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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
GRIFFIN TECHNOLOGY INCORPORATED
(Name of subject company)
GRIFFIN TECHNOLOGY INCORPORATED
(Name of person(s) filing statement)
COMMON STOCK, PAR VALUE
$0.05 PER SHARE
(Title of class of securities)
398268 10 2
((CUSIP) number of class of securities)
ROBERT S. URLAND
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GRIFFIN TECHNOLOGY INCORPORATED
1133 CORPORATE DRIVE
FARMINGTON, NEW YORK 14425
(Name, address and telephone number of person authorized
to receive notice and communications on behalf of
the person(s) filing statement)
With a copy to:
JOHN C. PARTIGAN, ESQ.
NIXON, HARGRAVE, DEVANS & DOYLE LLP
CLINTON SQUARE
P.O. BOX 1051
ROCHESTER, NEW YORK 14603
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The subject company is Griffin Technology Incorporated, a New York
corporation (the "Company"). The principal address of the executive offices of
the Company is 1133 Corporate Drive, Farmington, New York 14425. The title of
the class of equity securities to which the statement relates is the Company's
common stock, par value $0.05 per share (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This statement relates to the tender offer made by D-GT Acquisition,
Incorporated, a New York corporation ("Purchaser") and a wholly-owned subsidiary
of Diebold, Incorporated, a Ohio corporation ("Parent"), to purchase all of the
issued and outstanding Shares at a price of $7.75 per share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated October 26, 1995 of Purchaser (the "Offer to Purchase") and the
related Letter of Transmittal (which together constitutes the "Offer"),
disclosed in a tender offer statement on Schedule 14D-1 filed with the
Securities and Exchange Commission on October 26, 1995 (the "Schedule 14D-1").
The Schedule 14D-1 states that the principal executive offices of Purchaser are
located at 5995 Mayfair Road, North Canton, Ohio 44720.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) Except as described below or incorporated herein by reference as
provided below, to the knowledge of the Company, as of the date hereof there are
no material contracts, agreements, arrangements or understandings or any actual
or potential conflicts of interest between Company or its affiliates and (1) the
Company, its executive officers, directors or affiliates; or (2) Purchaser or
Parent or their executive officers, directors or affiliates.
Certain contracts, agreements, arrangements or understandings between the
Company and certain of its directors and executive officers are described on
page 3 of the Company's Proxy Statement dated October 11, 1995 (the "1995 Proxy
Statement"). A copy of such page of the 1995 Proxy Statement is filed herewith
as Exhibit 10 and is incorporated herein by reference.
THE AGREEMENT AND PLAN OF MERGER
The following is a summary of certain provisions of the Agreement and Plan
of Merger dated as of October 20, 1995 (the "Merger Agreement") by and among the
Company, Purchaser and Parent. The Merger Agreement is filed as Exhibit 1 to
this Schedule 14D-9 and is incorporated herein by reference. Such summary is
qualified in its entirety by reference to the Merger Agreement.
The Offer. The Merger Agreement provides for the making of the Offer by
the Purchaser. The obligation of Purchaser to accept for payment and pay for
shares tendered pursuant to the Offer is subject to the satisfaction of the
condition that at least two-thirds of the outstanding Shares have been validly
tendered pursuant to the Offer and not withdrawn (the "Minimum Condition") and
certain other conditions that are described in the following paragraph. The
Purchaser has agreed that, without the written consent of the Company, no change
in the Offer may be made which changes the form of consideration to be paid or
decreases the price per Share or the number of Shares sought in the Offer or
which imposes conditions to the Offer in addition to the Minimum Condition and
those conditions described in the following paragraph or which broadens the
scope of such conditions.
Certain Conditions to the Offer. Notwithstanding any other provisions of
the Offer, Purchaser shall not be required to accept for payment or pay for, and
may postpone the acceptance for payment of, or the payment for, any Shares, and
may terminate the Offer and not accept for payment or pay for any Shares, or,
subject to the terms of the Merger Agreement, amend the Offer if (i) immediately
prior to the expiration of the Offer (as it may be extended in accordance with
the Offer), the Minimum Condition shall not have been satisfied, (ii) any
applicable waiting period under the HSR Act shall not have expired or been
terminated prior to the
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expiration of the Offer, or (iii) at any time prior to the acceptance for
payment of Shares, Purchaser makes a determination (which shall be based on any
reasonable determination by the Parent or Purchaser made in good faith) that any
of the following conditions exist:
(a) there shall have been instituted or be pending any action,
proceeding, application, claim or counterclaim by any government or
governmental authority or agency, domestic or foreign, before any court or
governmental regulatory or administrative agency, authority or tribunal,
domestic or foreign, (i) challenging the acquisition by Parent or the
Purchaser of the Shares, seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or seeking to obtain from Parent or
the Purchaser any damages that would result in a Material Adverse Effect on
the Company if such were assessed against the Company, (ii) seeking to
prohibit or materially limit the ownership or operation by Parent of the
Surviving Corporation of all or any material portion of the business or
assets of the Company or compel Parent or the Surviving Corporation to
dispose of or to hold separate all or any material portion of the business
or assets of the Company, or to impose any material limitation on the
ability of the Company or the Surviving Corporation to conduct such
business or own such assets, or (iii) seeking to impose material
limitations on the ability of Parent (or any other affiliate of Parent) to
acquire or hold or to exercise full rights of ownership of the Shares,
including but not limited to, the right to vote the Shares, purchased by
them on all matters properly presented to the stockholders of the Company;
or
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, promulgated, entered, enforced or deemed applicable to
the Offer, the Merger or the Merger Agreement, or any other action shall
have been taken by any government, governmental authority or court,
domestic or foreign, other than the routine application to the Offer or the
Merger of waiting periods under the HSR Act, that has, or has a substantial
likelihood of resulting in, any of the consequences referred to in clauses
(i) through (iii) of paragraph (a) above; or
(c) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements contained
in the Merger Agreement, or any of the representations and warranties of
the Company set forth in the Merger Agreement shall not have been true and
correct in any material respect when made or, except for any
representations and warranties made as of a specific date, shall have
ceased to be true and correct in any material respect as if made on and as
of the Expiration Date (or, in the case of representations and warranties
that are specifically qualified as to materiality, shall not have been true
and correct when made or shall have ceased to be true and correct on and as
of the Expiration Date); or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange,
Inc. (ii) the declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or not
mandatory), (iii) the commencement of a war, armed hostilities or other
international or national calamity directly or indirectly involving the
United States and having a Material Adverse Effect on the Company or
materially adversely affecting (or materially delaying) the consummation of
the Offer, (iv) any limitation (whether or not mandatory), by any U.S.
governmental authority or agency on, or any other event that, in the
judgment of Parent, is substantially likely to materially adversely affect,
the extension of credit by banks or other financial institutions, or (v)
from the date of the Merger Agreement through the date of termination or
expiration of the Offer, a decline of at least 25% in the Standard & Poor's
500 Index; or
(e) prior to the purchase of Shares pursuant to the Offer, the Board
of Directors shall have withdrawn or modified (including by amendment of
the Schedule 14D-9) in a manner adverse to Parent its approval or
recommendation of the Offer, the Merger Agreement or the Merger or shall
have recommended another offer for the purchase of the Shares, which, in
the sole judgment of the Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent) giving rise to
such condition, makes it inadvisable to proceed with such acceptance for
payment except where as a result of the Company's receipt of an unsolicited
acquisition proposal from a third party (A) the Company issues to its
stockholders a communication that contains only the statements permitted by
Rule
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14d-9(e) under the Exchange Act (and does not otherwise withdraw, modify or
amend its approval or recommendation of the transactions contemplated
hereby) and (B) within five business days of issuing such communications
the Company publicly reconfirms its approval and recommendation of the
transactions contemplated by the Offer and the Merger Agreement; or
(f) There shall have occurred since June 30, 1995, a change,
occurrence or circumstance in the Company's business having a Material
Adverse Effect thereon;
which, in the sole judgment of Purchaser in any such case, and regardless of the
circumstances (including any action or omission by Purchaser) giving rise to any
such condition, makes it inadvisable to proceed with such acceptance for
payment.
The Merger. The Merger Agreement provides that, following the purchase of
Shares pursuant to the Offer, the approval of the Merger Agreement by the
shareholders of the Company (if required) and the satisfaction or waiver of the
other conditions to the Merger, the Purchaser will be merged with and into the
Company. The Merger shall become effective at such time as a certificate of
merger is filed by the Department of State of the State of New York, or at such
later time as is specified in such certificate of merger (the "Effective Time").
As a result of the Merger, all of the properties, rights, privileges and
franchises of the Company and the Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and the
Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
At the Effective Time, by virtue of the Merger (i) each issued and
outstanding Share held in the treasury of the Company, or by Parent, the
Purchaser or any other subsidiary of Parent shall be cancelled, and no payment
shall be made with respect thereto; (ii) each share of common stock of the
Purchaser then outstanding shall be converted into and become one share of
common stock of the Surviving Corporation; and (iii) each Share outstanding
immediately prior to the Effective Time shall, except as otherwise provided in
(i) above and except for Shares held by shareholders exercising appraisal rights
pursuant to Sections 623 and 910 of the New York Business Corporation Law (the
"NYBCL") ("Dissenting Shares"), be converted into the right to receive $7.75 in
cash or any higher price per Share that may be paid pursuant to the Offer,
without interest.
The Merger Agreement provides that the certificate of incorporation and
by-laws of the Company at the Effective Time will be the certificate of
incorporation of the Surviving Corporation. The Merger Agreement also provides
that the directors of the Purchaser at the Effective Time will be the directors
of the Surviving Corporation and the officers of the Company at the Effective
Time will be the officers of the Surviving Corporation.
Recommendation. The Board of Directors has (i) determined that the Merger
Agreement and the transactions contemplated thereby, including the Offer and the
Merger, are fair to, and in the best interests of shareholders of the Company,
(ii) approved the Merger Agreement and the transactions contemplated thereby,
including the Offer, the Merger and the Tender Agreements and the transactions
contemplated thereby, and (iii) resolved to recommend acceptance of the Offer
and approval and adoption of the Merger Agreement and the Merger by the
Company's shareholders. This recommendation of the Board of Directors may be
withdrawn, modified or amended if the Board by a majority vote determines in its
good faith judgment, based as to legal matters on the written opinion of legal
counsel, that such withdrawal, amendment or modification is required by the
Board in the exercise of its fiduciary duties. Any such withdrawal, modification
or amendment may give rise to certain termination rights on the part of Parent
and the Purchaser, as described below.
Interim Agreements of Parent, Purchaser and the Company. Pursuant to the
Merger Agreement, the Company has covenanted and agreed that, during the period
from the date of the Merger Agreement to the Effective Time, the Company will
conduct its business and operations according to its ordinary and usual course
of business consistent with past practice. Pursuant to the Merger Agreement,
without limiting the generality of the foregoing, and except as otherwise
expressly provided in the Merger Agreement, prior to the Effective Time, the
Company will not, without the prior written consent of Purchaser: (a) amend its
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certificate of incorporation or by-laws; (b) (i) create, incur or assume any
indebtedness for money borrowed, including obligations in respect of capital
leases, except (A) purchase money mortgages granted in connection with past
practice, (B) indebtedness for borrowed money incurred in the ordinary course of
business not aggregating in excess of $8.0 million outstanding at any time under
its existing Fifth Amended and Restated Revolving Credit and Term Loan Agreement
with The Chase Manhattan Bank, N.A. as the same may be amended from time to time
("Credit Agreement"), provided that the proceeds thereof are not distributed to
the shareholders of the Company; or (ii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person (except the Company); provided, however,
that the Company may endorse negotiable instruments in the ordinary course of
business consistent with past practice; (c) declare, set aside or pay any
dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of the Shares; (d) issue, sell, grant, purchase
or redeem, or issue or sell any securities convertible into, or options with
respect to, or warrants to purchase or rights to subscribe to, or subdivide or
in any way reclassify, any Shares, except in any case above pursuant to
outstanding Company stock purchase rights; (e)(i) increase the rate of
compensation payable or to become payable by the Company to its directors,
officers or employees, whether by salary or bonus, by more than four percent per
person on an annual basis for directors and officers of the Company and by more
than four and one-half percent in the aggregate for all other employees of the
Company (excluding commission-only compensation, the rate of which shall not be
increased); or (ii) increase the rate or term of, or otherwise alter, any bonus,
insurance, pension or other employee benefit plan, payment or arrangement made
to, for or with any such directors, officers or employees; (f) enter into any
agreement, commitment or transactions (other than certain borrowings described
above), except agreements, commitments or transactions in the ordinary course of
business consistent with past practice; (g) sell, transfer, mortgage, pledge,
grant any security interest or permit the imposition of any lien or other
encumbrance on any asset other than in the ordinary course of business
consistent with past practice and except pursuant to the Credit Agreement; (h)
waive any right under certain contracts and other agreements if such waiver
would have a Material Adverse Effect; (i) make any material change in its
accounting methods or practices or make any material change in depreciation or
amortization policies or rates adopted by it for accounting purposes or, other
than normal writedowns or writeoffs consistent with past practices, make any
writedowns of inventory or writeoffs of notes or accounts receivable; (j) make
any loan or advance to any of its shareholders, officers, directors, employees
(other than advances to field sales personnel, vacation advances, relocation
advances and travel advances in each case made in the ordinary course of
business in a manner consistent with past practice), or make any other loan or
advance to any other person or group otherwise than in the ordinary course of
business consistent with past practice; (k) terminate or fail to renew, where
such renewal is at the Company's option, any contract or other agreement
(excluding customer leases or contracts), the termination or failure of which to
renew would have a Material Adverse Effect; (l) enter into any collective
bargaining agreement; (m) make any addition to or modification of the Company's
employee benefits plans; (n) take, agree to take, or knowingly permit to be
taken any action, or do or, with respect to anything within the Company's
control, knowingly permit to be done anything in the conduct of its business
which would be contrary to or in breach of any of the terms or provisions of the
Merger Agreement, or which would cause any of the representations of the Company
to be or become untrue in any material respect; or (o) agree to do any of the
foregoing.
The Merger Agreement provides that, when used in connection with a
corporation, the term "Material Adverse Effect" means a material adverse effect
or the business, assets, prospects, financial condition or results of operations
of such corporation or on the ability of the corporation to consummate the
transactions contemplated by the Merger Agreement.
