses (except expenses approved in advance by the Indemnifying
Party) subsequently incurred by such Indemnitee in connection with the defense
thereof; provided, that, if the defendants in any such claim include both the
Indemnifying Party and one or more Indemnitees and in such Indemnitees'
reasonable judgment a conflict of interest between such Indemnitees and such
Indemnifying Party exists in respect of such claim or if the Indemnifying Party
shall assume responsibility for such claim with any reservations or exceptions,
such Indemnitees will have the right to employ separate counsel reasonably
satisfactory to the Indemnifying Party to represent such Indemnitees, and in
that event the reasonable fees and expenses of such separate counsel (but not
more than one separate counsel) will be paid by such Indemnifying Party.
(c) If an Indemnifying Party elects to defend or to seek to
compromise any Third Party Claim, the appropriate Indemnitee shall (x) cooperate
in all reasonable respects with the Indemnifying Party in connection with such
defense, (y) not admit any liability with respect to, or settle, compromise or
discharge, such Third Party Claim without the Indemnifying Party's prior written
consent and (z) agree to any settlement, compromise or discharge of such Third
Party Claim which the Indemnifying Party may recommend and which by its terms
obligates the Indemnifying Party to pay the full amount of the liability in
connection with such Third Party Claim and which releases the Indemnifying Party
completely in connection with such Third Party Claim.
(d) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances with respect to which such Indemnitee may have any right
or claim relating to such Third Party Claim against any claimant or plaintiff
asserting such Third Party Claim. Such Indemnitee shall cooperate
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with such Indemnifying Party in a reasonable manner, and at the cost and expense
of such Indemnifying Party, in prosecuting any subrogated right or claim.
(e) With respect to any Third Party Claim for which the
Indemnifying Party assumes responsibility for defense, the Indemnifying Party
shall inform the Indemnitee, upon the reasonable written request of the
Indemnitee, of the status of efforts to resolve such Third Party Claim. With
respect to any Third Party Claim for which the Indemnifying Party does not
assume such responsibility, the Indemnitee shall inform the Indemnifying Party,
upon the reasonable written request of the Indemnifying Party, of the status of
efforts to resolve such Third Party Claim.
5.05 SURVIVAL OF INDEMNITIES
The obligations of Interpoint and ADIC under this Article V shall
survive the sale or other transfer by it of any assets or businesses or the
assignment by it of any Liabilities, with respect to any Indemnifiable Loss of
the other related to such assets, businesses or Liabilities. All obligations of
Interpoint and ADIC under this Article V shall terminate five years after the
Distribution Date, except with respect to claims for which one party has
provided notice to the other prior to the end of such five-year period.
ARTICLE VI
ACCESS TO INFORMATION
6.01 PROVISION OF CORPORATE RECORDS
Interpoint shall use its best efforts to arrange, as soon as
practicable following the Distribution Date, for the transportation to ADIC of
all original agreements, documents, books, records and files relating to or
affecting ADIC, any ADIC Subsidiary or the ADIC Business (collectively
"Records"), to the extent such items are not already in the possession of ADIC
or a ADIC Subsidiary, subject to the following exceptions:
(i) ADIC recognizes that certain Records may contain
incidental information relating to Interpoint and the Interpoint Subsidiaries or
may relate primarily to subsidiaries or divisions of Interpoint other than ADIC
and the ADIC Subsidiaries, and that Interpoint may retain such Records and
provide copies of the relevant portions thereof to ADIC; and
(ii) Interpoint may retain any tax returns, reports, forms
or work papers, and ADIC will be provided with copies of such returns, reports,
forms or work papers only to the extent that they relate to or affect ADIC and
the ADIC Subsidiaries' returns or tax liability.
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6.02 ACCESS TO INFORMATION
From and after the Distribution Date, each of Interpoint and ADIC shall
afford to the other and its authorized accountants, counsel and other designated
representatives reasonable access during normal business hours, subject to
appropriate restrictions for classified information, to the personnel,
properties, books and records of such party and its subsidiaries insofar as such
access is reasonably required by the other party.
6.03 CONFIDENTIALITY
Each of Interpoint and the Interpoint Subsidiaries on the one hand, and
ADIC and the ADIC Subsidiaries on the other hand, shall hold, and shall cause
its respective consultants and advisors to hold, in strict confidence, all
information concerning the other in its possession (except to the extent that
such information has been (a) in the public domain through no fault of such
party or (b) later lawfully acquired from other sources by such party) to the
extent such information (i) relates to the period up to the Effective Time, (ii)
relates to this Agreement or (iii) is obtained from the other party pursuant to
this Agreement, and each party shall not release or disclose such information to
any other person, except its auditors, attorneys, financial advisors, bankers
and other consultants and advisors, unless compelled to disclose by judicial or
administrative process or, as advised by its counsel, by other requirements of
law.
ARTICLE VII
MISCELLANEOUS
7.01 COMPLETE AGREEMENT; CONSTRUCTION
This Agreement and the Tax Allocation Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
thereof, and supersedes all previous negotiations, commitments and writings with
respect to such subject matter. In the event of any inconsistency between the
provisions of this Agreement and the provisions of the Tax Allocation Agreement,
the provision of the Tax Allocation Agreement will be controlling. To the extent
any liability for any tax is not covered by the provisions of the Tax Allocation
Agreement, such liability will be treated as a Liability hereunder.
7.02 SURVIVAL OF AGREEMENTS
Except as otherwise contemplated by this Agreement, all covenants and
agreements of the parties contained in this Agreement will survive the
Distribution Date.
7.03 GOVERNING LAW
This Agreement will be governed by and construed in accordance with the
laws of the State of Washington, without regard to the principles of conflicts
of laws thereof.
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7.04 NOTICES
All notices and other communications hereunder must be in writing and
must be delivered by hand, mailed by registered or certified mail (return
receipt requested) or sent by facsimile transmission to the parties at the
following addresses (or at such other addresses for a party as may be specified
by like notice) and will be deemed given on the date on which such notice is
received:
To Interpoint:
10301 Willows Road
Redmond, Washington 98052
Attn: Chief Executive Officer
Fax: (206) 869-7402
To ADIC:
10201 Willows Road
Redmond, Washington 98052
Attn: Chief Executive Officer
Fax: (206) 881-2296
7.05 AMENDMENTS
This Agreement may not be modified or amended except by an agreement in
writing signed by the parties.
7.06 SUCCESSORS AND ASSIGNS
Except in connection with a merger (including the Merger) or
consolidation or the sale of all or substantially all the assets of a party
hereto, this Agreement shall not be assignable, in whole or in part, directly or
indirectly, by either party hereto without the prior written consent of the
other, and any attempt to assign any rights or obligations arising under this
Agreement without such consent shall be void; provided, however, that the
provisions of this Agreement shall be binding upon, inure to the benefit of and
be enforceable by the parties and their respective successors and permitted
assigns.
7.07 TERMINATION
This Agreement may be terminated and the Distribution abandoned at any
time prior to the Distribution Record Date by and in the sole discretion of the
Board of Directors of Interpoint without the approval of ADIC or of Interpoint's
shareholders. In the event of such termination, no party will have any liability
of any kind to any other party.
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7.08 NO THIRD PARTY BENEFICIARIES
Except for the provisions of Article V relating to Indemnitees and as
otherwise expressly provided herein, this Agreement is solely for the benefit
of the parties hereto and their respective successors and permitted assigns and
should not be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
7.09 TITLE AND HEADINGS
Titles and headings to sections herein are inserted for the
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
7.10 LEGAL ENFORCEABILITY
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof. Any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. Without prejudice to any rights or remedies otherwise
available to any party hereto, each party hereto acknowledges that damages
would be an inadequate remedy for any breach of the provisions of this
Agreement and agrees that the obligations of the parties hereunder are
specifically enforceable.
7.11 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together constitute one and
the same instrument.
23
<PAGE> 24
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
INTERPOINT CORPORATION
By
-----------------------
Its
--------------------
ADVANCED DIGITAL INFORMATION
CORPORATION
By
-----------------------
Its
--------------------
24
<PAGE> 1
EXHIBIT 3.1
ADVANCED DIGITAL INFORMATION CORPORATION
RESTATED ARTICLES OF INCORPORATION
Pursuant to provisions of RCW 23B.10.070, the following constitutes
Restated Articles of Incorporation of Advanced Digital Information Corporation,
a Washington corporation.
ARTICLE 1. NAME
The name of this corporation is Advanced Digital Information
Corporation.
ARTICLE 2. DURATION
This corporation is organized under the Washington Business Corporation
Act and has perpetual existence.
ARTICLE 3. POWERS
This corporation has any and all powers that a corporation formed under
the Washington Business Corporation Act, or any amendment thereto or substitute
therefor, may at the time lawfully exercise.
ARTICLE 4. CAPITAL STOCK
4.1 AUTHORIZED CAPITAL
The total authorized stock of this corporation consists of 40,000,000
shares of Common Stock, no par value, and 2,000,000 shares of Preferred Stock,
no par value.
4.2 ISSUANCE OF PREFERRED STOCK IN SERIES
The Preferred Stock may be issued from time to time in one or more
series, the shares of each series to have the designation, voting power,
preferences, limitations and relative rights as are set forth herein or in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors.
4.2.1 AUTHORITY OF THE BOARD OF DIRECTORS
Authority is hereby expressly granted to the Board of
Directors of this corporation, subject to the provisions of this Article 4 and
to the limitations prescribed by law, to authorize the issue of one or more
series of Preferred Stock. The authority of the Board of
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ADIC RESTATED ARTICLES OF INC. PAGE 1
<PAGE> 2
Directors with respect to each series of Preferred Stock includes, but is not
limited to, the determination or fixing of the following:
(a) The number of shares of such series;
(b) The designation of such series;
(c) The dividends of such series, the conditions and dates upon
which such dividends are payable, the relation which such dividends bear to the
dividends payable on any other class or classes of stock and whether such
dividends are cumulative or noncumulative;
(d) Whether the shares of such series are subject to redemption by
this corporation and, if so subject to redemption, the terms and conditions of
such redemption;
(e) The terms and amounts of any sinking fund provided for the
purchase or redemption of the shares of such series;
(f) Whether or not the shares of such series are convertible into
or exchangeable for shares of any other class or classes or of any other series
of any class or classes of stock of this corporation and, if provision is made
for conversion or exchange, the terms and conditions of such conversion or
exchange;
(g) The extent, if any, to which the holders of the shares of such
series are entitled to vote with respect to the election of directors or
otherwise, including the right to elect a specified number or class of
directors, the number or percentage of votes required for certain actions, and
the extent to which a vote by class or series is required for certain actions;
(h) The restrictions, if any, on the issue or reissue of any
shares of such series;
(i) The rights of the holders of the shares of such series upon
the dissolution of, or upon the distribution of the assets of, this corporation;
and
(j) The extent, if any, to which any committee of the Board of
Directors may establish the designation of and the voting power, preferences,
limitations and relative rights of the shares of such series.
4.2.2 DIVIDENDS
Subject to any preferential rights granted for any series of
Preferred Stock, the holders of shares of the Common Stock are entitled to
receive dividends, out of the funds of this corporation legally available
therefor, at the rate and at the time or times, whether cumulative or
noncumulative, as may be provided by the Board of Directors. The holders
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ADIC RESTATED ARTICLES OF INC. PAGE 2
<PAGE> 3
of shares of the Preferred Stock are entitled to receive dividends to the extent
provided herein or by the Board of Directors in designating the particular
series of Preferred Stock. The holders of shares of the Common Stock are not
entitled to receive any dividends thereon other than the dividends referred to
in this section.
4.2.3 VOTING
The holders of shares of the Common Stock, on the basis of one
vote per share, have the right to vote for the election of members of the Board
of Directors of this corporation and the right to vote on all other matters,
except those matters on which a separate class of this corporation's
shareholders vote by class or series to the exclusion of the holders of the
shares of the Common Stock. To the extent provided herein or by resolution or
resolutions of the Board of Directors providing for the issue of a series of
Preferred Stock, the holders of each such series have the right to vote for the
election of members of the Board of Directors of this corporation and the right
to vote on all other matters, except those matters in which a separate class of
this corporation's shareholders vote by class or series to the exclusion of the
holders of the shares of such series.
4.2.4 ISSUANCE OF SHARES
This corporation may from time to time issue and dispose of any
of the authorized and unissued shares of the Common Stock or the Preferred Stock
for such consideration as may be fixed from time to time by the Board of
Directors, without action by the shareholders. The Board of Directors may
provide for payment therefor to be received by this corporation in cash,
property, services or such other consideration as is approved by the Board of
Directors. Any and all such shares of the Common Stock or the Preferred Stock of
this corporation, the issuance of which has been so authorized, and for which
consideration so fixed by the Board of Directors has been paid or delivered,
will be deemed fully paid stock and will not be liable to any further call or
assessment thereon.
ARTICLE 5. PREEMPTIVE RIGHTS
No preemptive rights exist with respect to shares of stock or
securities convertible into shares of stock of this corporation.
ARTICLE 6. CUMULATIVE VOTING
The right to cumulate votes in the election of Directors does not exist
with respect to shares of stock of this corporation.
ARTICLE 7. BYLAWS
The Board of Directors has the power to adopt, amend or repeal the
Bylaws of this corporation, subject to approval by a majority of the Continuing
Directors (as defined in Article 13). The shareholders also have the power to
adopt, amend or repeal the Bylaws of
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ADIC RESTATED ARTICLES OF INC. PAGE 3
<PAGE> 4
this corporation by the affirmative vote of the holders of not less than
two-thirds of the outstanding shares and, to the extent, if any, provided by a
resolution or resolutions of the Board of Directors providing for the issuance
of a series of Common Stock or Preferred Stock, not less than two-thirds of the
outstanding shares entitled to vote thereon, voting as a class.
ARTICLE 8. REGISTERED OFFICE AND AGENT
The name of the registered agent of this corporation and the address of
its registered office are as follows:
Peter H. van Oppen
Advanced Digital Information Corporation
10201 Willows Road
Redmond, WA 98052
ARTICLE 9. DIRECTORS
The number of Directors of this corporation will be determined in the
manner provided by the Bylaws and may be increased or decreased from time to
time in the manner provided therein. The Board of Directors will be divided into
three classes, with said classes to be as equal in number as is possible. At the
first election of Directors to such classified Board of Directors, each Class 1
Director will be elected to serve until the next ensuing annual meeting of
shareholders, each Class 2 Director will be elected to serve until the second
ensuing annual meeting of shareholders and each Class 3 Director will be elected
to serve until the third ensuing annual meeting of shareholders. At each annual
meeting of shareholders following the meeting at which the Board of Directors is
initially classified, the number of Directors equal to the number of Directors
in the class whose term expires at the time of such meeting will be elected to
serve until the third ensuing annual meeting of shareholders. Notwithstanding
any of the foregoing provisions of this Article, Directors will serve until
their successors are elected and qualified or until their earlier death,
resignation or removal from office, or until there is a decrease in the number
of Directors.
The Directors of this corporation may be removed only for cause. Any
such removal must be approved by the holders of not less than two-thirds of the
shares entitled to elect the Director or Directors whose removal is sought in
the manner provided by the Bylaws.
ARTICLE 10. AMENDMENTS TO ARTICLES OF INCORPORATION
This corporation reserves the right to amend or repeal by the
affirmative vote of the holders of a majority of the outstanding shares and, to
the extent, if any, provided by a resolution or resolutions of the Board of
Directors providing for the issuance of a series of Common Stock or Preferred
Stock, a majority of the outstanding shares entitled to vote
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ADIC RESTATED ARTICLES OF INC. PAGE 4
<PAGE> 5
thereon, voting as a class, any of the provisions contained in these Articles of
Incorporation in any manner now or hereafter permitted by law; provided,
however, that amendment or repeal of Article 7, Article 9, Article 10, Article
12 or Article 13 shall require the affirmative vote of the holders of at least
two-thirds of the outstanding shares. The rights of the shareholders of this
corporation are granted subject to this reservation.
ARTICLE 11. LIMITATION OF DIRECTOR LIABILITY
To the full extent that the Washington Business Corporation Act, as it
exists on the date hereof or may hereafter be amended, permits the limitation or
elimination of the liability of Directors, a Director of this corporation will
not be liable to this corporation or its shareholders for monetary damages for
conduct as a Director. Any amendments to or repeal of this Article 11 will not
adversely affect any right or protection of a Director of this corporation for
or with respect to any acts or omissions of such Director occurring prior to
such amendment or repeal.
ARTICLE 12. SPECIAL MEETINGS OF SHAREHOLDERS
The Chairman of the Board of Directors, the President or the Board of
Directors may call special meetings of the shareholders for any purpose.
Further, a special meeting of the shareholders will be held if the holders of
not less than 10% of all the votes entitled to be cast on any issue proposed to
be considered at such special meeting have dated, signed and delivered to the
Secretary of this corporation one or more written demands for such meeting,
describing the purpose or purposes for which it is to be held, provided,
however, that upon qualification of the corporation as a "public company" under
Title 23B RCW the percentage of votes required to call a special meeting will be
50%.
ARTICLE 13. SPECIAL VOTING REQUIREMENTS
In addition to any affirmative vote required by law, by these Restated
Articles of Incorporation or otherwise, any "Business Combination" (as
hereinafter defined) involving this corporation will be subject to approval in
the manner set forth in this Article 13.
13.1 DEFINITIONS
For the purposes of this Article 13:
(a) "Business Combination" means (i) a merger, share exchange or
consolidation of this corporation or any of its Subsidiaries
with any other corporation; (ii) the sale, lease, exchange,
mortgage, pledge, transfer or other disposition or
encumbrance, whether in one transaction or a series of
transactions, by this corporation or any of its Subsidiaries
of all or a substantial part of this corporation's assets
otherwise than in the usual and regular course of business; or
(iii) any agreement, contract or other arrangement providing
for any of the foregoing transactions.
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ADIC RESTATED ARTICLES OF INC. PAGE 5
<PAGE> 6
(b) "Continuing Director" means any member of the Board of
Directors who was a member of the Board of Directors on August
1, 1996 or who is elected to the Board of Directors after such
date upon the recommendation of a majority of the Continuing
Directors voting separately and as a subclass of Directors on
such recommendation.
(c) "Subsidiary" means a domestic or foreign corporation, a
majority of the outstanding voting shares of which are owned,
directly or indirectly, by this corporation.
13.2 VOTE REQUIRED FOR BUSINESS COMBINATIONS
13.2.1 SUPERMAJORITY VOTE
Except as provided in subsections 13.2.2 and 13.2.3 hereof, the
affirmative vote of the holders of not less than two-thirds of the outstanding
shares entitled to vote thereon and, to the extent, if any, provided by
resolution adopted by the Board of Directors authorizing the issuance of a class
or series of Common Stock or Preferred Stock, the affirmative vote of the
holders of not less than two-thirds of the outstanding shares of such class or
series, voting as a separate voting group, will be required for the adoption or
authorization of a Business Combination.
13.2.2 MAJORITY VOTE
Notwithstanding subsection 13.2.1 hereof, if a Business Combination has
been approved by a majority of the Continuing Directors, voting separately and
as a subclass of Directors, and if such Business Combination is otherwise
required to be approved by this corporation's shareholders pursuant to the
provisions of the Washington Business Corporation Act or of these Restated
Articles of Incorporation other than this Article 13, then the affirmative vote
of the holders of not less than a majority of the outstanding shares entitled to
vote thereon and, to the extent, if any, provided by resolution adopted by the
Board of Directors authorizing the issuance of a class or series of Common Stock
or Preferred Stock, the affirmative vote of the holders of not less than a
majority of the outstanding shares of such class or series, voting as a separate
voting group, will be required for the adoption or authorization of such
Business Combination.
13.2.3 NO SHAREHOLDER VOTE
Notwithstanding subsection 13.2.1 or 13.2.2 hereof, if a Business
Combination is approved by a majority of the Continuing Directors, voting
separately and as a subclass of Directors, and if such Business Combination is
not otherwise required to be approved by this corporation's shareholders
pursuant to the provisions of the Washington Business Corporation Act or of
these Restated Articles of Incorporation, then no vote of the shareholders of
this corporation will be required for approval of such Business Combination.
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ADIC RESTATED ARTICLES OF INC. PAGE 6
<PAGE> 7
DATED: August 9, 1996
ADVANCED DIGITAL INFORMATION CORPORATION
By: /s/ PETER H. VAN OPPEN
-----------------------------------------
Peter H. van Oppen, President
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ADIC RESTATED ARTICLES OF INC. PAGE 7
<PAGE> 1
EXHIBIT 3.2
RESTATED BYLAWS
OF
ADVANCED DIGITAL INFORMATION CORPORATION
Originally adopted on: July 22, 1996
Amendments are listed on page i
<PAGE> 2
ADVANCED DIGITAL INFORMATION CORPORATION
AMENDMENTS
DATE OF
SECTION EFFECT OF AMENDMENT AMENDMENT
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TABLE OF CONTENTS
SECTION 1. OFFICES..........................................................1
SECTION 2. SHAREHOLDERS.....................................................1
2.1 Annual Meeting..................................................1
2.2 Special Meetings................................................1
2.3 Date, Time and Place of Meeting.................................1
2.4 Notice of Meeting...............................................1
2.5 Business for Shareholders' Meetings.............................2
2.5.1 Business at Annual Meetings..........................2
2.5.2 Business at Special Meetings.........................3
2.5.3 Notice to Corporation................................3
2.6 Waiver of Notice................................................3
2.7 Fixing of Record Date for Determining Shareholders..............3
2.8 Voting Record...................................................4
2.9 Quorum..........................................................4
2.10 Manner of Acting...............................................4
2.11 Proxies........................................................4
2.12 Voting of Shares...............................................5
2.13 Voting for Directors...........................................5
2.14 Action by Shareholders Without a Meeting.......................5
SECTION 3. BOARD OF DIRECTORS...............................................5
3.1 General Powers..................................................5
3.2 Number and Tenure...............................................5
3.3 Nomination and Election.........................................6
3.3.1 Nomination...........................................6
3.3.2 Election.............................................7
3.4 Annual and Regular Meetings.....................................7
3.5 Special Meetings................................................7
3.6 Meetings by Communication Equipment.............................7
3.7 Notice of Special Meetings......................................7
3.7.1 Personal Delivery....................................7
3.7.2 Delivery by Mail.....................................7
3.7.3 Delivery by Private Carrier.........................8
3.7.4 Facsimile Notice....................................8
3.7.5 Delivery by Telegraph................................8
3.7.6 Oral Notice..........................................8
3.8 Waiver of Notice................................................8
3.8.1 In Writing...........................................8
3.8.2 By Attendance........................................8
3.9 Quorum..........................................................8
3.10 Manner of Acting...............................................9
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3.11 Presumption of Assent.........................................9
3.12 Action by Board or Committees Without a Meeting...............9
3.13 Resignation...................................................9
3.14 Removal.......................................................9
3.15 Vacancies.....................................................9
3.16 Executive and Other Committees................................10
3.16.1 Creation of Committees.............................10
3.16.2 Authority of Committees............................10
3.16.3 Audit Committee....................................10
3.16.4 Compensation Committee.............................10
3.16.5 Quorum and Manner of Acting........................11
3.16.6 Minutes of Meetings................................11
3.16.7 Resignation........................................11
3.16.8 Removal............................................11
3.17 Compensation..................................................11
SECTION 4. OFFICERS........................................................12
4.1 Appointment and Term...........................................12
4.2 Resignation....................................................12
4.3 Removal........................................................12
4.4 Contract Rights of Officers....................................12
4.5 Vacancies......................................................12
4.6 Chairman of the Board..........................................12
4.7 President......................................................13
4.8 Vice President.................................................13
4.9 Secretary......................................................13
4.10 Treasurer.....................................................13
4.11 Salaries......................................................14
SECTION 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS...........................14
5.1 Contracts......................................................14
5.2 Loans to the Corporation.......................................14
5.3 Checks, Drafts, Etc............................................14
5.4 Deposits.......................................................14
SECTION 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER......................14
6.1 Issuance of Shares.............................................14
6.2 Certificates for Shares........................................14
6.3 Stock Records..................................................15
6.4 Restriction on Transfer........................................15
6.5 Transfer of Shares.............................................15
6.6 Lost or Destroyed Certificates.................................15
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SECTION 7. BOOKS AND RECORDS...............................................15
SECTION 8. ACCOUNTING YEAR.................................................16
SECTION 9. SEAL............................................................16
SECTION l0. INDEMNIFICATION................................................17
10.1 Right to Indemnification......................................17
10.2 Restrictions on Indemnification...............................17
10.3 Advancement of Expenses.......................................17
10.4 Right of Indemnitee to Bring Suit.............................18
10.5 Procedures Exclusive..........................................18
10.6 Nonexclusivity of Rights......................................18
10.7 Insurance, Contract and Funding...............................18
10.8 Indemnification of Employee and Agent of the Corporation......18
10.9 Person Serving Other Entities.................................19
SECTION 11. AMENDMENTS.....................................................19
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RESTATED BYLAWS
OF
ADVANCED DIGITAL INFORMATION CORPORATION
SECTION 1. OFFICES
The principal office of the corporation is its principal place of
business or such other place as the corporation's Board of Directors (the
"Board") may designate. The corporation may have such other offices, either
within or without the state of Washington, as the Board may designate or as the
business of the corporation may require from time to time.
SECTION 2. SHAREHOLDERS
2.1 ANNUAL MEETING
The annual meeting of the shareholders shall be held each year within
90 to 180 days after the fiscal year end of the corporation at a date, time and
location determined by resolution of the Board of Directors, for the purpose of
electing Directors and transacting such other business as may properly come
before the meeting. At any time prior to the commencement of the annual meeting,
the Board may postpone the annual meeting for a period of up to one hundred
twenty 120 days from the date fixed for such meeting in accordance with this
subsection 2.1.
2.2 SPECIAL MEETINGS
The Chairman of the Board, the President or the Board may call special
meetings of the shareholders for any purpose. Further, a special meeting of the
shareholders will be held if the holders of not less than 10% of all the votes
entitled to be cast on any issue proposed to be considered at such special
meeting have dated, signed and delivered to the Secretary one or more written
demands for such meeting, describing the purpose or purposes for which it is to
be held; provided, however, that upon qualification of the corporation as a
"public company" under Title 23B RCW the percentage of votes required to call a
special meeting will be 50%.
2.3 DATE, TIME AND PLACE OF MEETING
Except as otherwise provided, all meetings of shareholders will be held
on such date and at such time and place within or without the state of
Washington as designated by the Board, by any persons entitled to call a meeting
hereunder or in a waiver of notice signed by all of the shareholders entitled to
notice of the meeting.
2.4 NOTICE OF MEETING
Written notice stating the place, day and time of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting is
called must be given by or at the direction of the Board, the Chairman of the
Board, the President or the Secretary to each
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shareholder entitled to notice of or to vote at the meeting not less than 10 nor
more than 60 days before the meeting, except that notice of a meeting to act on
an amendment to the Articles of Incorporation, a plan of merger or share
exchange, the sale, lease, exchange or other disposition of all or substantially
all of the corporation's assets other than in the regular course of business or
the dissolution of the corporation must be given not less than 20 nor more than
60 days before such meeting. Such notice may be transmitted by mail, private
carrier, personal delivery, telegraph, teletype or communications equipment
which transmits a facsimile of the notice to like equipment which receives and
reproduces such notice. If these forms of written notice are impractical in the
view of the Board, the Chairman of the Board, the President or the Secretary,
written notice may be transmitted by an advertisement in a newspaper of general
circulation in the area of the corporation's principal office. If such notice is
mailed, it will be deemed effective when deposited in the official government
mail, first-class postage prepaid, properly addressed to the shareholder at such
shareholder's address as it appears in the corporation's current record of
shareholders. Notice given in any other manner will be deemed effective when
dispatched to the shareholder's address, telephone number or other number
appearing on the records of the corporation. Any notice given by publication as
herein provided will be deemed effective five days after first publication.
2.5 BUSINESS FOR SHAREHOLDERS' MEETINGS
2.5.1 BUSINESS AT ANNUAL MEETINGS
In addition to the election of directors, other proper business may be
transacted at an annual meeting of shareholders, provided that such business is
properly brought before such meeting. To be properly brought before an annual
meeting, business must be (a) brought by or at the direction of the Board or (b)
brought before the meeting by a shareholder pursuant to written notice thereof,
in accordance with subsection 2.5.3 hereof, and received by the Secretary not
fewer than 60 nor more than 90 days prior to the date specified in subsection
2.1 hereof for such annual meeting (or, if less than 60 days' notice or prior
public disclosure of the date of the annual meeting is given or made to the
shareholders, not later than the tenth day following the day on which the notice
of the date of the annual meeting was mailed or such public disclosure was
made). Any such shareholder notice must set forth (i) the name and address of
the shareholder proposing such business; (ii) a representation that the
shareholder is entitled to vote at such meeting and a statement of the number of
shares of the corporation which are beneficially owned by such shareholder;
(iii) a representation that the shareholder intends to appear in person or by
proxy at the meeting to propose such business; and (iv) as to each matter the
shareholder proposes to bring before the meeting, a brief description of the
business desired to be brought before the meeting, the reasons for conducting
such business at the meeting, the language of the proposal (if appropriate), and
any material interest of the shareholder in such business. No business shall be
conducted at any annual meeting of shareholders except in accordance with this
subsection 2.5.1. If the facts warrant, the Board, or the chairman of an annual
meeting of shareholders, may determine and declare (a) that a proposal does not
constitute proper business to be transacted at the meeting or (b) that business
was not properly brought before the meeting in accordance with the provisions of
this subsection 2.5.1 and, if, in either case, it is so determined, any such
business shall not be transacted. The procedures set forth in this subsection
2.5.1 for business to be properly brought before an annual meeting by a
shareholder are in addition to, and
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<PAGE> 8
not in lieu of, the requirements set forth in Rule 14a-8 under Section 14 of the
Securities Exchange Act of 1934, as amended, or any successor provision.
2.5.2 BUSINESS AT SPECIAL MEETINGS
At any special meeting of the shareholders, only such business as is
specified in the notice of such special meeting given by or at the direction of
the person or persons calling such meeting, in accordance with subsection 2.4
hereof, may come before such meeting.
2.5.3 NOTICE TO CORPORATION
Any written notice required to be delivered by a shareholder to the
corporation pursuant to subsection 2.2, subsection 2.5.1 or subsection 2.5.2
hereof must be given, either by personal delivery or by registered or certified
mail, postage prepaid, to the Secretary at the corporation's principal office.
2.6 WAIVER OF NOTICE
Whenever any notice is required to be given to any shareholder under
the provisions of these Bylaws, the Articles of Incorporation or the Washington
Business Corporation Act ("WBCA"), a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
Further, notice of the time, place and purpose of any meeting will be deemed to
be waived by any shareholder by attendance thereat in person or by proxy, unless
such shareholder at the beginning of the meeting objects to holding the meeting
or transacting business at the meeting.
2.7 FIXING OF RECORD DATE FOR DETERMINING SHAREHOLDERS
For the purpose of determining shareholders entitled (a) to notice of
or to vote at any meeting of shareholders or any adjournment thereof, (b) to
demand a special meeting, or (c) to receive payment of any dividend, or in order
to make a determination of shareholders for any other purpose, the Board may fix
in advance a date as the record date for any such determination. Such record
date may not be more than 70 days, and in case of a meeting of shareholders, may
not be less than 10 days prior to the date on which the particular action
requiring such determination is to be taken. If no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting, the
record date shall be the day immediately preceding the date on which notice of
the meeting is first given to shareholders. Such a determination shall apply to
any adjournment of the meeting unless the Board fixes a new record date, which
it shall do if the meeting is adjourned to a date more than 120 days after the
date fixed for the original meeting. If no record date is fixed for the
determination of shareholders entitled to receive payment of any stock dividend
or distribution (other than one involving a purchase, redemption or other
acquisition of the corporation's shares) the record date shall be the date the
Board authorizes the stock dividend or distribution.
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<PAGE> 9
2.8 VOTING RECORD
At least 10 days before each meeting of shareholders, a complete record
of the shareholders entitled to vote at such meeting, or any adjournment
thereof, shall be made, arranged by voting group and by each class or series of
shares therein, with the address of and number of shares held by each
shareholder. This record shall be kept on file at the registered office of the
corporation for 10 days prior to such meeting and shall be kept open at such
meeting for the inspection of any shareholder or any shareholder's agent.
2.9 QUORUM
A majority of the votes entitled to be cast on a matter by the holders
of shares that, pursuant to the Articles of Incorporation or the WBCA, are
entitled to vote and be counted collectively upon such matter, represented in
person or by proxy, constitutes a quorum of such shares at a meeting of
shareholders. If less than a majority of such votes are represented at a
meeting, a majority of the votes so represented may adjourn the meeting from
time to time without further notice if the new date, time or place is announced
at the meeting before adjournment. Any business may be transacted at a
reconvened meeting that might have been transacted at the meeting as originally
called, provided a quorum is present or represented thereat. Once a share is
represented for any purpose at a meeting other than solely to object to holding
the meeting or transacting business thereat, it is deemed present for quorum
purposes for the remainder of the meeting and any adjournment thereof (unless a
new record date is or must be set for the adjourned meeting), notwithstanding
the withdrawal of enough shareholders to leave less than a quorum.
2.10 MANNER OF ACTING
If a quorum is present, action on a matter other than the election of
Directors shall be approved if the votes cast in favor of the action by the
shares entitled to vote and be counted collectively upon such matter exceed the
votes cast against such action by the shares entitled to vote and be counted
collectively thereon, unless the Articles of Incorporation or the WBCA requires
a greater number of affirmative votes.
2.11 PROXIES
A shareholder may vote by proxy executed in writing by the shareholder
or by his or her attorney-in-fact or agent or other officer or agent authorized
to tabulate votes. Such proxy is effective when received by the Secretary of the
corporation before or at the time of the meeting. A proxy becomes invalid 11
months after the date of its execution, unless otherwise provided in the proxy.
A proxy with respect to a specified meeting entitles the holder thereof to vote
at any reconvened meeting following adjournment of such meeting, but is not
valid after the final adjournment thereof.
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2.12 VOTING OF SHARES
Except as provided in the Articles of Incorporation or in Section 2.13
hereof, each outstanding share entitled to vote with respect to the subject
matter of an issue submitted to a meeting of shareholders is entitled to one
vote upon each such issue.
2.13 VOTING FOR DIRECTORS
Each shareholder entitled to vote at an election of Directors may vote,
in person or by proxy, the number of shares owned by such shareholder for as
many persons as there are Directors to be elected and for whose election such
shareholder has a right to vote.
2.14 ACTION BY SHAREHOLDERS WITHOUT A MEETING
Any action which could be taken at a meeting of the shareholders may be
taken without a meeting if a written consent setting forth the action so taken
is signed by all shareholders entitled to vote with respect to the subject
matter thereof. If not otherwise fixed by the Board, the record date for
determining shareholders entitled to take action without a meeting is the date
the first shareholder signs the consent. A shareholder may withdraw a consent
only by delivering a written notice of withdrawal to the corporation prior to
the time that all consents are in the possession of the corporation. Action
taken by written consent of shareholders without a meeting is effective when all
consents are in the possession of the corporation, unless the consent specifies
a later effective date. Any such consent shall be inserted in the minute book as
if it were the minutes of a meeting of the shareholders.
SECTION 3. BOARD OF DIRECTORS
3.1 GENERAL POWERS
All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be managed under the
direction of, the Board, except as may be otherwise provided in these Bylaws,
the Articles of Incorporation or the WBCA.
3.2 NUMBER AND TENURE
The Board shall be composed of not less than two nor more than eight
Directors, the specific number to be set by resolution of the Board, provided
that the Board may be less than such number until vacancies are filled. No
decrease in the number of Directors shall have the effect of shortening the term
of any incumbent Director.
The Board will be divided into three classes, with said classes to be
as equal in number as is possible. At the first election of Directors to such
classified Board, each Class 1 Director will be elected to serve until the next
ensuing annual meeting of shareholders, each Class 2 Director will be elected to
serve until the second ensuing annual meeting of shareholders and each Class 3
Director will be elected to serve until the third ensuing annual meeting of
shareholders. At each annual meeting of shareholders following the meeting at
which the Board is initially classified, the number of Directors equal to the
number of Directors in the class whose term expires at the time
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of such meeting will be elected to serve until the third ensuing annual meeting
of shareholders. Notwithstanding any of the foregoing provisions of this Section
3.2, Directors will serve until their successors are elected and qualified or
until their earlier death, resignation or removal from office or until there is
a decrease in the number of Directors. Directors need not be shareholders of the
corporation or residents of the state of Washington and need not meet any other
qualifications.
3.3 NOMINATION AND ELECTION
3.3.1 NOMINATION
Only persons who are nominated in accordance with the following
procedures are eligible for election as Directors. Nominations for the election
of Directors may be made (a) by or at the direction of the Board or (b) by any
shareholder of record entitled to vote for the election of Directors at such
meeting provided that such shareholder provides written notice (in accordance
with subsection 2.5.3 hereof) of such shareholder's intention to make such
nomination to the Secretary not later than (i) with respect to an election to be
held at an annual meeting of the shareholders, not fewer than 60 nor more than
90 days prior to the date specified in subsection 2.1 hereof for such annual
meeting (or if less than 60 days' notice or prior public disclosure of the date
of such annual meeting is given or made to the shareholders, not later than the
tenth day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure was made) and (ii) with respect to
an election to be held at a special meeting of the shareholders for the election
of Directors, the close of business on the seventh business day following the
date on which notice of such meeting is first given to shareholders. Any such
shareholder's notice must set forth (a) the name and address of the shareholder
who intends to make a nomination; (b) a representation that the shareholder is
entitled to vote at such meeting and a statement of the number of shares of the
corporation which are beneficially owned by such shareholder; (c) a
representation that the shareholder intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice; (d) as to
each person the shareholder proposes to nominate for election or re-election as
a Director, the name and address of such person and such other information
regarding such nominee as would be required in a proxy statement filed pursuant
to the proxy rules of the Securities and Exchange Commission had such nominee
been nominated by the Board, and a description of any arrangements or
understandings, between the shareholder and such nominee and any other persons
(including their names), pursuant to which the nomination is to be made; and (e)
the consent of each such nominee to serve as a Director if elected. If the facts
warrant, the Board, or the chairman of a shareholders' meeting at which
Directors are to be elected, may determine that a nomination was not made in
accordance with the foregoing procedure and, if it is so determined, the
defective nomination shall be disregarded. The right of shareholders to make
nominations pursuant to the foregoing procedure is subject to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation. The procedures set forth in this
subsection 3.3 for nomination for the election of Directors by shareholders are
in addition to, and not in limitation of, any procedures now in effect or
hereafter adopted by or at the direction of the Board or any committee thereof.
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3.3.2 ELECTION
At each election of Directors, the persons receiving the greatest
number of votes will be the Directors.
3.4 ANNUAL AND REGULAR MEETINGS
An annual Board meeting shall be held without notice immediately after
and at the same place as the annual meeting of shareholders. By resolution, the
Board, or any committee thereof, may specify the time and place either within or
without the state of Washington for holding regular meetings thereof without
other notice than such resolution.
3.5 SPECIAL MEETINGS
Special meetings of the Board or any committee designated by the Board
may be called by or at the request of the Chairman of the Board, the President,
the Secretary or, in the case of special Board meetings, any two Directors and,
in the case of any special meeting of any committee designated by the Board, by
the Chairman thereof. The person or persons authorized to call special meetings
may fix any place either within or without the state of Washington as the place
for holding any special Board or committee meeting called by them.
3.6 MEETINGS BY COMMUNICATION EQUIPMENT
Members of the Board or any committee designated by the Board may
participate in a meeting of such Board or committee by conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other at the same time. Participation by such means
constitutes presence in person at a meeting.
3.7 NOTICE OF SPECIAL MEETINGS
Notice of a special Board or committee meeting stating the place, date
and time of the meeting shall be given to a Director in writing or orally at
least two days before the meeting. Neither the business to be transacted at, nor
the purpose of, any special meeting need be specified in the notice of such
meeting.
3.7.1 PERSONAL DELIVERY
If notice is given by personal delivery, it is effective when delivered
to a Director.
3.7.2 DELIVERY BY MAIL
If notice is delivered by mail, it shall be deemed effective three days
after it is deposited in the official government mail, as evidenced by the
postmark, properly addressed to a Director at his or her address shown on the
records of the corporation with postage prepaid.
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3.7.3 DELIVERY BY PRIVATE CARRIER
If notice is given by private carrier, it shall be deemed effective
when delivered to a Director at his or her address shown on the records of the
corporation.
3.7.4 FACSIMILE NOTICE
If notice is delivered by wire or wireless equipment which transmits a
facsimile of the notice, the notice shall be deemed effective when dispatched to
a Director at his or her telephone number or other number appearing on the
records of the corporation.
3.7.5 DELIVERY BY TELEGRAPH
If notice is delivered by telegraph, it shall be deemed effective when
the content thereof is dispatched by the telegraph company for delivery to a
Director at his or her address shown on the records of the corporation.
3.7.6 ORAL NOTICE
If notice is delivered orally, by telephone or in person, it shall be
deemed effective when personally given to the Director.
3.8 WAIVER OF NOTICE
3.8.1 IN WRITING
Whenever any notice is required to be given to any Director under the
provisions of these Bylaws, the Articles of Incorporation or the WBCA, a waiver
thereof in writing, signed by the person or persons entitled to such notice and
delivered to the corporation, whether before or after the time stated therein,
shall be deemed equivalent to the giving of such notice. Neither the business to
be transacted at, nor the purpose of, any regular or special meeting of the
Board or any committee designated by the Board need be specified in the waiver
of notice of such meeting.
3.8.2 BY ATTENDANCE
A Director's attendance at or participation in a Board or committee
meeting constitutes a waiver of notice of such meeting, unless the Director at
the beginning of the meeting, or promptly upon his or her arrival, objects to
holding the meeting or transacting business thereat and does not thereafter vote
for or assent to action taken at the meeting.
3.9 QUORUM
A majority of the number of Directors fixed by or in the manner
provided in these Bylaws constitutes a quorum for the transaction of business at
any Board meeting but, if less than a majority are present at a meeting, a
majority of the Directors present may adjourn the meeting from time to time
without further notice.
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3.10 MANNER OF ACTING
If a quorum is present when the vote is taken, the act of the majority
of the Directors present at a Board meeting at which there is a quorum shall be
the act of the Board, unless the vote of a greater number is required by these
Bylaws, the Articles of Incorporation or the Washington Business Corporation
Act.
3.11 PRESUMPTION OF ASSENT
A Director of the corporation who is present at a Board or committee
meeting at which any action is taken shall be deemed to have assented to the
action taken unless (a) the Director objects at the beginning of the meeting, or
promptly upon the Director's arrival, to holding the meeting or transacting any
business thereat, (b) the Director's dissent or abstention from the action taken
is entered in the minutes of the meeting, or (c) the Director delivers written
notice of the Director's dissent or abstention to the presiding officer of the
meeting before its adjournment or to the corporation within a reasonable time
after adjournment of the meeting. The right of dissent or abstention is not
available to a Director who votes in favor of the action taken.
3.12 ACTION BY BOARD OR COMMITTEES WITHOUT A MEETING
Any action which could be taken at a meeting of the Board or of any
committee designated by the Board may be taken without a meeting if a written
consent setting forth the action so taken is signed by each of the Directors or
by each committee member either before or after the action is taken and
delivered to the corporation. Action taken by written consent of Directors
without a meeting is effective when the last Director signs the consent, unless
the consent specifies a later effective date. Any such written consent shall be
inserted in the minute book as if it were the minutes of a Board or a committee
meeting.
3.13 RESIGNATION
Any Director may resign at any time by delivering written notice to the
Chairman of the Board, the President, the Secretary or the Board. Any such
resignation takes effect at the time specified therein, or, if the time is not
specified, upon delivery thereof and, unless otherwise specified therein, the
acceptance of such resignation is not necessary to make it effective.
3.14 REMOVAL
At a meeting of shareholders called expressly for that purpose, one or
more members of the Board (including the entire Board) may be removed with or
without cause by a vote of the holders of a majority of the shares then entitled
to vote on the election of Directors, unless the Articles of Incorporation
permit removal for cause only.
3.15 VACANCIES
Subject to the provisions of Section 3.14 hereof and unless the
Articles of Incorporation provide otherwise, any vacancy occurring on the Board
may be filled by the shareholders, the Board or, if the Directors in office
constitute fewer than a quorum, by the affirmative vote of a
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majority of the remaining Directors. Any vacant office held by a Director
elected by the holders of one or more classes or series of shares entitled to
vote and be counted collectively thereon shall be filled only by the vote of the
holders of such class or series of shares. A Director elected to fill a vacancy
shall serve only until the next election of Directors by the shareholders.
3.16 EXECUTIVE AND OTHER COMMITTEES
3.16.1 CREATION OF COMMITTEES
The Board, by resolution adopted by a majority of the number of
Directors fixed by or in the manner provided in these Bylaws, may appoint
standing or temporary committees, including an Executive Committee, from its own
number and invest such committees with such powers as it may see fit, subject to
such conditions as may be prescribed by the Board, these Bylaws and applicable
law.
3.16.2 AUTHORITY OF COMMITTEES
Each committee shall have and may exercise all of the authority of the
Board to the extent provided in the resolution of the Board designating the
committee and any subsequent resolutions pertaining thereto and adopted in like
manner, except that no such committee shall have the authority to: (1) authorize
or approve a distribution except according to a general formula or method
prescribed by the Board, (2) approve or recommend to shareholders actions or
proposals required by the WBCA to be approved by shareholders, (3) fill
vacancies on the Board or any committee thereof, (4) adopt, amend or repeal
these Bylaws, (5) approve a plan of merger, consolidation, or exchange of shares
not requiring shareholder approval, or (6) amend the Articles of Incorporation
pursuant to RCW 23B.10.020, or (7) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences and limitations of a class or series of shares, except that the
Board may authorize a committee or a senior executive officer of the corporation
to do so within limits specifically prescribed by the Board.
3.16.3 AUDIT COMMITTEE
In addition to any committees appointed pursuant to this Section 3.16,
there shall be an Audit Committee, appointed annually by the Board, consisting
of at least two Directors who are not members of management. It shall be the
responsibility of the Audit Committee to review the scope and results of the
annual independent audit of books and records of the corporation, to review
compliance with all corporate policies which have been approved by the Board and
to discharge such other responsibilities as may from time to time be assigned to
it by the Board. The Audit Committee shall meet at such times and places as the
members deem advisable, and shall make such recommendations to the Board as they
consider appropriate.
3.16.4 COMPENSATION COMMITTEE
The Board may, in its discretion, designate a Compensation Committee
consisting of not less than two Directors as it may from time to time determine.
The duties of the Compensation Committee shall consist of the following: (a) to
establish and review periodically, but not less
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than annually, the compensation of the officers of the corporation and to make
recommendations concerning such compensation to the Board; (b) to consider
incentive compensation plans for the employees of the corporation; (c) to carry
out the duties assigned to the Compensation Committee under any stock option
plan or other plan approved by the corporation; (d) to consult with the
President concerning any compensation matters deemed appropriate by the
President or the Compensation Committee; and (e) to perform such other duties as
shall be assigned to the Compensation Committee by the Board.
3.16.5 QUORUM AND MANNER OF ACTING
A majority of the number of Directors composing any committee of the
Board, as established and fixed by resolution of the Board, constitutes a quorum
for the transaction of business at any meeting of such committee but, if less
than a majority is present at a meeting, a majority of such Directors present
may adjourn the meeting from time to time without further notice. Except as may
be otherwise provided in the WBCA, the act of a majority of the members of a
committee present at a meeting at which a quorum is present shall be the act of
the committee.
3.16.6 MINUTES OF MEETINGS
All committees shall keep regular minutes of their meetings and shall
cause them to be recorded in books kept for that purpose.
3.16.7 RESIGNATION
Any member of any committee may resign at any time by delivering
written notice thereof to the Chairman of the Board, the President, the
Secretary, the Board, or the Chairman of such committee. Any such resignation
takes effect at the time specified therein, or, if the time is not specified,
upon delivery thereof and, unless otherwise specified therein, the acceptance of
such resignation is not necessary to make it effective.
3.16.8 REMOVAL
The Board may remove from office any member of any committee elected or
appointed by it but only by the affirmative vote of not less than a majority of
the number of Directors fixed by or in the manner provided in these Bylaws.
3.17 COMPENSATION
By Board resolution, Directors and committee members may be paid their
expenses, if any, of attendance at each Board or committee meeting, or a fixed
sum for attendance at each Board or committee meeting, or a stated salary as
Director or a committee member, or a combination of the foregoing. No such
payment shall preclude any Director or committee member from serving the
corporation in any other capacity and receiving compensation therefor.
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SECTION 4. OFFICERS
4.1 APPOINTMENT AND TERM
The officers of the corporation shall be those officers appointed from
time to time by the Board or by any other officer empowered to do so. The Board
shall have sole power and authority to appoint executive officers. As used
herein, the term "executive officer" shall mean the President, any Vice
President in charge of a principal business unit, division or function or any
other officer who performs a policy-making function. The Board or the President
may appoint such other officers and assistant officers to hold office for such
period, have such authority and perform such duties as may be prescribed. The
Board may delegate to any other officer the power to appoint any subordinate
officers and to prescribe their respective terms of office, authority and
duties. Any two or more offices may be held by the same person. Unless an
officer dies, resigns or is removed from office, he or she shall hold office
until his or her successor is appointed.
4.2 RESIGNATION
Any officer may resign at any time by delivering written notice to the
corporation. Any such resignation takes effect at the time specified therein,
or, if the time is not specified, upon delivery thereof and, unless otherwise
specified therein, the acceptance of such resignation is not necessary to make
it effective.
4.3 REMOVAL
Any officer or agent elected or appointed by the Board may be removed
by the Board whenever in its judgment the best interests of the corporation
would be served thereby, with or without cause. An officer or assistant officer,
if appointed by another officer, may be removed by any officer authorized to
appoint officers or assistant officers.
4.4 CONTRACT RIGHTS OF OFFICERS
The appointment of an officer does not itself create contract rights.
4.5 VACANCIES
A vacancy in any office because of death, resignation, removal,
disqualification, creation of a new office or any other cause may be filled by
the Board for the unexpired portion of the term or for a new term established by
the Board.
4.6 CHAIRMAN OF THE BOARD
If elected, the Chairman of the Board shall perform such duties as
shall be assigned to him or her by the Board from time to time and shall preside
over meetings of the Board and shareholders unless another officer is appointed
or designated by the Board as Chairman of such meetings.
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4.7 PRESIDENT
The President shall be the chief executive officer of the corporation
unless some other officer is so designated by the Board, shall preside over
meetings of the Board and shareholders in the absence of a Chairman of the
Board, and, subject to the control, shall supervise and control all of the
assets, business and affairs of the corporation. The President may sign
certificates for shares of the corporation, deeds, mortgages, bonds, contracts
or other instruments, except when the signing and execution thereof have been
expressly delegated by the Board or by these Bylaws to some other officer or
agent of the corporation or are required by law to be otherwise signed or
executed by some other officer or in some other manner. In general, the
President shall perform all duties incident to the office of President and such
other duties as are prescribed by the Board from time to time.
4.8 VICE PRESIDENT
In the event of the death of the President or his or her inability to
act, the Vice President (or, if there is more than one Vice President, the Vice
President who was designated by the Board as the successor to the President, or,
if no Vice President is so designated, the Vice President first elected to such
office) shall perform the duties of the President, except as may be limited by
resolution of the Board, with all the powers of and subject to all the
restrictions upon the President. Any Vice President may sign, with the Secretary
or any Assistant Secretary, certificates for shares of the corporation. Vice
Presidents shall have, to the extent authorized by the President or the Board,
the same powers as the President to sign deeds, mortgages, bonds, contracts, or
other instruments. Vice Presidents shall perform such other duties as from time
to time may be assigned to them by the President or by the Board.
4.9 SECRETARY
If appointed, the Secretary shall be responsible for preparation of
minutes of the meetings of the Board and shareholders, maintenance of the
corporation records and stock registers, and authentication of the corporation's
records, and shall in general perform all duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him or
her by the President or by or at the direction of the Board. In the absence of
the Secretary, an Assistant Secretary may perform the duties of the Secretary.
4.10 TREASURER
If required by the Board, the Treasurer shall provide a bond for the
faithful discharge of his or her duties in such amount and with such surety or
sureties as the Board shall determine. The Treasurer shall have charge and
custody of and be responsible for all funds and securities of the corporation;
receive and give receipts for moneys due and payable to the corporation from any
source whatsoever, and deposit all such moneys in the name of the corporation in
banks, trust companies or other depositories selected in accordance with the
provisions of these Bylaws; and in general perform all of the duties incident to
the office of Treasurer and such other duties as from time to time may be
assigned to him or her by the President or by the Board. In the absence of the
Treasurer, an Assistant Treasurer may perform the duties of the Treasurer.
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4.11 SALARIES
The salaries of the officers shall be fixed from time to time by the
Board or by any person or persons to whom the Board has delegated such
authority. No officer shall be prevented from receiving such salary by reason of
the fact that he or she is also a Director of the corporation.
SECTION 5. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.1 CONTRACTS
The Board may authorize any officer or officers, or agent or agents, to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation. Such authority may be general or confined to
specific instances.
5.2 LOANS TO THE CORPORATION
No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the Board. Such authority may be general or confined to specific
instances.
5.3 CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the corporation shall be
signed by such officer or officers, or agent or agents, of the corporation and
in such manner as is from time to time determined by resolution of the Board.
5.4 DEPOSITS
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks, trust
companies or other depositories as the Board may select.
SECTION 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1 ISSUANCE OF SHARES
No shares of the corporation shall be issued unless authorized by the
Board, or by a committee designated by the Board and empowered to do so.
6.2 CERTIFICATES FOR SHARES
Certificates representing shares of the corporation shall be signed by
the President or any Vice President and by the Secretary or any Assistant
Secretary or the Treasurer or any Assistant Secretary and shall include on their
face written notice of any restrictions which may be imposed on the
transferability of such shares. All certificates shall be consecutively numbered
or otherwise identified.
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6.3 STOCK RECORDS
The stock transfer books shall be kept at the registered office or
principal place of business of the corporation or at the office of the
corporation's transfer agent or registrar. The name and address of each person
to whom certificates for shares are issued, together with the class and number
of shares represented by each such certificate and the date of issue thereof,
shall be entered on the stock transfer books of the corporation. The person in
whose name shares stand on the books of the corporation shall be deemed by the
corporation to be the owner thereof for all purposes.
6.4 RESTRICTION ON TRANSFER
Except to the extent that the corporation has obtained an opinion of
counsel acceptable to the corporation that transfer restrictions are not
required under applicable securities laws, or has otherwise satisfied itself
that such transfer restrictions are not required, all certificates representing
shares of the corporation shall bear a legend on the face of the certificate, or
on the reverse of the certificate if a reference to the legend is contained on
the face, which reads substantially as follows: "The securities evidenced by
this certificate have not been registered under the Securities Act of 1933 or
any applicable state law, and no interest therein may be sold, distributed,
assigned, offered, pledged or otherwise transferred unless (a) there is an
effective registration statement under such Act and applicable state securities
laws covering any such transaction involving said securities or (b) this
corporation receives an opinion of legal counsel for the holder of these
securities (concurred in by legal counsel for this corporation) stating that
such transaction is exempt from registration or this corporation otherwise
satisfies itself that such transaction is exempt from registration. Neither the
offering of the securities nor any offering materials have been reviewed by any
administrator under the Securities Act of 1933, or any applicable state law."
6.5 TRANSFER OF SHARES
The transfer of shares of the corporation shall be made only on the
stock transfer books of the corporation pursuant to authorization or document of
transfer made by the holder of record thereof or by his or her legal
representative, who shall furnish proper evidence of authority to transfer, or
by his or her attorney-in-fact authorized by power of attorney duly executed and
filed with the Secretary of the corporation. All certificates surrendered to the
corporation for transfer shall be cancelled and no new certificates shall be
issued until the former certificates for a like number of shares shall have been
surrendered and cancelled.
6.6 LOST OR DESTROYED CERTIFICATES
In the case of a lost, destroyed or mutilated certificate, a new
certificate may be issued therefor upon such terms and indemnity to the
corporation as the Board may prescribe.
SECTION 7. BOOKS AND RECORDS
The corporation shall:
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(a) Keep as permanent records minutes of all meetings of its
shareholders and the Board, a record of all actions taken by the shareholders or
the Board without a meeting, and a record of all actions taken by a committee of
the Board exercising the authority of the Board on behalf of the corporation.
(b) Maintain appropriate accounting records.
(c) Maintain a record of its shareholders, in a form that permits
preparation of a list of the names and addresses of all shareholders, in
alphabetical order by class of shares showing the number and class of shares
held by each; provided, however, such record may be maintained by an agent of
the corporation.
(d) Maintain its records in written form or in another form
capable of conversion into written form within a reasonable time.
(e) Keep a copy of the following records at its principal office:
1. the Articles of Incorporation and all amendments
thereto as currently in effect;
2. the Bylaws and all amendments thereto as currently in
effect;
3. the minutes of all meetings of shareholders and
records of all action taken by shareholders without a meeting, for the past
three years;
4. the financial statements described in Section
23B.16.200(1) of the WBCA for the past three years;
5. all written communications to shareholders generally
within the past three years;
6. a list of the names and business addresses of the
current Directors and officers; and
7. the most recent annual report delivered to the
Washington Secretary of State.
SECTION 8. ACCOUNTING YEAR
The accounting year of the corporation shall be the 12-month period
ending October 31, provided that if a different accounting year is at any time
selected for purposes of federal income taxes, the accounting year shall be the
year so selected.
SECTION 9. SEAL
The Board may provide for a corporate seal which shall consist of the
name of the corporation, the state of its incorporation and the year of its
incorporation.
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SECTION 10. INDEMNIFICATION
10.1 RIGHT TO INDEMNIFICATION
Each person who was, is or is threatened to be made a named party to or
is otherwise involved (including, without limitation, as a witness) in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and whether formal or informal
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
Director or officer of the corporation or, that being or having been such a
Director or officer or an employee of the corporation, he or she is or was
serving at the request of the corporation as a Director, officer, partner,
trustee, employee or agent of another corporation or of a partnership, joint
venture, trust, employee benefit plan or other enterprise (hereinafter an
"indemnitee"), whether the basis of a proceeding is alleged action in an
official capacity as such a Director, officer, partner, trustee, employee or
agent or in any other capacity while serving as such a Director, officer,
partner, trustee, employee or agent, shall be indemnified and held harmless by
the corporation against all expense, liability and loss (including counsel fees,
judgments, fines, ERISA excise taxes or penalties and amounts to be paid in
settlement) actually and reasonably incurred or suffered by such indemnitee in
connection therewith, and such indemnification shall continue as to an
indemnitee who has ceased to be a Director, officer, partner, trustee, employee
or agent and shall inure to the benefit of the indemnitee's heirs, executors and
administrators. Except as provided in subsection 10.2 of this Section with
respect to proceedings seeking to enforce rights to indemnification, the
corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if a proceeding (or part
thereof) was authorized or ratified by the Board. The right to indemnification
conferred in this Section 10.1 shall be a contract right.
10.2 RESTRICTIONS ON INDEMNIFICATION
No indemnification shall be provided to any such indemnitee for acts or
omissions of the indemnitee finally adjudged to be intentional misconduct or a
knowing violation of law, for conduct of the indemnitee finally adjudged to be
in violation of Section 23B.08.310 of the Washington Business Corporation Act,
for any transaction with respect to which it was finally adjudged that such
indemnitee personally received a benefit in money, property or services to which
the indemnitee was not legally entitled or if the corporation is otherwise
prohibited by applicable law from paying such indemnification, except that if
Section 23B.08.560 or any successor provision of the WBCA is hereafter amended,
the restrictions on indemnification set forth in this subsection 10.2 shall be
as set forth in such amended statutory provision.
10.3 ADVANCEMENT OF EXPENSES
The right to indemnification conferred in this Section shall include
the right to be paid by the corporation the expenses incurred in defending any
proceeding in advance of its final disposition (hereinafter an "advancement of
expenses"). An advancement of expenses shall be made upon delivery to the
corporation of an undertaking (hereinafter an "undertaking"), by or on behalf of
such indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by
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final judicial decision from which there is no further right to appeal that such
indemnitee is not entitled to be indemnified for such expenses under this
subsection 10.3.
10.4 RIGHT OF INDEMNITEE TO BRING SUIT
If a claim under subsection 10.1 or 10.3 of this Section is not paid in
full by the corporation within 60 days after a written claim has been received
by the corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be 20 days, the indemnitee
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim. If successful in whole or in part, in any such suit
or in a suit brought by the corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. The indemnitee
shall be presumed to be entitled to indemnification under this Section upon
submission of a written claim (and, in an action brought to enforce a claim for
an advancement of expenses, where the required undertaking has been tendered to
the corporation) and thereafter the corporation shall have the burden of proof
to overcome the presumption that the indemnitee is so entitled.
10.5 PROCEDURES EXCLUSIVE
Pursuant to Section 23B.08.560(2) or any successor provision of the
WBCA, the procedures for indemnification and advancement of expenses set forth
in this Section are in lieu of the procedures required by Section 23B.08.550 or
any successor provision of the WBCA.
10.6 NONEXCLUSIVITY OF RIGHTS
The right to indemnification and the advancement of expenses conferred
in this Section shall not be exclusive of any other right which any person may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation or Bylaws of the corporation, general or specific action of the
Board, contract or otherwise.
10.7 INSURANCE, CONTRACT AND FUNDING
The corporation may maintain insurance, at its expense, to protect
itself and any Director, officer, partner, trustee, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against such expense,
liability or loss under the WBCA. The corporation may enter into contracts with
any Director, officer, partner, trustee, employee or agent of the corporation in
furtherance of the provisions of this Section and may create a trust fund, grant
a security interest or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Section.
10.8 INDEMNIFICATION OF EMPLOYEE AND AGENT OF THE CORPORATION
The corporation may, by action of the Board, grant rights to
indemnification and advancement of expenses to employees and agents or any class
or group of employees and agents
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of the corporation (i) with the same scope and effect as the provisions of this
Section with respect to the indemnification and advancement of expenses of
Directors and officers of the corporation; (ii) pursuant to rights granted
pursuant to, or provided by, the WBCA; or (iii) otherwise consistent with law.
10.9 PERSON SERVING OTHER ENTITIES
Any person who, while a Director, officer or employee of the
corporation, is or was serving (a) as a Director or officer of another foreign
or domestic corporation of which a majority of the-shares entitled to vote in
the election of its Directors is held by the corporation, or (b) as a partner,
trustee or otherwise in an executive or management capacity in a partnership,
joint venture, trust or other enterprise of which the corporation or a wholly
owned subsidiary of the corporation is a general partner or has a majority
ownership shall be deemed to be so serving at the request of the corporation and
entitled to indemnification and advancement of expenses under subsections 10.1
and 10.3 of this Section.
SECTION 11. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by the Board, subject to approval by a majority of the Continuing
Directors (as defined in the Articles of Incorporation). The shareholders may
also alter, amend and repeal these Bylaws or adopt new Bylaws by the affirmative
vote of the holders of not less than two-thirds of the outstanding shares.
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EXHIBIT 4.2
- --------------------------------------------------------------------------------
RIGHTS AGREEMENT
DATED AS OF AUGUST 12, 1996
BETWEEN
ADVANCED DIGITAL INFORMATION CORPORATION
AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
AS RIGHTS AGENT
---------------------------------------------------------------------
<PAGE> 2
CONTENTS
<TABLE>
<S> <C> <C>
SECTION 1. CERTAIN DEFINITIONS .................................................... 1
SECTION 2. APPOINTMENT OF RIGHTS AGENT ............................................ 7
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES ................................. 7
SECTION 4. FORM OF RIGHT CERTIFICATES ............................................. 9
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION ........................... 9
SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND
EXCHANGE OF RIGHT CERTIFICATES; LOST,
STOLEN, DESTROYED OR MUTILATED RIGHT
CERTIFICATES; UNCERTIFICATED RIGHTS .................................... 10
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS .......................... 10
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES ..................... 12
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES ....................... 13
SECTION 10. PREFERRED SHARES RECORD DATE ........................................... 13
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN
ACQUIRING PERSON; EXCHANGE OF RIGHTS FOR
SHARES; BUSINESS COMBINATIONS .......................................... 14
SECTION 12. CERTAIN ADJUSTMENTS .................................................... 18
SECTION 13. CERTIFICATE OF ADJUSTMENT .............................................. 19
SECTION 14. ADDITIONAL COVENANTS ................................................... 19
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES ................................ 20
SECTION 16. RIGHTS OF ACTION ....................................................... 21
SECTION 17. AGREEMENT OF RIGHT HOLDERS ............................................. 21
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER ...................... 22
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 19. CONCERNING THE RIGHTS AGENT ............................................ 22
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT .............. 22
SECTION 21. DUTIES OF RIGHTS AGENT ................................................. 23
SECTION 22. CHANGE OF RIGHTS AGENT ................................................. 25
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES ................... 26
SECTION 24. REDEMPTION AND TERMINATION ............................................. 26
SECTION 25. NOTICES ................................................................ 27
SECTION 26. SUPPLEMENTS AND AMENDMENTS ............................................. 27
SECTION 27. SUCCESSORS ............................................................. 28
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND ACTIONS BY THE
COMPANY'S BOARD OF DIRECTORS ........................................... 28
SECTION 29. SEVERABILITY ........................................................... 28
SECTION 30. GOVERNING LAW .......................................................... 28
SECTION 31. COUNTERPARTS; EFFECTIVENESS ............................................ 29
SECTION 32. DESCRIPTIVE HEADINGS ................................................... 29
</TABLE>
Exhibits
A DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A
PARTICIPATING CUMULATIVE PREFERRED STOCK
B FORM OF RIGHT CERTIFICATE
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<PAGE> 4
RIGHTS AGREEMENT
RIGHTS AGREEMENT dated as of August 12, 1996, between ADVANCED DIGITAL
INFORMATION CORPORATION, a Washington corporation (the "Company"), and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Right (as hereinafter defined) for each share of Common Stock,
no par value, of the Company (the "Common Stock") outstanding at the Close of
Business (as hereinafter defined) on the date of the closing of the Spinoff (as
hereinafter defined) (the "Record Date") and has further authorized the issuance
of one Right (as such number may hereafter be adjusted pursuant to the
provisions of this Rights Agreement) with respect to each share of Common Stock
that shall become outstanding between the Record Date and the earliest of the
Distribution Date, the Redemption Date and the Expiration Date (as such terms
are hereinafter defined); provided, however, that Rights may be issued with
respect to shares of Common Stock that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date and the
Expiration Date in accordance with the provisions of Section 23. Each Right
shall initially represent the right to purchase one one-hundredth (1/100th) of a
share of Series A Participating Cumulative Preferred Stock, no par value, of the
Company (the "Preferred Shares"), having the powers, rights and preferences set
forth in the Designation of Rights and Preferences (as hereinafter defined)
attached as Exhibit A.