Other Agreements of Parent, the Purchaser and the Company. In the Merger
Agreement, the Company, its affiliates and their respective officers, directors,
employees, representatives and agents have agreed that they shall immediately
cease any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, the Company or any business
combination with the Company, subject to certain exceptions. The Company may,
directly or indirectly, furnish information and access, in each case only in
response to unsolicited requests therefor, to any corporation, partnership,
person or other entity or group pursuant to confidentiality agreements that do
not prohibit or restrict disclosure of any matter to Purchaser, and may
participate in discussions and
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negotiate with such entity or group concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company or any
division of the Company, only if such entity or group has submitted a written
proposal to the Board relating to any such transaction and the Board by a
majority vote determines in its good faith judgment, based as to legal matters
on the written opinion of legal counsel, that failing to take such action would
constitute a breach of the Board's fiduciary obligations. The Board shall
provide a copy of any such written proposal to Parent or Purchaser promptly
after receipt thereof and thereafter keep Parent and Purchaser promptly advised
of any development with respect thereto. Except as set forth above, neither the
Company or any of its affiliates, nor any of its or their respective officers,
directors, employees, representatives or agents shall directly or indirectly,
encourage, solicit, participate in or initiate discussions or negotiations with,
or provide any information to, any corporation, partnership, person or other
entity or group (other than Parent and Purchaser, any affiliate or associate of
Parent and Purchaser or any designees of Parent and Purchaser) concerning any
merger, sale of assets, sale of shares of capital stock or similar transaction
involving the Company or any substantial portion of the assets of the Company or
take any other action to facilitate the making of a proposal that constitutes or
could reasonably be expected to lead to an acquisition proposal, provided,
however, that nothing in the Merger Agreement shall prevent the Board from
approving or recommending to the Company's shareholders any unsolicited tender
offer or exchange offer by a third party as contemplated by Rules 14d-9 and
14e-2 promulgated under the Exchange Act in the event any unsolicited takeover
proposal shall have been made by a third party, if, in the good faith judgment
of the Board, based as to legal matters on the written opinion of legal counsel,
that withdrawing or modifying such approval or recommendation is required under
applicable law in the proper discharge of its fiduciary duties.
Pursuant to the Merger Agreement, between the date hereof and the Effective
Time, the Company will give Parent and Purchaser and their authorized
representatives reasonable access to all personnel, books, records, plants,
offices, and other facilities and properties of the Company, will permit Parent
and Purchaser to make such inspections as Parent and Purchaser may reasonably
request and will cause the Company's officers to furnish Purchaser with such
financial and operating data and other information with respect to the business
and properties of the Company as Purchaser may from time to time reasonably
request; provided, however, that until such time as the Parent and/or its
affiliates are beneficial owners of a majority of the outstanding Shares, any
such activities prior to the purchase by the Purchaser of Shares pursuant to the
Offer shall be for the purpose of verifying the accuracy of representations and
warranties of the Company and compliance by the Company with its covenants
contained in the Merger Agreement.
The Merger Agreement provides that promptly upon the purchase of Shares by
Purchaser, the Purchaser shall be entitled to designate the number of directors,
rounded up to the next whole number, on the Company's Board of Directors that
equals the product of (i) the total number of directors on the Board of
Directors (giving effect to the election of any additional directors pursuant to
this paragraph) and (ii) the percentage that the number of Shares owned by the
Purchaser (including Shares accepted for payment) bears to the total number of
Shares outstanding on a fully-diluted basis, and the Company shall use its best
efforts to cause the Purchaser's designees to be elected or appointed to the
Board of Directors, including, without limitation, increasing the number of
directors, and seeking and accepting resignations of its incumbent directors.
Notwithstanding the foregoing, the Company has agreed to use its best efforts to
ensure that three of the current members of the Board who are not officers or
employees of the Company remain members of the Board until the Effective Time.
Pursuant to the Merger Agreement, the Company shall cause a meeting of its
shareholders (the "Company Shareholder Meeting") to be duly called and held, at
the Parent's request and in accordance with applicable law, for the purposes of
voting on the approval and adoption of the Merger Agreement and the Merger.
The Merger Agreement provides that the Company will promptly prepare and
file with the Commission under the Exchange Act a proxy statement relating to
the Company Shareholder Meeting (the "Proxy Statement"). The Company has agreed,
subject to the fiduciary duties of its Board of Directors, based as to legal
matters on the written opinion of legal counsel, to use all reasonable efforts
to obtain the necessary approvals by its shareholders of the Merger Agreement
and the transactions contemplated thereby. Parent has
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agreed to vote and to cause its affiliates (including, without limitation, the
Purchaser) to vote all Shares owned by them in favor of adoption of the Merger
Agreement. Notwithstanding the foregoing, in the event that Purchaser acquires
at least 90% of the outstanding Shares and Purchaser so requests, the Parent,
Purchaser and the Company will take all actions necessary and appropriate to
cause the Merger to become effective without a meeting of the shareholders of
the Company in accordance with Section 905 of the NYBCL.
Purchaser has agreed that all rights to indemnification now existing in
favor of the directors and officers of the Company as provided in the Company's
by-laws as of the date of the Merger Agreement shall survive the Merger and
shall continue in full force and effect for a period of six years. For a period
of six years after the Effective Time, Purchaser has agreed to indemnify and
hold harmless, to the maximum extent permitted by the NYBCL, each of the present
or former directors and officers of the Company and advance expenses in
connection with such indemnification. In addition, Purchaser has agreed that for
three years after the Effective Time, Purchaser will cause the Surviving
Corporation to use its best reasonable efforts to provide officers' and
directors' liability insurance in respect of acts or omissions occurring prior
to the Effective Time covering each such person currently covered by the
Company's officers' and directors' liability insurance policy on terms with
respect to coverage and amount no less favorable than those of such policy in
effect on the date of the Merger Agreement, except that the Surviving
Corporation shall not be required to pay annual premiums in excess of $60,000
for one year after the Effective Time and $60,000 thereafter.
The Merger Agreement provides that the Company, the Purchaser and Parent
will each use their best efforts to consummate the transactions contemplated by
the Merger Agreement.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations by the Company as to undisclosed
liabilities, certain changes or events concerning it businesses, compliance with
applicable law, employee benefit plans, litigation and environmental
liabilities. In addition, the Company represented to Parent and the Purchaser
that the Board, at a meeting duly called and held, has (i) determined that the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, are fair to, and in the best interests of, the Company and the
shareholders of the Company, and (ii) approved the Merger Agreement and the
transactions contemplated thereby, including the Offer and the Merger, in all
respects and that such approval constitutes approval of the Offer, the Merger
Agreement and the Merger for purposes of Sections 902 and 912 of the NYBCL and
similar statutes of other states that might be deemed applicable.
Conditions to the Merger. The obligations of each of the Parent, the
Purchaser and the Company to effect the Merger are subject to the satisfaction
of certain conditions, including (i) the Purchaser shall have accepted for
payment Shares tendered pursuant to the Offer; (ii) the Merger Agreement shall
have been adopted by the requisite vote, if any is required, of the shareholders
of the Company in accordance with applicable law; (iii) no order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, issued, promulgated or enforced by any court or
governmental authority which prohibits or restricts the consummation of the
Merger; and (iv) any waiting period applicable to the Merger under the HSR Act
shall have terminated or expired. The obligation of the Purchaser and the Parent
to effect the Merger is further subject to satisfaction of the conditions,
unless waived by the Parent, that (i) the Company shall have performed and
complied in all material respects with the agreements and obligations contained
in the Merger Agreement required to be performed and complied with by it at or
prior to the Effective Time, (ii) all outstanding stock options of the Company
shall have been surrendered to the Company as provided in the Merger Agreement
and cancelled by the Company, and (iii) the Parent shall have received a comfort
letter, in form and substance reasonably requested by the Parent, from Price
Waterhouse LLP regarding the updating of the Company's most recent financial
statements. The obligation of the Company to effect the Merger is further
subject to the Parent and the Purchaser having performed and complied in all
material respects with the agreements and obligations contained in the Merger
Agreement required to be performed and complied with by each of them at or prior
to the Effective Time.
Termination. The Merger Agreement may be terminated: (a) by mutual written
consent of Parent, Purchaser and the Company; (b) by Parent and Purchaser or the
Company if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued a final order,
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decree or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other action
shall have become nonappealable; (c) by Parent and Purchaser if due to an
occurrence or circumstance which results in a failure to satisfy any of the
conditions to the Offer set forth herein, Purchaser shall have (i) failed to
commence the Offer within five days following the initial public announcement of
the Offer, (ii) terminated the Offer, or (iii) failed to pay for Shares pursuant
to the Offer within 75 days following the commencement of the Offer; (d) by the
Company if (i) there shall not have been a material breach of any
representation, warranty, covenant or agreement on the part of the Company and
the Purchaser shall have (A) failed to commence the Offer within five days
following the initial public announcement of the Offer, (B) terminated the
Offer, or (C) failed to pay for Shares pursuant to the Offer within 75 days
following the commencement of the Offer, or (ii) prior to the purchase of Shares
pursuant to the Offer, a corporation, partnership, person or other entity or
group shall have made a bona fide offer that the Board by a majority vote
determines in its good faith judgment and in the exercise of its fiduciary
duties, based as to legal matters on the written opinion of legal counsel, is
more favorable to the Company's shareholders than the Offer and the Merger,
provided that such termination under this clause (ii) shall not be effective
until payment of the Termination Fee described below; (e) by Parent and
Purchaser prior to the purchase of Shares pursuant to the Offer if (i) there
shall have been a breach of any representation or warranty on the part of the
Company having a Material Adverse Effect on the Company or materially adversely
affecting (or materially delaying) the consummation of the Offer, (ii) there
shall have been a breach of any covenant or agreement on the part of the Company
resulting in a Material Adverse Effect on the Company or materially adversely
affecting (or materially delaying) the consummation of the Offer, (iii) the
Company shall engage in negotiations with any entity or group (other than Parent
or Purchaser) that has proposed a Third Party Acquisition (as defined below),
(iv) the Board shall have withdrawn or modified (including by amendment of the
Schedule 14D-9) in a manner adverse to Purchaser its approval or recommendation
of the Offer, the Merger Agreement or the Merger or shall have recommended
another offer, or shall have adopted any resolution to effect any of the
foregoing, or (v) the Minimum Condition shall not have satisfied by the
expiration date of the Offer and on or prior to such date an entity or group
(other than Parent or Purchaser) shall have made and not withdrawn a proposal
with respect to a Third Party Acquisition; or (f) by the Company if (i) there
shall have been a breach of any representation or warranty on the part of Parent
or Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer, or (ii) there shall have been a material breach of
any covenant or agreement on the part of Parent or Purchaser and which
materially adversely affects (or materially delays) the consummation of the
Offer.
Termination Fee and Expenses. In the event that Parent and Purchaser
terminate the Merger Agreement pursuant to clause (d)(ii) of the preceding
paragraph, the Company shall reimburse Parent, Purchaser and their affiliates
(not later than one business day after submission of statements therefor) for
all actual documented out-of-pocket fees and expenses actually and reasonably
incurred by any of them or on their behalf in connection with the Offer and the
Merger and the consummation of all transactions contemplated by the Merger
Agreement (including, without limitation, fees payable to financing sources,
investment bankers, counsel to any of the foregoing, and accountants and filing
fees and printing costs) (the "Expense Reimbursement Amount"). In the event that
Parent and Purchaser terminate the Merger Agreement pursuant to clause (c) of
the preceding paragraph (but only if such termination is based on a failure to
satisfy clause (i) or clause (iii)(c), (e) or (f) of Annex A of the Merger
Agreement) or clause (e) of the preceding paragraph, (i) the Company shall
reimburse the Parent, the Purchaser or their affiliates for up to $250,000 of
the Expense Reimbursement Amount and (ii) such amount shall be paid to Parent,
the Purchaser or their affiliates, as directed by the Parent, together with
interest thereon at the rate of 8% per annum, in 24 consecutive monthly
installments of an amount equal to 1/24 of the lesser of $250,000 or the Expense
Reimbursement Amount, commencing on the first business day of the month
immediately following the month in which the Parent, the Purchaser or such
affiliate(s) became entitled to receive such amount. Pursuant to the Merger
Agreement, in the event the Company terminates the Merger Agreement pursuant to
clause (d)(ii) of the preceding paragraph or in the event Parent and Purchaser
terminate the Merger Agreement pursuant to clause (e)(ii), (iii), (iv) or (v) of
the preceding paragraph, the Company shall pay to Parent the amount of $1
million as liquidated damages immediately upon such a termination (less the
aggregate amount paid to the Purchaser by the shareholders of the Company who
are parties to the Tender
8
<PAGE> 9
Agreement described below) (the "Termination Fee") as well as all amounts to
which Parent and Purchaser would be entitled pursuant to this paragraph.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger or otherwise by any person
(which includes a "person" as such term is defined in Section 13(d)(3) of the
Exchange Act) or entity other than Parent, Purchaser or any affiliate thereof (a
"Third Party"); (ii) the acquisition by Third Party of 30% or more of the total
assets of the Company taken as a whole; (iii) the acquisition by Third Party of
30% or more of the outstanding Shares; (iv) the adoption by the Company of a
plan of liquidation or the declaration or payment of an extraordinary dividend;
or (v) the repurchase by the Company of more than 20% of the outstanding Shares.
Pursuant to the Merger Agreement, in the event of the termination and
abandonment of the Merger Agreement, the Merger Agreement will become void and
have no effect, without any liability on the part of any party or its
affiliates, directors, officers or shareholders, other than certain provisions
of the Merger Agreement relating to the termination fee, expenses of the parties
and confidentiality of information, provided, that a party will not be relieved
from liability for any breach of the Merger Agreement.
Costs and Expenses. Except as discussed above, the Merger Agreement
provides that all costs and expenses incurred in connection with the
transactions contemplated by the Merger Agreement shall be paid by the party
incurring such costs and expenses.
Amendments and modifications. Subject to applicable law, the Merger
Agreement may be amended, modified or supplemented only by a written agreement
of the Parent (for itself and the Purchaser) and the Company at any time prior
to the Effective Time expected by duly authorized officers of the respective
parties except that after the earlier of (i) the purchase by the Purchaser of
more than 50% of the outstanding Shares on a fully diluted basis, and (ii) the
meeting of shareholders to approve the Merger, the price per Share to be paid
pursuant to the Merger Agreement to the holders of Shares may not be decreased
at the form of consideration to be received by the holders of Shares in the
Merger may not be altered without approval of such holders.