Accordingly, in consideration of the premises and the mutual agreements
set forth in this Rights Agreement, the Company and the Rights Agent hereby
agree as follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Rights Agreement, the following terms have the
meanings indicated:
"Acquiring Person" shall mean any Person (as hereinafter defined)
which, alone or together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as
hereinafter defined) of 15% or more of the Common Stock (as hereinafter defined)
then outstanding, but shall not include the Company, any Subsidiary (as
hereinafter defined) of the Company, any employee benefit plan of the Company or
of any of its Subsidiaries, or any Person holding Common Stock for or pursuant
to the terms of any such employee benefit plan. Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as the result of an acquisition of
Common Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares beneficially owned by such Person
to 15% or more of the Common Stock of the Company then outstanding; provided,
however, that if a Person shall become the Beneficial Owner of 15% or more of
the Common Stock then outstanding by reason of share purchases by the Company
and shall, after such share purchases by the Company, become the
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Beneficial Owner of any additional Common Stock, then such Person shall be
deemed to be an "Acquiring Person." Notwithstanding the foregoing, if the Board
of Directors of the Company determines in good faith that a Person which would
otherwise be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph, has become such inadvertently, and such Person
divests as promptly as practicable a sufficient number of Common Shares so that
such Person would no longer be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph, then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement.
"Affiliate" and "Associate," when used with reference to any Person,
shall have the respective meanings ascribed to such terms in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act (as hereinafter defined),
as in effect on the date of this Rights Agreement.
A Person shall be deemed to be the "Beneficial Owner" of, to
"beneficially own," and to have "Beneficial Ownership" of, any securities:
(a) that such Person or any of such Person's Affiliates
or Associates is deemed to "beneficially own" within the meaning of Rule 13d-3
of the General Rules and Regulations under the Exchange Act, as in effect on the
date of this Rights Agreement;
(b) that such Person or any of such Person's Affiliates
or Associates have (i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (written or oral), or upon the exercise of
conversion rights, exchange rights, rights (other than the Rights), warrants or
options, or otherwise; provided, however, that a Person shall not be deemed to
be the Beneficial Owner of, to beneficially own, or to have Beneficial Ownership
of, securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates or Associates until
such tendered securities are accepted for purchase or exchange thereunder or
(ii) the right to vote pursuant to any agreement, arrangement or understanding
(written or oral); provided, however, that a Person shall not be deemed to be
the Beneficial Owner of, to beneficially own, or to have Beneficial Ownership
of, any security if (A) the agreement, arrangement or understanding (written or
oral) to vote such security arises solely from a revocable proxy or consent
given to such Person in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and regulations under
the Exchange Act and (B) the beneficial ownership of such security is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or
(c) that are beneficially owned, directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement, arrangement or understanding (written or oral) for
the purpose of acquiring, holding, voting (except pursuant to a revocable proxy
as described in clause (b)(ii) of this definition) or disposing of any
securities of the Company.
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<PAGE> 6
Notwithstanding the foregoing, nothing contained in this definition
shall cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired in a bona fide firm commitment underwriting pursuant to an
underwriting agreement with the Company.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
"Book Value," when used with reference to Common Shares (as hereinafter
defined) issued by any Person, shall mean the amount of such Person's equity
applicable to each Common Share, determined (a) in accordance with generally
accepted accounting principles in effect on the date as of which such Book Value
is to be determined, (b) using all the consolidated assets and all the
consolidated liabilities of such Person on the date as of which such Book Value
is to be determined, except that no value shall be included in such assets for
goodwill arising from consummation of a business combination, and (c) after
giving effect to (i) the exercise of all rights, options and warrants to
purchase such Common Shares (other than the Rights), and the conversion of all
securities convertible into such Common Shares, at an exercise or conversion
price, per Common Share, that is less than such Book Value before giving effect
to such exercise or conversion (whether or not exercisability or convertibility
is conditioned upon occurrence of a future event), (ii) all dividends and other
distributions on the capital stock of such Person declared prior to the date as
of which such Book Value is to be determined and to be paid or made after such
date, and (iii) any other agreement, arrangement or understanding (written or
oral), or transaction or other action prior to the date as of which such Book
Value is to be determined that would have the effect of thereafter reducing such
Book Value.
"Business Combination" shall have the meaning set forth in Section
11(d)(i).
"Business Day" shall mean any day other than a Saturday, Sunday or a
day on which banking institutions in New York, New York, or Seattle, Washington,
are authorized or obligated by law or executive order to close.
"Close of Business" on any given date shall mean 5 p.m., New York City
time, on such date; provided, however, that if such date is not a Business Day,
"Close of Business" shall mean 5 p.m., New York City time, on the next
succeeding Business Day.
"Common Shares," when used with reference to the Company prior to a
Business Combination, shall mean the shares of Common Stock of the Company or
any other shares of capital stock of the Company into which the Common Stock
shall be reclassified or changed. "Common Shares," when used with reference to
any Person (other than the Company prior to a Business Combination), shall mean
shares of capital stock of such Person (if such Person is a corporation) of any
class or series, or units of equity interests in such Person (if such Person is
not a corporation) of any class or series, the terms of which do not limit (as a
maximum
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<PAGE> 7
amount and not merely in proportional terms) the amount of dividends or income
payable or distributable on such class or series or the amount of assets
distributable on such class or series upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person and do not provide that
such class or series is subject to redemption at the option of such Person, or
any shares of capital stock or units of equity interests into which the
foregoing shall be reclassified or changed; provided, however, that, if at any
time there shall be more than one such class or series of capital stock or
equity interests of such Person, "Common Shares" of such Person shall include
all such classes and series substantially in the proportion of the total number
of shares or other units of each such class or series outstanding at such time.
"Common Stock" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"Company" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement; provided, however, that if there is a
Business Combination, "Company" shall have the meaning set forth in Section
11(d)(iii).
The term "control" with respect to any Person shall mean the power to
direct the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"Designation of Rights and Preferences" shall mean the Designation of
Rights and Preferences of Series A Participating Cumulative Preferred Stock
setting forth the powers, preferences, rights, qualifications, limitations and
restrictions of such series of Preferred Stock of the Company, a copy of which
is attached to this Rights Agreement as Exhibit A.
"Distribution Date" shall have the meaning set forth in Section 3(b).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as in
effect on the date in question, unless otherwise specifically provided in this
Rights Agreement.
"Exchange Consideration" shall have the meaning set forth in Section
11(b)(i).
"Expiration Date" shall have the meaning set forth in Section 7(a).
"Formula Number" shall have the meaning set forth in the Designation of
Rights and Preferences.
"Major Part," when used with reference to the assets of the Company and
its Subsidiaries as of any date, shall mean assets (a) having a fair market
value aggregating 50% or more of the total fair market value of all the assets
of the Company and its Subsidiaries (taken as a whole) as of the date in
question, (b) accounting for 50% or more of the total value (net of depreciation
and amortization) of all the assets of the Company and its Subsidiaries (taken
as a whole) as would be shown on a consolidated or combined balance
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<PAGE> 8
sheet of the Company and its Subsidiaries as of the date in question, prepared
in accordance with generally accepted accounting principles then in effect, or
(c) accounting for 50% or more of the total amount of net income or revenues of
the Company and its Subsidiaries (taken as a whole) as would be shown on a
consolidated or combined statement of income of the Company and its Subsidiaries
for the period of 12 months ending on the last day of the Company's monthly
accounting period next preceding the date in question, prepared in accordance
with generally accepted accounting principles then in effect.
"Market Value," when used with reference to any securities on any date,
shall mean the average of the daily closing prices, per share, of such
securities for the period that is the shorter of (a) 30 consecutive Trading Days
(as hereinafter defined) immediately prior to the date in question and (b) the
number of consecutive Trading Days beginning on the Trading Day immediately
after the date of the first public announcement of the event requiring a
determination of the Market Value and ending on the Trading Day immediately
prior to the record date of such event; provided, however, that, in the event
that the Market Value of such securities is to be determined in whole or in part
during a period following the announcement by the issuer of such securities of
any action of the type described in Section 12(a) that would require an
adjustment thereunder, then, and in each such case, the Market Value of such
securities shall be appropriately adjusted to reflect the effect of such action
on the market price of such securities. The closing price for each Trading Day
shall be the closing price quoted on the composite tape for securities listed on
the New York Stock Exchange, or, if such securities are not quoted on such
composite tape or if such securities are not listed on such exchange, on the
principal United States securities exchange registered under the Exchange Act
(or any recognized foreign stock exchange) on which such securities are listed
or, if such securities are not listed on any such exchange, the average of the
closing bid and asked quotations with respect to a share of such securities on
the National Association of Securities Dealers, Inc. Automated Quotations System
or such other system then in use or, if no such quotations are available, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such securities selected by the Company's Board
of Directors. If on any such Trading Day no market maker is making a market in
such securities, the closing price of such securities on such Trading Day shall
be deemed to be the fair value of such securities as determined in good faith by
the Company's Board of Directors (whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent,
the holders of Rights and all other Persons); provided, however, that for the
purpose of determining the closing price of the Preferred Shares for any Trading
Day on which there is no public market for the Preferred Shares or there is no
such market maker for the Preferred Shares, the closing price on such Trading
Day shall be deemed to be the Formula Number times the closing price of the
Common Stock on such Trading Day.
"Person" shall mean an individual, corporation, partnership, joint
venture, association, trust, unincorporated organization or other entity and
shall include any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement. Any reference in this Rights Agreement to
Preferred Shares shall be
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<PAGE> 9
deemed to include any authorized fraction of a Preferred Share, unless the
context otherwise requires.
"Principal Party" shall mean the Surviving Person in a Business
Combination; provided, however, that if such Surviving Person is a direct or
indirect Subsidiary of any other Person, "Principal Party" shall mean the Person
which is the ultimate parent of such Surviving Person and which is not itself a
Subsidiary of another Person. In the event ultimate control of such Surviving
Person is shared by two or more Persons, "Principal Party" shall mean that
Person which is immediately controlled by such two or more Persons.
"Purchase Price" with respect to each Right shall mean $50, subject to
adjustment as provided herein, and shall be payable in lawful money of the
United States of America. All references herein to the Purchase Price shall mean
the Purchase Price as in effect at the time in question.
"Record Date" shall have the meaning set forth in the introductory
paragraph of this Rights Agreement.
"Redemption Date" shall have the meaning set forth in Section 24(a).
"Redemption Price" with respect to each Right shall mean $.01, as such
amount may from time to time be adjusted in accordance with Section 12. All
references in this Rights Agreement to the Redemption Price shall mean the
Redemption Price as in effect at the time in question.
"Registered Common Shares" shall mean Common Shares that are, as of the
date of consummation of a Business Combination, and have continuously been for
the 12 months immediately preceding such date, registered under Section 12 of
the Exchange Act.
"Right" shall mean the right to purchase Preferred Shares (or other
securities) as provided in this Rights Agreement.
"Right Certificate" shall mean a certificate evidencing a Right in
substantially the form attached to this Rights Agreement as Exhibit B.
"Securities Act" shall mean the Securities Act of 1933, as in effect on
the date in question, unless otherwise specifically provided in this Rights
Agreement.
"Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring Person has
become such.
"Subsidiary" shall mean a Person, at least a majority of the total
outstanding voting power (being the power under ordinary circumstances (and not
merely upon the happening of a contingency) to vote in the election of directors
of such Person (if such Person is a corporation) or to participate in the
management and control of such Person (if such Person is not a corporation)) of
which is owned, directly or indirectly, by another Person or by one or
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more other subsidiaries of such other Person or by such other Person or by one
or more other subsidiaries of such other Person.
"Spinoff" shall mean the distribution of approximately 8 million shares
of the Common Stock to the shareholders of Interpoint Corporation, a Washington
corporation. As a result of the Spinoff, the Company will cease to be a
subsidiary of Interpoint Corporation and will operate as an independent,
publicly-held company. The Spinoff is being made in connection with, and is a
condition precedent to, the merger of Interpoint Corporation with a wholly owned
subsidiary of Crane Co., a Delaware corporation, pursuant to an Agreement and
Plan of Merger dated as of July 1, 1996 among Interpoint Corporation, Crane Co.
and the wholly owned subsidiary of Crane Co.
"Surviving Person" shall mean (a) the Person which is the continuing or
surviving Person in a consolidation or merger specified in Section 11(d)(i)(A)
or 11(d)(i)(B) or (b) the Person to which the Major Part of the assets of the
Company and its Subsidiaries is sold, leased, exchanged or otherwise transferred
or disposed of in a transaction specified in Section 11(d)(i)(C); provided,
however, that if the Major Part of the assets of the Company and its
subsidiaries is sold, leased, exchanged or otherwise transferred or disposed of
in one or more related transactions specified in Section 11(d)(i)(C) to more
than one Person, the "Surviving Person" in such case shall mean the Person that
acquired assets of the Company and/or its Subsidiaries with the greatest fair
market value in such transaction or transactions.
"Trading Day" shall mean a day on which the principal national
securities exchange (or principal recognized foreign stock exchange, as the case
may be) on which any securities or Rights, as the case may be, are listed or
admitted to trading is open for the transaction of business or, if the
securities or Rights in question are not listed or admitted to trading on any
national securities exchange (or recognized foreign stock exchange, as the case
may be), a Business Day.
SECTION 2. APPOINTMENT OF RIGHTS AGENT
The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who prior to the Distribution Date shall
also be the holders of the Common Stock) in accordance with the terms and
conditions of this Rights Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint one or more co-Rights
Agents as it may deem necessary or desirable (the term "Rights Agent" being used
in this Rights Agreement to refer, collectively, to the Rights Agent together
with any such co-Rights Agents). In the event the Company appoints one or more
co-Rights Agents, the respective duties of the Rights Agent and any co-Rights
Agents shall be as the Company shall determine.
SECTION 3. ISSUE OF RIGHTS AND RIGHT CERTIFICATES
(a) One Right shall be associated with each share of Common Stock
outstanding on the Record Date, each additional share of Common Stock that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and
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the Expiration Date and each additional share of Common Stock with which Rights
are issued after the Distribution Date but prior to the earlier of the
Redemption Date and the Expiration Date as provided in Section 23; provided,
however, that if the number of outstanding Rights are combined into a smaller
number of outstanding Rights pursuant to Section 12(a), the appropriate
fractional Right determined pursuant to such Section shall thereafter be
associated with each such share of Common Stock.
(b) Until the earlier of (i) the Close of Business on the tenth
Business Day after the Shares Acquisition Date and (ii) the Close of Business on
such date, if any, as may be designated by the Company's Board of Directors
following the commencement of, or first public disclosure of an intent to
commence, a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any of
its Subsidiaries, or any Person holding Common Stock for or pursuant to the
terms of any such employee benefit plan) for outstanding Common Stock, if upon
consummation of such tender or exchange offer such Person could be the
Beneficial Owner of 15% or more of the outstanding Common Stock (the Close of
Business on the earlier of such dates being the "Distribution Date"), (y) the
Rights will be evidenced by the certificates for Common Stock registered in the
names of the holders thereof and not by separate Right Certificates and (z) the
Rights, including the right to receive Right Certificates, will be transferable
only in connection with the transfer of Common Stock. As soon as practicable
after the Distribution Date, the Company will prepare and execute, the Rights
Agent will countersign, and the Company will send or cause to be sent (and the
Rights Agent, if requested, will send), by first-class, postage-prepaid mail, to
each record holder of Common Stock as of the Distribution Date, at the address
of such holder shown on the records of the Company, a Right Certificate
evidencing one whole Right for each share of Common Stock (or for the number of
shares of Common Stock with which one whole Right is then associated if the
number of Rights per share of Common Stock held by such record holder has been
adjusted in accordance with the proviso in Section 3(a)). If the number of
Rights associated with each share of Common Stock has been adjusted in
accordance with the proviso in Section 3(a), at the time of distributing the
Right Certificates the Company may make any necessary and appropriate rounding
adjustments so that Right Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Right in accordance
with Section 15(a). As of and after the Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(c) Certificates representing Common Stock issued after the Record Date
(including, without limitation, upon transfer or exchange of outstanding Common
Stock), but prior to the earliest of the Distribution Date, the Redemption Date
and the Expiration Date, shall have printed on, written on or otherwise affixed
to them the following legend:
This certificate also evidences and entitles the holder hereof
to certain rights as set forth in the Rights Agreement dated as of
August 12, 1996, as it may be amended from time to time (the "Rights
Agreement"), between Advanced Digital Information Corporation ("ADIC")
and ChaseMellon Shareholder Services, L.L.C., as Rights Agent (or
between ADIC and any successor Rights Agent under the Rights
Agreement), the terms of which are
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hereby incorporated herein by reference and a copy of which is on file
at the principal executive offices of ADIC. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. ADIC will mail to the holder of this certificate a copy of
the Rights Agreement without charge after receipt of a written request
therefor. Rights beneficially owned by Acquiring Persons or their
Affiliates or Associates thereof (as such terms are defined in the
Rights Agreement) and by any subsequent holder of such Rights are null
and void and nontransferable.
Notwithstanding the requirements of this paragraph (c), the omission of a legend
shall not affect the enforceability of any part of this Rights Agreement or the
rights of any holder of Rights.
SECTION 4. FORM OF RIGHT CERTIFICATES
The Right Certificates (and the form of election to purchase and form
of assignment to be printed on the reverse side thereof) shall be in
substantially the form set forth as Exhibit B and may have such marks of
identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Rights Agreement, or as may be required to comply
with any applicable law or with any rule or regulation made pursuant thereto or
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Sections 7, 11 and 23, the Right Certificates, whenever issued, shall be dated
as of the Distribution Date, and on their face shall entitle the holders thereof
to purchase such number of Preferred Shares as shall be set forth therein for
the Purchase Price set forth therein.
SECTION 5. EXECUTION, COUNTERSIGNATURE AND REGISTRATION
(a) The Right Certificates shall be executed on behalf of the Company
by the Chairman of the Board of Directors, the Chief Executive Officer, the
President, the Chief Operating Officer, the Chief Financial Officer or a Vice
President (whether preceded by any additional title) of the Company, either
manually or by facsimile signature, shall have affixed thereon the Company's
seal or a facsimile thereof, and shall be attested by the Secretary, an
Assistant Secretary or a Vice President (whether preceded by any additional
title, provided that such Vice President shall not have also executed the Right
Certificates) of the Company, either manually or by facsimile signature. The
Right Certificates shall be manually countersigned by the Rights Agent and shall
not be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such an officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates may nevertheless
be countersigned by the Rights Agent and issued and delivered by the Company
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such an officer of the Company; and any Right
Certificate may be signed on behalf of the Company by any person who, at the
actual date of execution of such Right
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<PAGE> 13
Certificate, shall be a proper officer of the Company to sign such Right
Certificate, although at the date of execution of this Rights Agreement any such
person was not such an officer of the Company.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office in Seattle, Washington, books for
registration and transfer of the Right Certificates issued under this Rights
Agreement. Such books shall show the names and addresses of the respective
holders of the Right Certificates, the number of Rights evidenced by each Right
Certificate, the certificate number of each Right Certificate and the date of
each Right Certificate.
SECTION6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; LOST, STOLEN, DESTROYED OR MUTILATED RIGHT
CERTIFICATES; UNCERTIFICATED RIGHTS
(a) Subject to the provisions of Sections 7(e) and 15, at any time
after the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date and the Expiration Date, any Right Certificate or
Right Certificates may be transferred, split up, combined or exchanged for
another Right Certificate or Right Certificates (other than Right Certificates
representing Rights that have become void pursuant to Section 7(e) or that have
been exchanged pursuant to Section 11(b), entitling the registered holder to
purchase a like number of one one-hundredths (1/100th) of a Preferred Share as
the Right Certificate or Right Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Right Certificate or Right Certificates shall make such
request in writing delivered to the Rights Agent and shall surrender the Right
Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the principal office of the Rights Agent; provided, however, that
neither the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any Right Certificate surrendered for
transfer until the registered holder shall have completed and signed the
certification contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to the provisions of Sections 7(e) and 15, countersign and
deliver to the Person entitled thereto a Right Certificate or Right
Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split-up, combination or exchange of
Right Certificates.
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a valid Right Certificate, and, in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and, at the Company's
request, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Right Certificate if mutilated, the Company will make a new
Right Certificate of like tenor and deliver such new Right Certificate to the
Rights Agent for
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<PAGE> 14
delivery to the registered holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.
(c) Notwithstanding any other provision of this Rights Agreement, the
Company and the Rights Agent may amend this Rights Agreement to provide for
uncertificated Rights in addition to or in place of Rights evidenced by Right
Certificates.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS
(a) Subject to Section 7(e) and except as otherwise provided in this
Rights Agreement (including Section 11), each Right shall entitle the registered
holder thereof, upon exercise thereof as provided in this Rights Agreement, to
purchase for the Purchase Price, at any time after the Distribution Date and at
or prior to the earlier of (i) the Close of Business on the tenth year
anniversary of the Record Date (the Close of Business on such date being the
"Expiration Date") and (ii) the Redemption Date, one one-hundredth (1/100th) of
a Preferred Share, subject to adjustment from time to time as provided in
Sections 11 and l2.
(b) The registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as otherwise provided in this Rights Agreement)
in whole or in part at any time after the Distribution Date, upon surrender of
the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the principal office of the Rights
Agent in Seattle, Washington, together with payment of the Purchase Price for
each one one-hundredth (1/100th) of a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Expiration Date, (ii) the
Redemption Date, and (iii) the time at which such Rights are exchanged as
provided in Section 11(b).
(c) Upon receipt of a Right Certificate representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the Preferred Shares to be purchased together
with an amount equal to any applicable transfer tax, by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon (i) either (A) promptly requisition from any transfer
agent of the Preferred Shares (or make available, if the Rights Agent is the
transfer agent) certificates for the number of Preferred Shares to be purchased
and the Company hereby irrevocably authorizes its transfer agent to comply with
all such requests or (B) if the Company shall have elected to deposit the
Preferred Shares with a depositary agent under a depositary arrangement,
promptly requisition from the depositary agent depositary receipts representing
the number of one one-hundredths (1/100ths) of a Preferred Share to be purchased
(in which case certificates for the Preferred Shares to be represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company will direct the depositary agent to comply with all such requests,
(ii) when appropriate, promptly requisition from the Company the amount of cash
to be paid in lieu of the issuance of fractional shares in accordance with
Section 15, (iii) promptly after receipt of such certificates or depositary
receipts, cause the same to be delivered to or upon the order of the registered
holder of such Right Certificate, registered in such name or names as may be
designated by such holder, and (iv) when appropriate, after receipt, promptly
deliver such cash to or upon the order of the registered holder of such Right
Certificate.
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<PAGE> 15
(d) In case the registered holder of any Right Certificate shall
exercise fewer than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent and delivered to the registered holder of such Right
Certificate or to his or her duly authorized assigns, subject to the provisions
of Section 15.
(e) If the Rights are at any time beneficially owned by an Acquiring
Person or an Affiliate or Associate of an Acquiring Person, such Rights shall be
null and void and nontransferable and the holder of any such Right (including
any purported transferee or subsequent holder) shall not have any right to
exercise or transfer any such Right. No Right Certificate shall be issued at any
time upon the transfer of any Rights to an Acquiring Person whose Rights would
be void pursuant to the preceding sentence or any Associate or Affiliate thereof
or to any nominee of such Acquiring Person, Associate or Affiliate; and any
Right Certificate delivered to the Rights Agent for transfer to an Acquiring
Person whose Rights would be void pursuant to the preceding sentence shall be
canceled.
(f) Notwithstanding anything in this Rights Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of any Right Certificates upon the
occurrence of any purported exercise as set forth in this Section 7 unless such
registered holder shall have (i) completed and signed the certificate contained
in the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Company shall reasonably request.
(g) The Company may temporarily suspend, for a period of time not to
exceed 90 calendar days after the Distribution Date, the exercisability of the
Rights in order to prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the Preferred Shares
purchasable upon exercise of the Rights and permit such registration statement
to become effective; provided, however, that no such suspension shall remain
effective after, and the Rights shall without any further action by the Company
or any other Person become exercisable immediately upon, the effectiveness of
such registration statement. Upon any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended and shall issue a further public announcement at such time
as the suspension is no longer in effect. Notwithstanding any provision in this
Rights Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction if the requisite qualification under the blue sky or securities
laws of such jurisdiction shall not have been obtained or the exercise of the
Rights shall not be permitted under applicable law.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES
All Right Certificates surrendered or presented for the purpose of
exercise, transfer, split-up, combination or exchange shall, and any Right
Certificate surrendered or presented for any purpose that represents Rights that
have become null and void and nontransferable
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<PAGE> 16
pursuant to Section 7(e) shall, if surrendered or presented to the Company or to
any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered or presented to the Rights Agent, shall be
canceled by it, and no Right Certificates shall be issued in lieu thereof except
as expressly permitted by this Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any Right Certificate purchased or acquired by the Company.
The Rights Agent shall deliver all canceled Right Certificates to the Company,
or shall, at the Company's written request, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES
(a) The Company covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares or any
authorized and issued Preferred Shares held in its treasury, free from
preemptive rights or any right of first refusal, a number of Preferred Shares
sufficient to permit the exercise in full of all outstanding Rights.
(b) In the event that there shall not be sufficient Preferred Shares
issued but not outstanding, or authorized but unissued, to permit the exercise
or exchange of Rights in accordance with Section 11, the Company covenants and
agrees that it will take all such action as may be necessary to authorize
additional Preferred Shares for issuance upon the exercise or exchange of Rights
pursuant to Section 11.
(c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares delivered upon exercise
or exchange of Rights shall, at the time of delivery of the certificates for
such Preferred Shares (subject to payment of the Purchase Price), be duly and
validly authorized and issued and fully paid and nonassessable shares.
(d) So long as the Preferred Shares issuable upon the exercise or
exchange of Rights are to be listed on any national securities exchange, the
Company covenants and agrees to use its best efforts to cause, from and after
such time as the Rights become exercisable or exchangeable, all Preferred Shares
reserved for such issuance to be listed on such securities exchange upon
official notice of issuance upon such exercise or exchange.
(e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges that may be
payable in respect of the issuance or delivery of Right Certificates or of any
Preferred Shares upon the exercise or exchange of Rights. The Company shall not,
however, be required to pay any transfer tax that may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or in
respect of the issuance or delivery of certificates representing the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or exchange or to issue
or deliver any certificates representing Preferred Shares upon the exercise or
exchange of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of
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surrender) or until it has been established to the Company's satisfaction that
no such tax is due.
SECTION 10. PREFERRED SHARES RECORD DATE
Each Person in whose name any certificate for Preferred Shares is
issued upon the exercise or exchange of Rights shall for all purposes be deemed
to have become the holder of record of the Preferred Shares represented thereby
on, and such certificate shall be dated, the date on which the Right Certificate
evidencing such Rights was duly surrendered and payment of any Purchase Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date on which the Preferred Shares
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such Preferred Shares on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Shares
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Right Certificate shall not be entitled to
any rights of a holder of Preferred Shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. ADJUSTMENTS IN RIGHTS AFTER THERE IS AN ACQUIRING PERSON;
EXCHANGE OF RIGHTS FOR SHARES; BUSINESS COMBINATIONS
(a) Upon a Person becoming an Acquiring Person, each holder of a Right,
except as provided in Section 7(e), shall thereafter have a right to receive,
upon exercise thereof for the Purchase Price in accordance with the terms of
this Rights Agreement, such number of shares of Common Stock as shall equal the
result obtained by multiplying the Purchase Price by a fraction, the numerator
of which is the number of one one-hundredths (1/100ths) of a Preferred Share for
which a Right is then exercisable and the denominator of which is 50% of the
Market Value of the Common Stock on the date on which a Person becomes an
Acquiring Person. As soon as practicable after a Person becomes an Acquiring
Person (provided the Company shall not have elected to make the exchange
permitted by Section 11(b)(i) for all outstanding Rights), the Company covenants
and agrees to use its best efforts to:
(i) prepare and file a registration statement under the
Securities Act, on an appropriate form, with respect to the securities
purchasable upon exercise of the Rights;
(ii) cause such registration statement to become effective
as soon as practicable after such filing;
(iii) cause such registration statement to remain effective
(with a prospectus at all times meeting the requirements of the
Securities Act) until the Expiration Date; and
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(iv) qualify or register the securities purchasable upon
exercise of the Rights under the blue sky or securities laws of such
jurisdictions as may be necessary or appropriate.
(b) (i) The Company's Board of Directors may, at its option, at
any time after a Person becomes an Acquiring Person, mandatorily
exchange all or part of the then outstanding and exercisable Rights
(which shall not include Rights that shall have become null and void
and nontransferable pursuant to the provisions of Section 7(e)) for
consideration per Right consisting of one-half of the Common Stock that
would be issuable at such time upon the exercise of one Right in
accordance with Section 11(a) (the consideration issuable per Right
pursuant to this Section 11(b)(i) being the "Exchange Consideration").
If the Company's Board of Directors elects to exchange all the Rights
for the Exchange Consideration pursuant to this Section 11(b)(i) prior
to the physical distribution of the Right Certificates, the Company may
distribute the Exchange Consideration in lieu of distributing Right
Certificates, in which case for purposes of this Rights Agreement
holders of Rights shall be deemed to have simultaneously received and
surrendered for exchange Right Certificates on the date of such
distribution.
(ii) Any action of the Company's Board of Directors
ordering the exchange of any Rights pursuant to Section 11(b)(i) shall
be irrevocable and, immediately upon the taking of such action and
without any further action and without any notice, the right to
exercise any such Right pursuant to Section 11(a) shall terminate and
the only right thereafter of a holder of such Right shall be to receive
the Exchange Consideration in exchange for each such Right held by such
holder or, if the Exchange Consideration shall not have been paid, to
exercise any such Right pursuant to Section 11(d)(i). The Company shall
promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a
notice of any such exchange to all holders of such Rights at their last
addresses as they appear on the registry books of the Rights Agent. Any
notice that is mailed in the manner provided in this Rights Agreement
shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the
exchange of the Rights for the Exchange Consideration will be effected
and, in the event of any partial exchange, the number of Rights that
will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights that shall have become
null and void and nontransferable pursuant to the provisions of Section
7(e)) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Stock issued
but not outstanding or authorized but unissued to permit the exercise in full of
the Rights in accordance with Section 11(a) or 11(b), the Company shall take all
such action as may be necessary to authorize additional Common Stock for
issuance upon exercise of the Rights. In the event the Company shall, after a
good-faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Stock, the Company shall substitute, for each
Common Stock that would otherwise be issuable upon exercise of a Right, that
number
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of Preferred Shares or fraction thereof such that the current Market Value of
one Preferred Share multiplied by such number or fraction is equal to the
current Market Value of one share of Common Stock as of the date of issuance of
such Preferred Shares or fraction thereof.
(d) (i) In the event that, following a Distribution Date, any
transactions specified in the following clause (A), (B) or (C) of this
Section 11(d)(i) (each such transaction being a "Business Combination")
shall be consummated, directly or indirectly:
(A) the Company shall consolidate with, or merge with and
into, any other Person;
(B) any Person shall consolidate with the Company, or
merge with and into the Company and the Company shall be the continuing
or surviving corporation following the merger and, in connection with
such merger, all or part of the Common Stock shall be changed into or
exchanged for capital stock or other securities of the Company or of
any other Person (or the Company) or cash or any other property; or
(C) the Company shall sell, lease, exchange or otherwise
transfer or dispose of (or one or more of its Subsidiaries shall sell,
lease, exchange or otherwise transfer or dispose of), in one or more
transactions, the Major Part of the assets of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons other
than the Company or one or more of its wholly owned Subsidiaries,
then, in each such case, proper provision shall be made so that each
holder of a Right, except as provided in Section 7(e), shall thereafter
have the right to receive, upon the exercise thereof for the Purchase
Price in accordance with the terms of this Rights Agreement, the
securities specified below (or, at such holder's option, if any
Business Combination is consummated at any time after a Person becomes
an Acquiring Person, the securities specified in Section 11(a)):
(1) If the Principal Party in such Business Combination has
Registered Common Shares outstanding, each Right shall thereafter
represent the right to receive, upon the exercise thereof for the
Purchase Price in accordance with the terms of this Rights Agreement,
such number of Registered Common Shares of such Principal Party, free
and clear of all liens, encumbrances or other adverse claims, as shall
have an aggregate Market Value equal to the result obtained by
multiplying the Purchase Price by two; or
(2) If the Principal Party in such Business Combination does
not have Registered Common Shares outstanding, each Right shall
thereafter represent the right to receive, upon the exercise thereof
for the Purchase Price in accordance with the terms of this Rights
Agreement, at the election of the holder of such Right at the time of
the exercise thereof, any of:
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<PAGE> 20
(x) such number of Common Shares of the Surviving Person
in such Business Combination as shall have an aggregate Book Value
immediately after giving effect to such Business Combination equal to
the result obtained by multiplying the Purchase Price by two;
(y) such number of Common Shares of the Principal Party
in such Business Combination (if the Principal Party is not also the
Surviving Person in such Business Combination) as shall have an
aggregate Book Value immediately after giving effect to such Business
Combination equal to the result obtained by multiplying the Purchase
Price by two; or
(z) if the Principal Party in such Business Combination
is an Affiliate of one or more Persons which has Registered Common
Shares outstanding, such number of Registered Common Shares of
whichever of such Affiliates of the Principal Party has Registered
Common Shares with the greatest aggregate Market Value on the date of
consummation of such Business Combination as shall have an aggregate
Market Value on the date of such Business Combination equal to the
result obtained by multiplying the Purchase Price by two.