SHAREHOLDER TENDER AGREEMENTS
Under the Shareholder Tender Agreements (the "Tender Agreements") executed
by and between Purchaser and each of the directors of the Company ("Tender
Shareholders"), each Tender Shareholder agrees to tender all Shares beneficially
owned by him or her in accordance with the terms of the Offer and to not
withdraw the tender of such shares. A copy of a form of Tender Agreement is
attached hereto as Exhibit 2 and is incorporated by reference herein, and the
following description of such agreement is qualified in its entirety by
reference thereto.
Pursuant to the Tender Agreements each Tender Shareholder acknowledges that
his obligation to accept payment for his Shares is subject to all the terms and
conditions of the Offer and agrees not to transfer or offer to sell any of the
Shares that he or she beneficially owns except pursuant to the Offer. Moreover,
the Tender Shareholder, by the terms of the Tender Agreement, appoints Purchaser
as its proxy, during and for the term of the Tender Agreement, to vote each
Share beneficially owned by him or her at any annual, special, or adjourned
meeting of the stockholders of the Company (a) in favor of the Merger, the
execution and delivery by the Company of the Merger Agreement and the approval
and adoption of the terms thereof; (b) against any action or agreement that
would result in a breach in any respect of any covenant, agreement,
representation or warranty of the Company under the Merger Agreement; and (c)
against the following actions (other than the Merger and the other transactions
contemplated by the Merger Agreement): (i) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or its subsidiaries; (ii) a sale, lease or transfer of a
material amount of assets of the Company or one of its subsidiaries, or a
reorganization, recapitalization, dissolution or liquidation of the Company or
its subsidiaries; (iii) (A) any change in a majority of the persons who
constitute the board of directors of the Company as of the date hereof; (B) any
change in the present capitalization of the Company or any amendment of the
Company's Certificate of Incorporation or By-Laws, as amended to date; (C) any
other material change in the Company's corporate structure or business; or (D)
any other action which, in the case
9
<PAGE> 10
of each of the matters referred to in clauses (iii)(A), (B), (C) and (D), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or adversely affect the Merger and the other transactions contemplated
by this Agreement and the Merger Agreement. The Tender Agreement terminates on
the date the Merger Agreement is terminated in accordance with its terms.
If Purchaser or the Company terminates the Merger Agreement (other than
certain terminations by the Company based on a breach of a representation,
warranty or covenant of the Parent or Purchaser under the Merger Agreement) and
within two years from the date of such termination, the Board of Directors
approves or recommends any proposal concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company other
than from Purchaser at a per share price with a value in excess of $7.75, then
the Tender Shareholders agree to pay Purchaser an amount equal to the product of
(x) the excess of the other subsequent price over the current Offer price and
(y) the number of shares disposed of or otherwise participating in the
subsequent transaction. The fee payable by the Tender Shareholder to the
Purchaser under the Tender Agreement would also be applicable to certain other
transactions involving the Company or the Tender Shareholder within such
two-year period.
CONFIDENTIALITY AGREEMENT
On July 19, 1994, the Company, the Parent and DLJ entered into a
confidentiality agreement (the "Confidentiality Agreement"), pursuant to which
the Company agreed to provide certain confidential information (the "Evaluation
Material") to the Parent in connection with the Parent's evaluation of a
possible negotiated transaction involving the Company. The Confidentiality
Agreement provides, among other things, that (i) the Evaluation Material may
only be disclosed to directors, officers, employees, advisors and other
representatives of the Parent who need to know the Evaluation Material in order
to assist in the evaluation of a possible transaction, (ii) the Parent may
disclose Evaluation Material to relevant regulatory authorities, provided the
Parent has received an opinion of counsel that such disclosure is required by
applicable law, exchange requirement or similar obligation and, prior to such
disclosure, the Parent advises and consults with the Company and its legal
counsel regarding the information proposed to be disclosed; (iii) if the Parent
decides not to proceed with a transaction involving the Company, the Parent will
promptly notify DLJ and promptly redeliver to the Company all copies of the
Evaluation Material and all other related materials in its possession; and (iv)
it will remain in effect for two years from the date thereof.
COMPANY BENEFIT PLANS
1986 Employee Stock Purchase Plan. The terms and conditions of the 1986
Employee Stock Purchase Plan (the "Purchase Plan") provide that in the event of
any merger of which the Company is the survivor but becomes a subsidiary of
another corporation, each participant in the Purchase Plan has the right
immediately prior to the merger to elect to receive the number of whole shares
which can be purchased at the Purchase Price of the merger, as defined in the
Purchase Plan, with the full amount which has been withheld from and paid by him
or her pursuant to the Purchase Plan, together with any remaining excess cash in
his account. If such an election is not made, the participant's subscription
agreement shall terminate and he or she shall receive a prompt refund in cash of
the total amount of his or her account. A copy of the Purchase Plan is attached
hereto as Exhibit 6 and is incorporated herein by reference.
On October 20, 1995, the Board of Directors of the Company approved a
resolution providing that the Company would not accept any additional
subscriptions to purchase shares of the Company's Common Stock pursuant to the
Purchase Plan received after 11:59 p.m. (E.S.T.) on the date thereof, and that
the Purchase Plan would be deemed amended accordingly. Under the Merger
Agreement, participants in the Purchase Plan who agree to cancel their
subscriptions prior to the effective date of the Merger will be entitled to
receive at such date an amount in cash equal to the total amount of their
account under the Purchase Plan plus an amount equal to the difference between
the "purchase price," as defined in the Purchase Plan, of each share covered by
such subscription agreement, and the Merger Consideration.
1988 Stock Option Plan. The terms and conditions of the Company's 1988
Stock Option Plan (the "Option Plan") provide that in the event that the Company
is merged with another corporation, the Board of
10
<PAGE> 11
Directors of any corporation assuming the obligations of the Company thereunder,
shall either (i) make appropriate provision for the protection of any
outstanding options by the substitution on an equitable basis of appropriate
stock of the Company, or of the merged corporation, which will be issuable in
respect to the shares of Common Stock of the Company, provided only that the
excess of the aggregate fair market value of the shares subject to such options
immediately after such substitution over the purchase price thereof is not more
than the excess of the aggregate fair market value of the shares subject to
options immediately before such substitution over the purchase price thereof, or
(ii) upon written notice to the participant provide that the option must be
exercised with sixty (60) days of the date of such notice or it will be
terminated. A copy of the Option Plan is attached hereto as Exhibit 7 and is
incorporated herein by reference.
On October 20, 1995, the Board of Directors of the Company approved a
resolution providing that with respect to options outstanding under the Option
Plan, the proper officers of the Company would be authorized: (i) if the
exercise price of the option is greater than $7.75 per share, to obtain
agreements from each holder to surrender the option and cancel his or her stock
option agreement effective upon the consummation of the Merger; or (ii) if the
exercise price of the option is less than $7.75 per share, to obtain agreements
from each holder to surrender the option and cancel his or her stock option
agreement effective upon consummation of the Merger, in consideration of a cash
payment at the effective date of the Merger equal to the difference between the
exercise price and $7.75 per share; and (iii) if the holder refuses to sign the
agreement described in clauses (i) and (ii) above, to provide the 60-day notice
of termination of the option set forth in the Option Plan as described above.
The Board also approved and adopted a resolution providing that each
outstanding option under the Option Plan would be accelerated so as to be fully
exercisable prior to the consummation of the Offer, subject to the condition
that the holder of each such option would surrender all of his or her
outstanding and unexercised options (whether or not presently exercisable), and
would sign the agreement relating to the surrender and payment or surrender and
cancellation of the options, as described in the preceding paragraph.
1991 Directors Stock Plan. Under the Company's 1991 Directors Stock Plan
(the "Directors Plan") a total of 2,400 shares of Common Stock are available for
issuance and will be issued and fully vested upon consummation of the Offer in
accordance with the terms of the Directors Plan. A copy of the Directors Plan is
attached hereto as Exhibit 8 and is incorporated herein by reference.
1994 Severance Plan. Under the terms of the Merger Agreement, the Parent
will, and will cause the Surviving Corporation to, provide severance benefits to
all of the employees of the Company (as of the date of acceptance for payment of
the Shares pursuant to the Offer) of equal or greater value to those set forth
in the Company's 1994 Severance Plan for a period of two years following the
date of acceptance for payment of the Shares. This covenant shall survive the
Effective Time, as defined in the Merger Agreement, until fully discharged and
is intended to benefit all of the employees of the Company as of the date of
acceptance for payment of the Shares pursuant to the Offer. A copy of the 1994
Severance Plan is attached hereto as Exhibit 9 and is incorporated herein by
reference.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
(a) and (b) At a meeting held on October 20, 1995, the Company's Board of
Directors unanimously determined that the Merger Agreement and the Offer and the
Merger described therein are fair to, and in the best interests of, the Company
stockholders, and recommended that all of the Company's shareholders tender
their shares pursuant to the Offer.
In reaching its conclusion, the Board of Directors of the Company carefully
considered the terms and conditions of the Offer and other matters, including
presentations by the Company's management, the Company's financial advisor,
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), and the Company's
legal advisor.
DLJ reviewed with the Board, among other things, the Company's need to find
a strong strategic partner to remain competitive in a changing and increasingly
competitive market. DLJ also provided a brief history of
11
<PAGE> 12
its efforts on behalf of the Company to identify a strategic partner since DLJ
was retained by the Company in November of 1992.
On or about July, 1994, DLJ received a verbal indication of interest from a
company which is a major financial transaction processor for a possible
transaction at a price of $5.25 per share. During a subsequent conversation with
DLJ, this entity expressed an unwillingness to explore a potential transaction
at a higher price, and the Company subsequently broke off discussions.
Parent and the Company first discussed the possibility of Parent's
acquisition of the Company in February of 1994. Subsequently, from April of 1994
until October of 1994 both entities took steps to explore the feasibility of an
acquisition. These steps included due diligence investigations, visits to
facilities, evaluations of operations, analyzes of products and technological
capabilities, and reviews of opportunities for profit improvements based on
synergies resulting from a business combination. Based on these visits and other
due diligence inquires, Parent and the Company prepared tentative business plans
and strategies for an eventual business combination. However, negotiation
discussions were broken off on October 17, 1994 when the Parent learned that
certain liabilities of the Company were not capable of being quantified before
the proposed transaction date.
In September of 1994, the Company began discussions with a major financial
services company regarding a possible acquisition of the Company. A
non-disclosure agreement between this entity and the Company was entered into on
February 1, 1995. In December of 1994, DLJ received a verbal indication of
interest from this entity at a proposed price of around $9.00 per share. This
entity conducted extensive due diligence on the Company during the period from
December of 1994 until May, 1995, and the parties and their counsel negotiated a
draft merger agreement for the proposed transaction. During the month of June,
1995, however, the Company was advised by representatives of this entity that,
as a result of a proxy fight with a dissident shareholder group (which group,
according to published reports, is seeking to limit the entity's involvement in
certain non-traditional businesses), the entity decided not to pursue a
transaction with the Company.
In June 1995, DLJ contacted Greg Searle and Gerald Morris of Parent
regarding a possible transaction. Initial price indications were at $7.00 per
share. During this conversation, DLJ said that the proposed price was below the
current market price of the Company's Shares at such time, and would not be
acceptable to the Company. On or about September 21, 1995, Parent increased its
proposed offer price to $7.50 per share. As a result of further discussions on
or about September 28, 1995 between DLJ and Goldman, Sachs & Co., Inc., Parent's
financial advisor, Parent increased its proposed offer price to $7.75 per share.
On October 3, 1995, Goldman Sachs & Co., Inc. advised DLJ that $7.75 was
Parent's best offer.
DLJ advised the Board at its October 20, 1995 meeting that, in DLJ's view,
further negotiation as to price would be unlikely to cause Parent to increase
the Offer price, based on its discussion with Goldman, Sachs & Co., Inc. DLJ
further advised the Board that DLJ was not aware of any other strategic partners
available to the Company at this time.
After a review of the negotiation history, DLJ made a presentation to the
Board which included, among other things, (i) a comparison of certain financial
and securities data of the Company with various other companies whose securities
are traded in public markets; (ii) a review of the historical stock prices and
trading volumes of the Common Stock of the Company; and (iii) a review of prices
and premiums paid in other business combinations. DLJ delivered its oral opinion
to the Board that the $7.75 cash consideration per share proposed to be paid to
the holders of shares pursuant to the Offer was fair to the shareholders from a
financial point of view. DLJ subsequently confirmed its oral fairness opinion in
writing. The written fairness opinion of DLJ dated October 20, 1995 (the
"Fairness Opinion") is filed as Exhibit 3 to this Schedule 14D-9 and is
incorporated herein by reference, and the preceding description of such opinion
is qualified in its entirety by reference thereto.
The Company's senior management and legal advisors summarized the principal
terms of the transaction and the final form of the Merger Agreement with the
Board, including certain considerations relating to the regulatory and antitrust
aspects of the Offer, the termination and break-up fee provisions, the
continuation of
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<PAGE> 13
indemnification and director's and officer's liability insurance and the Board's
fiduciary obligations to the Company's stockholders.
Based on the presentations described above and the Board's own
deliberations and discussions, the Board unanimously determined that the Offer
and the Merger pursuant to the draft Merger Agreement would be fair to, and in
the best interests of, the Company's stockholders and that it would recommend to
the Company's stockholders that they accept the Offer and tender all their
shares pursuant to the Offer. In the evening following the October 20 Board
meeting, the definitive Merger Agreement was executed by the parties. The
Company and Parent issued a joint press release announcing the execution of the
Merger Agreement on October 23, 1995. A copy of the joint press release is
attached as Exhibit 4 hereto.
In reaching its conclusion to approve the Merger Agreement and recommend
that shareholders accept the Offer, the Company's Board of Directors considered
a number of factors, including, without limitation, the following:
(1) The business, financial condition, results of operations and
competitive position of the Company, on both a historical and a prospective
basis, as well as the current industry, economic and market conditions and the
Company's current operating strategies.
(2) Historical trading prices and recent trading patterns of the Company's
Common Stock. The Board noted that the offer price constitutes a premium over
current market prices for the Company's Common Stock.
(3) The Fairness Opinion of DLJ, the Company's financial advisor, that, on
the basis of its review and analysis and subject to the limitations set forth
therein, the $7.75 per share cash consideration to be received by the
shareholders of the Company pursuant to the Offer is fair, from a financial
point of view, to such shareholders.
(4) The terms and conditions of the Offer and Merger, as reviewed by and
discussed with the Company's management and legal counsel.
(5) The Board's belief that the Offer and the Merger represent the best
alternative available to the Company and its shareholders under present
circumstances, based on presentations from the management of the Company and the
consideration of all other relevant factors. In this regard, the Board
considered the Company's extensive recent history of discussions with third
parties regarding the possibility of an acquisition or other strategic
transaction.
The Board of Directors did not assign relative weights to the foregoing
factors or determine that any factor was of more importance than other factors.
Rather, the Board of Directors viewed its position and recommendations as being
based on the totality of the information presented to and considered by it.
A copy of the written Fairness Opinion of DLJ, setting forth the
assumptions made, factors considered and scope of the review undertaken by DLJ
is attached hereto as Exhibit 3 and incorporated herein by reference.
SHAREHOLDERS ARE URGED TO READ THE OPINION OF DLJ IN ITS ENTIRETY.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company and DLJ have entered into a letter agreement dated November 10,
1992, as amended on April 8, 1994 (the "Engagement Letter").
Pursuant to the Engagement Letter, DLJ has been engaged to act as the
exclusive financial advisor to the Company for a period of four years with
respect to the sale, merger, consolidation or any other business combination, in
one or a series of transactions, involving all or a substantial amount (more
than fifty percent) of the business, securities or assets of the Company (each a
"Transaction"). The Engagement Letter provides that the Company will pay to DLJ
for its services (i) a retainer fee of $100,000, (ii) a fee of $100,000 at the
time DLJ notifies the Board that DLJ is prepared to deliver its opinion as to
the fairness from a financial point of view of any proposed acquisition
transaction, if requested by the Company, (iii) additional cash which is an
amount equal to two and one quarter percent (2.25%) of the aggregate amount of
consideration received by
13
<PAGE> 14
the Company and/or its shareholders, plus the amount of any debt securities
assumed or preferred stock redeemed or remaining outstanding in connection with
the Transactions, including, in the case of a sale or other disposition by the
Company of assets, the net value of any assets not sold by the Company, less the
amount paid to DLJ pursuant to clause (i) above. Such additional compensation
shall be contingent upon and payable in cash promptly upon consummation of a
Transaction.
Except as described above, neither the Company nor any person acting on its
behalf has retained any other person to make solicitations or recommendations to
security holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) To the best of the Company's knowledge, there has been no transaction
in securities referred to in Item 1 which was effected during the past sixty
(60) days by the person(s) named in response to Item 3(a) and by any executive
officer, director or affiliate or subsidiary of such persons.
(b) The members of the Board of Directors have signed Shareholder Tender
Agreements and intend to tender to Purchaser the Shares being sought by
Purchaser which are held of record or beneficially owned by such persons.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as described under Items 3(b) and 4 above, the Company is not
engaged in any negotiations in response to the Offer which relates to or would
result in: (i) an extraordinary transaction such as a merger or reorganization,
involving the Company or any subsidiary of the Company; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary of the
Company; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as otherwise set forth in response to Item 4 above, there is no
transaction, Board resolution, agreement in principle or signed contract in
response to the Offer.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Annex I is being furnished in connection with the possible designation by
the Purchaser, pursuant to the Merger Agreement, of certain persons to be
appointed to the Board of Directors other than at a meeting of the Company's
shareholders.
14
<PAGE> 15
INFORMATION CONCERNING THE PURCHASER DESIGNEES
TO THE BOARD OF DIRECTORS OF THE COMPANY
(ALL ARE CITIZENS OF THE UNITED STATES)
<TABLE>
<CAPTION>
NAME AND AGE (AS OF PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
10/23/95) FIVE-YEAR EMPLOYMENT HISTORY
<S> <C>
- ---------------------------------------------------------------------------------------------
William T. Blair (62) 1993-present, Executive Vice President, Diebold; 1989-93 Vice
c/o Diebold, Incorporated President and General Manager, North American Sales and Services,
5995 Mayfair Road Diebold
North Canton, OH 44720
Gerald F. Morris (52) 1993-present, Executive Vice President and Chief Financial
c/o Diebold, Incorporated Officer,
5995 Mayfair Road Diebold; 1994-present, Vice President, Treasurer and Director,
North Canton, OH 44720 D-GT Acquisition; 1990-93, Senior Vice President and Chief
Financial Officer, Diebold
Gregg A. Searle (47) 1993-present, Executive Vice President, Diebold; 1994-present,
c/o Diebold, Incorporated President and Director, D-GT Acquisition; 1990-1993, Vice
5995 Mayfair Road President,
North Canton, OH 44720 Diebold; 1991-93, General Manager, InterBold; 1990-91, Vice
President,
U.S. Sales & Marketing, InterBold
Alben W. Warf (57) 1994-present, Group Vice President, Self-Service Systems,
c/o Diebold, Incorporated Diebold;
5995 Mayfair Road 1993-94, Vice President, Diebold, and General Manager, InterBold;
North Canton, OH 44720 1990-93, Vice President, Development and Manufacturing, Diebold
Robert J. Warren (49) 1990-present, Vice President and Treasurer, Diebold;
c/o Diebold, Incorporated 1994-present,
5995 Mayfair Road Director, D-GT Acquisition
North Canton, OH 44720
</TABLE>
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 -- Agreement and Plan of Merger dated as of October 20, 1995 by
and among Company, Purchaser and Parent.
Exhibit 2 -- Form of Shareholder Tender Agreement between Purchaser and
each Tender Shareholder of the Company.
Exhibit 3 -- Fairness Opinion delivered by DLJ to the Board of Directors of
the Company dated October 20, 1995.
Exhibit 4 -- Joint Press Release of the Company and Parent dated October
23, 1995.
Exhibit 5 -- Information concerning the Purchaser Designees to the Board of
Directors of the Company.
Exhibit 6 -- 1986 Employee Stock Purchase Plan.
Exhibit 7 -- 1988 Stock Option Plan.
Exhibit 8 -- 1991 Directors Stock Plan.
Exhibit 9 -- 1994 Severance Plan.
Exhibit 10 -- Page 3 of 1995 Proxy Statement.
Exhibit 11 -- Confidentiality Agreement between Parent and Company, dated
July 19, 1994.
Exhibit 12 -- Letter to Shareholders of the Company.
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<PAGE> 16
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: October 26, 1995
GRIFFIN TECHNOLOGY INCORPORATED
By: /s/ Robert S. Urland
---------------------------
Name: Robert S. Urland
Title: President and Chief
Executive Officer
16
<PAGE> 17
EXHIBIT INDEX
Exhibit 1 -- Agreement and Plan of Merger dated as of October 20, 1995 by
and among Company, Purchaser and Parent.
Exhibit 2 -- Form of Shareholder Tender Agreement between Purchaser and
each Tender Shareholder of the Company.
Exhibit 3 -- Fairness Opinion delivered by DLJ to the Board of Directors of
the Company dated October 20, 1995.
Exhibit 4 -- Joint Press Release of the Company and Parent dated October
23, 1995.
Exhibit 5 -- Information concerning the Purchaser Designees to the Board of
Directors of the Company.
Exhibit 6 -- 1986 Employee Stock Purchase Plan.
Exhibit 7 -- 1988 Stock Option Plan.
Exhibit 8 -- 1991 Directors Stock Plan.
Exhibit 9 -- 1994 Severance Plan.
Exhibit 10 -- Page 3 of 1995 Proxy Statement.
Exhibit 11 -- Confidentiality Agreement between Parent and Company, dated
July 19, 1994.
Exhibit 12 -- Letter to Shareholders of the Company.
<PAGE> 1
EXHIBIT 1
Agreement and Plan of Merger dated as of October 20, 1995
by and among Company, Purchaser and Parent.
<PAGE> 2
================================================================================
AGREEMENT AND PLAN OF MERGER
AMONG
GRIFFIN TECHNOLOGY INCORPORATED,
DIEBOLD, INCORPORATED
AND
D-GT ACQUISITION, INCORPORATED
Dated as of October 20, 1995
================================================================================
<PAGE> 3
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
(Not Part of the Agreement)
<TABLE>
<CAPTION>
Page
----
<S> <C>
Article I - THE TENDER OFFER.................................................... 2
1.01. The Offer....................................................... 2
1.02. Company Action.................................................. 6
1.03. Board of Directors and Committees;
Section 14(f)................................................. 9
ARTICLE II - THE MERGER......................................................... 11
2.01. The Merger...................................................... 11
2.02. Effective Time.................................................. 12
2.03. Certificate of Incorporation.................................... 12
2.04. By Laws......................................................... 12
2.05. Directors and Officers.......................................... 13
2.06. Further Assurances.............................................. 13
2.07. Shareholders' Meeting........................................... 14
ARTICLE III - CONVERSION OR CANCELLATION OF SHARES;
STOCK RIGHTS...................................................... 17
3.01. Conversion or Cancellation of Shares............................ 17
3.02. Exchange of Certificates; Paying Agent.......................... 18
3.03. Dissenters' Rights.............................................. 21
3.04. Transfer of Shares After the Effective
Time.......................................................... 22
3.05. Company Stock Rights............................................ 22
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................................ 24
4.01. Organization; Qualification..................................... 24
4.02. The Company's Capitalization.................................... 25
4.03. Company Equity Investments...................................... 25
4.04. Authority Relative to this Agreement............................ 26
4.05. Consents and Approvals: No Violation............................ 27
4.06. SEC Reports: Financial Statements............................... 28
4.07. Proxy Statement; Offer Documents................................ 29
4.08. Undisclosed Liabilities......................................... 30
4.09. Absence of Certain Changes or Events............................ 31
4.10. Title, Etc. .................................................... 31
4.11. Patents, Trademarks, Etc. ...................................... 33
4.12. Insurance....................................................... 34
4.13. Employee Benefit Plans.......................................... 34
4.14. Legal Proceedings, Etc. ........................................ 36
4.15. Taxes........................................................... 36
4.16. Material Agreements............................................. 38
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4.17. Compliance with Law............................................. 39
4.18. Insider Interests............................................... 39
4.19. Accounts Receivable............................................. 39
4.20. Officers, Directors and Employees............................... 40
4.21. Environmental Protection........................................ 40
4.22. Brokers and Finders............................................. 42
4.23. No Other Representations or Warranties.......................... 42
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE PARENT
AND THE PURCHASER................................................... 43
5.01. Corporation Organization........................................ 43
5.02. Authorized Capital.............................................. 43
5.03. Corporation Authority........................................... 43
5.04. No Prior Activities............................................. 44
5.05. No Financing Contingency........................................ 45
5.06. Governmental Filings; No Violations............................. 45
5.07. Brokers and Finders............................................. 46
5.08. Offer Documents; Proxy Statement;
Other Information ............................................ 46
5.09. No Other Representations or Warranties ......................... 47
ARTICLE VI - COVENANTS OF THE PARTIES........................................... 48
6.01. Conduct of Business of the Company.............................. 48
6.02. Notification of Certain Matters................................. 51
6.03. Access to Information........................................... 52
6.04. Further Information............................................. 53
6.05. Further Assurances.............................................. 54
6.06. Interim Financial Statements.................................... 54
6.07. Fairness Opinion................................................ 55
6.08. Best Efforts.................................................... 55
6.09. Filings......................................................... 57
6.10. Public Announcements............................................ 58
6.11. Indemnity; D&O Insurance........................................ 59
6.12. Company Benefit Plans........................................... 62
6.13. Other Potential Bidders......................................... 63
6.14. Employees of the Company........................................ 65
ARTICLE VII - CONDITIONS TO THE MERGER.......................................... 66
7.01. Conditions to Each Party's
Obligation to Effect the Merger............................... 66
7.02. Conditions to the Obligations of
the Parent and the Purchaser to
Effect the Merger............................................. 67
7.03. Conditions to the Obligations of the
Company to Effect the Merger.................................. 67
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ARTICLE VIII - CLOSING.......................................................... 67
8.01. Time and Place................................................... 67
8.02. Filings at the Closing........................................... 68
ARTICLE IX - TERMINATION; AMENDMENT; WAIVER..................................... 68
9.01. Termination...................................................... 68
9.02. Effect of Termination............................................ 71
9.03. Fees and Expenses................................................ 71
ARTICLE X - MISCELLANEOUS....................................................... 73
10.01. Survival of Representations, Warranties,
Covenants and Agreements....................................... 73
10.02. Amendment and Modification....................................... 74
10.03. Waiver of Compliance; Consents................................... 74
10.04. Counterparts..................................................... 75
10.05. Governing Law.................................................... 75
10.06. Notices.......................................................... 75
10.07. Entire Agreement, Assignment, Etc. .............................. 77
10.08. Validity......................................................... 78
10.09. Headings......................................................... 78
10.10. Specific Performance............................................. 78
ANNEX A Certain Conditions to Offer
ANNEX B Form of Shareholder Tender Agreement
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of October 20, 1995, among Griffin Technology
Incorporated, a New York corporation (the "Company"), D-GT Acquisition,
Incorporated, a New York corporation (the "Purchaser"), and Diebold,
Incorporated, an Ohio corporation (the "Parent").