(ii) The Company shall not consummate any Business Combination
unless each issuer of Common Shares for which Rights may be exercised, as set
forth in this Section 11(d), shall have sufficient authorized Common Shares that
have not been issued or reserved for issuance (and that shall, when issued upon
exercise thereof in accordance with this Rights Agreement, be validly issued,
fully paid and nonassessable and free of preemptive rights, rights of first
refusal or any other restrictions or limitations on the transfer or ownership
thereof) to permit the exercise in full of the Rights in accordance with this
Section 11(d) and unless prior thereto:
(A) a registration statement under the Securities Act, on an
appropriate form, with respect to the Rights and the Common Shares of such
issuer purchasable upon exercise of the Rights shall be effective; and
(B) the Company and each such issuer shall have:
(1) executed and delivered to the Rights Agent a supplemental
agreement providing for the assumption by such issuer of the obligations set
forth in this Section 11(d) (including the obligation of such issuer to issue
Common Shares upon the exercise of Rights in accordance with the terms set forth
in Sections 11(d)(i) and 11(d)(iii)) and further providing that such issuer, at
its own expense, will use its best efforts to:
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(x) cause a registration statement under the Securities
Act, on an appropriate form, with respect to the Rights and the Common
Shares of such issuer purchasable upon exercise of the Rights to remain
effective (with a prospectus at all times meeting the requirements of
the Securities Act) until the Expiration Date;
(y) qualify or register the Rights and the Common Shares
of such issuer purchasable upon exercise of the Rights under the blue
sky or securities laws of such jurisdictions as may be necessary or
appropriate; and
(z) list the Rights and the Common Shares of such issuer
purchasable upon exercise of the Rights on each national securities
exchange on which the Common Stock was listed prior to the consummation
of the Business Combination or, if the Common Stock was not listed on a
national securities exchange prior to the consummation of the Business
Combination, on a national securities exchange;
(2) furnished to the Rights Agent a written opinion of independent
counsel stating that such supplemental agreement is a valid, binding and
enforceable agreement of such issuer; and
(3) filed with the Rights Agent a certificate of a nationally
recognized firm of independent accountants setting forth the number of Common
Shares of such issuer that may be purchased upon the exercise of each Right
after the consummation of such Business Combination.
(iii) After consummation of any Business Combination and subject to
the provisions of Section 11(d)(ii), (A) each issuer of Common Shares for which
Rights may be exercised as set forth in this Section 11(d) shall be liable for,
and shall assume, by virtue of such Business Combination, all the obligations
and duties of the Company pursuant to this Rights Agreement, (B) the term
"Company" shall thereafter be deemed to refer to such issuer, (C) each such
issuer shall take such steps in connection with such consummation as may be
necessary to ensure that the provisions of this Rights Agreement (including the
provisions of Sections 11(a) and 11(b)) shall thereafter apply, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights, and (D) the number of Common Shares of each such
issuer thereafter receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11(a) and 12(a), and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be, on like terms to any such Common Shares.
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SECTION 12. CERTAIN ADJUSTMENTS
(a) To preserve the actual or potential economic value of the
Rights, if at any time after the date of this Rights Agreement there shall be
any change in the Common Stock or the Preferred Shares, whether by reason of
stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of securities, split-ups, split-offs, spin-offs,
liquidations, other similar changes in capitalization, any distribution or
issuance of cash, assets, evidences of indebtedness or subscription rights,
options or warrants to holders of Common Stock or Preferred Shares, as the case
may be (other than the Rights or regular quarterly cash dividends), or
otherwise, then, in each such event the Company's Board of Directors shall make
such appropriate adjustments in the number of Preferred Shares (or the number
and kind of other securities) issuable upon exercise of each Right, the Purchase
Price and Redemption Price in effect at such time and the number of Rights
outstanding at such time (including the number of Rights or fractional Rights
associated with each share of Common Stock) such that following such adjustment
such event shall not have had the effect of reducing or limiting the benefits
the holders of the Rights would have had absent such event.
(b) If, as a result of an adjustment made pursuant to Section
12(a), the holder of any Right thereafter exercised shall become entitled to
receive any securities other than Preferred Shares, then the number of such
securities so receivable upon exercise of any Right thereafter shall be subject
to adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of Sections 11(a) and 12(a), and the provisions of
Sections 7, 9 and 10 with respect to the Preferred Shares shall apply, as nearly
as reasonably may be possible, on like terms to any such other securities.
(c) All Rights originally issued by the Company subsequent to any
adjustment made to the amount of Preferred Shares or other securities relating
to a Right shall evidence the right to purchase, for the Purchase Price, the
adjusted number and kind of securities purchasable from time to time under this
Rights Agreement upon exercise of the Rights, all subject to further adjustment
as provided in this Rights Agreement.
(d) Irrespective of any adjustment or change in the Purchase Price
or the number of Preferred Shares or number or kind of other securities issuable
upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the terms that were expressed in the
initial Right Certificates issued under this Rights Agreement.
(e) In any case in which action taken pursuant to Section 12(a)
requires that an adjustment be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the holder of any Right exercised after such record date the
Preferred Shares and/or other securities, if any, issuable upon such exercise
over and above the Preferred Shares and/or other securities, if any, issuable
before giving effect to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional securities upon the
occurrence of the event requiring such adjustment.
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SECTION 13. CERTIFICATE OF ADJUSTMENT
Whenever an adjustment is made as provided in Section 11 or 12, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent and with each transfer agent for the Preferred Shares
a copy of such certificate, and (c) mail a brief summary thereof to each holder
of a Right Certificate (or, prior to the Distribution Date, of Common Stock) in
accordance with Section 25.
SECTION 14. ADDITIONAL COVENANTS
(a) Notwithstanding any other provision of this Rights Agreement, no
adjustment to the number of Preferred Shares (or fraction of a share) or other
securities for which a Right is exercisable or the number of Rights outstanding
or associated with each Common Share or any similar or other adjustment shall be
made or be effective if such adjustment would have the effect of reducing or
limiting the benefits the holders of the Rights would have had absent such
adjustment, including, without limitation, the benefits under Sections 11 and
12, unless the terms of this Rights Agreement are amended so as to preserve such
benefits.
(b) The Company covenants and agrees that, after the Distribution Date,
except as permitted by Section 26, it will not take (or permit any Subsidiary of
the Company to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will reduce or otherwise limit the
benefits the holders of the Rights would have had absent such action, including,
without limitation, the benefits under Sections 11 and 12. Any action taken by
the Company during any period after any Person becomes an Acquiring Person but
prior to the Distribution Date shall be null and void unless such action could
be taken under this Section 14(b) from and after the Distribution Date.
SECTION 15. FRACTIONAL RIGHTS AND FRACTIONAL SHARES
(a) The Company may, but shall not be required to, issue fractional
Rights or distribute Right Certificates that evidence fractional Rights. In lieu
of such fractional Rights, the Company may pay to the registered holders of the
Right Certificates with regard to which such fractional Rights would otherwise
be issuable an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 15(a), the current market
value of a whole Right shall be the closing price of the Rights (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date on
which such fractional Rights would have been otherwise issuable.
(b) The Company may, but shall not be required to, issue fractional
Preferred Shares upon exercise of the Rights or distribute certificates that
evidence fractional Preferred Shares. In lieu of fractional Preferred Shares,
the Company may elect to (i) utilize a depository arrangement as provided by the
terms of the Preferred Shares or (ii) in the case of a fractional Preferred
Share (other than one one-hundredth (1/100th) of a Preferred Share or any
integral multiple thereof), pay to the registered holders of Right Certificates
at the time
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<PAGE> 24
such Rights are exercised as provided in this Rights Agreement an amount in cash
equal to the same fraction of the current market value of one Preferred Share,
if any are outstanding and publicly traded (or the Formula Number times the
current market value of one share of Common Stock if the Preferred Shares are
not outstanding and publicly traded). For purposes of this Section 15(b), the
current market value of a Preferred Share (or share of Common Stock) shall be
the closing price of a Preferred Share (or share of Common Stock) (as determined
pursuant to the second and third sentences of the definition of Market Value
contained in Section 1) for the Trading Day immediately prior to the date of
such exercise. If, as a result of an adjustment made pursuant to Section 12(a),
the holder of any Right thereafter exercised shall become entitled to receive
any securities other than Preferred Shares, the provisions of this Section 15(b)
shall apply, as nearly as reasonably may be, on like terms to such other
securities.
(c) The Company may, but shall not be required to, issue fractional
Common Shares upon exchange of Rights pursuant to Section 11(b), or to
distribute certificates that evidence fractional Common Shares. In lieu of such
fractional Common Shares, the Company may pay to the registered holders of Right
Certificates with regard to which such fractional Common Shares would otherwise
be issuable an amount in cash equal to the same fraction of the current Market
Value of one Common Share as of the date on which a Person became an Acquiring
Person.
(d) Each holder of Rights by accepting the Rights expressly waives his
or her right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as provided in this Section 15.
SECTION 16. RIGHTS OF ACTION
(a) All rights of action in respect of this Rights Agreement are vested
in the respective registered holders of the Right Certificates (and, prior to
the Distribution Date, the registered holders of the Common Stock), and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Stock), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Stock), may, in his or her own behalf and for his or her own benefit,
enforce, and may institute and maintain any suit, action or proceeding against
the Company to enforce, or otherwise act in respect of, his or her right to
exercise the Rights evidenced by such Right Certificate in the manner provided
in such Right Certificate and in the Rights Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Rights Agreement and shall be entitled to specific
performance of the obligations of any Person under, and injunctive relief
against actual or threatened violations of the obligations of any Person subject
to, this Rights Agreement.
(b) Any holder of Rights who prevails in an action to enforce the
provisions of this Rights Agreement shall be entitled to recover the reasonable
costs and expenses, including attorneys' fees, incurred in such action.
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SECTION 17. AGREEMENT OF RIGHT HOLDERS
Every holder of a Right, by accepting the same, consents and agrees
with the Company and the Rights Agent and with every other holder of a Right
that:
(a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Stock;
(b) after the Distribution Date, the Right Certificates will be
transferable, subject to Section 7(e), only on the registry books of the Rights
Agent if surrendered at the principal office of the Rights Agent, duly endorsed
or accompanied by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the Person
in which name a Right Certificate (or, prior to the Distribution Date, the
associated Common Stock certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby (notwithstanding any notations of ownership
or writing on the Right Certificates or the associated Common Stock certificate
made by anyone other than the Company or the Rights Agent) for all purposes
whatsoever, and neither the Company nor the Rights Agent shall be affected by
any notice to the contrary.
SECTION 18. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER
No holder, as such, of any Right Certificate shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained in this Rights Agreement or in any Right Certificate be construed to
confer upon the holder of any Right Certificate, as such, any of the rights of a
shareholder of the Company, including, without limitation, any right to vote for
the election of directors or on any matter submitted to shareholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting shareholders, or to
receive dividends or other distributions or subscription rights, or otherwise,
until the Right or Rights evidenced by such Right Certificate shall have been
exercised in accordance with the provisions of this Rights Agreement.
SECTION 19. CONCERNING THE RIGHTS AGENT
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Rights Agreement and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and other disbursements incurred in administering and executing
this Rights Agreement and exercising and performing its duties under this Rights
Agreement.
(b) The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance on any
Right Certificate or certificate for the Common Stock or
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<PAGE> 26
for other securities of the Company, instrument of assignment or transfer, power
of attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons.
SECTION 20. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT
(a) Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the stock transfer or corporate trust business of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Rights Agreement without the execution or filing of any paper or any further act
on the part of any of the parties to this Rights Agreement; provided, however,
that such corporation would be eligible for appointment as a successor Rights
Agent under the provisions of Section 22. In case at the time such successor
Rights Agent shall succeed to the agency created by this Rights Agreement any of
the Right Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at that
time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right Certificates either in the
name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and, in all such cases, such Right Certificates shall have the full force
provided in the Right Certificates and in this Rights Agreement.
(b) In case at any time the name of the Rights Agent shall be
changed and at such time any of the Right Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Right Certificates so countersigned; and, in
case at that time any of the Right Certificates shall not have been
countersigned, the Rights Agent may countersign such Right Certificates either
in its prior name or in its changed name; and, in all such cases, such Right
Certificates shall have the full force provided in the Right Certificates and in
this Rights Agreement.
SECTION 21. DUTIES OF RIGHTS AGENT
The Rights Agent undertakes the duties and obligations imposed by this
Rights Agreement upon the following terms and conditions, by all of which the
Company and the holders of Right Certificates (or, prior to the Distribution
Date, of the Common Stock), by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion.
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<PAGE> 27
(b) Whenever in the performance of its duties under this Rights
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of any Acquiring Person) be
proved or established by the Company prior to taking, refraining from taking or
suffering any action under this Rights Agreement, such fact or matter (unless
other evidence in respect thereof be specifically prescribed in this Rights
Agreement) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial
Officer, a Vice President (whether preceded by any additional title), the
Treasurer or the Secretary of the Company and delivered to the Rights Agent, and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Rights
Agreement in reliance upon such certificate.
(c) The Company shall indemnify the Rights Agent for, and hold it
harmless against, any loss, liability or expense incurred without gross
negligence, bad faith or intentional misconduct on its part arising out of or in
connection with its duties under this Rights Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with
its exercise or performance of any of its duties under this Rights Agreement. In
no case will the Rights Agent be liable for special, indirect, incidental or
consequential loss or damage of any kind whatsoever, even if the Rights Agent
has been advised of the possibility of such loss or damage.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Rights Agreement or in
the Right Certificates (except as to its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and shall
be deemed to have been made by the Company only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Rights Agreement or the execution and delivery
hereof (except the due execution of this Rights Agreement by the Rights Agent)
or in respect of the validity or execution of any Right Certificate (except its
countersignature thereof); it shall not be responsible for any breach by the
Company of any covenant or condition contained in this Rights Agreement or in
any Right Certificate; it shall not be responsible for any adjustment required
under the provisions of Section 11 or 12 or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
Rights evidenced by Right Certificates after actual notice of any such
adjustment); and it shall not by any act under this Rights Agreement be deemed
to make any representation or warranty as to the authorization or reservation of
any Preferred Shares or Common Stock to be issued pursuant to this Rights
Agreement or any Right Certificate or as to whether any Preferred Shares or
Common Stock will, when so issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge
and deliver or cause to be performed, executed, acknowledged and delivered all
such further and other acts, instruments and assurances as may reasonably be
required by the Rights Agent for the carrying out or performing by the Rights
Agent of the provisions of this Rights Agreement.
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<PAGE> 28
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this Rights
Agreement from any one of the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial
Officer, a Vice President (whether preceded by any additional title), the
Secretary or the Treasurer of the Company in connection with its duties, and it
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with the instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not the Rights
Agent under this Rights Agreement. Nothing in this Rights Agreement shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty under this Rights Agreement
either itself or by or through its attorneys or agents, and the Rights Agent
shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys or agents or for any loss to the Company
resulting from any such act, default, neglect or misconduct provided reasonable
care was exercised in the selection and continued employment thereof.
SECTION 22. CHANGE OF RIGHTS AGENT
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Rights Agreement upon 30 days' notice in
writing mailed to the Company and to each transfer agent of the Common Stock and
the Preferred Shares by registered or certified mail, and to the holders of the
Right Certificates (or, prior to the Distribution Date, of the Common Stock) by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' notice in writing mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and the Preferred Shares by registered or certified mail, and to
the holders of the Right Certificates (or, prior to the Distribution Date, of
the Common Stock) by first-class mail. If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Rights Agent. If the Company shall fail to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent or by the holder of a Right Certificate
(or, prior to the Distribution Date, of the Common Stock) (who shall, with such
notice, submit his or her Right Certificate or, prior to the Distribution Date,
the certificate representing his or her Common Stock, for inspection by the
Company), then the registered holder of any Right Certificate (or, prior to the
Distribution Date, of the Common Stock) may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation in good standing organized and doing business under the laws of the
United States or of the state of Washington (or of any other
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<PAGE> 29
state of the United States so long as such corporation is authorized to conduct
a stock transfer or corporate trust business in the state of Washington) and
having a principal office in the state of Washington, which is authorized under
such laws to exercise stock transfer or corporate trust powers and is subject to
supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. After appointment, the successor Rights Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; provided, however,
that the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it under this Rights Agreement,
and execute and deliver any further assurance, conveyance, act or deed necessary
for the purpose. Not later than the effective date of any such appointment, the
Company shall file notice thereof in writing with the predecessor Rights Agent
and each transfer agent of the Common Stock and the Preferred Shares, and mail a
notice thereof in writing to the registered holders of the Right Certificates
(or, prior to the Distribution Date, of the Common Stock). Failure to give any
notice provided for in this Section 22, however, or any defect therein shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.
SECTION 23. ISSUANCE OF ADDITIONAL RIGHTS AND RIGHT CERTIFICATES
Notwithstanding any of the provisions of this Rights Agreement or of
the Rights to the contrary, the Company may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Rights Agreement. In addition, in connection with the
issuance or sale of Common Stock following the Distribution Date and prior to
the earlier of the Redemption Date and the Expiration Date, the Company (a)
shall issue, with respect to Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company, and (b) may issue, in any other case, if deemed necessary or
appropriate by the Company's Board of Directors, Right Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Right Certificate shall be issued if, and to
the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Right Certificate would be issued and (ii) no
such Right Certificate shall be issued if, and to the extent that, appropriate
adjustment shall otherwise have been made in lieu of the issuance thereof.
SECTION 24. REDEMPTION AND TERMINATION
(a) The Company's Board of Directors may, at its option, at any
time prior to such time as any Person becomes an Acquiring Person, order the
redemption of all, but not fewer than all, the then outstanding Rights at the
Redemption Price (the date of such redemption being the "Redemption Date"). The
redemption of the Rights by the Board of Directors may
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be made effective at such time, on such basis and with such conditions as the
Board of Directors in its sole discretion may establish.
(b) Immediately upon the action of the Company's Board of
Directors ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price. Within 10 Business Days after the action of the Company's
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last addresses as they appear
upon the registry books of the Rights Agent or, prior to the Distribution Date,
on the registry books of the transfer agent for the Common Stock. Each such
notice of redemption will state the method by which payment of the Redemption
Price will be made. The notice, if mailed in the manner provided in this Rights
Agreement, shall be conclusively presumed to have been duly given, whether or
not the holder of Rights receives such notice. In any case, failure to give such
notice by mail, or any defect in the notice, to any particular holder of Rights
shall not affect the sufficiency of the notice to other holders of Rights.
SECTION 25. NOTICES
Notices or demands authorized by this Rights Agreement to be given or
made by the Rights Agent or by the holder of a Right Certificate (or, prior to
the Distribution Date, of Common Stock) to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:
Advanced Digital Information Corporation
10201 Willows Road
Redmond, Washington 98052
Attention: Peter H. van Oppen
Subject to the provisions of Section 22, notices or demands authorized by this
Rights Agreement to be given or made by the Company or by the holder of a Right
Certificate (or, prior to the Distribution Date, of Common Stock) to or on the
Rights Agent shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Company) as follows:
ChaseMellon Shareholder Services, L.L.C.
----------------------------------------
----------------------------------------
Attention:
------------------------------
Notices or demands authorized by this Rights Agreement to be given or made by
the Company or the Rights Agent to any holder of a Right Certificate (or, prior
to the Distribution Date, of Common Stock) shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed to such holder at such
holder's address as shown on the registry books of
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the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Stock.
SECTION 26. SUPPLEMENTS AND AMENDMENTS
At any time prior to the Distribution Date and subject to the last
sentence of this Section 26, the Company may, and the Rights Agent shall if the
Company so directs, supplement or amend any provision of this Rights Agreement
(including, without limitation, the date on which the Distribution Date shall
occur, the time during which the Rights may be redeemed pursuant to Section 24
or any provision of the Designation of Rights and Preferences) without the
approval of any holder of the Rights. From and after the Distribution Date and
subject to applicable law, the Company may, and the Rights Agent shall if the
Company so directs, amend this Rights Agreement without the approval of any
holder of Right Certificates to (a) cure any ambiguity or correct or supplement
any provision contained in this Rights Agreement that may be defective or
inconsistent with any other provision of this Rights Agreement or (b) make any
other provisions in regard to matters or questions arising under this Rights
Agreement that the Company may deem necessary or desirable and that shall not
adversely affect the interests of the holders of Right Certificates (other than
an Acquiring Person or an Affiliate or Associate of an Acquiring Person). Any
supplement or amendment adopted during any period after any Person has become an
Acquiring Person but prior to the Distribution Date shall be null and void
unless such supplement or amendment could have been adopted under the prior
sentence from and after the Distribution Date. Any supplement or amendment to
this Rights Agreement duly approved by the Company shall become effective
immediately upon execution by the Company, whether or not also executed by the
Rights Agent.
SECTION 27. SUCCESSORS
All the covenants and provisions of this Rights Agreement by or for the
benefit of the Company or the Rights Agent shall bind and inure to the benefit
of their respective successors and assigns under this Rights Agreement.
SECTION 28. BENEFITS OF THIS RIGHTS AGREEMENT; DETERMINATIONS AND
ACTIONS BY THE COMPANY'S BOARD OF DIRECTORS
(a) Nothing in this Rights Agreement shall be construed to give to
any Person other than the Company, the Rights Agent and the registered holders
of the Right Certificates (and, prior to the Distribution Date, of the Common
Stock) any legal or equitable right, remedy or claim under this Rights
Agreement; provided, however, that this Rights Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, of the
Common Stock).
(b) Except as explicitly otherwise provided in this Rights
Agreement, the Company's Board of Directors shall have the exclusive power and
authority to administer this Rights Agreement and to exercise all rights and
powers specifically granted to the Company's
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Board of Directors or to the Company, or as may be necessary or advisable in the
administration of this Rights Agreement, including, without limitation, the
right and power to (i) interpret the provisions of this Rights Agreement and
(ii) make all determinations deemed necessary or advisable for the
administration of this Rights Agreement (including, without limitation, a
determination to redeem or not redeem the Rights or to amend this Rights
Agreement and a determination of whether there is an Acquiring Person).
SECTION 29. SEVERABILITY
If any term, provision, covenant or restriction of this Rights
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Rights Agreement shall remain in full force
and effect and shall in no way be affected, impaired or invalidated.
SECTION 30. GOVERNING LAW
This Rights Agreement and each Right Certificate issued under this
Rights Agreement shall be deemed to be a contract made under the laws of the
state of Washington and for all purposes shall be governed by and construed in
accordance with the law of Washington applicable to contracts to be made and
performed entirely within Washington.
SECTION 31. COUNTERPARTS; EFFECTIVENESS
This Rights Agreement may be executed in any number of counterparts,
each of which shall for all purposes be deemed to be an original, and all of
which shall together constitute but one and the same instrument. This Rights
Agreement shall be effective as of the Close of Business on the date of this
Rights Agreement first set forth above.
SECTION 32. DESCRIPTIVE HEADINGS
Descriptive headings of the several Sections of this Rights Agreement
are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions of this Rights Agreement.
-29-
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this Rights
Agreement to be duly executed as of the day and year first above written.
ADVANCED DIGITAL INFORMATION
CORPORATION
By: /s/ PETER H. VAN OPPEN
------------------------------------------
Name: Peter H. van Oppen
Its: Chairman, President and Chief
Executive Officer
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C., as Rights Agent
By: /s/ JOYCE DAVIS
------------------------------------------
Name: Joyce Davis
Its: AVP
-30-
<PAGE> 34
EXHIBIT A
TO RIGHTS
AGREEMENT
ADVANCED DIGITAL INFORMATION CORPORATION
DESIGNATION OF RIGHTS AND PREFERENCES
OF SERIES A PARTICIPATING
CUMULATIVE PREFERRED STOCK
The Board of Directors of Advanced Digital Information Corporation (the
"Corporation") hereby establishes a series of the Corporation's Preferred Stock
designated as Series A Participating Cumulative Preferred Stock. The rights,
preferences, restrictions and other matters relating to the Series A
Participating Cumulative Preferred Stock are set forth below:
SECTION 1. DESIGNATION AND NUMBER OF SHARES
The shares of such series shall be designated the "Series A
Participating Cumulative Preferred Stock" (the "Series A Preferred Stock"), no
par value. The number of shares initially constituting the Series A Preferred
Stock shall be 100,000 provided, however, that if more than a total of 100,000
shares of Series A Preferred Stock shall be issuable upon the exercise of Rights
(the "Rights") issued pursuant to the Rights Agreement dated as of August 12,
1996 between the Corporation and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent (the "Rights Agreement"), the Corporation's Board of Directors,
pursuant to Section 23B.06.020 of the Washington Business Corporation Act, shall
direct by resolution that Articles of Amendment be properly executed and filed
in accordance with the provisions thereof, providing for the total number of
shares of Series A Preferred Stock authorized to be issued to be increased (to
the extent that the Amended and Restated Articles of Incorporation then permit)
to the largest number of whole shares (rounded up to the nearest whole number)
issuable upon exercise of such Rights.
SECTION 2. DIVIDENDS OR DISTRIBUTIONS
(a) Subject to the prior and superior rights of the holders of
shares of any other series of Preferred Stock or other class of capital stock of
the Corporation ranking prior and superior to the shares of Series A Preferred
Stock with respect to dividends, the holders of shares of Series A Preferred
Stock shall be entitled to receive, when, as, and if declared by the Board of
Directors, out of the assets of the Corporation legally available therefor,
quarterly dividends payable in cash on the last day of each fiscal quarter in
each year, or such other dates as the Corporation's Board of Directors shall
approve (each such date being referred to in this Designation of Rights and
Preferences as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or a
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (i) $.01 and (ii) the Formula
Number (as hereinafter defined) then in effect times the cash dividends then to
be paid on each share of Common Stock. In addition, if the Corporation shall pay
any dividend or make any distribution on the
A-1
<PAGE> 35
Common Stock payable in assets, securities or other forms of noncash
consideration (other than dividends or distributions solely in shares of Common
Stock), then, in each such case, the Corporation shall simultaneously pay or
make on each outstanding whole share of Series A Preferred Stock a dividend or
distribution in like kind equal to the Formula Number then in effect times such
dividend or distribution on each share of Common Stock. As used in this
Designation of Rights and Preferences and in the Rights Agreement, the "Formula
Number" shall be 100; provided, however, that if at any time after the date of
the closing of the Spinoff (as defined in the Rights Agreement), the Corporation
shall (i) declare or pay any dividend on the Common Stock payable in shares of
Common Stock or make any distribution on the Common Stock in shares of Common
Stock, (ii) subdivide (by a stock split or otherwise) the outstanding shares of
Common Stock into a larger number of shares of Common Stock, or (iii) combine
(by a reverse stock split or otherwise) the outstanding shares of Common Stock
into a smaller number of shares of Common Stock, then in each such event the
Formula Number shall be adjusted to a number determined by multiplying the
Formula Number in effect immediately prior to such event by a fraction, the
numerator of which is the number of shares of Common Stock that are outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that are outstanding immediately prior to such event (and
rounding the result to the nearest whole number); and provided further, that if
at any time after the date of the closing of the Spinoff the Corporation shall
issue any shares of its capital stock in a merger, reclassification or change of
the outstanding shares of Common Stock, then in each such event the Formula
Number shall be appropriately adjusted to reflect such merger, reclassification
or change so that each share of Preferred Stock continues to be the economic
equivalent of a Formula Number of shares of Common Stock prior to such merger,
reclassification or change.
(b) The Corporation shall declare a dividend or distribution on
the Series A Preferred Stock as provided in Section 2(a) immediately prior to or
at the same time it declares a dividend or distribution on the Common Stock
(other than a dividend or distribution solely in shares of Common Stock);
provided, however, that in the event no dividend or distribution (other than a
dividend or distribution in shares of Common Stock) shall have been declared on
the Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per
share on the Series A Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date. The Corporation's Board of Directors
may fix a record date for the determination of holders of shares of Series A
Preferred Stock entitled to receive a dividend or distribution declared thereon,
which record date shall be the same as the record date for any corresponding
dividend or distribution on the Common Stock and which shall not be more than 60
days prior to the date fixed for payment thereof.
(c) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from and after the Quarterly
Dividend Payment Date next preceding the date of original issue of such shares
of Series A Preferred Stock; provided, however, that dividends on such shares
that are originally issued after the record date for the determination of
holders of shares of Series A Preferred Stock entitled to receive a quarterly
dividend and on or prior to the next succeeding Quarterly Dividend Payment Date
shall begin to accrue and be cumulative from and after such Quarterly Dividend
Payment Date. Notwithstanding the
A-2
<PAGE> 36
foregoing, dividends on shares of Series A Preferred Stock that are originally
issued prior to the record date for the first Quarterly Dividend Payment shall
be calculated as if cumulative from and after the last day of the fiscal quarter
(or such other Quarterly Dividend Payment Date as the Corporation's Board of
Directors shall approve) next preceding the date of original issuance of such
shares. Accrued but unpaid dividends shall not bear interest. Dividends paid on
the shares of Series A Preferred Stock in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares at the time
outstanding.
(d) So long as any shares of Series A Preferred Stock are
outstanding, no dividends or other distributions shall be declared, paid or
distributed, or set aside for payment or distribution, on the Common Stock
unless, in each case, the dividend required by this Section 2 to be declared on
the Series A Preferred Stock shall have been declared.
(e) The holders of shares of Series A Preferred Stock shall not be
entitled to receive any dividends or other distributions except as provided in
this Designation of Rights and Preferences.
SECTION 3. VOTING RIGHTS
The holders of shares of Series A Preferred Stock shall have the
following voting rights:
(a) Each holder of Series A Preferred Stock shall be entitled to a
number of votes equal to the Formula Number then in effect for each share of
Series A Preferred Stock held of record on each matter on which holders of the
Common Stock or shareholders generally are entitled to vote, multiplied by the
maximum number of votes per share that any holders of the Common Stock or
shareholders generally then have with respect to such matter (assuming any
holding period or other requirement to vote a greater number of shares is
satisfied).
(b) Except as otherwise provided in this Designation of Rights and
Preferences or by applicable law, the holders of shares of Series A Preferred
Stock and the holders of shares of Common Stock and any other capital stock of
the Corporation having general voting rights shall vote together as one class
for the election of directors of the Corporation and on all other matters
submitted to a vote of shareholders of the Corporation.
(c) Except as provided in this Designation of Rights and
Preferences or by applicable law, holders of Series A Preferred Stock shall have
no special voting rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of Common Stock as set forth in
this Designation of Rights and Preferences) for authorizing or taking any
corporate action.
SECTION 4. CERTAIN RESTRICTIONS
(a) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in Section 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A
A-3
<PAGE> 37
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends on, make any other distributions
on, or redeem or purchase or otherwise acquire for consideration any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock; provided, however, that the Corporation may
at any time redeem, purchase or otherwise acquire shares of any such
junior stock in exchange for shares of any stock of the Corporation
ranking junior (either as to dividends or upon dissolution, liquidation
or winding up) to the Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration
any shares of Series A Preferred Stock, or any shares of stock ranking
on a parity with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Corporation's Board of Directors) to all holders of such shares
upon such terms as the Corporation's Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
(b) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
SECTION 5. LIQUIDATION RIGHTS
Upon the liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, no distribution shall be made to (a) the
holders of shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred Stock unless,
prior thereto, the holders of shares of Series A Preferred Stock shall have
received an amount equal to the greater of (i) $.01 per share and (ii) the
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment, plus an aggregate amount per share equal to the
Formula Number then in effect times the aggregate amount to be distributed per
share to holders of Common Stock or (b) the
A-4
<PAGE> 38
holders of shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Preferred Stock,
except distributions made ratably on the Series A Preferred Stock and all other
such parity stock in proportion to the total amounts to which the holders of all
such shares are entitled upon such liquidation, dissolution or winding up.
SECTION 6. CONSOLIDATION, MERGER, ETC.
In case the Corporation shall enter into any consolidation, merger,
combination or other transaction in which the shares of Common Stock are
exchanged for or changed into other stock or securities, cash and/or any other
property, then in any such case the then outstanding shares of Series A
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share equal to the Formula Number then in effect times the aggregate
amount of stock, securities, cash and/or any other property (payable in kind),
as the case may be, into which or for which each share of Common Stock is
exchanged or changed. In the event both this Section 6 and Section 2 appear to
apply to a transaction, this Section 6 will control.
SECTION 7. NO REDEMPTION; NO SINKING FUND
(a) The shares of Series A Preferred Stock shall not be subject to
redemption by the Corporation or at the option of any holder of Series A
Preferred Stock; provided, however, that the Corporation may purchase or
otherwise acquire outstanding shares of Series A Preferred Stock in the open
market or by offer to any holder or holders of shares of Series A Preferred
Stock.