WHEREAS, the Board of Directors of the Company has determined
that it is in the best interests of its shareholders for the Purchaser to
acquire the Company upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Company, the Parent and the Purchaser desire to
make certain representations, warranties and agreements in connection with this
Agreement;
WHEREAS, in furtherance of such acquisition, the Parent
proposes to cause the Purchaser to make a tender offer to purchase all of the
issued and outstanding shares of common stock of the Company, par value $0.05
per share (the "Common Stock"), upon the terms and subject to the conditions of
this Agreement, and the Board of Directors of the Company has approved the offer
and determined to recommend that the Company's shareholders accept the offer;
and
WHEREAS, to complete such acquisition, the respective Boards
of Directors of the Parent, the Purchaser and the Company, and the Parent acting
as the sole shareholder of the Purchaser, have approved the offer and the merger
of the Purchaser with and into the Company upon the terms and subject to the
conditions of
<PAGE> 7
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this Agreement, whereby each issued and outstanding share of Common Stock not
owned directly or indirectly by the Parent or the Company, except shares of
Common Stock held by persons who object to such merger and demand payment of the
value of their shares of Common Stock, will be converted into the right to
receive the same price per share of Common Stock paid pursuant to the offer;
NOW, THEREFORE, in consideration of the representations,
warranties and agreements herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
THE TENDER OFFER
1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Article IX and none of the events or
conditions set forth in Annex A shall have occurred and be existing, then, not
later than the fifth business day after the date of this Agreement, the
Purchaser shall, subject to the provisions of this Agreement, commence a tender
offer (the "Offer") for all of the outstanding shares of Common Stock (the
"Shares"), at a price of $7.75 per Share, net to the seller in cash. The
Purchaser shall accept for payment and pay for all Shares that have been validly
tendered and not withdrawn pursuant to the Offer at the earliest time following
expiration of the Offer that all conditions to the Offer shall have been
satisfied or waived by the Purchaser. The obligation of the Purchaser to
commence the Offer shall be subject to the conditions set forth in Annex A
hereto and the obligation of the Purchaser to accept for payment, purchase and
pay for Shares tendered pursuant to the
<PAGE> 8
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Offer shall be subject to such conditions, including the condition that a number
of Shares representing not less than two-thirds of the Shares then outstanding
on a fully diluted basis shall have been validly tendered and not withdrawn
prior to the expiration date of the Offer (the "Minimum Condition"). The
Purchaser expressly reserves the right to increase the price per Share payable
in the Offer or to make any other changes in the terms and conditions of the
Offer; provided, however, that, unless previously approved by the Company in
writing, no change may be made which decreases the price per Share payable in
the Offer, which changes the form of consideration to be paid in the Offer,
which reduces the maximum number of Shares to be purchased in the Offer, which
imposes conditions to the Offer in addition to those set forth in Annex A hereto
or which broadens the scope of such conditions. Notwithstanding the foregoing,
the Purchaser may, without the consent of the Company, (a) extend the Offer if,
at the scheduled expiration date of the Offer, any of the conditions to the
Purchaser's obligation to purchase Shares shall not be satisfied until such time
as such conditions are satisfied, but in no event shall any such extension
continue the Offer beyond the ninetieth day following the commencement of the
Offer, (b) extend the Offer for a period of not more than 15 business days
beyond the latest expiration date that would otherwise be permitted under clause
(a) of this sentence if, on the date of such extension, more than two-thirds but
less than 90 percent of the outstanding Shares has been validly tendered and not
properly withdrawn pursuant to the Offer, or (c) extend the Offer for any reason
for
<PAGE> 9
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a period of not more than 10 calendar days beyond the latest expiration date
that would otherwise be permitted under clauses (a) or (b) of this sentence. It
is agreed that the conditions set forth in Annex A are for the sole benefit of
the Parent and the Purchaser and may be asserted by the Parent or the Purchaser
regardless of the circumstances giving rise to any such condition (including any
action or inaction by the Purchaser, unless any such action or inaction by the
Purchaser would constitute a breach by the Purchaser of any of its covenants
under this Agreement) or may be waived by the Parent or the Purchaser, in whole
or in part at any time and from time to time, in its sole discretion. The
failure by the Parent or the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time. Any reasonable determination (which shall be made in good
faith) by the Parent or the Purchaser with respect to any of the foregoing
conditions (including, without limitation, the satisfaction of such conditions)
shall be final and binding on the parties. The Company agrees that no Shares
held by the Company will be tendered in the Offer.
(b) As promptly as reasonably practicable following execution
of this Agreement, the Parent and the Purchaser shall file with the Securities
and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1
with respect to the Offer, which shall contain an offer to purchase and related
letter of transmittal and summary advertisement (such Schedule 14D-1 and
<PAGE> 10
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the documents therein pursuant to which the Offer will be made, together with
any supplements or amendments thereto, the "Offer Documents"). The Offer
Documents shall comply as to form in all material respects with the requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations promulgated thereunder and, on the date filed with the SEC
and on the date first published, sent or given to the holders of Shares, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by the Parent or the Purchaser
with respect to information supplied by the Company specifically for inclusion
in the Offer Documents. Each of the Parent, the Purchaser and the Company agrees
promptly to correct any information supplied by it specifically for inclusion in
the Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect, and each of the Parent and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
Federal securities laws. The Parent and the Purchaser agree to provide the
Company and its counsel in writing with any comments the Parent, the Purchaser
or their counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after the receipt of such comments.
<PAGE> 11
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1.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that the Board of Directors of
the Company (the "Board"), at a meeting duly called and held, has unanimously
adopted resolutions (i) determining that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, are fair to, and in the
best interests of, the shareholders of the Company, (ii) approving and adopting
this Agreement and the transactions contemplated hereby, including the Offer,
the Merger (as defined in Section 2.01), and the Shareholders Tender Agreements
of even date between the Purchaser and each of the Directors of the Company (the
"Shareholder Tender Agreements") and the transactions contemplated thereby, in
all respects and that such approval constitutes approval of the Offer, this
Agreement, the Merger and the Shareholder Tender Agreements, and the
transactions contemplated hereby and thereby, for purposes of Sections 902 and
912 of the New York Business Corporation Law (the "BCL") and similar provisions
of any other similar state statutes that might be deemed applicable to the
transactions contemplated hereby, and (iii) recommending that the shareholders
of the Company accept the Offer, tender their Shares thereunder to the Purchaser
and approve and adopt this Agreement and the Merger; provided, however, that
such recommendation may be withdrawn, modified or amended to the extent that the
Board, by a majority vote, determines in its good faith judgment, based as to
legal matters on the written opinion of legal counsel, that the Board is
required to do so for the proper discharge of its fiduciary duties. The
foregoing shall
<PAGE> 12
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constitute a good faith proposal of the Parent (and the Purchaser) to acquire
the Shares, and acceptance and approval of such proposal by the Board, in
accordance with Section 912 of the BCL.
(b) The Company has been advised by each of its executive
officers who as of the date hereof is aware of the transactions contemplated
hereby and each of its Directors that each such person intends to tender
pursuant to the Offer all Shares owned by such person. The Company represents
that the Board has received the oral opinion of Donaldson, Lufkin & Jenrette,
Incorporated ("DLJ") that the proposed consideration to be received by holders
of Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view and that DLJ is prepared to deliver its written opinion
that the proposed consideration to be received by holders of Shares pursuant to
the Offer and Merger is fair to such holders from financial point of view within
three days from the date of this Agreement.
(c) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9"), containing the recommendation described in
Section 1.02(a) and shall mail the Schedule 14D-9 to the shareholders of the
Company. The Schedule 14D-9 shall comply in all material respects with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder and on the date filed with the SEC and on the date first published,
sent or
<PAGE> 13
- 8 -
given to the Company's shareholders, and shall not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by the Company with respect to information supplied in
writing by the Parent or the Purchaser specifically for inclusion or
incorporation by reference in the Schedule 14D-9. Each of the Company, the
Parent and the Purchaser agrees promptly to correct any information provided by
it for the use in the Schedule 14D-9 if and to the extent that such information
shall have become false or misleading in any material respect, and the Company
further agrees to take all steps necessary to amend or supplement the Schedule
14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed
with the SEC and disseminated to the Company's shareholders, in each case as and
to the extent required by applicable Federal securities laws. The Parent and its
counsel shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-9 and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to shareholders of the Company. The Company agrees
to provide the Parent and its counsel in writing with any comments the Company
or its counsel may receive from the SEC or its Staff with respect to the
Schedule 14D-9 promptly after the receipt of such comments.
(d) In connection with the Offer, the Company will, and will
cause its transfer agent (the "Transfer Agent") to, furnish promptly to the
Parent and the Purchaser mailing labels containing
<PAGE> 14
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the names and addresses of all record holders of Shares as of a recent date and
of those persons becoming record holders after such date, together with copies
of all lists of shareholders and security position listing and computer files
and all other information in the Company's possession and control regarding the
beneficial ownership of Shares. The Company shall promptly furnish the Parent
and the Purchaser with such additional information (including, but not limited
to, updated lists of holders of Shares and their addresses, mailing labels and
security position listings and computer files) and such other assistance as the
Parent and the Purchaser or their agents may reasonably request in communicating
the Offer to the record and beneficial holders of Shares.
1.03. Board of Directors and Committees; Section 14(f). (a)
Promptly upon acceptance for payment of, and payment for, Shares pursuant to the
Offer and from time to time thereafter, the Purchaser shall be entitled to
designate up to such number of directors, rounded up to the next whole number,
on the Board as will give the Purchaser representation on the Board equal to the
product of the number of directors on the Board (giving effect to any increase
in the number of directors pursuant to this Section 1.03) and the percentage
that such number of Shares beneficially owned by the Purchaser and its
affiliates bears to the total number of outstanding Shares, and the Company
shall, at such time, cause the Purchaser's designees to be elected or appointed,
upon request by the Purchaser. In connection with the foregoing, the Company
shall promptly, as reasonably agreed by the
<PAGE> 15
-10-
Parent and the Company, either increase the size of the Board and/or secure the
resignation of such number of its current directors as is necessary to enable
the Purchaser's designees to be elected or appointed to the Board and to cause
the Purchaser's designees to be so elected or appointed. At such times and,
subject to the last sentence of this Section 1.03(a), to the extent requested by
the Parent, the Company will use its best efforts to cause persons designated by
the Purchaser to constitute the same percentage of each committee of the Board
(other than any committee of the Board established to take action under this
Agreement) as the Purchaser's designees constitute on the Board. Notwithstanding
the foregoing, the Company, the Parent and the Purchaser shall each use its best
efforts to ensure that three of the members of the Board as of the date hereof
who are not officers, employees or affiliates of the Company (the "Independent
Directors") shall remain members of the Board until the Effective Time (as
defined in Section 2.02 hereof) and if the number of the Independent Directors
shall be reduced below three for any reason, any remaining Independent
Director(s) shall be entitled to designate independent persons to fill such
vacancies and such persons shall be deemed to be Independent Directors; or, if
no Independent Directors then remain, the other directors shall designate three
independent persons to fill such vacancies, and such persons shall be deemed to
be Independent Directors.
(b) The Company's obligation to appoint designees to the Board
shall be subject to Section 14(f) of the Exchange Act, and Rule 14f-1
promulgated thereunder. The Company shall promptly
<PAGE> 16
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take all action required pursuant to such Section and Rule in order to fulfill
its obligations under this Section 1.03, including mailing to its shareholders
with the Schedule 14D-9 such information as is required under such Section and
Rule in order to fulfill its obligations under this Section 1.03. The Purchaser
will supply to the Company in writing and be solely responsible for any
information with respect to itself and its nominees, officers, directors and
affiliates required by such Section and Rule.
(c) Following the election or appointment of the Purchaser's
designees pursuant to this Section 1.03, any amendment of this Agreement, any
termination of this Agreement by the Company, any recommendation made by the
Board pursuant to Section 2.07(a)(ii) of this Agreement, any actions taken by
the Board pursuant to Section 6.13 of this Agreement, any extension by the
Company of the time for the performance of any of the obligations or other acts
of the Purchaser or the Parent hereunder or waiver of any of the Company's
rights or waiver by the Company of any condition hereunder, will require the
concurrence of a majority of such directors.
ARTICLE II
THE MERGER
2.01. The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Parent shall cause
the Purchaser to merge (the "Merger") with and into the Company and the separate
corporate existence of the Purchaser shall thereupon cease. The Company shall be
the surviving corporation
<PAGE> 17
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in the Merger (the Purchaser and the Company are sometimes hereinafter referred
to as the "Constituent Corporations" and the Company is sometimes hereinafter
referred to as the "Surviving Corporation") and shall, following the Merger, be
governed by the laws of the State of New York, and the separate corporate
existence of the Company, with all its rights, privileges, immunities, powers
and franchises, of a public as well as of a private nature, shall continue
unaffected by the Merger. From and after the Effective Time, the Merger shall
have the effects specified in the BCL.
2.02. Effective Time. At the Closing contemplated in Section
8.01, the Company and the Parent will cause a Certificate of Merger (the "New
York Certificate of Merger") to be executed and filed by the Company and the
Purchaser with the Secretary of State of the State of New York as provided in
the BCL. The Merger shall become effective as of the date and at the time the
New York Certificate of Merger is duly filed with the Secretary of State of the
State of New York, and such time is hereinafter referred to as the "Effective
Time."
2.03. Certificate of Incorporation. The Restated Certificate
of Incorporation of the Company, as amended (the "Restated Certificate"), in
effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the BCL.
2.04. By-Laws. The By-Laws of the Company as in effect
immediately prior to the Effective Time shall be the By-Laws of
<PAGE> 18
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the Surviving Corporation, until duly amended in accordance with the terms
thereof and the BCL.
2.05. Directors and Officers. At the Effective Time, the
directors of the Purchaser immediately prior to the Effective Time shall be the
directors of the Surviving Corporation, each of such directors to hold office,
subject to the applicable provisions of the Restated Certificate and By-Laws of
the Surviving Corporation, until their respective successors shall be duly
elected or appointed and qualified. The officers of the Company immediately
prior to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed and qualified.
2.06. Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments or assurances
or any other acts or things are necessary, desirable or proper:
(a) to vest, perfect or confirm, of record or otherwise, in
the Surviving Corporation, its right, title or interest in, to or under
any of the rights, privileges, powers, franchises, properties or assets
of either of the Constituent Corporations, or
(b) otherwise to carry out the purposes of this Agreement,
the proper officers and directors of the Surviving Corporation are hereby
authorized on behalf of the respective Constituent Corporations to execute and
deliver, in the name and on behalf of
<PAGE> 19
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the respective Constituent Corporations, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of the Constituent
Corporations, all such other acts and things necessary, desirable or proper to
vest, perfect or confirm its right, title or interest in, to or under any of the
rights, privileges, powers, franchises, properties or assets of the Constituent
Corporations and otherwise to carry out the purposes of this Agreement.