(b) The shares of Series A Preferred Stock shall not be subject to or
entitled to the operation of a retirement or sinking fund.
SECTION 8. RANKING
The Series A Preferred Stock shall rank junior to all other series of
Preferred Stock of the Corporation, unless the Corporation's Board of Directors
shall specifically determine otherwise in fixing the powers, preferences and
relative, participating, optional and other special rights of the shares of such
series and the qualifications, limitations and restrictions thereof.
SECTION 9. FRACTIONAL SHARES
The Series A Preferred Stock shall be issuable upon exercise of the
Rights issued pursuant to the Rights Agreement in whole shares or in any
fractional share that is one one-hundredth (1/100th) of a share or any integral
multiple of such fraction, and shall entitle the holder, in proportion to such
holder's fractional shares, to receive dividends, exercise voting rights,
participate in distributions and have the benefit of all other rights of holders
of Series A Preferred Stock. In lieu of fractional shares, the Corporation,
prior to the first issuance of a share or a fractional share of Series A
Preferred Stock, may elect to (a) make a cash payment as provided in the Rights
Agreement for a fractional share other than one one-hundredth
A-5
<PAGE> 39
(1/100th) of a share or any integral multiple thereof or (b) issue depository
receipts evidencing such authorized fractional share of Series A Preferred Stock
pursuant to an appropriate agreement between the Corporation and a depository
selected by the Corporation; provided, however, that such agreement shall
provide that the holders of such depository receipts shall have all the rights,
privileges and preferences to which they are entitled as holders of the Series A
Preferred Stock.
SECTION 10. REACQUIRED SHARES
Any shares of Series A Preferred Stock purchased or otherwise acquired
by the Corporation in any manner whatsoever shall be retired and canceled
promptly after the acquisition thereof. All such shares shall upon their
cancellation become authorized but unissued shares of Preferred Stock, without
designation as to series until such shares are once more designated as part of a
particular series by the Corporation's Board of Directors pursuant to the
provisions of Article 4 of the Amended and Restated Articles of Incorporation.
SECTION 11. AMENDMENT
None of the powers, preferences and relative, participating, optional
and other special rights of the Series A Preferred Stock as provided in this
Designation of Rights and Preferences or in the Amended and Restated Articles of
Incorporation shall be amended in any manner that would alter or change the
powers, preferences, rights or privileges of the holders of Series A Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of at least 66-2/3% of the outstanding shares of Series A Preferred Stock,
voting as a separate class.
A-6
<PAGE> 40
EXHIBIT B
TO RIGHTS
AGREEMENT
[FORM OF RIGHT CERTIFICATE]
Certificate No. [R] -
___________ Rights
NOT EXERCISABLE AFTER [Record Date + 10 years], 2006, OR EARLIER IF
REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE
RIGHTS AGREEMENT. RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR
AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND BY ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS ARE NULL AND VOID AND NONTRANSFERABLE.
RIGHT CERTIFICATE
ADVANCED DIGITAL INFORMATION CORPORATION
This certifies that , or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights Agreement
dated as of August 12, 1996 (the "Rights Agreement"), between Advanced Digital
Information Corporation, a Washington corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C., as Rights Agent (the "Rights Agent"),
unless the Rights evidenced hereby shall have been previously redeemed by the
Company, to purchase from the Company at any time after the Distribution Date
(as defined in the Rights Agreement) and prior to 5 p.m., New York City time, on
[Record Date + 10 years], 2006, at the principal office of the Rights Agent, or
its successors as Rights Agent (in Seattle, Washington), one one-hundredth
(1/100th) of a fully paid, nonassessable share of Series A Participating
Cumulative Preferred Stock, no par value, of the Company (the "Preferred
Shares"), at a purchase price per one one-hundredth (1/100th) of a share equal
to $50 (the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed.
B-1
<PAGE> 41
The Purchase Price and the number and kind of shares that may be
purchased upon exercise of each Right evidenced by this Right Certificate, as
set forth above, are the Purchase Price and the number and kind of shares that
may be so purchased as of [Record Date]. As provided in the Rights Agreement,
the Purchase Price and the number and kind of shares that may be purchased upon
the exercise of each Right evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.
If the Rights evidenced by this Right Certificate are at any time
beneficially owned by an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), such
Rights shall be null and void and nontransferable and the holder of any such
Right (including any purported transferee or subsequent holder) shall not have
any right to exercise or transfer any such Right.
This Right Certificate is subject to all the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated in this Right Certificate by reference and made a part
hereof and to which reference to the Rights Agreement is hereby made for a full
description of the rights, limitations of rights, obligations, duties and
immunities under this Right Certificate of the Rights Agent, the Company and the
holders of the Right Certificates. Copies of the Rights Agreement are on file at
the above-mentioned office of the Rights Agent and are also available from the
Company upon written request.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal stock transfer or corporate trust office of the
Rights Agent, may be exchanged for another Right Certificate or Right
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number and kind of shares as the Rights evidenced by
the Right Certificate or Right Certificates surrendered shall have entitled such
holder to purchase. If this Right Certificate shall be exercised in part, the
holder shall be entitled to receive upon surrender hereof another Right
Certificate or Right Certificates for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Right Certificate may be (i) redeemed by the Company at its option at a
redemption price (in cash or shares of Common Stock or other securities of the
Company deemed by the Company's Board of Directors to be at least equivalent in
value) of $.01 per Right (which amount shall be subject to adjustment as
provided in the Rights Agreement) or (ii) exchanged in whole or in part for
shares of Common Stock or other securities of the Company.
The Company may, but shall not be required to, issue fractions of
Preferred Shares or distribute certificates that evidence fractions of Preferred
Shares upon the exercise of any Right or Rights evidenced hereby. In lieu of
issuing fractional shares, the Company may elect to make a cash payment as
provided in the Rights Agreement for fractions of a share other than one
one-hundredth (1/100th) of a share or any integral multiple thereof or to issue
certificates or utilize a depository arrangement as provided in the terms of the
Rights Agreement and the Preferred Shares.
B-2
<PAGE> 42
No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Company that may at any time be
issuable on the exercise of the Right or Rights evidenced by this Right
Certificate, nor shall anything contained in the Rights Agreement or in this
Right Certificate be construed to confer upon the holder hereof, as such, any of
the rights of a shareholder of the Company, including, without limitation, any
right to vote for the election of directors or on any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders except as provided in the Rights Agreement, or to receive dividends
or other distributions or subscription rights, or otherwise, until the Right or
Rights evidenced by this Right Certificate shall have been exercised as provided
in accordance with the provisions of the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal.
Dated as of:
---------------------
ADVANCED DIGITAL INFORMATION
CORPORATION
By:
------------------------------------------
Name:
Its:
Attest:
- ----------------------------------------
Name:
Countersigned:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., as Rights Agent
By:
--------------------------------------
Name:
Its:
B-3
<PAGE> 43
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if such
holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED
----------------------------------------------------
hereby sells, assigns and transfers unto
---------------------------------------
- --------------------------------------------------------------------------------
(Please print name and address of transferee)
- --------------------------------------------------------------------------------
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint ___________________ Attorney, to
transfer the within Right Certificate on the books of the within-named Company,
with full power of substitution.
Dated:
---------------------------
--------------------------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
- -------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------------
Signature
- --------------------------------------------------------------------------------
B-4
<PAGE> 44
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder desires to exercise
Rights represented by the Right Certificate.)
To: ADVANCED DIGITAL INFORMATION CORPORATION
The undersigned hereby irrevocably elects to exercise
___________________ Rights represented by this Right Certificate to purchase the
Preferred Shares issuable upon the exercise of such Rights and requests that
certificates for such Preferred Shares be issued in the name of:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number
________________________________________________________________________________
(Please print name and address)
________________________________________________________________________________
Dated: _______________________
_______________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
B-5
<PAGE> 45
Form of Reverse Side of Right Certificate -- continued
- --------------------------------------------------------------------------------
The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement).
---------------------------------
Signature
- --------------------------------------------------------------------------------
NOTICE
The signature in the Form of Assignment or Form of Election to
Purchase, as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.
In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.
B-6
<PAGE> 1
TAX ALLOCATION AGREEMENT
This TAX ALLOCATION AGREEMENT, dated as of August ___, 1996 (this
Agreement") is being entered into by and between INTERPOINT CORPORATION, a
Washington corporation (together with its successors and assigns,
"Interpoint"), and ADVANCED DIGITAL INFORMATION CORPORATION, a Washington
corporation (together with its successors and assigns, "ADIC"). Interpoint and
ADIC are entering into this Agreement to provide for the allocation between
Interpoint and the Interpoint Subsidiaries, on the one hand, and ADIC and the
ADIC Subsidiaries, on the other hand, of all responsibilities, liabilities, and
benefits relating to (1) Taxes paid or payable by either of them for all
taxable periods or portions thereof ending on or before the Disaffiliation Date
(as hereinafter defined) and (2) Tax returns to be filed by either of them for
such taxable periods.
I. DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to the singular and
the plural forms of the terms defined). Any terms used but not defined herein
shall have the meaning given them in that certain Separation Agreement dated
the date hereof between Interpoint and ADIC.
"ADIC Affiliated Group" means the affiliated group of corporations
(within the meaning of Section 1504(a) of the Code or applicable state or local
statute, rule or regulation, as the case may be) of which ADIC is the common
parent (or would be the common parent if ADIC were not a member of the
Interpoint Affiliated Group).
"ADIC Affiliated Group Annual Federal Income Taxes" means, for any
taxable period, the sum (which may be positive or negative) of the Separate
Annual Federal Income Taxes of each and every ADIC Company.
"ADIC Companies" means, for any taxable period, ADIC and the ADIC
Subsidiaries that are includable in the ADIC Affiliated Group (or, in the case
of Article III hereof, are foreign corporations, including, but not limited to,
ADIC Europe).
"Alternative Minimum Tax" means the Tax imposed by Section 55 of the
Code, or any successor provision thereto.
"Annual State or Local Income Taxes" means, with respect to any
combined, consolidated or unitary state or local Income Tax Return, the sum of
all of the Tax liabilities of the ADIC Companies as reflected on such Tax
Return.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto (or, to the extent relevant for any taxable
period, the Internal Revenue Code in effect for such period).
<PAGE> 2
"Disaffiliation" means ADIC's ceasing to be a member of the Interpoint
Affiliated Group.
"Disaffiliation Date" means the date upon which ADIC ceases to be a
member of the Interpoint Affiliated Group as determined by ADIC in conformity
with Treasury Regulations Section 1.1502-76(b).
"Final Determination" means the final resolution of liability for any
Tax for a taxable period, including without limitation any related interest or
penalties, (i) by IRS Form 870-AD (or any successor form thereto), on the date
of acceptance by or on behalf of the Commissioner of the IRS, or by a
comparable agreement form under the laws of any state, local or foreign
government or the rules or regulations of any state, local or foreign taxing
authority, except that a Form 870-AD or comparable form that reserves the right
of the taxpayer to file a claim for refund and/or the right of the taxing
authority to assert a further deficiency shall not constitute a Final
Determination with respect to the item or items so reserved; (ii) by a
decision, judgment, decree, or other order by a court of competent
jurisdiction, which has become final and unappealable; (iii) by a closing
agreement or offer in compromise under section 7121 or 7122 of the Code, or
comparable agreements under the laws of any state, local or foreign government
or the rules or regulations of any state, local or foreign taxing authority;
(iv) by any allowance of a refund or credit in respect of an overpayment of
Tax, including any related interest or penalties, but only after the expiration
of all periods during which such refund may be recovered (including by way of
offset) by the jurisdiction imposing the Tax (including, without limitation, a
refund or credit allowed as a result of the filing of an amended return) ; or
(v) by any other final disposition by reason of the expiration of the
applicable statute of limitations In addition to the foregoing, any event
(e.g., the filing of an IRS Form 870 or a partial settlement) which is agreed
by the parties in writing to be a Final Determination shall also be treated as
a Final Determination.
"Income Taxes" means Taxes based on or measured by net income,
including franchise or similar Taxes for which a consolidated, unitary or
combined Tax Return is required or permitted.
"IRS" means the Internal Revenue Service.
"Interpoint Affiliated Group" means the affiliated group of
corporations (within the meaning of Section 1504(a) of the Code or applicable
state or local statute, rule or regulation, as the case may be) of which
Interpoint is the common parent.
"Interpoint Companies" means, for any taxable period, Interpoint and
the Interpoint Subsidiaries that are includable in the Interpoint Affiliated
Group (or, in the case of Article III hereof, that are foreign corporations),
excluding all ADIC Companies.
"Interpoint Consolidated Return" has the meaning specified in Section
2.01.
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"Original Tax Provision" means the amount paid by Interpoint or ADIC,
as the case may be thereunder prior to any audit or other adjustment of any Tax
Item by any taxing authority.
"Post-Disaffiliation Correlative Amounts" means all payments made
pursuant to this Agreement that are not in settlement of a tax liability but
are correlative thereto (e.g., interest, penalties, additions to tax or costs
of contesting a proposed adjustment under Section 9 hereof) and which are
neither paid nor accrued on or before the Disaffiliation Date and which are not
obligations existing as of the Disaffiliation Date.
"Quarterly Federal Income Tax Provision" means the currently payable
federal Income Taxes (positive or negative) computed in accordance with the
Code and which is intended to be the quarterly estimate of ADIC Affiliated
Group Annual Federal Income Taxes.
"Quarterly State or Local Income Tax Provision" means the currently
payable state or local income tax expense (positive or negative) computed in
accordance with applicable state statutes and which is intended to be the
quarterly estimate of State and Local Income Taxes.
"Separate Annual Federal Income Taxes" means with respect to any
member of the Interpoint Affiliated Group, the separate federal Income Tax
liability (which may be positive or negative) of such member, calculated as
follows:
(i) taxable income or loss shall be determined in accordance with
Section 1.1552-1(a)(1)(ii) of the Treasury Regulations, except that (A) the
portion of the separate net operating loss of such member, if any, that will
become part of the consolidated net operating loss attributable to such member
under Section 1.1502-79(a)(3) of the Treasury Regulations shall not be taken
into account, (B) the portion of any consolidated net capital loss carryback
attributable to such member shall be taken into account, but only to the extent
absorbed in the taxable year and (C) the last sentence thereof (which does not
permit taxable income to be reduced below zero) shall be disregarded,
(ii) such taxable income or loss shall be multiplied by the highest
marginal rate in effect for the Interpoint Affiliated Group for such period
under Section 11(b) of the Code,
(iii) all Tax Credits Attributable To Such Member, if any, shall be
subtracted from the amount set forth in clause (ii),
(iv) all tax credit recapture, if any, attributable to such member
shall be added to the amount set forth in clause (ii),
(v) all other additions to tax (e.g.. interest on the deferred tax
liability with respect to installment obligations under Section 453A of the
Code or the Environmental Tax imposed on corporations under Section 59A of the
Code), if any, attributable to such member shall be added to the amount set
forth in clause (ii), and
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(vi) any Alternative Minimum Tax liability, as provided under
Section 2.02 (c) hereof, shall be added to the amount set forth in clause (ii).
Notwithstanding anything in the preceding sentence to the contrary,
any reference to, or incorporation of, any Sections of the Treasury Regulations
shall be modified to the extent necessary to comply with the Code. In
addition, except as otherwise directed by Interpoint and to the extent
permitted by law, such methods, conventions, elections and principles of
taxation shall be used as are consistent with the methods, conventions,
elections and principles previously used by the Interpoint Affiliated Group or
such ADIC Company in preparing prior federal income tax returns and for the
taxable period which ends as the result of the Disaffiliation. To the extent
permitted by law, income shall be calculated in accordance with either Section
1.1502-76 (b) (2) (i) (on the basis of income shown on permanent records) of
the Treasury Regulations.
"Separation Agreement" means that certain Separation Agreement dated
the date hereof by and between ADIC and Interpoint.
"Tax Benefit" means any item of loss, deduction, or tax credit or any
similar item which at any time results in an actual reduction in taxable income
or taxes payable on a Tax Return (if a Tax Return is required to reflect such
item).
"Tax Credit Attributable To Such Member" means, for any taxable period
with respect to any tax credit, the sum of:
(A) the product of (1) the amount of such credit allowed (after
taking into account any relevant limitations but without taking into account
any carryovers or carrybacks of such credit) on the Interpoint Consolidated
Return and (2) a fraction the numerator of which is the credit earned (or
foreign tax paid) by such member and the denominator of which is the sum of all
such credits earned (or foreign taxes paid) by all members of the Interpoint
Affiliated Group that earned such credits (or paid foreign taxes) and
(B) the amount of carrybacks or carryovers of such credit of such
member that are absorbed in accordance with Section 1.1502-3(b) (or -4(e)) of
the Treasury Regulations.
"Tax Detriment" means any item of income, gain, recapture of credits
or any similar item which results at any time in an actual increase in taxable
income or taxes payable as reflected on a Tax Return (if a Tax Return is
required to reflect such item).
"Tax Item" means any Tax Benefit or Tax Detriment.
"Tax Return" means any return, filing, questionnaire, report, form or
other document including amended returns or claims for refund filed or required
to be filed for any period with any taxing authority (whether domestic or
foreign) in connection with any Taxes (whether or not a payment is required to
be made with respect to such filing), including any forms required to obtain an
exemption from any Tax.
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"Taxes" means all forms of taxation, whenever created or imposed, and
whether of the United States or elsewhere, and whether imposed by a local,
municipal, governmental, tribal (including without limitation, Indian or other
native American), state, federation or other body, and without limiting the
generality of the foregoing, shall include income, sales, use, ad valorem,
gross receipts, value added, franchise, transfer, recording, withholding,
payroll, employment, excise, occupation, premium or property taxes, together
with any related interest,' penalties and additions to tax, or additional
amounts imposed by any taxing authority (domestic or foreign) upon the ADIC
Companies or the Interpoint Companies.
II. FEDERAL INCOME TAXES
2.01 FILING OF FEDERAL INCOME TAX RETURNS AND FEDERAL INCOME TAX
PAYMENTS
For all tax periods or portions thereof ending on or before the
Disaffiliation Date, Interpoint shall prepare and file all consolidated federal
income Tax Returns ("Interpoint Consolidated Returns") which are required to be
filed for the Interpoint Affiliated Group and will pay all Taxes shown as due
thereon. Such returns shall include all Tax Items of the ADIC Companies.
Subject to review and approval by ADIC (which approval shall not be
unreasonably withheld), Interpoint will make all decisions relating to the
preparation and filing of such returns. Each ADIC Company whose Tax Items are
includable in any such return shall agree to be included in the Interpoint
Consolidated Return on any form as may be prescribed for such consent if such
consent is requested.
2.02 (a) INFORMATION TO BE PROVIDED BY ADIC COMPANIES
So as to enable Interpoint to prepare accurately and completely the
Interpoint Consolidated Returns and in order to provide for accurate financial
reporting, for tax periods or portions thereof ending on or before the
Disaffiliation Date, ADIC shall (i) prepare and submit to Interpoint, no later
than 180 days after the end of such tax period or portion thereof, information
in the form requested by Interpoint necessary to complete a federal income tax
return (complying, including reporting and financial, with all appropriate
rules and regulations, policies and practices) reflecting the Tax Items of the
ADIC Companies, and (ii) provide such other information with respect to taxes
(including, without limitation, forecasts and projections) as Interpoint may
reasonably request. ADIC shall bear all costs and expenses of preparation and
submission of such information, including, without limitation, accountants' and
attorneys' fees.
(b) PAYMENTS
For taxable periods or portions thereof beginning on or after November
1, 1995 and ending on or before the Disaffiliation Date, ADIC shall pay to
Interpoint or Interpoint shall pay to ADIC, as the case may be, an amount equal
to the Quarterly Federal Income Tax Provision on the first working day of the
second month following the end of each quarter. On the last day of the taxable
year, an obligation shall arise requiring ADIC to pay to Interpoint
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or Interpoint to pay to ADIC, as the case may be, an amount equal to the
difference (if any) between the ADIC Affiliated Group Annual Federal Income
Taxes and the sum of the Quarterly Federal Income Tax Provisions for the
taxable year, it being understood that if the ADIC Affiliated Group Annual
Federal Income Taxes is determined to be a negative number (e.g., because
deductions of ADIC for the year exceed its income) then, whether or not the
Interpoint Affiliated Group has any liability for tax on the Interpoint
Consolidated Return., Interpoint shall pay to ADIC an amount equal to that
negative number. Notwithstanding anything to the contrary contained herein, in
the Merger Agreement or the Separation Agreement or in the Code or regulations
or rulings thereunder, any deductions arising from the payment to holders of
options to acquire Interpoint stock pursuant to Section 2.01(d) of the Merger
Agreement shall be allocated to ADIC in determining the ADIC Affiliated Group
Annual Federal Income Taxes whether such holders are employees of ADIC or
Interpoint , and no payment made by Interpoint to ADIC under this Section
2.01(b) shall reduce the Aggregate Share Distribution Amount otherwise
determined under Section 2.01(b) of the Merger Agreement.
(c) ALTERNATIVE MINIMUM TAX
For the purpose of calculating ADIC Affiliated Group Annual Federal
Income Taxes, allocations of the Alternative Minimum Tax will be made in
accordance with proposed Treasury Regulation Section 1.1502-55 unless and
until those Treasury Regulations are issued in final form, in which case any
determinations made under the proposed Treasury Regulations shall be revised to
the extent required by the final Treasury Regulations.
III. STATE AND LOCAL INCOME TAXES
3.01 FILING OF STATE AND LOCAL INCOME TAX RETURNS
For all tax periods or portions thereof ending on or before the
Disaffiliation Date, Interpoint shall prepare and file all combined,
consolidated or unitary state or local income Tax Returns which are required by
law to be filed which include both any Tax Item of any ADIC Company and any Tax
Item of any Interpoint Company. Interpoint shall pay all Taxes shown as due on
such Tax Returns (including those for which any subsidiary may be liable).
Interpoint will advise ADIC in a timely manner of the ADIC Companies which will
be included in combined, consolidated or unitary Tax Returns to be filed by
Interpoint pursuant to this paragraph, and the states or localities in which
such returns will be filed. Subject to review and approval by ADIC (which
approval shall not be unreasonably withheld), Interpoint will make all
decisions relating to the preparation and filing of such returns. Each ADIC
Company whose Tax items are included in any combined, consolidated or unitary
state or local income Tax Return shall agree to be included on such return on
any form as may be prescribed for such consent if such consent is requested.
ADIC shall prepare and file all other state and local income and franchise Tax
Returns required to be filed with respect to the ADIC Companies and shall pay
all taxes reportable on such returns.
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3.02 (a) INFORMATION TO BE PROVIDED BY ADIC COMPANIES
So as to enable Interpoint to accurately and completely prepare all
combined, consolidated or unitary state and local income Tax Returns and in
order to provide for accurate financial reporting, for tax periods or portions
thereof ending on or before the Disaffiliation Date each ADIC Company which
will be included in a combined, consolidated or unitary return to be filed by
Interpoint pursuant to the preceding paragraph shall (i) prepare and submit to
Interpoint, no later than 180 days after the end of such tax period or portion
thereof, information in the form requested by Interpoint necessary to complete
state and local income and franchise tax returns (complying, including
reporting and financial, with all applicable rules and regulations, policies
and practices) for each state or locality in which such combined, consolidated
or unitary returns will be filed and (ii) such other information with respect
to taxes (including, without limitation, forecasts and projections) as
Interpoint may reasonably request. ADIC shall bear all costs and expenses of
preparation and submission of such information, including, without limitation,
accountants' and attorneys' fees.
(b) PAYMENTS
For taxable periods or portions thereof beginning on or after November
1, 1995 and ending on or before the Disaffiliation Date, ADIC shall pay to
Interpoint or Interpoint shall pay to ADIC, as the case may be, an amount equal
to the Quarterly State or Local Income Tax Provision on the first working day
of the second month following the end of each quarter. On the last day of the
taxable year, an obligation shall arise requiring ADIC to pay to Interpoint or
Interpoint to pay to ADIC, as the case may be, an amount equal to the
difference (if any) between the Annual State or Local Income Taxes and the sum
of the Quarterly State or Local Income Tax Provision for the taxable year, it
being understood that if ADIC Annual State or Local Income Taxes is determined
to be a negative number (e.g., because deductions of ADIC for the year exceed
its income) then, whether or not the Interpoint Affiliated Group has any
liability for tax on a combined or consolidated state or local tax return,
Interpoint shall pay to ADIC an amount equal to that negative number.
Notwithstanding anything to the contrary contained herein, in the Merger
Agreement or the Separation Agreement or in the laws, regulations or rulings of
any state or local taxing authority, any deductions arising from the payment to
holders of options to acquire Interpoint stock pursuant to Section 2.01(d) of
the Merger Agreement shall be allocated to ADIC in determining ADIC Annual
State and Local Income Taxes whether such holders are employees of ADIC or
Interpoint , and no payment made by Interpoint to ADIC under this Section
2.01(b) shall reduce the Aggregate Share Distribution Amount otherwise
determined under Section 2.01(b) of the Merger Agreement.
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IV. FOREIGN TAXES AND U.S. TAXES OF FOREIGN CORPORATIONS
4.01 FILING OF FOREIGN INCOME TAX RETURNS AND PAYMENT OF TAXES
ADIC shall prepare and file all foreign Income Tax Returns required to
be filed by any ADIC Company for all Tax periods or portions thereof, and shall
pay all taxes shown as due in connection therewith. Interpoint shall prepare
and file all other foreign Income Tax Returns required to be filed by any other
Interpoint Company and will pay all Taxes due in connection therewith.
4.02 FILING OF U.S. TAX RETURNS AND PAYMENT OF TAXES
ADIC shall prepare and file all U.S. Income Tax Returns (if any)
required to be filed by any ADIC Company that is a foreign corporation and pay
all Taxes due in connection therewith. Interpoint shall prepare and file all
U.S. Tax Returns (if any) for all other Interpoint Companies and pay all Taxes
due in connection therewith. Any obligations for the payment of Taxes for
periods ending on or before the Disaffiliation date shall be treated as an
advance made by Interpoint to ADIC or the payment of an intercompany advance by
ADIC to Interpoint, as the case may be, and shall be satisfied pursuant to
Section 2.03 of the Separation Agreement.
V. SUBSEQUENT ADJUSTMENTS OF TAX LIABILITY
5.01 FEDERAL, STATE, LOCAL AND FOREIGN INCOME TAXES - IN GENERAL
(a) LIABILITY OF ADIC
ADIC shall indemnify and hold harmless the Interpoint Companies from
and against any and all federal, state, local or foreign Income Tax liability
resulting from any Final Determination which adjusts any Tax Item of any ADIC
Company for any Tax period or portion thereof, including, without limitation,
any interest, penalties or additions to tax attributable thereto. ADIC shall
be entitled to the benefit of all refunds (whether actual or constructive) of
federal, state, local and foreign Income Taxes, and all interest attributable
thereto, resulting from any Final Determination which adjusts any Tax Item of
any ADIC Company for any Tax period or portion thereof. As provided in Article
V of the Separation Agreement, Taxes other than Income Taxes may be considered
Liabilities subject to indemnification under the Separation Agreement.
(b) LIABILITY OF INTERPOINT
Interpoint shall indemnify and hold harmless the ADIC Companies from
and against any and all federal, state, local or foreign income Tax liability
resulting from any Final Determination which adjusts any Tax Item of any member
or former member of the Interpoint Affiliated Group (other than an ADIC
Company) for any tax period or portion thereof, including, without limitation,
any interest, penalties or additions to tax attributable thereto. As
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provided herein, Interpoint shall be entitled to the benefit of all refunds
(whether actual or constructive) of federal, state, local or foreign Income
Taxes, and all interest attributable thereto, resulting from any Final
Determination which adjusts any Tax Item of any Interpoint Company for any tax
period or portion thereof.
5.02 DETERMINATION OF INDEMNIFICATION AMOUNTS
If any Final Determination results in an adjustment to any Tax Item of
any ADIC Company or Interpoint Company for any Tax period or portion thereof
ending on or before the Disaffiliation Date, and such adjustment would affect
the liability of ADIC to pay to Interpoint or of Interpoint to pay to ADIC, as
the case may be, any Original Tax Provision, such Original Tax Provision shall
be redetermined to give effect to such adjustment, as if it had been made as
part of or reflected in the Tax Return to which such Original Tax Provision
relates. ADIC shall pay to Interpoint or Interpoint shall pay to ADIC, as the
case may be, (a) any excess of the Original Tax Provision pursuant to such
redetermination over the Original Tax Provision as originally computed, plus
(b) the amount of any interest, penalties, additions to tax or expenses (as
described in Section 5.01) with respect to such amount. Any amount payable by
ADIC or Interpoint pursuant to this Section 5.02 shall be reduced to reflect
any amount paid directly by an ADIC Company or an Interpoint Company, as the
case may be, to any government or taxing authority to satisfy the increased Tax
liability taken into account in computing such payment.
Vl. CARRYBACKS OF ADIC TAX BENEFITS
If a Tax Benefit of an ADIC Company arises in any taxable period
ending after the Disaffiliation Date which either (i) is required under
applicable law to be carried back to any taxable period ending on or before the
Disaffiliation Date or (ii) ADIC properly elects to carryback to such earlier
taxable period, then the Original Tax Provision for the taxable period to which
such Tax Benefit is carried back shall. be adjusted accordingly, and (whether
or not an Original Tax Provision existed for the applicable period) Interpoint
shall pay to ADIC the amount of the reduction in Tax liability resulting from
the carryback of such Tax Benefit (to the extent that ADIC does not receive
such amount directly from the appropriate taxing authority). Such payment
shall be made within thirty (30) days of the receipt by any Interpoint Company
of the tax benefit of any such reduction. For the purposes of this Article VI,
if for any taxable period ending after the Disaffiliation Date, both Interpoint
and ADIC have Tax Benefits that they can properly elect to carryback, then such
Tax Benefits shall be applied first against any income or tax attributable to
Interpoint or ADIC, as the case may be. Interpoint then shall pay ADIC the
amount of the additional reduction in Tax liability remaining after that
application to the extent of ADIC's pro rata share of the amount of the
remaining Tax Benefits that can be carried back. Such pro rata share shall be
the total amount of remaining Tax Benefits that can be carried back multiplied
by a fraction the numerator of which is the amount of the remaining Tax
Benefits of the ADIC Companies and the denominator of which is the sum of the
remaining Tax Benefits of both the ADIC and Interpoint Companies that are
described in the first sentence of this Article VI.
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VII. TAXES ATTRIBUTABLE TO FORMATION AND DISAFFILIATION OF ADIC
7.01 INTERPOINT LIABILITY. Notwithstanding any provision of
this Agreement to the contrary, except as otherwise provided in this Article
VII, Interpoint shall pay, and shall indemnify and hold harmless the ADIC
Companies from and against, and ADIC shall not be required to make any payment
to Interpoint in respect of, any Taxes (including without limitation (i) the
inclusion in income of "excess loss accounts," within the meaning of Section
1.1502-19 of the Treasury Regulations or comparable provisions of state or
local tax laws or (ii) the restoration of deferred gain on deferred
intercompany transactions under Section 1.1502-13 of the Treasury Regulations)
attributable to transactions undertaken in contributing to or capitalizing the
ADIC Companies or in the Disaffiliation, including, without limitation, the
transfer of the stock or the assets of any ADIC Company within the Interpoint
Affiliated Group, or the sale, exchange, distribution or other transfer of the
stock of ADIC by or to any Interpoint Company or to the shareholders of
Interpoint.
7.02 TAX BENEFITS. In the event that, as a result of a Final
Determination attributable to one or more transactions described in Section
7.01, there is an adjustment to a federal, state, local or foreign Tax Item of
an ADIC Company with respect to a tax period or portion thereof ending on or
before the Disaffiliation Date (other than an adjustment with respect to which
ADIC has borne all resulting increases in Tax liability pursuant to Section
7.03) and as a result of such adjustment there is allowable a net increase in
federal, state, local or foreign Tax Benefits or a net decrease in federal,
state, local or foreign Tax Detriments of an ADIC Company in any tax period or
portion thereof ending after the Disaffiliation Date, ADIC shall pay to
Interpoint the amount of any such reduction together with interest received as
a result of such reduction. Such payments shall be made within thirty (30)
days of the receipt by the ADIC Companies of the benefit of any such reduction
or interest which the ADIC Companies would not have received but for such net
increase or net decrease. Interpoint shall notify ADIC of any Final
Determination which may give rise to a payment under this paragraph and will
provide ADIC with such information as may be reasonably necessary for the ADIC
Companies to avail themselves of the benefit of any resulting net increase in
Tax Benefits or net decrease in Tax Detriments. ADIC shall promptly take all
action as may be reasonably necessary to secure the benefit of any reduction in
Income Tax liability, plus interest resulting from such net increase or
decrease (including by filing an amended return or claim for refund) and shall
diligently pursue such benefit. ADIC shall provide Interpoint with notice as
to the date of the closing of the statute of limitations for any taxable year
of any material ADIC Company under any state, local or foreign Income Tax law
under which there may be a material benefit for which Interpoint may be
entitled to a payment under this section at least thirty (30) days prior to
such date. Any benefit or interest which is not received by the ADIC Companies
as a result of the application of the statute of limitations to a taxable year
of an ADIC Company shall be considered to have been received at the time of the
receipt by ADIC of the notification from Interpoint required under this
paragraph if such notification is promptly given by Interpoint after the
occurrence of an adjustment and if it is received-at least ten (10) business
days prior to the last day of which procedures are
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available under the relevant statute of limitation to make claims for refunds
of Income Taxes for the taxable year of the ADIC Company in question.
7.03 ADIC LIABILITY. Notwithstanding Section 7.01 hereof, ADIC
shall be liable for the Taxes described in Article VIII of this Agreement,
even if attributable to transactions undertaken in organizing or capitalizing
the ADIC Companies or the Disaffiliation, if the incurrence of the Tax in
question resulted solely from the failure by ADIC to timely provide information
available to the Interpoint Companies, or file any forms or provide any
certificates, reasonably requested in writing by Interpoint either to be
provided to Interpoint or to be filed by the ADIC Companies.
VIII. TAXES OTHER THAN INCOME TAXES
ADIC shall pay, and shall indemnify and hold harmless the Interpoint
Companies against, all Taxes, other than income taxes, attributable to the ADIC
Companies for all periods prior to the Disaffiliation Date, including any
expenses incurred by any Interpoint Company (including reasonable accountants'
and attorneys' fees) in connection therewith. Interpoint shall pay, and shall
indemnify and hold harmless the ADIC Companies against, all Taxes, other than
income taxes, attributable to the Interpoint Companies for all periods prior to
the Disaffiliation Date, including any expenses incurred by any ADIC Company
(including reasonable accountants' and attorneys' fees) in connection
therewith.
IX. ADMINISTRATIVE PROVISIONS
9.01. CONTESTS
In order to be indemnified under this Agreement a party entitled to be
indemnified under this Agreement for any liability resulting from an adjustment
to Tax Item reportable in any tax period or portion thereof or the imposition
of a Tax shall provide the indemnifying party (at the indemnifying party's
cost) with written notice of any claim or of the commencement of any audit or
proceeding which may result in any such indemnification, together with copies
of all correspondence, notices or other documents relating thereto; shall
provide the indemnifying party with notice of and an opportunity to attend any
meeting with tax authorities regarding such claim, audit or proceeding; and
shall not (unless otherwise required by a proper notice of assessment of levy)
pay, settle, compromise or concede any portion of such claim or issue relating
thereto without the written consent of the indemnifying party and shall, at the
indemnifying party's sole cost (including any reasonable out-of-pocket costs
incurred by the indemnified party) take such action as the indemnifying party
may reasonably request (including the filing of a petition, amended return or
claim for refund) in contesting such claim, provided that the indemnifying
party shall, if so requested, provide an opinion of independent tax counsel or
an independent accounting firm that there exists a reasonable basis for such
contest, and shall assign to the indemnifying party any claim for refund for
any portion of such claim which shall have been paid. If in the course of a
contest a compromise is offered with respect to offsetting or partially
offsetting issues, the parties agree
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to negotiate in good faith in an effort to share the benefits of such
compromise. Any party receiving a refund (or interest attributable thereto) to
which the other party is entitled shall promptly pay such refund and interest
to such other party.
9.02 COOPERATION AND EXCHANGE OF INFORMATION
Interpoint and ADIC will provide each other with such cooperation and
information as either of them may reasonably request of the other in filing any
Tax Return, determining a liability for Taxes or a right to refund of Taxes or
in conducting any audit or other proceeding in respect of Taxes, Such
cooperation and information shall include, without limitation, providing copies
of all relevant Tax Returns, together with accompanying schedules and related
workpapers, the computerized tax data base with respect to any Interpoint
Company or ADIC Company, documents relating to rulings or other determinations
by taxing authorities, and records concerning the ownership and tax basis of
property, which either party may possess. Each party shall make its employees
available on a mutually convenient basis to provide explanations of any
documents or information requested hereunder. Except as otherwise provided in
this agreement, the party requesting assistance hereunder shall reimburse the
other for any reasonable out-of-pocket costs incurred in providing any Tax
Return, document or other written information, upon receipt of reasonable
documentation of such costs. Each party will retain all returns, schedules and
workpapers, and all material records or other documents relating thereto, until
the expiration of the statute of limitations (including extensions) of the
taxable years to which such returns and other documents relate and, unless such
Tax Returns and other documents are offered to the other party, until the final
determination of any payments which may be required in respect of such years
under this agreement. Any information obtained under this Section shall be
kept confidential, except as may be otherwise necessary in connection with the
filing of returns or claims for refund or in conducting any audit or other
proceeding.
9.03. STATEMENT OF POSSIBLE CARRYFORWARDS
Within thirty (30) days before the filing by the Interpoint Affiliated
Group of its consolidated federal income tax return for its taxable year which
includes the Disaffiliation Date and the filing by the Interpoint Affiliated
Group of any state or local consolidated, combined or unitary tax returns
including an ADIC Company for the taxable year which includes the
Disaffiliation Date (and, if requested by ADIC, at any additional time prior to
such dates) , Interpoint will provide ADIC with its estimate of the amount of
carryforwards of losses, credits, or other Tax Items, if any, which may be
available to the ADIC Companies following the Disaffiliation Date, Such
estimate will be for information only, based on Interpoint's best estimate of
the available benefits as of the time such estimate is provided, and no
warranty as to the existence or availability of carryforwards shall be given or
implied. Interpoint will inform ADIC of any adjustments to such carryforward
determined in connection with the filing of the Interpoint Affiliated Group's
Tax Returns, promptly after such filing, or which may result from any audit or
other proceeding, at the time of a Final Determination with respect thereto.
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9.04 MEANING OF RECEIPT OR REDUCTION
Any reference in this Agreement to the receipt by a party of an
amount, or a reduction in a tax liability of a party or interest with respect
thereto, shall (except where the context indicates to the contrary) include any
offset or credit against any other tax liability of such party, and shall be
deemed to have been received or refunded at the time such other tax liability
(or interest thereon) would otherwise have been due.
9.05 CHARACTER AND EFFECT OF PAYMENTS
All amounts paid pursuant to this Agreement by one party to another,
other than Post Disaffiliation Correlative Amounts, shall be treated by such
parties for all Tax purposes as intercompany settlements of liabilities
existing on or before the Disaffiliation Date. If, notwithstanding such
treatment by Interpoint and ADIC, as a result of a Final Determination the
federal, state, local or foreign income tax liability of either Interpoint or
ADIC shall be increased as a result of its receipt of a payment pursuant to
this Agreement, or with respect to any payment of a Post Disaffiliation
Correlative Amount, such payment shall be appropriately adjusted (but only to
the extent that the indemnifying party shall have been given the opportunity to
contest such adjustment in accordance with Section 9.01 hereof) so that the
amount of such payment, as adjusted, reduced by the amount of all Income Taxes
payable with respect to the receipt thereof (but taking into account all
correlative tax benefits resulting from the payment of such Income Taxes) ,
shall equal the amount of the payment which the party receiving such payment
would otherwise be entitled to receive pursuant to this Agreement.
9.06 ENTIRE AGREEMENT; TERMINATION OF PRIOR AGREEMENTS
This agreement constitutes the entire agreement between the parties
concerning the subject matter hereof and supersedes (to the extent not
incorporated herein) all other agreements, whether or not written, in respect
of any Tax between any of the Interpoint Companies, on the one hand, and any of
the ADIC Companies, on the other hand. This Agreement may not be amended
except by an agreement in writing, signed by the parties hereto.
9.07 NOTICES
All notices, requests, demands and other communications to any party
hereunder shall be in writing and shall be duly given if delivered and mailed
(registered or certified mail, postage prepaid, return receipt requested) to
the address set forth below or such other address as either party shall give
written notice to the other:
If to Interpoint:
10301 Willows Road
Redmond, Washington 98073-9705
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Attention: Chief Executive Officer
If to ADIC:
10201 Willows Road
Redmond, Washington 981052
Attention: Chief Operating Officer
9.08 RESOLUTION OF DISPUTES
Any disputes between the parties concerning the calculation of
amounts, allocation or attribution of costs or of any Tax or Tax Item or
similar accounting matters shall be resolved by a nationally recognized public
accounting firm selected by the parties, whose fees and expenses shall be
shared equally by Interpoint and ADIC.
9.09 APPLICATION TO PRESENT AND FUTURE SUBSIDIARIES OR AFFILIATES
This agreement is being entered into by Interpoint (on behalf of
itself and each of the Interpoint Companies), and ADIC (on behalf of itself and
each of the ADIC Companies). This agreement shall constitute a direct
obligation of Interpoint and the ADIC Companies, and shall continue as such
whether or not they remain affiliated, as the case may be, and shall be deemed
to have been readopted and affirmed on behalf of any corporation which becomes
an ADIC Company in the future. ADIC shall, upon the written request of
Interpoint, cause any of its companies formally to execute this agreement.
This agreement shall be binding upon, and shall inure to the benefit of, the
successors, assigns and persons controlling any of the corporations bound
hereby, including but not limited to, Crane and its Affiliates.
9.10 TERM
This agreement shall commence on the date of execution indicated on
page one hereof and shall continue in effect until otherwise agreed to in
writing by Interpoint and ADIC, or their successors.
9.11 COMPREHENSIVE SETTLEMENT
Following the expiration of the statute of limitations for all taxable
years ending on or before the Disaffiliation Date, and for the taxable year
which includes the Disaffiliation Date, of Interpoint and each ADIC Company,
under every federal, state, local or foreign Tax law under which Interpoint or
ADIC may have a material liability for such years, Interpoint and ADIC shall
each, if requested by the other, agree to negotiate in good faith in an effort
to reach an appropriate settlement of all of the then remaining obligations of
either party pursuant to this Agreement.
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<PAGE> 15
9.12 GOVERNING LAW
This agreement shall be governed by the laws of the State of
Washington, without regard to the principles of conflicts of law thereof.
9.13 SEVERABILITY
If any term, provision or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions and restrictions shall remain in full force
and effect and shall in no way be affected, impaired or invalidated. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions and restrictions without
including any of such which may be hereafter declared invalid, void and
unenforceable.
9.14 SOURCE OF INTERPOINT PAYMENTS
Interpoint shall satisfy all of its payment obligations under this
Agreement with its own funds and shall not directly or indirectly obtain or
borrow funds or use as security any funds of Crane Co. to satisfy such payment
obligations.
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<PAGE> 16
IN WITNESS WHEREOF, the parties have executed this agreement as of the
date first above written.
INTERPOINT CORPORATION
By_______________________
ADVANCED DIGITAL INFORMATION
CORPORATION.
By_______________________
Acknowledged and Agreed
CRANE CO.
By:_______________________
16
<PAGE> 1
Exhibit 10.3
ADVANCED DIGITAL INFORMATION CORPORATION
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purpose of the Advanced Digital Information Corporation 1996 Stock
Option Plan (the "Plan") is to enhance the long-term shareholder value of
Advanced Digital Information Corporation, a Washington corporation (the
"Company"), by offering opportunities to employees, directors, officers,
consultants, agents, advisors and independent contractors of the Company and its
Subsidiaries (as defined in Section 2) to participate in the Company's growth
and success, and to encourage them to remain in the service of the Company and
its Subsidiaries and to acquire and maintain stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 AWARD
"Award" means an award or grant made to a Participant pursuant to the
Plan, including awards or grants of Incentive Stock Options and Nonqualified
Stock Options or any combination thereof.
2.2 BOARD
"Board" means the Board of Directors of the Company.
2.3 CAUSE
"Cause" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.4 CODE
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
2.5 COMMON STOCK
"Common Stock" means the common stock, no par value, of the
Company.
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2.6 CORPORATE TRANSACTION
"Corporate Transaction" means any of the following events:
(a) Consummation of any merger or consolidation of the Company
in which the Company is not the continuing or surviving corporation, or
pursuant to which shares of the Common Stock are converted into cash,
securities or other property, if following such merger or consolidation
the holders of the Company's outstanding voting securities immediately
prior to such merger or consolidation own less than 66-2/3% of the
outstanding voting securities of the surviving corporation;
(b) Consummation of any sale, lease, exchange or other
transfer in one transaction or a series of related transactions of all
or substantially all of the Company's assets other than a transfer of
the Company's assets to a majority-owned subsidiary corporation (as the
term "subsidiary corporation" is defined in Section 8.3) of the
Company;
(c) Approval by the holders of the Common Stock of
any plan or proposal for the liquidation or dissolution of the
Company; or
(d) Acquisition by a person, within the meaning of Section 3(a)(9) or
of Section 13(d)(3) (as in effect on the date of adoption of the Plan) of the
Exchange Act of a majority or more of the Company's outstanding voting
securities (whether directly or indirectly, beneficially or of record).Ownership
of voting securities shall take into account and shall include ownership as
determined by applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption
of the Plan) pursuant to the Exchange Act.
2.7 DISABILITY
"Disability" means "disability" as that term is defined for purposes of
Section 22(e)(3) of the Code.
2.8 ELIGIBLE DIRECTOR
"Eligible Director" means a member of the Board who is not also an
employee of the Company or any "parent corporation" or "subsidiary corporation"
(as those terms are defined in Section 8.3) of the Company.
2.9 EXCHANGE ACT
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.10 FAIR MARKET VALUE
"Fair Market Value" shall be as established in good faith by the Plan
Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the closing selling price for the Common Stock as reported by the Nasdaq
National Market for a single trading day or (b) if the Common Stock is listed on
the New York Stock Exchange or the American Stock Exchange, the closing selling
price for the Common Stock as such price is officially quoted in the composite
tape of transactions on such exchange for a single trading day. If there is no
such reported price for the Common Stock for the date in question, then such
price on the last preceding date for which such price exists shall be
determinative of Fair Market Value.
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2.11 GOOD REASON
"Good Reason" means the occurrence of any of the following events or
conditions and the failure of the Successor Corporation to cure such event or
condition within 30 days after receipt of written notice by the Holder:
(a) a change in the Holder's status, title, position or
responsibilities (including reporting responsibilities) that, in the Holder's
reasonable judgment, represents a substantial reduction in the status, title,
position or responsibilities as in effect immediately prior thereto; the
assignment to the Holder of any duties or responsibilities that, in the Holder's
reasonable judgment, are materially inconsistent with such status, title,
position or responsibilities; or any removal of the Holder from or failure to
reappoint or reelect the Holder to any of such positions, except in connection
with the termination of the Holder's employment for Cause, for Disability or as
a result of his or her death, or by the Holder other than for Good Reason;
(b) a reduction in the Holder's annual base salary;
(c) the Successor Corporation's requiring the Holder (without
the Holder's consent) to be based at any place outside a 35-mile radius of his
or her place of employment prior to a Corporate Transaction, except for
reasonably required travel on the Successor Corporation's business that is not
materially greater than such travel requirements prior to the Corporate
Transaction;
(d) the Successor Corporation's failure to (i) continue in
effect any material compensation or benefit plan (or the substantial equivalent
thereof) in which the Holder was participating at the time of a Corporate
Transaction, including, but not limited to, the Plan, or (ii) provide the Holder
with compensation and benefits substantially equivalent (in terms of benefit
levels and/or reward opportunities) to those provided for under each material
employee benefit plan, program and practice as in effect immediately prior to
the Corporate Transaction;
(e) any material breach by the Successor
Corporation of its obligations to the Holder under the Plan or any
substantially equivalent plan of the Successor Corporation; or
(f) any purported termination of the Holder's employment or
service for Cause by the Successor Corporation that does not comply with the
terms of the Plan or any substantially equivalent plan of the Successor
Corporation.
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2.12 GRANT DATE
"Grant Date" means the date the Plan Administrator adopted the granting
resolution or a later date designated in a resolution of the Plan Administrator
as the date an Award is to be granted, or the date an Option is automatically
granted pursuant to Section 9.
2.13 HOLDER
"Holder" means the Participant to whom an Award is granted or, for a
Holder who has died, the personal representative of the Holder's estate, the
person(s) to whom the Holder's rights under the Award have passed by will or by
the applicable laws of descent and distribution or the beneficiary designated
pursuant to Section 10.
2.14 INCENTIVE STOCK OPTION
"Incentive Stock Option" means an Option to purchase Common Stock
granted under Section 7 with the intention that it qualify as an "incentive
stock option" as that term is defined in Section 422 of the Code.
2.15 NONQUALIFIED STOCK OPTION
"Nonqualified Stock Option" means an Option to purchase Common Stock
granted under Section 7 other than an Incentive Stock Option.
2.16 OPTION
"Option" means the right to purchase Common Stock granted under Section
7.
2.17 PARTICIPANT
"Participant" means an individual who is a Holder of an Award or, as
the context may require, any employee, director, officer, consultant, agent,
advisor or independent contractor of the Company or a Subsidiary who has been
designated by the Plan Administrator as eligible to participate in the Plan.
2.18 PLAN ADMINISTRATOR
"Plan Administrator" means the Board or any committee of the Board
designated to administer the Plan under Section 3.1.
2.19 SECURITIES ACT
"Securities Act" means the Securities Act of 1933, as amended.
2.20 SUBSIDIARY
"Subsidiary," except as provided in Section 8.3 in connection with
Incentive Stock Options, means any entity that is directly or indirectly
controlled by the Company or in which the
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Company has a significant ownership interest, as determined by the Plan
Administrator, and any entity that may become a direct or indirect parent of the
Company.
2.21 SUCCESSOR CORPORATION
"Successor Corporation" has the meaning set forth under
Section 12.2.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board. If and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall
consider in selecting the Plan Administrator and the membership of any committee
acting as Plan Administrator of the Plan with respect to any persons subject or
likely to become subject to Section 16 under the Exchange Act the provisions
regarding (a) "outside directors" as contemplated by Section 162(m) of the Code
and (b) "nonemployee directors" as contemplated by Rule 16b-3 under the Exchange
Act. The Board may delegate the responsibility for administering the Plan with
respect to designated classes of eligible Participants to different committees,
subject to such limitations as the Board deems appropriate. Committee members
shall serve for such term as the Board may determine, subject to removal by the
Board at any time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN
ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 12.1, a
maximum of 625,000 shares of Common Stock shall be available for issuance
under the Plan. Shares issued under the Plan shall be drawn from authorized and
unissued shares.
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4.2 LIMITATIONS
Subject to adjustment from time to time as provided in Section 12.1,
not more than 100,000 shares of Common Stock may be made subject to Awards
under the Plan to any individual Participant in the aggregate in any one fiscal
year of the Company, such limitation to be applied in a manner consistent with
the requirements of, and only to the extent required for compliance with, the
exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code.
4.3 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise or payment of
the Award to the extent it is exercised for in shares), shall again be available
for issuance in connection with future grants of Awards under the Plan;
provided, however, that any such shares shall be counted in accordance with the
requirements of Section 162(m) of the Code.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
key employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects; provided, however, that Eligible Directors shall be
eligible to receive Awards only under Section 9. Awards may also be made to
consultants, agents, advisors and independent contractors who provide services
to the Company and its Subsidiaries.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of Awards to be made under the Plan.
Such Awards may consist of Incentive Stock Options and/or Nonqualified Stock
Options. Awards may be granted singly or in combination.
6.2 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other acquired entities ("Acquired
Entities") (or the parent of the Acquired Entity) and the new Award is
substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or of stock, reorganization or liquidation (the
"Acquisition Transaction"). In the event that a written agreement pursuant to
which the Acquisition Transaction is completed is approved by the Board and said
agreement sets forth the terms and conditions of the substitution for or
assumption of outstanding awards of the Acquired Entity, said terms and
conditions shall be deemed to be the action of the Plan Administrator without
any further action by the Plan Administrator, except as may be required for
compliance with Rule 16b-3 under the Exchange Act, and the persons holding such
Awards shall be deemed to be Participants and Holders.
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SECTION 7. AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date.
7.3 TERM OF OPTIONS
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be five years from the Grant
Date.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which or the installments in which the
Option shall become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time. If not so established in the instrument
evidencing the Option, the Option will become exercisable according to the
following schedule, which may be waived or modified by the Plan Administrator at
any time:
<TABLE>
<CAPTION>
Period of Holder's Continuous Employment or
Service With the Company or Its Subsidiaries Percent of Total Option
From the Option Grant Date That Is Exercisable
-------------------------- -------------------
<S> <C>
After 1 year 25%
After 2 years 50%
After 3 years 75%
After 4 years 100%
</TABLE>
To the extent that the right to purchase shares has accrued thereunder,
an Option may be exercised from time to time by written notice to the Company,
in accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised
and accompanied by payment in full as described in Section 7.5. The Plan
Administrator may determine at any time that an Option may not be exercised as
to less than 100 shares at any one time (or the lesser number of remaining
shares covered by the Option).
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7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option shall be paid
in full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or check, or, unless the Plan Administrator at any time
determines otherwise, a combination of cash and/or check and one or both of the
following alternative forms: (a) tendering (either actually or, if and so long
as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange
Act, by attestation) Common Stock already owned by the Holder for at least six
months (or any shorter period necessary to avoid a charge to the Company's
earnings for financial reporting purposes) having a Fair Market Value on the day
prior to the exercise date equal to the aggregate Option exercise price; or (b)
if and so long as the Common Stock is registered under Section 12(b) or 12(g) of
the Exchange Act, delivery of a properly executed exercise notice, together with
irrevocable instructions, to (i) a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option exercise price and any withholding tax obligations that may arise
in connection with the exercise and (ii) the Company to deliver the certificates
for such purchased shares directly to such brokerage firm, all in accordance
with the regulations of the Federal Reserve Board. In addition, the exercise
price for shares purchased under an Option may be paid either singly or in
combination with one or more of the alternative forms of payment authorized by
this Section 7.5, by (y) a promissory note delivered pursuant to Section 10 or
(z) such other consideration as the Plan Administrator may permit.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed by,
or to provide services to, the Company or its Subsidiaries, which provisions may
be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time.
In case of termination of the Holder's employment or services other
than by reason of death or Cause, the Option shall be exercisable, to the extent
of the number of shares purchasable by the Holder at the date of such
termination, only within three months after the date the Holder ceases to be an
employee, director, officer, consultant, agent, advisor or independent
contractor of the Company or a Subsidiary if termination of the Holder's
employment or services is for any reason other than Disability and only within
one year after the date of such termination by reason of Disability, but in no
event later than the remaining term of the Option. Any Option exercisable at the
time of the Holder's death may be exercised, at any time or from time to time
within one year after the date of death, but in no event later than the
remaining term of the Option, to the extent of the number of shares purchasable
by the Holder at the date of the Holder's death, by the personal representative
of the Holder's estate, the person(s) to whom the Holder's rights under the
Award have passed by will or the applicable laws of descent and distribution or
the beneficiary designated pursuant to Section 11. Any portion of an Option that
is not exercisable on the date of termination of the Holder's employment or
services shall terminate on such date, unless the Plan
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Administrator determines otherwise. In case of termination of the Holder's
employment or services for Cause, the Option shall automatically terminate upon
first notification to the Holder of such termination, unless the Plan
Administrator determines otherwise. If a Holder's employment or services with
the Company are suspended pending an investigation of whether the Holder shall
be terminated for Cause, all the Holder's rights under any Option likewise shall
be suspended during the period of investigation.
A transfer of employment or services between or among the Company and
its Subsidiaries shall not be considered a termination of employment or
services. The effect of a Company-approved leave of absence on the terms and
conditions of an option shall be determined by the Plan Administrator, in its
sole discretion.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the Company) exceeds $100,000, such portion in
excess of $100,000 shall be treated as a Nonqualified Stock Option. In the event
the Participant holds two or more such Options that become exercisable for the
first time in the same calendar year, such limitation shall be applied on the
basis of the order in which such Options are granted.
8.2 10% SHAREHOLDERS
If a Participant owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the Option term shall not exceed five
years. The determination of 10% ownership shall be made in accordance with
Section 422 of the Code.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, "parent corporation" and "subsidiary
corporation" shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.
8.4 TERM
The term of an Incentive Stock Option shall not exceed 10 years.
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8.5 EXERCISABILITY
To qualify for Incentive Stock Option tax treatment, an Option
designated as an Incentive Stock Option must be exercised within three months
after termination of employment for reasons other than death, except that, in
the case of termination of employment due to total disability, such Option must
be exercised within one year after such termination. Employment shall not be
deemed to continue beyond the first 90 days of a leave of absence unless the
Participant's reemployment rights are guaranteed by statute or contract. For
purposes of this Section 8.5, "total disability" shall mean a mental or physical
impairment of the Participant which is expected to result in death or which has
lasted or is expected to last for a continuous period of 12 months or more and
which causes the Participant to be unable, in the opinion of the Company and two
independent physicians, to perform his or her duties for the Company and to be
engaged in any substantial gainful activity. Total disability shall be deemed to
have occurred on the first day after the Company and the two independent
physicians have furnished their opinion of total disability to the Plan
Administrator.
8.6 TAXATION OF INCENTIVE STOCK OPTIONS
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after the
Grant Date of the Incentive Stock Option and one year from the date of exercise.
A Participant may be subject to the alternative minimum tax at the time of
exercise of an Incentive Stock Option. The Plan Administrator may require a
Participant to give the Company prompt notice of any disposition of shares
acquired by the exercise of an Incentive Stock Option prior to the expiration of
such holding periods.
8.7 PROMISSORY NOTES
The amount of any promissory note delivered pursuant to Section 10 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.
SECTION 9. AWARDS OF OPTIONS TO NONEMPLOYEE
DIRECTORS
Notwithstanding any other provision of the Plan to the contrary, grants
to Eligible Directors shall be made only pursuant to the terms and conditions
set forth below.
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9.1 ANNUAL GRANTS
Commencing with the Company's 1997 Annual Meeting of Shareholders, each
Eligible Director shall automatically receive a grant of an Option to purchase
500 shares of Common Stock immediately following each year's Annual Meeting of
Shareholders ("Annual Grants"). Annual Grants shall vest and become exercisable
upon the optionee's continued service as a director until the next Annual
Meeting of Shareholders after the Grant Date.
9.2 INITIAL GRANTS
Each Eligible Director shall automatically receive a grant of an Option
to purchase 5,500 shares of Common Stock immediately following his or her
initial election or appointment to the Board ("Initial Grants"). Initial Grants
shall vest and become exercisable as follows: Options for 1,375 shares shall
become exercisable on and after one year after the Grant Date, and Options for
an additional 1,375 shares shall become exercisable on and after each of the
three succeeding anniversaries of the Grant Date.
9.3 NONQUALIFIED STOCK OPTIONS; TERM OF OPTIONS
Options granted to an Eligible Director under the Plan shall constitute
Nonqualified Stock Options. The term of each Option granted under this Section 9
shall be five years from the Grant Date.
9.4 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option granted under
this Section 9 shall be the Fair Market Value of the Common Stock on the Grant
Date.
9.5 POST-TERMINATION EXERCISES
In case of termination of the Holder's services other than by reason of
death or Cause, the Option shall be exercisable, to the extent of the number of
shares purchasable by the Holder at the date of such termination, only within
three months after the date the Holder ceases to be a director of the Company if
such termination is for reasons other than Disability and only within one year
if such termination is by reason of Disability, but in no event later than the
remaining term of the Option. Any Option exercisable at the time of the Holder's
death may be exercised, to the extent of the number of shares purchasable by the
Holder at the date of the Holder's death, by the personal representative of the
Holder's estate entitled thereto at any time or from time to time within one
year after the date of death, but in no event later than the remaining term of
the Option. In case of termination of the Holder's services for Cause, the
Option shall automatically terminate upon first notification to the Holder of
such termination. If a Holder's services with the Company are suspended pending
an investigation of whether the Holder shall be terminated for Cause, all the
Holder's rights under any Option likewise shall be suspended during the period
of investigation.
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9.6 CORPORATE TRANSACTION
In the event of a Corporate Transaction, each Award that is at the time
outstanding shall automatically accelerate so that each such Award shall,
immediately prior to the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur if, in the
opinion of the Company's accountants, it would render unavailable "pooling of
interests" accounting for a Corporate Transaction that would otherwise qualify
for such accounting treatment. All such Awards not exercised prior to that time
shall terminate and cease to remain outstanding immediately following the
consummation of the Corporate Transaction.
9.7 AVAILABILITY OF SHARES
The Options provided for in this Section 9 are subject to the
availability of shares under the Plan. If at the date of any grant under this
Section 9 there are insufficient shares of Common Stock available to satisfy the
grants in whole, then the shares available shall be divided by the number of
Eligible Directors then entitled to a grant and each such Eligible Director
shall be granted an Option for that number of shares.
9.8 OTHER TERMS APPLICABLE
Except as otherwise provided in this Section 9, Options granted to
Eligible Directors shall be subject to the terms and conditions of the Plan
applicable to other Participants.
SECTION 10. LOANS, INSTALLMENT PAYMENTS AND
LOAN GUARANTEES
To assist a Holder (including a Holder who is an officer or director of
the Company) in acquiring shares of Common Stock pursuant to an Award granted
under the Plan, the Plan Administrator, in its sole discretion, may authorize,
either at the Grant Date or at any time before the acquisition of Common Stock
pursuant to the Award, (a) the extension of a loan to the Holder by the Company,
(b) the payment by the Holder of the purchase price, if any, of the Common Stock
in installments, or (c) the guarantee by the Company of a loan obtained by the
Holder from a third party. The terms of any loans, installment payments or loan
guarantees, including the interest rate and terms of repayment, will be subject
to the Plan Administrator's discretion. Loans, installment payments and loan
guarantees may be granted with or without security. The maximum credit available
is the purchase price, if any, of the Common Stock acquired, plus the maximum
federal and state income and employment tax liability that may be incurred in
connection with the acquisition.
SECTION 11. ASSIGNABILITY
No Award granted under the Plan may be pledged, assigned or transferred
by the Holder other than by will or by the laws of descent and distribution, and
during the Holder's lifetime, such Awards may be exercised only by the Holder.
Notwithstanding the foregoing, and to the extent permitted by Section 422 of the
Code, the Plan Administrator, in its sole discretion, may permit such
assignment, transfer and exercisability and may permit a Holder of such Awards
to designate
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a beneficiary who may exercise the Award or receive compensation under the Award
after the Holder's death; provided, however, that any Award so assigned or
transferred shall be subject to all the same terms and conditions contained in
the instrument evidencing the Award.
SECTION 12. ADJUSTMENTS
12.1 ADJUSTMENT OF SHARES
In the event that, at any time or from time to time, a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (a) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (b) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (i) the maximum number and
class of securities subject to the Plan as set forth in Section 4.1, (ii) the
number and class of securities that may be made subject to Awards to any
individual Participant as set forth in Sections 4.2, 9.1, 9.2 and 9.3 and (iii)
the number and class of securities subject to any outstanding Award and the per
share price of such securities, without any change in the aggregate price to be
paid therefor. The determination by the Plan Administrator as to the terms of
any of the foregoing adjustments shall be conclusive and binding.
12.2 CORPORATE TRANSACTION
Except as otherwise provided in the instrument that evidences the
Award, in the event of a Corporate Transaction, each Award that is at the time
outstanding shall automatically accelerate so that each such Award shall,
immediately prior to the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur if, in the
opinion of the Company's accountants, it would render unavailable "pooling of
interests" accounting for a Corporate Transaction that would otherwise qualify
for such accounting treatment. Except for Options granted pursuant to Section 9,
such Award shall not so accelerate, if and to the extent (a) such Award is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation or parent thereof (the "Successor Corporation") or to be replaced
with a comparable award for the purchase of shares of the capital stock of the
Successor Corporation or, (b) such Award is to be replaced with a cash incentive
program of the Successor Corporation that preserves the spread existing at the
time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such Award. The
determination of Award comparability under clause (a) above shall be made by the
Plan Administrator, and its determination shall be conclusive and binding. All
such Awards shall terminate and cease to remain outstanding immediately
following the consummation of the Corporate Transaction, except to the extent
such Awards (other than Options granted pursuant to Section 9) are assumed by
the Successor Corporation. Any such Awards that are assumed or replaced in the
Corporate Transaction and do not otherwise accelerate at that time shall be
accelerated in the event the Holder's employment or services should subsequently
terminate within two years following such Corporate Transaction, unless such
employment or services are
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<PAGE> 14
terminated by the Successor Corporation for Cause or by the Holder voluntarily
without Good Reason. Notwithstanding the foregoing, no Incentive Stock Option
shall become exercisable pursuant to this Section 12.2 without the Holder's
consent, if the result would be to cause such Option not to be treated as an
Incentive Stock Option (whether by reason of the annual dollar limitation
described in Section 8.1 or otherwise).
12.3 FURTHER ADJUSTMENT OF AWARDS
Subject to the preceding Section 12.2, the Plan Administrator shall
have the discretion, exercisable at any time before a sale, merger,
consolidation, reorganization, liquidation or change in control of the Company,
as defined by the Plan Administrator, to take such further action as it
determines to be necessary or advisable, and fair and equitable to Participants,
with respect to Awards (other than Options granted pursuant to Section 9). Such
authorized action may include (but shall not be limited to) establishing,
amending or waiving the type, terms, conditions or duration of, or restrictions
on, Awards so as to provide for earlier, later, extended or additional time for
exercise, alternate forms and amounts of payments and other modifications, and
the Plan Administrator may take such actions with respect to all Participants,
to certain categories of Participants or only to individual Participants. The
Plan Administrator may take such actions before or after granting Awards to
which the action relates and before or after any public announcement with
respect to such sale, merger, consolidation, reorganization, liquidation or
change in control that is the reason for such action.