2.07. Shareholders' Meeting. (a) The Company, acting through
the Board, shall, at the Parent's request and in accordance with applicable law:
(i) duly call, give notice of, convene and hold an
annual or special meeting of its shareholders (the "Shareholders'
Meeting"), to be held as soon as practicable (provided that the
Purchaser shall have accepted for payment and paid for Shares pursuant
to the Offer) for the purpose of approving and adopting this Agreement,
the Merger and the transactions contemplated hereby and thereby;
(ii) subject to the provisions of Section 1.02(a)
(iii), the Board will include in the Proxy Statement (as defined in
Section 4.07) the recommendation of the Board that shareholders of the
Company vote in favor of the approval and adoption of this Agreement
and the Merger and the other transactions contemplated hereby and
thereby and that the cash consideration to be received by the
shareholders of the Company pursuant to the Merger is fair to such
shareholders; and
<PAGE> 20
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(iii) will, as soon as practicable after the Parent's
request, prepare and file a preliminary Proxy Statement with the SEC
and, after consultation with the Parent and the Purchaser, respond
promptly to any comments made by the SEC with respect to the Proxy
Statement and any preliminary version thereof and cause the Proxy
Statement to be mailed to its shareholders at the earliest practicable
time after responding to all such comments to the satisfaction of the
staff of the SEC and to obtain the necessary approvals by its
shareholders of this Agreement.
Without limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to this Section 2.07(a) shall not be affected by either the
commencement, public proposal, public disclosure or other communication to the
Company of any offer to acquire some or all of the Shares or all or any
substantial portion of the assets of the Company or any change in the
recommendation of the Board.
(b) The Company, the Parent and the Purchaser, as the case may
be, shall promptly prepare and file any other filings required under the
Exchange Act or any other Federal or state securities or corporate laws relating
to the Merger and the transactions contemplated herein (the "Other Filings").
Each of the parties hereto shall notify the other parties hereto promptly of the
receipt by it of any comments from the SEC or its staff and of any request of
the SEC for amendments or supplements to the Proxy Statement or by the SEC or
any other governmental officials with respect to any Other Filings or for
additional information
<PAGE> 21
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and will supply the other parties hereto with copies of all correspondence
between it and its representatives, on the one hand, and the SEC or the members
of its staff or any other governmental officials, on the other hand, with
respect to the Proxy Statement, any Other Filings or the Merger. The Company,
the Parent and the Purchaser each shall use its best efforts to obtain and
furnish the information required to be included in the Proxy Statement, any
Other Filings or the Merger. If at any time prior to the time of approval of
this Agreement by the Company's shareholders there shall occur any event that
should be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its shareholders such amendment or
supplement. The Company shall not mail the Proxy Statement or, except as
required by the Exchange Act or the rules and regulations promulgated
thereunder, any amendment or supplement thereto, to the Company's shareholders
unless the Company has first obtained the consent of the Parent to such mailing.
(c) At the meeting of shareholders, the Parent, the Purchaser
and their affiliates will vote all Shares owned by them in favor of approval and
adoption of this Agreement, the Merger, and the transactions contemplated hereby
and thereby.
(d) Notwithstanding the foregoing, in the event that the
Purchaser shall acquire at least 90 percent of then outstanding Shares, the
parties hereto agree, at the request of the Purchaser, to take all necessary and
appropriate action to cause the Merger to become effective, in accordance with
<PAGE> 22
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Section 905 or 907 of the BCL, as soon as reasonably practicable after such
acquisition and satisfaction or waiver of the conditions of Article VII, without
a meeting of the shareholders of the Company.
ARTICLE III
CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS
3.01. Conversion or Cancellation of Shares. At the Effective
Time, by virtue of the Merger and without any action on the part of the holders
thereof:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by the Parent or any wholly-owned
subsidiary of the Parent (collectively, the "Parent Companies"), Shares held by
shareholders exercising appraisal rights pursuant to Sections 623 and 910 of the
BCL (the "Dissenting Shareholders"), and any Shares held in the treasury of the
Company) shall be converted into and represent the right to receive, without
interest, an amount in cash equal to $7.75 net or such greater amount per
share which may be paid pursuant to the Offer as it may be amended (the "Merger
Consideration") upon surrender of the certificate or certificates that,
immediately prior to the Effective Time, represented issued and outstanding
Shares (the "Certificates"). As of the Effective Time, all such
Shares shall no longer be outstanding, shall be automatically cancelled and
shall cease to exist, and each holder of a Certificate representing any such
Shares shall thereafter cease to have any rights with respect to such Shares,
except the right to receive the Merger Consideration without interest for such
Shares
<PAGE> 23
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upon the surrender of such Certificate or Certificates in accordance with
Section 3.02.
(b) Each Share issued and outstanding immediately prior to the
Effective Time and owned by any of the Parent Companies, and each Share issued
and held in the Company's treasury immediately prior to the Effective Time shall
no longer be outstanding, shall be cancelled without payment of any
consideration therefor and shall cease to exist, and each holder of a
Certificate representing any such Shares shall thereafter cease to have any
rights with respect to such Shares.
(c) Each share of Common Stock, par value $1.00 per share, of
the Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and become one fully-paid and non-assessable share of
Common Stock, par value $0.05 per share, of the Surviving Corporation.
3.02. Exchange of Certificates; Paying Agent. (a) Prior to the
Closing, the Parent shall select a bank or trust company to act as paying agent
(the "Paying Agent") for the payment of the cash consideration specified in
Section 3.01 upon surrender of Certificates converted into the right to receive
cash pursuant to the Merger. From time to time at and after the Effective Time,
the Parent shall make available, or cause the Purchaser or the Surviving
Corporation to make available, to the Paying Agent immediately available funds
in amounts and at times necessary for the payment of the Merger Consideration
(the "Funds") upon surrender of Certificates pursuant to Section 3.01,
<PAGE> 24
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it being understood that any and all interest earned on the Funds shall be paid
over by the Paying Agent as the Parent shall direct.
(b) Promptly after the Effective Time, the Paying Agent shall
mail to each person who was, at the Effective Time, a holder of record of a
Certificate or Certificates, other than the Company or any of the Parent
Companies, a letter of transmittal and instructions for use in effecting the
surrender, in exchange for payment in cash therefor, of the Certificates. The
letter of transmittal shall specify that delivery shall be effected, and risk of
loss and title shall pass, only upon proper delivery to and receipt of such
Certificates by the Paying Agent and shall be in such form and have such
provisions as the Parent shall reasonably specify. Upon surrender to the Paying
Agent of such Certificates, together with the letter of transmittal, duly
executed and completed in accordance with the instructions thereto and such
other documents as may be reasonably required by the Paying Agent, the Paying
Agent shall promptly pay to the persons entitled thereto, out of the Funds, a
check in the amount to which such persons are entitled pursuant to Section
3.01(a), after giving effect to any required tax withholdings, and such
Certificate shall forthwith be cancelled. No interest will be paid or will
accrue on the amount payable upon the surrender of any such Certificates. If
payment is to be made to a person other than the registered holder of the
Certificates surrendered, it shall be a condition of such payment that the
Certificates so surrendered shall be properly endorsed or otherwise in proper
form for transfer and that the person requesting such payment shall pay
<PAGE> 25
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any transfer or other taxes required by reason of the payment to a person other
than the registered holder of the Certificates surrendered or establish to the
satisfaction of the Surviving Corporation or the Paying Agent that such tax has
been paid or is not applicable. Until surrendered as contemplated by this
Section 3.02, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the amount of
cash, without interest, into which the Shares theretofore represented by such
Certificate shall have been converted pursuant to Section 3.01. No interest
shall accrue or be paid on any portion of the Merger Consideration.
(c) One hundred eighty days following the Effective Time, the
Surviving Corporation shall be entitled to cause the Paying Agent to deliver to
it any Funds (including any interest, dividends, earnings or distributions
received with respect thereto which shall be paid as directed by the Parent)
made available to the Paying Agent by the Parent which have not been disbursed,
and thereafter holders of Certificates who have not theretofore complied with
the instructions for exchanging their Certificates shall be entitled to look
only to the Surviving Corporation for payment as general creditors thereof with
respect to the cash payable upon due surrender of their Certificates.
(d) Except as otherwise provided herein, the Surviving
Corporation shall pay all charges and expenses, including those of the Paying
Agent, in connection with the exchange of the Merger Consideration for
Certificates.
<PAGE> 26
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(e) Notwithstanding anything to the contrary in this Section
3.02, none of the Paying Agent, the Parent, the Company, the Surviving
Corporation or the Purchaser shall be liable to a holder of a Certificate
formerly representing Shares for any amount properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If Certificates are not surrendered prior to two years after the Effective Time
(or immediately prior to such earlier date on which any payment pursuant to this
Article III would otherwise escheat or become the property of any Federal, state
or local government agency or authority, court or commission), unclaimed funds
payable with respect to such Certificates shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free and clear
of all claims or interest of any person previously entitled thereto.
3.03. Dissenters' Rights. Notwithstanding the provisions of
Section 3.01 or any other provision of this Agreement to the contrary, Shares
that have not been voted in favor of the approval and adoption of the Merger and
with respect to which dissenters' rights shall have been demanded and perfected
in accordance with Sections 623 and 910 of the BCL (the "Dissenting Shares") and
not withdrawn shall not be converted into the right to receive cash at or after
the Effective Time, but such Shares shall become the right to receive such
consideration as may be determined to be due to holders of Dissenting Shares
pursuant to the laws of the State of New York unless and until the holder of
such Dissenting Shares withdraws his or her demand for such
<PAGE> 27
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appraisal or becomes ineligible for such appraisal. If a holder of Dissenting
Shares shall withdraw his or her demand for such appraisal or shall become
ineligible for such appraisal (through failure to perfect or otherwise), then,
as of the Effective Time or the occurrence of such event, whichever last occurs,
such holder's Dissenting Shares shall automatically be converted into and
represent the right to receive the Merger Consideration, without interest, as
provided in Section 3.01(a). The Company shall give the Parent (i) prompt notice
of any demands for appraisal of Shares received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the prior written
consent of the Parent, make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
3.04. Transfer of Shares After the Effective Time. No
transfers of Shares shall be made in the stock transfer books of the Surviving
Corporation at or after the Effective Time. If, after the Effective Time,
Certificates formerly representing Shares are presented to the Surviving
Corporation, they shall be cancelled and exchanged for the Merger Consideration
set forth in Section 3.01.
3.05. Company Stock Rights. (a) With respect to options to
purchase shares of Common Stock of the Company (the "Options") outstanding
pursuant to the Griffin Technology Incorporated 1988 Stock Option Plan (the
"Stock Option Plan"), the Board (or if appropriate, any committee administering
the Stock
<PAGE> 28
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Option Plan) shall, as soon as practicable after the date hereof, adopt such
resolutions or take such other actions as may be required to provide that each
outstanding Option shall be accelerated so as to be fully exercisable prior to
the Effective Time, subject to the condition that the holder of each such Option
shall surrender all of such holder's outstanding and unexercised Options
(whether or not presently exercisable) in consideration of the payment at the
Effective Time of an amount of cash per share subject to each such Option equal
to the difference between the exercise price of such Option and the Merger
Consideration. Prior to the Effective Time, the Company shall use its best
efforts to procure the surrender of all outstanding Options. As to any Option
not so surrendered, the Company shall use its best efforts to obtain, prior to
the Effective Time, the consent of the holder of the Option to acquire upon
payment of the exercise price an amount of cash equal to the Merger
Consideration in lieu of each Share formerly covered thereby.
(b) With respect to outstanding options (the "Purchase Plan
Options", together with the Options, the "Company Stock Rights") to purchase
shares of the Common Stock of the Company pursuant to the Griffin Technology
Incorporated 1986 Employee Stock Purchase Plan (the "Stock Purchase Plan"), the
Company shall take all action necessary prior to the Effective Time to obtain
the agreement of eligible employees under the Stock Purchase Plan to the
cancellation of their subscription agreements thereunder in consideration of
the payment at the Effective Time of an amount of cash per share covered by
any such subscription agreement equal to
<PAGE> 29
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the sum of (i) the difference between the "Purchase Price", as defined in the
Stock Purchase Plan, of each share covered by such subscription agreement and
the consideration per share described in Section 1.01(a) hereof, plus (ii) the
aggregate amount previously deducted from such eligible employee's pay pursuant
to the Stock Purchase Plan with respect to such subscription agreement. The
rights of any such eligible employee under the Stock Purchase Plan who does not
agree to the cancellation of his subscription agreement as described in this
Section 3.05(b) shall be only as set forth in the Stock Purchase Plan.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent and
the Purchaser that:
4.01. Organization; Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of New York, and has all requisite corporate power and authority to
own, lease and operate its properties and carry on its business as now being
conducted. The Company is duly qualified to do business and is in good standing
in each jurisdiction in which the nature of the Company's business or the
location of its properties makes such qualification necessary, except for any
such failure to qualify or be in good standing as shall not have a Material
Adverse Effect on the Company. The Company Disclosure Letter (as defined in
Section 4.05) identifies, and the Company has heretofore made available to the
Parent, complete and correct copies of the
<PAGE> 30
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Restated Certificate and By-Laws of the Company, as currently in effect.
4.02. The Company's Capitalization. The authorized capital
stock of the Company consists solely of six million Shares. As of the close of
business on September 28, 1995, there were 2,384,707 shares of Common Stock
issued and outstanding and no Shares held in the Company's treasury. All
outstanding Shares have been duly authorized and validly issued, and, except as
provided in Section 630 of the BCL, are fully paid, nonassessable and were
issued free of preemptive rights. Except for the Company Stock Rights described
in Section 3.05 hereof and except as set forth on the Company Disclosure Letter
there are not now, and at the Effective Time there will not be, any
subscriptions, options, warrants, calls, rights, agreements or commitments
relating to the issuance, sale, delivery or transfer by the Company (including
any right of conversion or exchange under any outstanding security or other
instrument) of its Shares. There are no outstanding contractual obligations of
the Company to repurchase, redeem or otherwise acquire any outstanding Shares.
The Company Disclosure Letter contains a complete and accurate list of all
holders of Options, Purchase Plan Options and any other options or rights of any
kind to purchase or acquire shares of the Common Stock of the Company, together
with the number of such options and the terms of such options held by each such
holder.
4.03. Company Equity Investments. Except as set forth on the
Company Disclosure Letter, the Company does not own, directly or indirectly, or
have the right to acquire, any equity
<PAGE> 31
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security of another entity and has not made any loan or advance to any other
entity.
4.04. Authority Relative to this Agreement. The Company has
full corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly adopted by the Board, and the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board and,
except for the approval of the Merger by the holders of at least two-thirds of
the outstanding Shares in accordance with the BCL, no other corporate actions on
the part of the Company are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby, including the acquisition of
Shares pursuant to the Offer and the Merger. The Company has taken all actions
necessary to render Section 912 of the BCL to be inapplicable to such
transactions and the transactions contemplated by the Shareholder Tender
Agreements. This Agreement has been duly and validly executed and delivered by
the Company and, assuming due authorization, execution and delivery by the
Parent and the Purchaser, constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
to the extent that enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting the enforcement
of creditors' rights generally as at the time in effect and by general
principles of equity, regardless of whether
<PAGE> 32
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such enforceability is considered in a proceeding in equity or at law.
4.05. Consents and Approvals; No Violation. Except as set
forth on the Company Disclosure Letter delivered to the Company as of the date
of this Agreement (the "Company Disclosure Letter"), and except for any required
approval of the Merger by the shareholders of the Company and the filing of the
New York Certificate of Merger in accordance with the BCL, neither the
execution, delivery and performance of this Agreement by the Company nor the
consummation by it of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the Restated Certificate or
By-Laws of the Company, (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, except (A) in connection with the Hart-Scott-Rodino Antitrust of
1976, as amended (the "HSR Act"), (B) where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not have a Material Adverse Effect, and (C) for any requirements which became
applicable to the Company as a result of the specific regulatory status of the
Parent or the Purchaser or as a result of any other facts that specifically
relate to the business or activities in which the Parent or the Purchaser is
or proposes to be engaged; (iii) constitute a breach or result in a default
under, or give rise to any right of termination, amendment, cancellation or
acceleration under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture,
<PAGE> 33
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license, contract, agreement or other instrument or obligation of any kind to
which the Company is a party or by which the Company or any of its assets may be
bound, except for any such breach, default or right as to which requisite
waivers or consents have been obtained or which, in the aggregate, would not
have a Material Adverse Effect; or (iv) assuming compliance with the BCL and the
HSR Act, violate any order, writ, injunction, judgment, decree, law, statute,
rule, regulation or governmental permit or license applicable to the Company or
any of its assets, which violation would have a Material Adverse Effect.
For purposes of this Agreement, "Material Adverse Effect"
means a material adverse effect on the business, assets, prospects, financial
condition or results of operation of the Company or on the ability of the
Company to consummate the transactions contemplated by this Agreement.
4.06. SEC Reports; Financial Statements. The Company has filed
all required forms, reports and documents with the SEC since January 1, 1990
(collectively, the "SEC Reports"), each of which has complied in all material
respects with all applicable requirements of the Securities Act of 1933, as
amended (the "Securities Act"), and the Exchange Act, each as in effect on the
dates so filed. None of such forms, reports or documents, including, without
limitation, any financial statements or schedules included or incorporated by
reference therein, contained, when filed, any untrue statement of a material
fact or omitted to state a material fact required to be stated or incorporated
by reference therein or necessary in order to make
<PAGE> 34
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the statements therein, in light of the circumstances under which they were
made, not misleading. The Company has heretofore made available or promptly will
make available to the Parent a complete and correct copy of any amendment,
documents or other instruments which previously had been filed by the Company
with the SEC pursuant to the Exchange Act. The Company has previously furnished
to the Parent audited balance sheets of the Company as of June 30th in each of
the years 1990 through 1995, and the related audited statements of income,
statements of cash flow, changes in shareholders' equity and changes in
financial position of the Company for the fiscal years then ended, together with
the respective reports thereon of Price Waterhouse LLP. The balance sheet of the
Company as of June 30, 1995 is hereinafter referred to as the "Company Balance
Sheet". Each of the balance sheets included in the financial statements referred
to in this Section 4.06 (including the related notes thereto) presents fairly
the financial position of the Company as of their respective dates, and the
other related statements included therein (including the related notes thereto)
present fairly the results of operations, the cash flows, and changes in
shareholders' equity and changes in financial position for the periods then
ended, all in conformity with generally accepted accounting principles applied
on a consistent basis, except as otherwise noted therein.
4.07. Proxy Statement; Offer Documents. Any proxy or similar
materials distributed to the Company's shareholders in connection with the
Merger, including any amendments or supplements thereto (the "Proxy Statement"),
will comply in all
<PAGE> 35
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material respects with applicable federal securities laws and will not contain
any untrue statements of a material fact required to be stated therein or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation is made by the Company
with respect to information supplied by the Parent in writing for inclusion in
the Proxy Statement. None of the information supplied by the Company in writing
for inclusion in the Offer Documents or provided by the Company in the Schedule
14D-9 will, at the respective times that the Offer Documents and the Schedule
14D-9 or any amendments or supplements thereto are filed with the SEC and are
first published or sent or given to holders of Shares, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
4.08. Undisclosed Liabilities. Except as set forth on the
Company Disclosure Letter or reflected in the financial statements referred to
in Section 4.06, the Company has no liability or obligation, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether due
or to become due) except those which would not, individually or in the
aggregate, have a Material Adverse Effect.
4.09. Absence of Certain Changes or Events. Except as set
forth on the Company Disclosure Letter, since the date of the
<PAGE> 36
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Company Balance Sheet (i) the business of the Company has been conducted in the
ordinary course consistent with past practice (except as otherwise contemplated
by this Agreement), (ii) there has not been any change which has had a Material
Adverse Effect, and (iii) the Company has not taken any action described in
Section 6.01.
4.10. Title, Etc. (a) The Company Disclosure Letter sets forth
a list of all of the land, which includes the buildings, structures and other
improvements located thereon (the "Real Property"), which is owned in fee by the
Company. The Company has, with respect to personal property, good, and, with
respect to real property, good, marketable and insurable, title to all of the
properties and assets which it purports to own and which are material to the
business, operation or financial condition of the Company free and clear of all
mortgages, security interests, liens, claims, charges or other encumbrances of
any nature whatsoever, except for (i) any liens, encumbrances or defects
reflected in the Company Balance Sheet; (ii) any liens, encumbrances or defects
which do not, individually or in the aggregate, materially detract from the fair
market value (free of such liens, encumbrances or defects) of the property or
assets subject thereto or materially interfere with the current use by the
Company of the property or assets subject thereto or affected thereby or
otherwise have a Material Adverse Effect; (iii) any liens or encumbrances for
taxes not delinquent or which are being contested in good faith, provided that
adequate reserves for the same have been established on the Company Balance
Sheet; (iv) any
<PAGE> 37
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liens or encumbrances for current taxes and assessments not yet past due; (v)
any inchoate mechanic's and materialmen's liens and encumbrances for
construction in progress; (vi) any workmen's, repairmen's, warehousemen's and
carriers' liens and encumbrances arising in the ordinary course of business, so
long as such liens have not been filed; (vii) any liens of the type referred to
in (vi) above that have been filed, so long as such liens do not aggregate in
excess of $25,000; (viii) liens securing obligations under the Credit Agreement
(as defined in Section 6.01(b)); and (ix) with respect to Real Property, any
liens, encumbrances or defects which are matters of record, including but not
limited to, easements, quasi-easements, rights of way, land use ordinances and
zoning plans.
(b) The Company Disclosure Letter sets forth a list of all of
the leases and subleases (the "Real Property Leases") under which, as of the
date hereof, the Company has the right to occupy space. The Company has
heretofore delivered to the Parent a true, correct and complete copy of all of
the Real Property Leases, including all amendments thereto. All Real Property
Leases and material leases pursuant to which the Company leases personal
property from others are, in all material respects, valid, binding and
enforceable in accordance with their terms; the Company has not received notice
of any default by the Company under any Real Property Lease which would have a
Material Adverse Effect; there are no existing defaults, or any condition or
event which with the giving of notice or lapse of time would constitute a
default, by the Company thereunder which would have a Material Adverse Effect;
<PAGE> 38
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and, with respect to the Company's obligations thereunder without qualification
and with respect to the obligations of all other parties thereto, to the
knowledge of the Company, no uncured default or event or condition on the part
of any landlord exists under any Real Property Lease which with the giving of
notice or the lapse of time would constitute a default thereunder which would
have a Material Adverse Effect.
(c) All of the land, buildings, structures and other
improvements occupied by the Company in the conduct of its business are included
in the Real Property and the Real Property Leases.
(d) The Company does not own or hold, and is not obligated
under or a party to, any option, right of first refusal or other contractual
right to purchase, acquire, sell or dispose of the Real Property and the Real
Property Leases or any portion thereof or interest therein.
4.11. Patents, Trademarks, Etc. The Company Disclosure Letter
identifies all registered trademarks, copyrights and patents owned or licensed
by the Company as of the date hereof. The Company owns, or is licensed or
otherwise has adequate right to use, all patents, patent rights, trademarks,
trademark rights, service marks, service mark rights, trade names, trade name
rights, copyrights, know-how, technology, trade secrets and other proprietary
information (collectively, the "Intellectual Property") which are material to
the conduct of the business of the Company. Except as set forth in the Company
Disclosure Letter, no claims have been asserted by any person, and the
<PAGE> 39
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Company has not asserted a claim against any person, with respect to any of the
Intellectual Property owned or used by the Company or challenging or questioning
the validity or effectiveness of any license or agreement relating thereto to
which the Company is a party.
4.12. Insurance. The Company Disclosure Letter identifies all
material property, general liability and casualty insurance policies which
currently insure the Company and the Company shall use its reasonable efforts to
keep such policies in full force and effect up to the Closing Date. Such
policies are adequate in the view of the management of the Company for the
assets and operations of the Company.
4.13. Employee Benefit Plans. (a) For purposes of this Section
4.13, "Company Benefit Plans" means all employee benefit plans and arrangements
described in section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), with respect to which the Company has a liability,
whether direct or indirect, actual or contingent, and any material bonus,
incentive and similar plans maintained by the Company.
(b) The Company Disclosure Letter sets forth a list of all
Company Benefit Plans and the Company has delivered or made available to the
Parent, where applicable, accurate and complete copies of all Company Benefit
Plan texts and related agreements.
(c) Except as set forth in the Company Disclosure Letter with
respect to each Company Benefit Plan: (i) such plan has been administered and
enforced in all material respects in accordance with its terms and applicable
law; (ii) to the best of
<PAGE> 40
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the knowledge of the Company after reasonable inquiry, no breach of fiduciary
duty or prohibited transaction has occurred; (iii) no actions, suits, claims or
disputes are pending, or to the knowledge of the Company, threatened; (iv) all
contributions and premiums due have been made on a timely basis; (v) all
contributions made or required to be made under such Company Benefit Plan meet
the requirements for deductibility under the Internal Revenue Code of 1986, as
amended, (the "Code"); and (vi) no Company Benefit Plan is a multiemployer plan
(as defined in ERISA section 3(37)), a multiple employer plan within the meaning
of the Code or ERISA, a defined benefit plan within the meaning of ERISA section
3(35), or a plan subject to section 302 of ERISA or section 412 of the Code.
(d) Except as set forth on the Company Disclosure Letter, the
consummation of the transactions contemplated by this Agreement will not (i)
entitle any individual to severance pay, or (ii) accelerate the time of payment
or vesting, or increase the amount, of compensation due to any individual. The
Company has delivered to the Parent true, correct and complete copies of each
plan, agreement or arrangement relating to the foregoing, including all
amendments thereto.
(e) The Company Disclosure Letter sets forth a description of
all obligations of the Company with respect to retiree medical and retiree life
insurance benefits under the Company Benefit Plans. The Company has delivered to
the Parent written material which is representative in all material respects of
written communications of the Company with respect to retiree
<PAGE> 41
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medical and life benefits under the Company Benefit Plans, a list of which is
set forth on the Company Disclosure Letter.
(f) Each Company Benefit Plan intended to be qualified under
section 401(a) of the Code is so qualified, and each trust or other funding
vehicle related thereto is exempt from federal income tax under section 501(a)
of the Code.
(g) With respect to any insurance policy providing funding for
benefits under any Company Benefit Plan, (i) there is no material liability of
the Company in the nature of a retroactive or retrospective rate adjustment,
loss sharing arrangement, or other actual or contingent liability, nor would
there be any such liability if such insurance policy was terminated on the date
hereof, and (ii) to the knowledge of the Company, no insurance company issuing
any such policy is in receivership, conservatorship, liquidation or similar
proceeding and, to the knowledge of the Company, no such proceeding with respect
to any insurer is imminent.
4.14. Legal Proceedings, Etc. Except as set forth on the
Company Disclosure Letter, (i) there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against or
relating to the Company before any court or governmental or regulatory authority
or body with respect to which there is a reasonable likelihood of a
determination which would have a Material Adverse Effect, and (ii) the Company
is not subject to any outstanding order, writ, judgment, injunction or decree of
any court or governmental or regulatory authority or body.
<PAGE> 42
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4.15. Taxes. Except as set forth on the Company Disclosure
Letter, (i) the Company has paid or adequately reserved for in the Company
Balance Sheet all Taxes (as defined below) required to be paid by it through the
date hereof (other than Taxes or audit adjustments which would not, in the
aggregate, have a Material Adverse Effect) and shall timely pay any Taxes
required to be paid by it after the date hereof and on or before the Effective
Time (unless the payment of such Taxes is being contested by the Company in good
faith), (ii) the Company has filed all notices, reports and returns for Taxes
("Tax Returns") that it is required to file through the date hereof and shall,
on or before the Effective Time, prepare and file, consistent with prior years
in all material respects, all Tax Returns that it is required to file after the
date hereof and on or before the Effective Time, (iii) no penalties or other
charges are due with respect to the late filing of any Tax Return, (iv) the
Company is not currently being audited by any taxing authority, (v) no extension
of time with respect to any date on which any Tax Return was or is to be filed
by the Company is in force as of the date hereof, (vi) no waiver or agreement by
the Company is in force as of the date hereof for the extension of time for the
assessment or payment of any Tax, and (vii) the Company has not agreed to make
and is not required to make any adjustment under Section 481(a) of the Code by
reason of a change in accounting method or otherwise. "Taxes" shall mean all
taxes, levies or other assessments, including, without limitation, income,
excise, property, sales, gross receipts, employment, import and franchise
taxes and customs
<PAGE> 43
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duties imposed by the United States, or any state, county, local or foreign
government, or subdivision or agency thereof, and including any interest,
penalties or additions attributable thereto.