12.4 LIMITATIONS
The grant of Awards will in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
SECTION 13. WITHHOLDING
The Company may require the Holder to pay to the Company the amount of
any withholding taxes that the Company is required to withhold with respect to
the grant or exercise of any Award. In such instances, subject to the Plan and
applicable law and unless the Plan Administrator determines otherwise, the
Holder may satisfy withholding obligations, in whole or in part, by paying cash,
by electing to have the Company withhold shares of Common Stock or by
transferring shares of Common Stock to the Company, in such amounts as are
equivalent to the Fair Market Value of the withholding obligation. The Company
shall have the right to withhold from any shares of Common Stock issuable
pursuant to an Award or from any cash amounts otherwise due or to become due
from the Company to the Participant an amount equal to such taxes. The Company
may also deduct from any Award any other amounts due from the Participant to the
Company or a Subsidiary.
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SECTION 14. AMENDMENT AND TERMINATION OF
PLAN
14.1 AMENDMENT OF PLAN
The Plan may be amended by the shareholders of the Company. The Board
may also amend the Plan in such respects as it shall deem advisable; however, to
the extent required for compliance with Section 422 of the Code or any
applicable law or regulation, shareholder approval will be required for any
amendment that will (a) increase the aggregate number of shares as to which
Awards may be granted, (b) modify the class of employees eligible to receive
Awards, or (c) otherwise require shareholder approval under any applicable law
or regulation.
14.2 TERMINATION OF PLAN
The Company's shareholders or the Board may suspend or terminate the
Plan at any time. The Plan will have no fixed expiration date; provided,
however, that no Incentive Stock Options may be granted more than 10 years after
the earlier of the Plan's adoption by the Board or approval by the shareholders.
14.3 CONSENT OF HOLDER
The amendment or termination of the Plan shall not, without the consent
of the Holder of any Award under the Plan, impair or diminish any rights or
obligations under any Award theretofore granted under the Plan.
Any change or adjustment to an outstanding Incentive Stock Option shall
not, without the consent of the Holder, be made in a manner so as to constitute
a "modification" that would cause such Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option.
SECTION 15. GENERAL
15.1 AWARD AGREEMENTS
Awards granted under the Plan shall be evidenced by a written agreement
which shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and which are not inconsistent with the
Plan.
15.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS
None of the Plan, participation in the Plan as a Participant or any
action of the Plan Administrator taken under the Plan shall be construed as
giving any Participant or employee of the Company any right to be retained in
the employ of the Company or limit the Company's right to terminate the
employment or services of the Participant.
15.3 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register
for offering or resale or to qualify for exemption under the Securities Act, or
to register or qualify under state
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securities laws, any shares of Common Stock, security or interest in a security
paid or issued under, or created by, the Plan, or to continue in effect any such
registrations or qualifications if made. The Company may issue certificates for
shares with such legends and subject to such restrictions on transfer and
stop-transfer instructions as counsel for the Company deems necessary or
desirable for compliance by the Company with federal and state securities laws.
Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company's counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.
15.4 NO RIGHTS AS A SHAREHOLDER
No Award shall entitle the Holder to any dividend, voting or other
right of a shareholder unless and until the date of issuance under the Plan of
the shares that are the subject of such Award, free of all applicable
restrictions.
15.5 COMPLIANCE WITH LAWS AND REGULATIONS
Notwithstanding anything in the Plan to the contrary, the Board, in its
sole discretion, may bifurcate the Plan so as to restrict, limit or condition
the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
15.6 NO TRUST OR FUND
The Plan is intended to constitute an "unfunded" plan. Nothing
contained herein shall require the Company to segregate any monies or other
property, or shares of Common Stock, or to create any trusts, or to make any
special deposits for any immediate or deferred amounts payable to any
Participant, and no Participant shall have any rights that are greater than
those of a general unsecured creditor of the Company.
15.7 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
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SECTION 16. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption.
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EXHIBIT 10.4
ADVANCED DIGITAL INFORMATION CORPORATION
1996 TRANSITION PLAN
<PAGE> 2
SECTION 1. PURPOSE
The purpose of the Advanced Digital Information Corporation 1996
Transition Plan (the "Plan") is to provide for (i) the grant of ADIC Adjusted
Options as a result of the adjustment of the Interpoint Options in connection
with the Distribution, (ii) the grant of options after the Distribution to
holders of options issued under the Plan in connection with the adjustment of
outstanding options pursuant to Section 7, and (iii) the administration of the
ADIC Adjusted Options (and any other options granted in respect thereof in
accordance with the Plan).
SECTION 2. DEFINITIONS
"ADIC" or "Corporation" means Advanced Digital Information Corporation,
a Washington corporation.
"ADIC Adjusted Option" has the meaning set forth under the definition
of "Interpoint Option."
"Board" means the Corporation's Board of Directors.
"Common Stock" means the common stock, no par value, of ADIC.
"Distribution" means the distribution of all the outstanding shares of
Common Stock to the shareholders of Interpoint.
"Interpoint" means Interpoint Corporation, a Washington corporation.
"Interpoint Adjusted Option" has the meaning set forth under the
definition of "Interpoint Option."
"Interpoint Common Stock" means the common stock, no par value, of
Interpoint.
"Interpoint Option" means an option to purchase Interpoint Common
Stock, which was granted under the Interpoint Corporation 1995 Stock Option and
Award Plan, as set forth on Exhibit A (the "1995 Plan"), the Amended 1985
Incentive Stock Option Plan, as set forth on Exhibit B (the "1985 Plan"), the
Interpoint Corporation Amended Non-Qualified Stock Option Plan, as set forth on
Exhibit C (the "Non-Qualified Plan"), or the Interpoint Corporation Amended 1981
Incentive Stock Option Plan, as set forth on Exhibit D (the "1981 Plan"), which
Interpoint Option, in connection with the Distribution, has been surrendered in
exchange for and converted into two separately exercisable options, one to
purchase Common Stock (an "ADIC Adjusted Option") and one to purchase Interpoint
Common Stock (an "Interpoint Adjusted Option").
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"Interpoint Plan" means any of the 1995 Plan, the 1985 Plan, the
Non-Qualified Plan and the 1981 Plan, each of which is incorporated into the
Plan by reference, and all of which are referred to together as the "Interpoint
Plans."
"Plan Administrator" has the meaning set forth in Section 3.1.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board, or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board. As long as the Common Stock is registered
under Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Board shall consider, in selecting the Plan
Administrator and the membership of any committee acting as Plan Administrator
of the Plan with respect to any persons subject or likely to become subject to
Section 16 under the Exchange Act, the provisions regarding (a) "outside
directors" as contemplated by Section 162(m) of the Internal Revenue Code of
1986, as amended, and (b) "nonemployee directors" as contemplated by Rule 16b-3
under the Exchange Act. The Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible
participants to different committees, subject to such limitations as the Board
deems appropriate. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN
ADMINISTRATOR
Subject to the express provisions of the Plan, the Plan Administrator
shall have exclusive authority, in its discretion, to determine all matters
relating to grants of options under the Plan, including the selection of
individuals to be granted options; the number of shares of Common Stock subject
to an option; all terms, conditions, restrictions and limitations, if any, of an
option; and the terms of any instrument that evidences the option. The Plan
Administrator shall also have exclusive authority to interpret the Plan and may
from time to time adopt, and change, rules and regulations of general
application for the Plan's administration. The Plan Administrator's
interpretation of the Plan and its rules and regulations, and all actions taken
and determinations made by the Plan Administrator pursuant to the Plan, shall be
conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Corporation's
officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE ADJUSTMENT PLAN
There are reserved for issuance upon the exercise of options under the
Plan that number of shares of Common Stock equal to the number of shares of
Interpoint Common Stock issuable upon exercise of the Interpoint Options. Such
shares shall be drawn from authorized and unissued shares.
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SECTION 5. ELIGIBILITY
Prior to the Distribution, the Plan Administrator may only grant ADIC
Adjusted Options in connection with the Distribution. After the Distribution,
the Plan Administrator may grant options to holders of options issued under the
Plan, but only in connection with the adjustment of options issued under the
Plan pursuant to Section 7. Any person eligible under the Plan may receive one
or more grants of options, as the Plan Administrator shall from time to time
determine, and such determinations may vary as to different employees and may
vary as to different grants.
SECTION 6. GRANTS OF OPTIONS
The Plan Administrator is authorized under the Plan, in its discretion,
to grant options in accordance with the terms and conditions of the Interpoint
Plan under which the Interpoint Option corresponding to the ADIC Adjusted Option
(or option granted in respect thereof) was granted; provided, however, that the
exercise price per share of each ADIC Adjusted Option will be the difference
between the exercise price of the Interpoint Option corresponding to the ADIC
Adjusted Option and the exercise price of the related Interpoint Adjusted
Option.
SECTION 7. ADJUSTMENTS
In the event of any changes in the outstanding stock of the Corporation
by reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations or exchanges of shares, split-ups, split-offs,
spin-offs, liquidations or other similar changes in capitalization, or any
distribution to shareholders other than cash dividends, the Plan Administrator
shall make such adjustments, if any, in light of the change or distribution as
permitted or required for a particular ADIC Adjusted Option (or any other option
granted in respect thereof in accordance with the Plan) by the Interpoint Plan
under which the corresponding Interpoint Option was granted.
SECTION 8. AMENDMENT AND TERMINATION OF PLAN
The Plan shall have no fixed expiration date; provided, however, that
no grants of options in respect of an ADIC Adjusted Option shall be made unless
such grant would have been permissible pursuant to the Interpoint Plan under
which the Interpoint Option corresponding to such ADIC Adjusted Option was made.
The Plan may be terminated, modified or amended by the Board in such respects as
it shall deem advisable; provided, however, that shareholder approval will be
required for any amendment that would require shareholder approval under any
applicable law or regulation. The amendment or termination of the Plan shall
not, without the consent of the recipient of any option under the Plan, impair
or diminish any rights or obligations under any option theretofore granted under
the Plan.
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SECTION 9. EFFECTIVE DATE
The Adjustment Plan shall become effective immediately prior to the
Distribution on October __, 1996. The Plan Administrator may in its discretion
authorize the granting of options, the issuance or exercise of which shall be
expressly subject to the condition that a registration statement under the
Securities Act of 1933, as amended, with respect to such shares shall have
become effective.
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EXHIBIT A
INTERPOINT CORPORATION
1995 STOCK OPTION AND AWARD PLAN
AS AMENDED AND RESTATED ON DECEMBER 6, 1995
SECTION 1. PURPOSE
The purpose of the Interpoint Corporation 1995 Stock Option and Award
Plan, as amended and restated (the "Plan"), is to enhance the long-term
profitability and shareholder value of Interpoint Corporation, a Washington
corporation (the "Company"), by offering incentives and rewards to those
employees, directors, officers, consultants, agents, advisors and independent
contractors of the Company and its Subsidiaries (as defined in Section 2 below)
who are key to the Company's growth and success, and to encourage them to remain
in the service of the Company and its Subsidiaries and to acquire and maintain
stock ownership in the Company.
SECTION 2. DEFINITIONS
For purposes of the Plan, the following terms shall be defined as set
forth below:
2.1 AWARD
"Award" means an award or grant made to a Participant
pursuant to the Plan.
2.2 BOARD
"Board" means the Board of Directors of the Company.
2.3 CAUSE
"Cause" means dishonesty, fraud, misconduct, unauthorized use or
disclosure of confidential information or trade secrets, or conviction or
confession of a crime punishable by law (except minor violations), in each case
as determined by the Plan Administrator, and its determination shall be
conclusive and binding.
2.4 CODE
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
<PAGE> 7
2.5 COMMON STOCK
"Common Stock" means the common stock, no par value, of the
Company.
2.6 CORPORATE TRANSACTION
"Corporate Transaction" means any of the following events:
(a) Approval by the holders of the Common Stock of any merger or
consolidation of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Common Stock are
converted into cash, securities or other property, other than a merger of the
Company in which the holders of the Common Stock immediately prior to the merger
have substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger;
(b) Approval by the holders of the Common Stock of any sale,
lease, exchange or other transfer in one transaction or a series of related
transactions of all or substantially all of the Company's assets other than a
transfer of the Company's assets to a majority-owned subsidiary corporation (as
the term "subsidiary corporation" is defined in Section 8.3 of the Plan) of the
Company; or
(c) Approval by the holders of the Common Stock of any plan or
proposal for the liquidation or dissolution of the Company.
2.7 DISABILITY
"Disability" means "disability" as that term is defined for purposes of
Section 22(e)(3) of the Code.
2.8 ELIGIBLE DIRECTOR
"Eligible Director" means a member of the Board who is not also an
employee of the Company or any "parent corporation" or "subsidiary corporation"
(as those terms are defined in Section 8.3 of the Plan) of the Company.
2.9 EXCHANGE ACT
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.10 FAIR MARKET VALUE
"Fair Market Value" shall be as established in good faith by the Plan
Administrator or (i) if the Common Stock is listed on the Nasdaq National
Market, the closing price for the Common Stock as reported by the Nasdaq
National Market for a single trading day or (ii) if the Common Stock is listed
on the New York Stock Exchange, the mean of the high and low per share trading
prices for the Common Stock as reported in The Wall Street Journal for the
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New York Stock Exchange--Composite Transactions (or similar successor
consolidated transactions reports) for a single trading day.
2.11 GOOD REASON
"Good Reason" means the occurrence of any of the following
events or conditions:
(a) a change in the Holder's status, title, position or
responsibilities (including reporting responsibilities) that, in the Holder's
reasonable judgment, represents a substantial reduction of the status, title,
position or responsibilities as in effect immediately prior thereto; the
assignment to the Holder of any duties or responsibilities that, in the Holder's
reasonable judgment, are inconsistent with such status, title, position or
responsibilities; or any removal of the Holder from or failure to reappoint or
reelect the Holder to any of such positions, except in connection with the
termination of the Holder's employment for Cause, for Disability or as a result
of his or her death, or by the Holder other than for Good Reason;
(b) a reduction in the Holder's annual base salary;
(c) the Company's requiring the Holder (without the Holder's
consent) to be based at any place outside a 35-mile radius of his or her place
of employment prior to a Corporate Transaction, except for reasonably required
travel on the Company's business that is not materially greater than such travel
requirements prior to the Corporate Transaction;
(d) the Company's failure to (i) continue in effect any material
compensation or benefit plan (or the substantial equivalent thereof) in which
the Holder was participating at the time of a Corporate Transaction, including,
but not limited to, the Plan, or (ii) provide the Holder with compensation and
benefits at least equal (in terms of benefit levels and/or reward opportunities)
to those provided for under each employee benefit plan, program and practice as
in effect immediately prior to the Corporate Transaction (or as in effect
following the Corporate Transaction, if greater);
(e) any material breach by the Company of any provision of the
Plan; or
(f) any purported termination of the Holder's employment or
service for Cause by the Company that does not comply with the terms of the
Plan.
2.12 GRANT DATE
"Grant Date" means (i) the date designated in a resolution of the Plan
Administrator as the date an Award is granted, (ii) if the Plan Administrator
does not designate the Grant Date in the resolution, the date the Plan
Administrator adopted the resolution, or (iii) the date an option is
automatically granted pursuant to Section 9 of the Plan.
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2.13 HOLDER
"Holder" means the Participant to whom an Award is granted, or the
personal representative of a Holder who has died.
2.14 INCENTIVE STOCK OPTION
"Incentive Stock Option" means an option to purchase Common Stock
granted under Section 7 of the Plan with the intention that it qualify as an
"incentive stock option" as that term is defined in Section 422 of the Code.
2.15 NONQUALIFIED STOCK OPTION
"Nonqualified Stock Option" means an option to purchase Common Stock
granted under Section 7 of the Plan other than an Incentive Stock Option.
2.16 OPTION
"Option" means the right to purchase Common Stock granted under
Sections 7 or 9 of the Plan.
2.17 PARTICIPANT
"Participant" means an individual who is a Holder of an
Award.
2.18 PLAN ADMINISTRATOR
"Plan Administrator" means the Board or any committee of the Board
designated to administer the Plan under Section 3.1 of the Plan.
2.19 SUBSIDIARY
"Subsidiary," except as expressly provided otherwise, means any entity
that is directly or indirectly controlled by the Company or in which the Company
has a significant ownership interest, as determined by the Plan Administrator,
and any entity that may become a direct or indirect parent of the Company.
SECTION 3. ADMINISTRATION
3.1 PLAN ADMINISTRATOR
The Plan shall be administered by the Board or a committee or
committees (which term includes subcommittees) appointed by, and consisting of
two or more members of, the Board; provided. however, that so long as the
Company is subject to Rule 16b-3 promulgated under Section 16(b) of the Exchange
Act as in effect prior to May 1, 1991, such committee shall consist of at least
three members of the Board. The Board may delegate the responsibility for
administering the Plan with respect to designated classes of eligible
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<PAGE> 10
Participants to different committees or, with respect to grants made to newly
hired individuals other than persons subject to Section 16(b) of the Exchange
Act, to one or more officers of the Company, subject to such limitations as the
Board deems appropriate. Committee members shall serve for such term as the
Board may determine, subject to removal by the Board at any time.
Notwithstanding the foregoing, the administration of the Plan with respect to
officers and directors of the Company who are subject to Section 16 of the
Exchange Act with respect to securities of the Company shall comply with the
requirements of Rule 16b-3 under the Exchange Act as then applicable to the
Company's employee benefit plans.
3.2 ADMINISTRATION AND INTERPRETATION BY THE PLAN ADMINISTRATOR
Except for the terms and conditions explicitly set forth in the Plan,
the Plan Administrator shall have exclusive authority, in its discretion, to
determine all matters relating to Awards under the Plan, including the selection
of individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if ANY, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan's administration. The Plan
Administrator's interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company's officers as it so determines.
SECTION 4. STOCK SUBJECT TO THE PLAN
4.1 AUTHORIZED NUMBER OF SHARES
Subject to adjustment from time to time as provided in Section 12.1 of
the Plan, a maximum of 100,000 shares of Common Stock shall be available for
issuance under the Plan. Shares issued under the Plan shall be drawn from
authorized and unissued shares.
4.2 LIMITATIONS
Subject to adjustment from time to time as provided in Section 12.1 of
the Plan, not more than 50,000 shares of Common Stock may be made subject to
Awards under the Plan to any individual Participant in the aggregate in any one
fiscal year of the Company, such limitation to be applied in a manner consistent
with the requirements of, and only to the extent required for compliance with,
the exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code.
4.3 REUSE OF SHARES
Any shares of Common Stock that have been made subject to an Award that
cease to be subject to the Award (other than by reason of exercise), including,
without limitation, in
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connection with the cancellation of an Award and the grant of a replacement
Award, shall again be available for issuance in connection with future grants of
Awards under the Plan.
SECTION 5. ELIGIBILITY
Awards may be granted under the Plan to those officers, directors and
key employees of the Company and its Subsidiaries as the Plan Administrator from
time to time selects; provided, however, that Eligible Directors shall be
eligible to receive Awards only under Section 9 of the Plan. Awards may also be
made to consultants, agents, advisors and independent contractors who provide
services to the Company and its Subsidiaries.
SECTION 6. AWARDS
6.1 FORM AND GRANT OF AWARDS
The Plan Administrator shall have the authority, in its sole
discretion, to determine the type or types of Awards to be made under the Plan.
Such Awards shall consist of Incentive Stock Options and Nonqualified Stock
Options.
6.2 ACQUIRED COMPANY AWARDS
Notwithstanding anything in the Plan to the contrary, the Plan
Administrator may grant Awards under the Plan in substitution for awards issued
under other plans, or assume under the Plan awards issued under other plans, if
the other plans are or were plans of other entities ("Acquired Entities") (or
the parent of the Acquired Entity) and the new Award is substituted, or the old
award is assumed, by reason of a merger, consolidation, acquisition of property
or of stock, reorganization or liquidation (the "Acquisition Transaction"). In
the event that a written agreement pursuant to which the Acquisition Transaction
is completed is approved by the Board and said agreement sets forth the terms
and conditions of the substitution for or assumption of outstanding awards of
the Acquired Entity, said terms and conditions shall be deemed to be the action
of the Plan Administrator without any further action by the Plan Administrator,
except as may be required for compliance with Rule 16b-3 under the Exchange Act,
and the persons holding such Awards shall be deemed to be Participants and
Holders.
SECTION 7. AWARDS OF OPTIONS
7.1 GRANT OF OPTIONS
The Plan Administrator is authorized under the Plan, in its sole
discretion, to issue Options as Incentive Stock Options or as Nonqualified Stock
Options, which shall be appropriately designated.
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<PAGE> 12
7.2 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant Date.
7.3 TERM OF OPTIONS
The term of each Option shall be as established by the Plan
Administrator or, if not so established, shall be five years from the Grant
Date.
7.4 EXERCISE OF OPTIONS
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option the time at which or the installments in which the
Option shall become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time. If not so established in the instrument
evidencing the Option, the Option will become exercisable according to the
following schedule, which may be waived or modified by the Plan Administrator at
any time:
<TABLE>
<CAPTION>
Period of Holder's Continuous Employment Percent of Total Option
or Service with the Company or Its That Is
Subsidiaries From the Option Grant Date Exercisable
<S> <C>
After 1 year 25%
After 2 years 50%
After 3 years 75%
After 4 years 100%
</TABLE>
To the extent that the right to purchase shares has accrued thereunder,
an Option may be exercised from time to time by written notice to the Company,
in accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised
and accompanied by payment in full as described in Section 7.5 of the Plan.
7.5 PAYMENT OF EXERCISE PRICE
The exercise price for shares purchased under an Option SHALL be paid
in full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or check and/or one or more of the following alternative
forms: (i) Common Stock already owned by the Holder for at least six months (or
any shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the day prior to the
exercise date equal to the aggregate Option exercise price or (ii) if the Common
Stock is publicly traded, delivery of a properly executed exercise notice,
together with irrevocable
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<PAGE> 13
instructions, to (a) a brokerage firm designated by the Company to deliver
promptly to the Company the aggregate amount of sale or loan proceeds to pay the
Option exercise price and any withholding tax obligations that may arise in
connection with the exercise and (b) the Company to deliver the certificates for
such purchased shares directly to such brokerage firm, all in accordance with
the regulations of the Federal Reserve Board.
7.6 POST-TERMINATION EXERCISES
The Plan Administrator shall establish and set forth in each instrument
that evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed by,
or to provide services to, the Company or its Subsidiaries, which provisions may
be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time. In case of termination of the
Holder's employment or services other than by reason of death or Cause, the
Option shall be exercisable, to the extent of the number of shares purchasable
by the Holder at the date of such termination, only within three months after
the date of such termination for reasons other than Disability and only within
one year after the date of such termination by reason of Disability, but in no
event later than the remaining term of the Option. Any Option exercisable at the
time of the Holder's death may be exercised, to the extent of the number of
shares purchasable by the Holder at the date of the Holder's death, by the
personal representative of the Holder's estate entitled thereto at any time or
from time to time within one year after the date of death, but in no event later
than the remaining term of the Option. In case of termination of the Holder's
employment or services for Cause, the Option shall automatically terminate upon
first notification to the Holder of such termination, unless the Plan
Administrator determines otherwise. If a Holder's employment or services with
the Company are suspended pending an investigation of whether the Holder shall
be terminated for Cause, all the Holder's rights under any Option likewise shall
be suspended during the period of investigation. A transfer of employment or
services between or among the Company and its Subsidiaries shall not be
considered a termination of employment or services. Unless the Plan
Administrator determines otherwise, a leave of absence approved in accordance
with Company procedures shall not be considered a termination of employment or
services, except that with respect to Incentive Stock Options such leave of
absence shall be subject to any requirements of Section 422 of the Code.
SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS
To the extent required by Section 422 of the Code, Incentive Stock
Options shall be subject to the following additional terms and conditions:
8.1 DOLLAR LIMITATION
To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time during any calendar year (under the Plan and all
other stock option plans of the
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<PAGE> 14
Company) exceeds $100,000, such portion in excess of $100,000 shall be treated
as a Nonqualified Stock Option, unless such annual limitation is modified or
eliminated under Code Section 422. In the event the Participant holds two or
more such Options that become exercisable for the first time in the same
calendar year, such limitation shall be applied on the basis of the order in
which such Options are granted.
8.2 10% SHAREHOLDERS
If a Participant owns 10% or more of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value of
the Common Stock on the Grant Date and the OPTION term shall not exceed five
years.
8.3 ELIGIBLE EMPLOYEES
Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3 of the Plan, "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms for
purposes of Section 422 of the Code.
8.4 TERM
The term of an Incentive Stock Option shall not exceed 10 years.
8.5 EXERCISABILITY
An Option designated as an Incentive Stock Option must be exercised
within three months after termination of employment for reasons other than death
to qualify for Incentive Stock Option tax treatment, except that in the case of
termination of employment due to Disability, such Option must be exercised
within one year after such termination.
8.6 TAXATION OF INCENTIVE STOCK OPTION
In order to obtain certain tax benefits afforded to Incentive Stock
Options under Section 422 of the Code, the Participant must hold the shares
issued upon the exercise of an Incentive Stock Option for two years after the
date of grant of the Incentive Stock Option and one year from the date of
exercise. A Participant may be subject to the alternative minimum tax at the
time of exercise of an Incentive Stock Option. The Committee may require a
Participant to give the Company prompt notice of any disposition of shares
acquired by the exercise of an Incentive Stock Option prior to the expiration of
such holding periods.
SECTION 9. AWARDS OF OPTIONS TO NONEMPLOYEE DIRECTORS
Notwithstanding any other provision of the Plan to the contrary, grants
to Eligible Directors shall be made only pursuant to the terms and conditions
set forth below. All grants
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<PAGE> 15
made under this Section 9 prior to shareholder approval of the Plan shall be
subject to such shareholder approval.
9.1 ORIGINAL GRANTS
Each Eligible Director who is in office on the date the Plan is adopted
by the Board shall automatically receive a grant of an Option to purchase 500
shares of Common Stock immediately following the Board's adoption of the Plan
("Original Grants"). Original Grants shall vest and become exercisable upon the
optionee's continued service as a director until the Company's first Annual
Meeting of Shareholders after the Grant Date.
9.2 ANNUAL GRANTS
Commencing with the Company's 1996 Annual Meeting of Shareholders, each
Eligible Director shall automatically receive a grant of an Option to purchase
500 shares of Common Stock immediately following each year's Annual Meeting of
Shareholders ("Annual Grants"). Annual Grants shall vest and become exercisable
upon the optionee's continued service as a director until the next Annual
Meeting of Shareholders after the Grant Date.
9.3 INITIAL GRANTS
Each Eligible Director shall automatically receive a grant of an Option
to purchase 5,500 shares of Common Stock immediately following his or her
initial election or appointment to the Board ("Initial Grants"). Initial Grants
shall vest and become exercisable as follows: Options for 1,375 shares shall
become exercisable on and after one year after the Grant Date, and Options for
an additional 1,375 shares shall become exercisable on and after each of the
three succeeding anniversaries of the Grant Date.
9.4 NONQUALIFIED STOCK OPTIONS; TERM OF OPTIONS
Options granted to an Eligible Director under the Plan shall constitute
Nonqualified Stock Options. The term of each Option granted under this Section 9
shall be five years from the Grant Date.
9.5 OPTION EXERCISE PRICE
The exercise price for shares purchased under an Option granted under
this Section 9 shall be the Fair Market Value of the Common Stock on the Grant
Date.
9.6 POST-TERMINATION EXERCISES
In case of termination of the Holder's services other than by reason of
death or Cause, the Option shall be exercisable, to the extent of the number of
shares purchasable by the Holder at the date of such termination, only within
three months after the date the Holder ceases to be director of the Company if
such termination is for reasons other than Disability and only within one year
if such termination is by reason of Disability, but in no event later than the
remaining term of the Option. Any Option exercisable at the time of the Holder's
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<PAGE> 16
death may be exercised, to the extent of the number of shares purchasable by the
Holder at the date of the Holder's death, by the personal representative of the
Holder's estate entitled thereto at any time or from time to time within one
year after the date of death, but in no event later than the remaining term of
the Option. In case of termination of the Holder's services for Cause, the
Option shall automatically terminate upon first notification to the Holder of
such termination. If a Holder's services with the Company are suspended pending
an investigation of whether the Holder shall be terminated for Cause, all the
Holder's rights under any Option likewise shall be suspended during the period
of investigation.
9.7 CORPORATE TRANSACTION
In the event of any Corporate Transaction, each Option that is at the
time outstanding shall automatically accelerate so that each such Option shall,
immediately prior to the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur if, in the
opinion of the Company's accountants, it would render unavailable "pooling of
interests" accounting for a Corporate Transaction that would otherwise qualify
for such accounting treatment. All such Options not exercised prior to that time
shall terminate and cease to remain outstanding immediately following the
consummation of the Corporate Transaction.
9.8 AVAILABILITY OF SHARES
The Options provided for in this Section 9 are subject to the
availability of shares under the Plan. If at the date of any grant under this
Section 9 there are insufficient shares of Common Stock available to satisfy the
grants in whole, then the shares available shall be divided by the number of
Eligible Directors then entitled to a grant and each such Eligible Director
shall be granted an Option for that number of shares.
9.9 OTHER TERMS APPLICABLE
Except as otherwise provided in this Section 9, Options granted to
Eligible Directors shall be subject to the terms and conditions of the Plan
applicable to other Participants.
SECTION 10. LOANS, LOAN GUARANTEES AND
INSTALLMENT PAYMENTS
To assist a Holder (including a Holder who is an officer or director of
the Company) in acquiring shares of Common Stock pursuant to an Award granted
under the Plan other than an Option granted pursuant to Section 9 of the Plan,
the Plan Administrator may authorize, either at the Grant Date or at any time
before the acquisition of Common Stock pursuant to the Award, (i) the extension
of a loan to the Holder by the Company, (ii) the payment by the Holder of the
purchase price, if any, of the Common stock in installments, or (iii) the
guarantee by the Company of a loan obtained by the grantee from a third party.
The terms of any loans, installment payments or guarantees, including the
interest rate and terms of repayment, will be subject to the Plan
Administrator's discretion. Loans, installment payments and guarantees may be
granted with or without security. The maximum credit available is the
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<PAGE> 17
purchase price, if any, of the Common Stock acquired plus the maximum federal
and state income and employment tax liability that may be incurred in connection
with the acquisition.
SECTION 11. ASSIGNABILITY
No Option granted under the Plan may be assigned or transferred by the
Holder other than by will or by the laws of descent and distribution, and during
the Holder's lifetime, such Awards may be exercised only by the Holder.
Notwithstanding the foregoing, with respect to Awards other than Options granted
pursuant to Section 9 of the Plan, and to the extent permitted by Rule 16b-3
under the Exchange Act and Section 422 of the Code, the Plan Administrator, in
its sole discretion, may permit such assignment, transfer and exercisability and
may permit a Holder of such Awards to designate a beneficiary who may exercise
the Award after the Holder's death. With respect to Options granted pursuant to
Section 9 of the Plan, and to the extent permitted by Rule 16b-3 under the
Exchange Act as then applicable to the Company's employee benefit plans, such
Options may be transferred or assigned by gift or other transfer to either (i)
any trust or estate in which the original award recipient or such person's
spouse or other immediate family member has a substantial beneficial interest or
(ii) a spouse or other immediate family member, provided that such a transfer
would continue to require such awards to be disclosed pursuant to Item 403 of
Regulation S-K under the Securities Act of 1933, as amended.
SECTION 12. ADJUSTMENTS
12.1 ADJUSTMENT OF SHARES
In the event that at any time or from time to time a stock dividend,
stock split, spin-off, combination or exchange of shares, recapitalization,
merger, consolidation, distribution to shareholders other than a normal cash
dividend, or other change in the Company's corporate or capital structure
results in (i) the outstanding shares, or any securities exchanged therefor or
received in their place, being exchanged for a different number or class of
securities of the Company or of any other corporation or (ii) new, different or
additional securities of the Company or of any other corporation being received
by the holders of shares of Common Stock of the Company, then the Plan
Administrator shall make proportional adjustments in (a) the maximum number and
class of securities subject to the Plan as set forth in Section 4.1 of the Plan,
(b) the number and class of securities that may be made subject to individual
Awards as set forth in Section 9 of the Plan, and (c) the number and class of
securities subject to any outstanding Award made pursuant to Section 9 of the
Plan and the per share price of such securities, without any change in the
aggregate price to be paid therefor, and the Plan Administrator, in its sole
discretion. shall make such equitable adjustments as it shall deem appropriate
in the circumstances in (y) the maximum number and class of securities that may
be made subject to Awards to any individual Participant as set forth in Section
4.2 of the Plan and (z) the number and class of securities that are subject to
any outstanding Award (other than Options granted pursuant to Section 9 of the
Plan) and the per share price of such securities, without any change in the
aggregate price to be paid therefor. The determination by the Plan Administrator
as to the terms of any of the foregoing adjustments shall be conclusive and
binding.
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<PAGE> 18
12.2 CORPORATE TRANSACTION
Except as otherwise provided in the instrument that evidences the
Award, in the event of any Corporate Transaction, each Option that is at the
time outstanding shall automatically accelerate so that each such Award shall,
immediately prior to the specified effective date for the Corporate Transaction,
become 100% vested, except that such acceleration will not occur if in the
opinion of the Company's accountants it would render unavailable "pooling of
interest" accounting for a Corporate Transaction that would otherwise qualify
for such accounting treatment. Except for Options granted pursuant to Section 9
of the Plan, such Award shall not so accelerate if and to the extent: (i) such
Award is, in connection with the Corporate Transaction, either to be assumed by
the successor corporation or parent thereof or to be replaced with a comparable
award for the purchase of shares of the capital stock of the successor
corporation or its parent corporation, (ii) such Award is to be replaced with a
cash incentive program of the successor corporation that preserves the spread
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to such Award, or
(iii) the acceleration of such Award is subject to other limitations imposed by
the instrument evidencing the Award. The determination of Award comparability
under clause (i) above shall be made by the Plan Administrator, and its
determination shall be conclusive and binding. All such Awards shall terminate
and cease to remain outstanding immediately following the consummation of the
Corporate Transaction, except to the extent such Awards (other than Options
granted pursuant to Section 9 of the Plan) are assumed by the successor
corporation or its parent corporation. Any such Awards that are assumed or
replaced in the Corporate Transaction and do not otherwise accelerate at that
time shall be accelerated in the event the Holder's employment or services
should subsequently terminate within two years following such Corporate
Transaction, unless such employment or services are terminated by the Company
for Cause or by the Holder voluntarily without Good Reason. Notwithstanding the
foregoing, no Incentive Stock Option shall become exercisable pursuant to this
Section 12.2 without the Holder's consent, if the result would be to cause such
Option not to be treated as an Incentive Stock Option (whether by reason of the
annual limitation described in Section 8.1 of the Plan or otherwise).
12.3 FURTHER ADJUSTMENT OF AWARDS
Subject to the preceding Section 12.2 of the Plan, the Plan
Administrator shall have the discretion, exercisable at any time before a sale,
merger, consolidation, reorganization, liquidation or change in control of the
Company, as defined by the Plan Administrator, to take such further action as it
determines necessary or advisable, and fair and equitable to Participants, with
respect to Awards (other than Options granted pursuant to Section 9 of the
Plan). Such authorized action may include (but shall not be limited to)
establishing. amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise, alternate forms and amounts of payments and other
modifications, and the Plan Administrator may take such actions with respect to
all Participants, to certain categories of Participants or only to individual
Participants. The Plan Administrator may take such actions before or after
granting Awards to which the action relates and before or after any public
announcement with respect to such
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<PAGE> 19
sale, merger, consolidation, reorganization, liquidation or change in control
that is the reason for such action.
12.4 LIMITATIONS
The grant of Awards will in no way affect the Company's right to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
SECTION 13. WITHHOLDING OF TAXES
The Company may require the Holder to pay to the Company the amount of
any withholding taxes that the Company is required to withhold with respect to
the grant or exercise of any Award.
SECTION 14. AMENDMENT AND TERMINATION OF PLAN
14.1 AMENDMENT OF PLAN
The Plan may be amended by the shareholders of the Company. The Board
may also amend the Plan in such respects as it shall deem advisable; however, to
the extent required for compliance with Rule 16b-3 under the Exchange Act,
Section 422 of the Code or any applicable law or regulation, shareholder
approval will be required for any amendment that will (i) increase the total
number of shares as to which Awards may be granted under the Plan, (ii)
materially modify the class of persons eligible to receive Awards, (iii)
materially increase the benefits accruing to Participants under the Plan, or
(iv) otherwise require shareholder approval under any applicable law or
regulation. Notwithstanding the foregoing, to the extent required for compliance
with Rule 16b-3 under the Exchange Act or any applicable law or regulation, no
amendment with respect to Section 9 of the Plan shall be made more than once
every six months that would change the amount, price, timing or vesting of the
Options, other than to comport to the changes in the Code, or the rules and
regulations promulgated thereunder.
14.2 TERMINATION OF THE PLAN
The Company's shareholders or the Board may suspend or terminate the
Plan at any time. The Plan will have no fixed expiration date; provided,
however, that no Incentive Stock Options may be granted more than 10 years after
the Plan's effective date.
14.3 CONSENT OF HOLDER
The amendment or termination of the Plan shall not, without the consent
of the Holder of any Award under the Plan, alter or impair any rights or
obligations under any Award theretofore granted under the Plan.
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<PAGE> 20
SECTION 15. GENERAL
15.1 NOTIFICATION
The Plan Administrator shall promptly notify a Participant OF an Award,
and a written grant shall promptly be executed and delivered by or on behalf of
the Company.
15.2 CONTINUED EMPLOYMENT OR SERVICES; RIGHTS IN AWARDS
Neither the Plan, participation in the Plan as a Participant nor any
action of the Plan Administrator taken under the Plan shall be construed as
giving any Participant, including any employee, officer or director of the
Company any right to be retained in the employ of the Company or to continue
service as an officer or director of the Company, or limit the Company's right
to terminate the employment or services of the Participant.
15.3 REGISTRATION; CERTIFICATES FOR SHARES
The Company shall be under no obligation to any Participant to register
for offering or resale under the Securities Act of 1933, as amended, or register
or qualify under state securities laws, any shares of Common Stock issued under
the Plan. The Company may issue certificates for shares with such legends and
subject to such restrictions on transfer and stop-transfer instructions as
counsel for the Company deems necessary or desirable for compliance by the
Company with federal and state securities laws.
15.4 NO RIGHTS AS A SHAREHOLDER
No Award shall entitle the Holder to any dividend, voting or other
right of a shareholder unless and until the date of issuance under the Plan of
the shares that are the subject of such Awards, free of all applicable
restrictions.
15.5 COMPLIANCE WITH LAWS AND REGULATIONS
It is the Company's intention that, so long as any of the Company's
equity securities are registered pursuant to Section 12(b) or 12(g) of the
Exchange Act, the Plan shall comply in all respects with Rule 16b-3 under the
Exchange Act and, if any Plan provision is later found not to be in compliance
with such Rule, the provision shall be deemed null and void, and in all events
the Plan shall be construed in favor of its meeting the requirements of Rule
16b-3. Notwithstanding anything in the Plan to the contrary, the Board, in its
sole discretion, may bifurcate the Plan so as to restrict, limit or condition
the use of any provision of the Plan to Participants who are officers or
directors subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Plan with respect to other Participants.
Additionally, in interpreting and applying the provisions of the Plan, any
Option granted as an Incentive Stock Option pursuant to the Plan shall, to the
extent permitted by law, be construed as an "incentive stock option" within the
meaning of Section 422 of the Code.
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<PAGE> 21
15.6 SEVERABILITY
If any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable in any jurisdiction, or as to any person, or would
disqualify the Plan or any Award under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator's determination, materially altering the intent of the
Plan or the Award, such provision shall be stricken as to such jurisdiction,
person or Award, and the remainder of the Plan and any such Award shall remain
in full force and effect.
SECTION 16. EFFECTIVE DATE
The Plan's effective date is the date on which it is adopted by the
Board, so long as it is approved by the Company's shareholders at any time
within 12 months of such adoption or, if earlier, and to the extent required for
compliance with Rule 16b-3 under the Exchange Act, at the next annual meeting of
the Company's shareholders after adoption of the Plan by the Board.
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<PAGE> 22
EXHIBIT B
INTERPOINT CORPORATION
AMENDED
1985
INCENTIVE STOCK OPTION PLAN
The following Incentive Stock Option Plan ("Plan") was adopted by
INTERPOlNT CORPORATION ("Company") effective December 18, 1985, and was approved
by the Shareholders on February 15, 1986. The Plan is intended to qualify under
Section 422A of the Internal Revenue Code of 1954 ("IRC") as finally adopted.
This Plan was amended by amendments adopted by the Board of Directors on
November 4, 1987. In addition, this plan was amended by the Board of Directors
effective December 20, 1989 and approved by affirmative vote of the Shareholders
on February 26, 1990. The Plan was further amended by the Board of Directors
effective December 16, 1992, and approved by affirmative vote of the
Shareholders on February 24, 1993. On November 22, 1993, the Board of Directors
adopted an amendment to the Plan which was approved by affirmative vote of the
Shareholders on February 11, 1994. Finally, the Plan was amended by the Board of
Directors effective December 7, 1994 and approved by affirmative vote of the
Shareholders on February 22, 1995.
1. PURPOSE.
The purpose of the Plan is to provide for the issuance of options to
key salaried employees ("Team Members") to purchase shares of the Company's
authorized but unissued common stock without par value in order to encourage key
salaried Team Members to have a proprietary interest in successful operations of
the Company and to expand and improve the Company's profits.
2. SHARES UNDER PLAN.
The aggregate number of shares which may be issued under the Plan
through amendment is 490,000 shares.
3. ELIGIBILITY.
a. To be eligible to receive an option under the Plan, an
individual must on the date of granting the option be a salaried Team Member of
either the Company, a parent or subsidiary of the Company, or a corporation or a
parent or subsidiary corporation of such
<PAGE> 23
corporation issuing or assuming a stock option in a transaction to which IRC
Section 425(a) applies.
b. No individual may receive grant of an option who at the time
the option is granted owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the employer corporation
or of its parent or subsidiary corporation unless at the time the option is
granted the option price is at least 110 percent of the fair market value of the
stock subject to the option and the option by its terms is not exercisable after
the expiration of five years from the date that option is granted.
4. ADMINISTRATION.
The Plan will be administered by a Committee of the Board of Directors
of the Company ("Committee") consisting of outside Directors (those who are not
employees of the Company). The Committee is authorized, consistent with the
Plan: to select Team Members to whom options are granted, to fix the number of
shares and price per share granted to each, to determine whether payable in
money or in stock of the Company or otherwise, to fix the date of grant, date of
termination and expiration and terms and conditions of each option, to interpret
the Plan, to determine rights and obligations of option holders, to grant
options and direct the Company to execute option agreements, to perform all
other acts necessary or convenient to administer the Plan, and to correct any
defect, omission or inconsistency in the Plan necessary to effect its purpose
and qualify as an incentive stock option plan under the IRC Section 422A. In
addition, the Interpoint President, or others as he or she may assign, may grant
options to newly hired Team Members who are not executive officers.
5. TERMS OF OPTIONS.
Each option must comply with the following terms:
a. Grant. The option must be granted within ten years from the
date the Plan is adopted or the date the Plan is approved by the shareholders,
whichever is earlier.
b. Option Price. The option price must not be less than the fair
market value of the stock at the time the option is granted. The fair market
value shall be the closing market price on the last business day preceding the
date of grant, or, if no trades were made on that day, it shall be the mean
between the bid and ask prices quoted by NASDAQ at the close of the market on
that day.
c. Exercise. Subject to the next two sentences, the option may be
exercisable for all or part of the shares subject to the option and at any
intervals determined by the Committee. No option may be exercisable after the
first to occur of the following events:
(1) The expiration of ten years from the date the option
is granted or such shorter period as the Committee may determine for that
option, and
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<PAGE> 24
(2) The expiration of three months from the date the
option holder ceases to be employed by the employer corporation, or the
expiration of one year from the date the option holder ceases to be employed by
the employer corporation in the case of a Team Member who dies or is disabled
within the meaning of IRC Section 22(c)(3).
Each option must be exercised by written notice to the Company signed
by the option holder or his or her personal representative stating the number of
shares being purchased and accompanied by full payment.
d. Sequential Exercise -- Pre-1987 Options. No option which was
granted prior to January 1, 1987 may be exercised while there is outstanding
(meaning not exercised in full or not expired by reason of lapse of time) any
incentive stock option which was granted, before the granting of the pre-1987
option, to the individual to purchase stock in the individual's employer
corporation or in a corporation which (at the time of the granting of the
option) is a parent or subsidiary corporation of the employer corporation, or in
a predecessor corporation of any such corporations.
e. Non-transferability. The option may not be transferable by the
individual to whom granted otherwise than by will or the laws of descent and
distribution, and must be exercisable, during the individual's lifetime, only by
the individual.
f. Payment. If approved by the Committee, the price for the stock
issued upon exercise of the option may be paid in stock of the corporation
granting the option.
g. Lapse. Upon lapse of any option not exercised in full, the
unexercised shares will become available for other option under the Plan.
6. OPTION AGREEMENT.
Each option granted under the Plan will be evidenced by a written
agreement executed by the Company and the option holder, and will contain terms
and conditions as the Committee deems desirable not inconsistent with the Plan.
7. NON-QUALIFIED OPTIONS.
Unless the option agreement provides otherwise, options granted under
the Plan are intended to be incentive stock options qualifying under IRC Section
422A, as amended. Non-qualified stock options may be granted under this Plan if
the option agreement granting the option states that it is intended that the
option not qualify as an incentive stock option. Paragraphs 3.b. and 5.d. of
this Plan shall not apply to non-qualified options granted hereunder.
8. CHANGE IN CAPITALIZATION.
If the Company changes its capitalization, whether by stock dividend,
stock split-up, reclassification or recapitalization, merger or consolidation,
or otherwise (if the option does
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<PAGE> 25
not terminate pursuant to paragraph 9), then the number and kind of shares then
subject to options and thereafter to become subject to options and the prices to
be paid therefor, will be proportionately adjusted by the Committee to whatever
extent the Committee determines the change equitably requires an adjustment,
without issuance of any fractional option or share.
9. MERGER OR CONSOLIDATION.
If the Company dissolves, is reorganized, splits up its stock or merges
or consolidates with any other corporation and the Company is not the surviving
corporation, then (unless one or more of the surviving corporations assumes the
options under the Plan or issues substitute options) each holder of outstanding
options will be notified of and have the right to exercise the options prior to
the dissolution, reorganization, stock split-up, merger or consolidation. Any
option not exercised within thirty (30) days of notification will thereupon
terminate, and simultaneously the Plan will terminate.
10. OPTIONS TO OUTSIDE DIRECTORS.
Notwithstanding any provision in this Plan to the contrary, options to
outside Directors shall be non-qualified options and shall be granted only in
accordance with the following provisions:
a. Grant. Each outside Director, upon his or her first election
or appointment as a director of the Company, shall be granted a non-qualified
option for 5,500 shares and shall not be eligible for any other options under
this or any other option plan of the Company.
b. Vesting. Each option granted under this Section 10 shall vest
as follows: options for 1,375 shares shall be exercisable on and after one (1)
year from the date of grant, and options for an additional 1,375 shares shall be
exercisable on end after each of the three succeeding anniversaries of the date
of grant.
c. Availability of Shares. The options provided for in this
Section 10 are subject to the availability of shares under this Plan. If at the
date of any grant there are insufficient shares available to satisfy the grants
in whole, then the shares available shall be divided by the number of outside
Directors then entitled to a grant and each such outside Director shall be
granted an option for that number of shares.
d. Term of Option. The term of each option shall be for a period
of ten (10) years from the date of grant thereof.
e. Option Price. The option price must not be less than the fair
market value of the stock at the time the option is granted. The fair market
value shall be the closing market price on the last business day preceding the
date of grant, or, if no trades were made on that day, it shall be the mean
between the bid and ask prices quoted by NASDAQ at the close of the market on
that day.
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<PAGE> 26
f. Other Terms Applicable. Except as otherwise provided in this
Section 10, options granted to outside Directors shall be subject to the terms
and conditions of this Plan applicable to other option holders.
11. AMENDMENT OF PLAN.
The Board of Directors of the Company may amend the Plan and, with the
consent of each option holder affected, the terms and conditions of granted
options as its deems advisable, but may not without the approval of the holders
of not less than a majority of the outstanding capital stock of the Company:
a. increase the maximum number of shares subject to the Plan,
except pursuant to paragraph 8;
b. decrease the option price provided for in paragraph 5;
c. extend the term for which options may be granted;
d. change the class of employees eligible to receive options; or
e. cause any condition or provision of an option or the Plan to
be inconsistent with the provisions of IRC Section 422A(b).
12. TERMINATION OF PLAN.
The Plan will terminate on December 17, 1995, except that the Board of
Directors of the company may terminate the Plan sooner at any time. No
termination, other than as provided in paragraph 9, will affect any option then
outstanding.
13. SEVERABILITY.
If any provision of this Plan or of any option is determined to be
inconsistent with the provisions of IRC Section 422A, the inconsistent provision
will be deemed omitted and the remaining provisions will remain in effect.
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<PAGE> 27
EXHIBIT C
INTERPOINT CORPORATION
AMENDED NON-QUALIFIED STOCK OPTION PLAN
The following Non-Qualified Stock Option Plan was adopted by the Board
of Directors on December 18, 1985 and approved by the Shareholders on February
15, 1986. It was amended by the Board of Directors on December 16, 1987, and the
amendment was approved by the Shareholders on February 20, 1988.
1. PURPOSE.
The purposes of this Stock Option Plan are to attract and retain the
best available personnel for positions of substantial responsibility, to provide
additional incentive to officers, directors, employees and others who have a
relationship with the Company or any Parent or Subsidiary of the Company, which
now exists or hereafter is organized or acquired by or acquires the Company, and
to promote the success of the business.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
a. "Board" shall mean the Board of Directors of the Company.
b. "Common Stock" shall mean the common stock, without par value,
of the Company.
c. "Company" shall mean Interpoint Corporation.
d. "Committee" shall mean the existing Stock Option Committee of
the Company.
e. "Option" shall mean a stock option granted pursuant to the
Plan.
f. "Optioned Shares" shall mean stock subject to an Option
granted pursuant to this Plan.
g. "Outside Director" shall mean a member of the Board of
Directors of the Company who is not an employee of the Company.
<PAGE> 28
h. "Plan" shall mean the Interpoint Corporation Amended
Non-Qualified Stock Option Plan.
i. "Shares" shall mean the shares of the Common Stock of the
Company.
3. STOCK SUBJECT TO THE PLAN.
Except as otherwise provided in Section 13, the maximum aggregate
number of Shares which may he optioned and sold pursuant to the Plan is 100,000
Shares; provided, however, that such maximum aggregate number of Shares shall be
automatically increased in direct proportion to any increase in outstanding
Shares. Shares may be authorized, but unissued, or may be Treasury Shares.
Except as otherwise provided in Section 15, if an Option should expire
or become unexercisable for any reason without having been exercised in full,
the unpurchased Shares which were subject thereto shall, unless the Plan shall
have been terminated, become available for other Options under the Plan.
4. ADMINISTRATION OF THE PLAN.
a. Appointment of Committee. The Plan shall be administered by
the Interpoint Corporation Stock Option Committee.
b. Procedure. A majority of the entire Committee shall constitute
a quorum and the action of a majority of the members present at any meeting at
which a quorum is present shall be deemed the action of the committee. In
addition, any decision or determination reduced to writing and signed by all of
the members of the Committee shall be fully effective as if it has been made by
a majority vote at a meeting duly called and held. The Committee may appoint a
secretary to keep minutes of its meetings and may make such rules and
regulations for the conduct of its business as it shall deem advisable.
c. Powers of the Committee. Except as provided in Section 11, and
subject to the provisions of the Plan, the Committee shall have authority: (i)
to determine the Option price of the Shares covered by each Option, the
Optionees to whom, and the time or times at which Options shall be granted, and
the number of Shares to be represented by each Option; (ii) to interpret the
Plan; (iii) to prescribe, amend and rescind rules and regulations relating to
the Plan; (iv) to determine the terms and provisions of each Option granted
under the Plan (which need not be identical) and, with the consent of the holder
thereof, modify or amend each Option; (v) to authorize any person to execute on
behalf of an Option previously granted by the Committee; and (vi) to make all
other determinations deemed necessary or advisable for the administration of the
Plan.
d. Effect of Committee's Decision. All decisions, determinations
and interpretations of the Committee shall be final and binding on all Optionees
and any other holders of any Options granted under this Plan.
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<PAGE> 29
5. ELIGIBILITY.
Options may be granted only to persons who, at the time of the grant,
are employees, officers, directors, agents, consultants or independent
contractors of the Company or any subsidiary of the Company (hereinafter
referred to as "Optionee"). An Optionee who has been granted an Option may, if
he is otherwise eligible, be granted an additional Option or Options.
6. TERM OF PLAN.
The Plan shall become effective upon its adoption by the Board or its
approval or ratification by vote of the holders of a majority of the outstanding
Shares entitled to vote on the adoption of the plan, whichever is earlier. It
shall continue in effect for a term of ten (10) years unless sooner terminated
under Section 12 of the Plan.
7. TERMS OF OPTION.
Unless otherwise provided in the terms of an Option, the term of each
Option granted under the Plan shall be ten (10) years from the date of grant
thereof.
8. OPTION PRICE.
The Option price for Shares to be issued pursuant to any Option granted
under the Plan shall be the fair market value for the Shares at the time the
Option is granted. This shall be the mean between the bid and ask prices for
Shares of the Common Stock quoted by NASDAQ as of the close of the last business
day preceding the date of grant.
9. VESTING AND EXERCISE OF OPTION.
Options shall be 100 percent vested immediately upon grant unless the
Committee establishes another vesting schedule.
Options shall be exercisable at any time after vesting (but no later
than ten (10) years after the option is granted), subject, however, to all other
terms of the Plan and of the Option granted to an Optionee. An Option may not be
exercised for fractional Shares of the Shares of the Company.
Notwithstanding the foregoing, in the event the Company or the
shareholders of the Company enter into an agreement to dispose of all or
substantially all of the assets or shares by means of a sale, a reorganization,
a liquidation, or otherwise, Options shall become immediately exercisable with
respect to the full number of Shares subject to those Options. All Options not
exercised prior to consummation of any such agreement shall terminate.
a. Procedure for Exercise. An Option shall be deemed to be
exercised when written notice of such exercise has been given to the Company in
accordance with the terms and full payment for the Shares with respect to which
the Option is exercised has been received by the Company. Until the issuance of
the stock certificates (as evidenced by the
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<PAGE> 30
appropriate entry on the books of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to
Optioned Shares notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other rights for which the record date is prior to the
date of exercise of the Option except as provided in Section 13 of the Plan.
b. Time of Exercise, Effect of Termination. Unless otherwise
provided in the terms of an Option, it is the intent of this Plan that an Option
may be exercised by the Optionee as provided in this Plan only while he or she
has a relationship with the Company as described herein, except as set out
below. If the Optionee's relationship is terminated, the following rules
control:
(1) If the Optionee dies, the persons to whom the
Optionee's rights have passed by will or the laws of descent and distribution
may exercise such rights, to the extent the Optionee could have done so,
immediately preceding his death. Any such Option must be exercised within twelve
(12) months of the Optionee's death, but in no event later than ten (10) years
after its grant.
(2) If the Optionee's relationship with the Company is
terminated, due to his or her embezzlement or theft of Company funds,
defraudation of the Company, violation of Company rules, regulations or
policies, or any intentional act which harms the Company, such Option, to the
extent not exercised as of the date of termination, shall be terminated as of
that date.
(3) If the Optionee's relationship with the Company is
terminated, for any reason other than those set forth in subparagraphs (1) and
(2) above, the Optionee may exercise his Option, to the extent exercisable as of
the date of his termination, within sixty (60) days after termination, but in no
event later than ten (10) years after its grant.
10. OPTION NOT TRANSFERABLE.
Options under the Plan may not be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution, and may be exercised during the Optionee's lifetime only by the
Optionee, or his guardian or legal representative.
11. OPTIONS TO OUTSIDE DIRECTORS.
Notwithstanding any provision in this Plan to the contrary, Options to
Outside Directors shall be granted only in accordance with the following
provisions:
a. Grant. Each Outside Director shall be granted an Option for
5,500 Shares upon the later of (i) the adoption of this Amended Non- Qualified
Stock Option Plan by the Shareholders or (ii) his or her initial election or
appointment as a director of the Company, and shall not be eligible for any
other Options under this Plan.
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<PAGE> 31
b. Vesting. Each Option granted under this Section 11 shall vest
as follows: options for 1,375 Shares shall be exercisable on and after one (1)
year from the date of grant, and options for an additional 1,375 Shares shall be
exercisable on and after each of the three succeeding anniversaries of the date
of grant.
c. Availability of Shares. The Options provided for in this
Section 11 are subject to the availability of shares under this Plan. If at the
date of any grant there are insufficient Shares available to satisfy the grants
in whole, then the Shares available shall be divided by the number of Outside
Directors then entitled to a grant and each such Outside Director shall be
granted an Option for that number of Shares.
d. Term of Option. The term of each Option shall be for a period
of ten (10) years from the date of grant thereof.
e. Option Price. The Option price shall be the fair market value
of the Shares at the time the option is granted. This shall be the mean between
the bid and ask prices for Shares of the Common Stock quoted by NASDAQ as of the
close of the last business day immediately preceding the date of grant.
f. Other Terms Applicable. Except as otherwise provided in this
Section 11, Options granted to Outside Directors shall be subject to the terms
and conditions of this Plan applicable to other optionees.
12. AMENDMENT OR TERMINATION OF THE PLAN.
a. The Board may amend the Plan from time to time in such
respects as the Board deems advisable, except that no amendment may, without
further stockholder approval or ratification:
(1) Increase the total number of Shares which may be
purchased under Section 3 of the Plan (subject, however, to Section 13);
(2) Change the definition of eligibility in Section 5 of
the Plan;
(3) Change the term of Option stated in Section 7 of the
Plan.
b. The Board, without further approval of the stockholders, may
at any time terminate the Plan.
c. Any Amendment or Termination of the Plan shall not affect
Options already granted and such Options shall remain in full force and effect
as if the Plan had not been amended or terminated.
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
The number and kind of Shares of Company stock subject to Option, in
respect thereof, shall be appropriately adjusted along with a corresponding
adjustment in the Option
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<PAGE> 32
price to reflect any stock dividend, stock split, split-up or any combination or
exchange of Shares, however accomplished. An appropriate adjustment shall also
be made with respect to the aggregate number and kind of Shares remaining
available to be optioned and sold under the Plan.
14. AGREEMENT AND REPRESENTATION OF EMPLOYEE.
As a condition to the exercise of any portion of an Option, the Company
may require the person exercising such Option to represent and warrant at the
time of exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute the Shares if, in the
opinion of counsel for the Company, such a representation is required under the
Securities Act of 1933 or any other applicable law, regulation or rule of any
governmental agency.
15. RESERVATIONS OF SHARES OF COMMON STOCK.
The Company, during the term of this Plan, will at all times reserve
and keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority in order to issue and sell, such number of
Shares as shall be sufficient to satisfy the requirements of the Plan. Inability
of the Company to obtain from any regulatory body having jurisdiction authority
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder shall relieve the Company of any liability in respect of
the non-issuance or sale of Shares as to which such requisite authority shall
not have been obtained.
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<PAGE> 33
EXHIBIT D
INTERPOINT CORPORATION
AMENDED
1981
INCENTIVE STOCK OPTION PLAN
The following Incentive Stock Option Plan ("Plan") is adopted by
INTERPOINT CORPORATION ("Company") effective December 1, 1981, if approved by
affirmative vote of the holders of a majority of the Company's shares within
twelve months after December 1, 1981, the date of adoption by the Board of
Directors. The Plan is intended to qualify under Section 422A of the Internal
Revenue Code of 1954 ("IRC") as finally adopted. This Plan was amended by
amendments adopted by the Board of Directors on November 4, 1987 and October 17,
1990.
1. PURPOSE.
The purpose of the Plan is to provide for the issuance of options to
key salaried employees to purchase shares of the Company's authorized but
unissued common stock without par value in order to encourage key salaried
employees to have a proprietary interest in successful operations of the Company
and to expand and improve the Company's profits.
2. SHARES UNDER PLAN.
The aggregate number of shares which may be issued under the Plan is
25,000 shares.
3. ELIGIBILITY.
a. To be eligible to receive an option under the Plan, an
individual must on the date of granting the option be a salaried employee of
either the Company, a parent or subsidiary of the Company, or a corporation or a
parent or subsidiary corporation of such corporation issuing or assuming a stock
option in a transaction to which IRC Section 425(a) applies.
b. No individual may receive grant of an option who at the time
the option is granted owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the employer corporation
or of its parent or subsidiary corporation unless at the time the option is
granted the option price is at least 110 percent of
<PAGE> 34
the fair market value of the stock subject to the option and the option by its
terms is not exercisable after the expiration of five years from the date that
option is granted.
4. ADMINISTRATION.
The Plan will be administered by a Committee of the board of Directors
of the Company ("Committee"). The Committee is authorized, consistent with the
Plan: to select employees to whom options are granted, to fix the number of
shares and price per share granted to each, to determine whether payable in
money or in stock of the Company or otherwise, to fix the date of grant, date of
termination and expiration and terms and conditions of each option, to interpret
the Plan, to establish, change and rescind rules for the Plan, to determine
rights and obligations of option holders, to grant options and direct the
Company to execute option agreements, to perform all other acts necessary or
convenient to administer the Plan, and to correct any defect, omission or
inconsistency in the Plan necessary to effect its purpose and qualify as an
incentive stock option plan under the IRC Section 422A.
5. TERMS OF OPTIONS.
Each option must comply with the following terms.
a. Grant. The option must be granted within ten years from the
date the Plan is adopted or the date the Plan is approved by the shareholders,
whichever is earlier.
b. Option Price. The option price must not be less than the fair
market value of the stock at the time the option is granted, which may be the
mean between the bid and ask prices quoted in the Seattle Times as of the close
of the last business day immediately preceding the date of grant.
c. Exercise. Subject to the next two sentences, the option may be
exercisable for all or part of the shares subject to the option and at any
intervals determined by the Committee. No option may be exercisable after the
first to occur of the following events:
(1) The expiration of ten years from the date the option
is granted or such shorter period as the Committee may determine for that
option, and
(2) the expiration of three months from the date the
option holder ceases to be employed by the employer corporation, or the
expiration of one year from the date the option holder ceases to be employed by
the employer corporation in the case of an employee who dies or is disabled
within the meaning of IRC Section 22(c)(3).
Each option must be exercised by written notice to the Company signed
by the option holder or his or her personal representative stating the number of
shares being purchased and accompanied by full payment.
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<PAGE> 35
d. Sequential Exercise -- Pre-1987 Options. No option which was
granted prior to January 1, 1987 may be exercised while there is outstanding
(meaning not exercised in full or not expired by reason of lapse of time) any
incentive stock option which was granted, before the granting of the pre-1987
option, to the individual to purchase stock in the individual's employer
corporation or in a corporation which (at the time of the granting of the
option) is a parent or subsidiary corporation of the employer corporation, or in
a predecessor corporation of any of such corporations.
e. Nontransferability. The option may not be transferable by the
individual to whom granted otherwise than by will or the laws of descent and
distribution, and must be exercisable, during the individual's lifetime, only by
the individual.
f. Payment. If approved by the Committee, the price for the stock
issued upon exercise of the option may be paid in stock of the corporation
granting the option.
g. Lapse. Upon lapse of any option not exercised in full, the
unexercised shares will become available for other options under the Plan.
6. OPTION AGREEMENT.
Each option granted under the Plan will be evidenced by a written
agreement executed by the Company and the option holder, and will contain terms
and conditions as the Committee deems desirable not inconsistent with the Plan.
7. NON-QUALIFIED OPTIONS.
Unless the option agreement provides otherwise, options granted under
this Plan are intended to be incentive stock options qualifying under IRC
Section 422A, as amended. Non-qualified stock opTions may be granted under this
Plan if the option agreement granting the option states that it is intended that
the option not qualify as an incentive stock option. Paragraphs 3.b. and 5.d. of
this Plan shall not apply to non-qualified options granted hereunder.
8. CHANGES IN CAPITALIZATION.
If the Company changes its capitalization, whether by stock dividend,
stock split-up, reclassification or recapitalization, merger or consolidation,
or otherwise, (if the option does not terminate pursuant to paragraph 9) then
the number and kind of shares then subject to options and thereafter to become
subject to options and the prices to be paid therefor, will be proportionately
adjusted by the Committee to whatever extent the Committee determines the change
equitably requires an adjustment, without issuance of any fractional option or
share.
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<PAGE> 36
9. MERGER OR CONSOLIDATION.
If the Company dissolves, is reorganized, splits up its stock or merges
or consolidates with any other corporation and the Company is not the surviving
corporation, then (unless one or more of the surviving corporations assumes the
options under the Plan or issues substitute options) each holder of outstanding
options will be notified of and have the right to exercise the options prior to
the dissolution, reorganization, stock split-up, merger or consolidation. Any
option not exercised within thirty (30) days of notification will thereupon
terminate, and simultaneously the Plan will terminate.
10. AMENDMENT OF PLAN.
The Board of Directors of the Company may amend the Plan and, with the
consent of each option holder affected, the terms and conditions of granted
options as it deems advisable, but may not without the approval of the holders
of not less than a majority of the outstanding capital stock of the Company:
a. increase the maximum number of shares subject to the Plan,
except pursuant to paragraph 8;
b. decrease the option price provided for in paragraph 5;
c. extend the term for which options may be granted;
d. change the class of employees eligible to receive options; or
e. cause any condition or provision of an option or the Plan to
be inconsistent with the provisions of IRC Section 422A(b).
11. TERMINATION OF PLAN.
The Plan will terminate on November 30, 1991, except that the Board of
Directors of the Company may terminate the Plan sooner at any time. No
termination, other than as provided in paragraph 9 will affect any option then
outstanding.
12. SEVERABILITY.
If any provision of this Plan or of any option is determined to be
inconsistent with the provisions of IRC Section 422A, the inconsistent provision
will be deemed omitted and the remaining provisions will remain in effect.
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<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
ADIC Europe SARL, a corporation organized under the laws of France
ADIC International, Inc., a corporation organized under the laws of Barbados