4.16. Material Agreements. Except as set forth on the Company
Disclosure Letter and except for agreements made for the purpose of completing
the transactions contemplated by this Agreement, the Company is not as of the
date hereof a party to, or bound by, any material agreement of any kind to be
performed in whole or in part after the Effective Time. Solely for the purpose
of this Section, the term "material agreement" shall mean (i) any single
agreement which involves the payment or receipt by the Company, subsequent to
the date of this Agreement, of more than $150,000 or (ii) any agreement for
money borrowed or pursuant to which the Company has guaranteed or otherwise
agreed to be responsible for the indebtedness, obligations or liabilities of any
other Person. Except as set forth on the Company Disclosure Letter, there is no
breach or default and there are no facts which with notice or the passage of
time would constitute a breach or default under, or give rise to any right of
termination, amendment, cancellation or acceleration under, whether as a result
of the consummation of the transactions contemplated hereby or otherwise, any
obligation to be performed by any party to a material agreement to which the
Company is a party, which breach, default or right (assuming the exercise
thereof) would have a Material Adverse Effect.
<PAGE> 44
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4.17. Compliance with Law. Except as set forth on the
Company Disclosure Letter, the business of the Company is not being conducted
and the properties and assets of the Company are not currently owned or operated
in violation of any law, ordinance, regulation, order, judgment, injunction,
award or decree of any governmental or regulatory entity or court or arbitrator,
except for possible violations which either individually or in the aggregate do
not, and so far as can be reasonably foreseen will not, have a Material Adverse
Effect.
4.18. Insider Interests. The Company Disclosure Letter
sets forth all material contracts, agreements with and other obligations to
officers, directors and employees or shareholders of the Company. Except as set
forth on the Company Disclosure Letter, no officer, director or shareholder of
the Company, and no entity controlled by any such officer, director or
shareholder, and no relative or spouse who resides with any such officer,
director or shareholder (i) owns, directly or indirectly, any material interest
in any person that is or is engaged in business other than on an arm's-length
basis as, a competitor, lessor, lessee, customer or supplier of the Company or
(ii) owns, in whole or in part, any tangible or intangible property that the
Company uses in the conduct of the business of the Company.
4.19. Accounts Receivable. All accounts receivable
relating to the business of the Company reflected on the Company Balance Sheet,
and all accounts receivable relating to the business of the Company arising
subsequent to the date of the Company Balance Sheet, have arisen in the ordinary
course of
<PAGE> 45
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business. All items which are required by generally accepted
accounting principles to be reflected as accounts receivable on the Company
Balance Sheet and on the books of the Company are so reflected and any reserve
accounts relating thereto have been established in accordance with generally
accepted accounting principles applied in a manner consistent with the Company's
past practices.
4.20. Officers, Directors and Employees. The Company
Disclosure Letter sets forth the name and current compensation of each officer,
director or employee of the Company whose current annual rate of compensation
from the Company (including bonuses but excluding commission-only compensation)
exceeds $50,000.
4.21. Environmental Protection. Except as set forth on
the Company Disclosure Letter, the Company has obtained all material permits,
certificates, licenses, approvals and other authorizations (collectively
"Environmental Permits") relating to pollution or protection of the environment,
including those relating to emissions, discharges, releases of pollutants,
contaminants or chemicals, or industrial, toxic or hazardous substances or
wastes into the environment (including, without limitation, ambient air, surface
water, ground water, or land) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or chemicals, or industrial, toxic or
hazardous substances or wastes. Except as set forth on the Company Disclosure
Letter, the Company is in material compliance with all terms and conditions of
the Environmental Permits, and
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the Company is also in material compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in all applicable environmental laws or
contained in any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved thereunder, if
any ("Pertinent Environmental Laws"). Except as set forth on the Company
Disclosure Letter, there are no past, present or future events, conditions,
circumstances, activities, practices, incidents, actions or plans which may
materially interfere with or prevent material compliance or continued compliance
with Pertinent Environmental Laws, or which may give rise to any material common
law or legal liability, or otherwise form the basis of any material claim,
action, demand, suit, proceeding, hearing, study or investigation, based on or
related to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling, or the emission, discharge, release or
threatened release into the environment, of any pollutant, contaminant or
chemical, or industrial, toxic or hazardous substance or waste. Except as set
forth on the Company Disclosure Letter, there is no civil, criminal or
administrative action, suit, demand, claim, hearing, notice or demand letter,
notice of violation, investigation, or proceeding pending or, to the Company's
knowledge, threatened against the Company relating in any way to any Pertinent
Environmental Laws.
4.22. Brokers and Finders. Neither the Company nor any
of its officers, directors or employees has employed any broker,
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finder or investment banker or incurred any liability for any brokerage fees,
commissions, finders' fees or investment banking fees in connection with the
transactions contemplated herein, except that the Company has employed, and will
pay the fees and expenses of, DLJ as its financial advisor, the arrangements
with which have been disclosed in writing to the Parent prior to the date
hereof.
4.23. No Other Representations or Warranties. Except
for the representations and warranties contained in this Agreement, anything
described in or listed in the Company Disclosure Letter, or any other document
delivered pursuant to this Agreement, neither the Company nor any other person
makes any representation or warranty to the Parent or the Purchaser, express or
implied, and the Company hereby disclaims any such representation or warranty,
whether by the Company or any of its officers, directors, employees, agents or
representatives or any other person, notwithstanding the delivery or disclosure
to the Parent or the Purchaser or any of its officers, directors, employees,
agents or representatives or any other person of any document or other
information by the Company or any of its officers, directors, employees, agents
or representatives or any other person. Any document delivered by the Company
pursuant to this Agreement is a true, correct and complete copy of such
document, and has not been modified or amended unless such amendment or
modification is included with such document.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
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THE PARENT AND THE PURCHASER
5.01. Corporation Organization. The Parent is a
corporation duly organized and validly existing and in good standing under the
laws of the State of Ohio and the Purchaser is a corporation duly organized and
validly existing and in good standing under the laws of the State of New York.
The Parent and the Purchaser each has all requisite corporate power and
authority to own its assets and carry on its business as now being conducted or
proposed to be conducted. Each of the Parent and the Purchaser has delivered to
the Company complete and correct copies of its Certificate or Articles of
Incorporation and By-Laws or Code of Regulations, as the case may be, as in
effect on the date hereof.
5.02. Authorized Capital. The authorized capital stock
of the Purchaser consists of 100 shares of Common Stock, par value $1.00 per
share, all of which shall be outstanding as of the Effective Time. All of the
issued and outstanding shares of capital stock of the Purchaser are validly
issued, fully paid, nonassessable and free of preemptive rights and all liens.
5.03. Corporation Authority. Each of the Parent and the
Purchaser has the necessary corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement by each of the Parent and the Purchaser, the performance by
the Parent and the Purchaser of its obligations hereunder and the consummation
by the Parent and the Purchaser of the transactions contemplated hereby have
been duly authorized by its Board of Directors and no other corporate proceeding
on the part of the Parent or the
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Purchaser is necessary for the execution and delivery of this Agreement by the
Parent and the Purchaser and the performance by the Parent and the Purchaser of
its obligations hereunder and the consummation by the Parent and the Purchaser
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of the Parent and the Purchaser and, assuming the due
authorization, execution and delivery hereof by the Company, is a legal, valid
and binding obligation of the Parent and the Purchaser, enforceable against the
Parent and the Purchaser in accordance with its terms, except to the extent that
its enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general equitable principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
5.04. No Prior Activities. The Purchaser has not
incurred, directly or indirectly, any liabilities or obligations, except those
incurred in connection with its incorporation or with the negotiation of this
Agreement, the Offer Documents, the Regulatory Filings and the consummation of
the transactions contemplated hereby and thereby. The Purchaser has not engaged,
directly or indirectly, in any business or activity of any type or kind, or
entered into any agreement or arrangement with any person or entity, and is not
subject to or bound by any obligation or undertaking, that is not contemplated
by or in connection with this Agreement, the Offer Documents, the Regulatory
Filings and the transactions contemplated hereby and thereby.
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5.05. No Financing Contingency. The Parent has sufficient
funds to consummate all of the transactions contemplated by this Agreement and
will make available to the Purchaser sufficient funds to consummate the Offer
and the Merger.
5.06. Governmental Filings; No Violations. (a) Other
than the Regulatory Filings, no notices, reports or other filings are required
to be made by the Parent or the Purchaser with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
the Parent or the Purchaser from, any governmental or regulatory authorities of
the United States, the several States or any foreign jurisdictions in connection
with the execution and delivery of this Agreement by the Parent and the
Purchaser and the consummation by the Parent and the Purchaser of the
transactions contemplated hereby, the failure to make or obtain any or all of
which could prevent, materially delay or materially burden the transactions
contemplated by this Agreement.
(b) Except as set forth on the Parent Disclosure Letter
delivered to the Company as of the date of this Agreement (the "Parent
Disclosure Letter"), neither the execution and delivery of this Agreement by the
Parent or the Purchaser nor the consummation by the Parent or the Purchaser of
the transactions contemplated hereby nor compliance by the Parent or the
Purchaser with any of the provisions hereof will: (i) conflict with or result in
any breach of any provision of its Certificate or Articles of Incorporation or
By-Laws or Code of Regulations, as the case may be, (ii) result in a violation
or breach of, or constitute (with
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or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, or require any
consent under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, agreement or other instrument or
obligation to which the Parent or the Purchaser is a party or by which it or any
of its properties or assets may be bound, (iii) require the creation or
imposition of any lien upon or with respect to the properties of the Parent or
the Purchaser or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Parent or the Purchaser or any of its properties
or assets, excluding from the foregoing clauses (iii) and (iv) violations,
breaches or defaults which in the aggregate, would not have a material adverse
effect on the business, financial condition or operations of the Parent or the
Purchaser or which would not prevent, materially delay or materially burden the
transactions contemplated by this Agreement.
5.07. Brokers and Finders. Neither the Parent, the Purchaser
nor any of its officers, directors or employees has employed any broker, finder
or investment banker or incurred any liability for any brokerage fees,
commissions, finders fees or investment banking fees in connection with the
transactions contemplated herein, except that the Parent has employed Goldman
Sachs & Co.
5.08. Offer Documents; Proxy Statement; Other
Information. None of the information included in the Offer Documents (including
any amendments or supplements thereto) or any
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schedules required to be filed with the SEC in connection therewith and
described therein as being supplied by the Parent or the Purchaser will, at the
respective times that the Offer Documents or any amendments or supplements
thereto or any such schedules are filed with the SEC, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
information supplied in writing by the Parent or the Purchaser specifically for
inclusion in the Proxy Statement, Schedule 14D-9 or any statement required
pursuant to Section 14(f) of the Exchange Act or any other schedules or
statements required to be filed with the SEC in connection therewith will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading.
5.09 No Other Representations or Warranties. Except for
the representations and warranties contained in this Agreement, anything
described in or listed in the Parent Disclosure Letter, or any other document
delivered pursuant to this Agreement, neither the Parent or the Purchaser nor
any other person makes any representations or warranty to the Company, express
or implied, and the Parent and the Purchaser hereby disclaim any such
representation or warranty, whether by the Parent or the Purchaser or any of its
or their officers, directors, employees, agents or representatives or any other
person, notwithstanding the delivery or disclosure to the Company
<PAGE> 53
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or any of its officers, directors, employees, agents or representatives or any
other person of any document or other information by the Parent and the
Purchaser or any of their officers, directors, employees, agents or
representatives or any other person. Any document delivered by the Parent or the
Purchaser pursuant to this Agreement is a true, correct and complete copy of
such document, and has not been modified or amended unless such amendment or
modification is included with such document.
ARTICLE VI
COVENANTS OF THE PARTIES
6.01. Conduct of Business of the Company. Except as
contemplated by this Agreement or as set forth on the Company Disclosure Letter,
during the period from the date of this Agreement to the Effective Time, the
Company will conduct its business and operations only in the ordinary and usual
course of business consistent with past practice. Without limiting the
generality of the foregoing, and, except as contemplated in this Agreement or as
set forth on the Company Disclosure Letter, prior to the Effective Time, without
the advance written consent of the Parent, the Company will not:
(a) Amend its Restated Certificate or By-Laws;
(b) (i) Create, incur or assume any indebtedness for money
borrowed, including obligations in respect of capital leases, except (A)
purchase money mortgages granted in connection with past practice, (B)
indebtedness for borrowed money incurred in the ordinary course of business not
aggregating in excess of
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$8.0 million outstanding at any time under its existing Fifth Amended and
Restated Revolving Credit and Term Loan Agreement with The Chase Manhattan Bank,
N.A. as the same may be amended from time to time ("Credit Agreement"), provided
that the proceeds thereof are not distributed to the shareholders of the
Company; or (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person; provided, however, that the Company may endorse negotiable
instruments in the ordinary course of business consistent with past practice;
(c) Declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of the Common Stock of the Company;
(d) Issue, sell, grant, purchase or redeem, or issue or sell
any securities convertible into, or options with respect to, or warrants to
purchase or rights to subscribe to, or subdivide or in any way reclassify, any
Shares, except in any case above pursuant to Company Stock Rights;
(e) (i) Increase the rate of compensation payable or to
become payable by the Company to its directors, officers or employees, whether
by salary or bonus, by more than four percent per person on an annual basis for
directors and officers of the Company and by more than four and one-half percent
in the aggregate for all other employees of the Company (excluding
commission-only compensation, the rate of which shall not be increased); or (ii)
increase the rate or term of, or otherwise
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alter, any bonus, insurance, pension, severance or other employee benefit plan,
payment or arrangement made to, for or with any such directors, officers or
employees;
(f) Enter into any agreement, commitment or transaction
(other than borrowings permitted by Section 6.01(b)), except agreements,
commitments or transactions in the ordinary course of business consistent with
past practice;
(g) Sell, transfer, mortgage, pledge, grant any security
interest or permit the imposition of any lien or other encumbrance on any asset
other than in the ordinary course of business consistent with past practice and
except pursuant to the Credit Agreement;
(h) Waive any right under any contract or other agreement
identified on the Company Disclosure Letter if such waiver would have a Material
Adverse Effect;
(i) Make any material change in its accounting methods or
practices or make any material change in depreciation or amortization policies
or rates adopted by it for accounting purposes or, other than normal writedowns
or writeoffs consistent with past practices, make any writedowns of inventory or
writeoffs of notes or accounts receivable;
(j) Make any loan or advance to any of its shareholders,
officers, directors, employees (other than advances to field sales personnel,
vacation advances, relocation advances and travel advances in each case made in
the ordinary course of business in a manner consistent with past practice) or
make any
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other loan or advance to any other person or group otherwise than in
the ordinary course of business consistent with past practice;
(k) Terminate or fail to renew, where such renewal is at the
Company's option, any contract or other agreement (excluding customer leases or
contracts), the termination or failure of which to renew would have a Material
Adverse Effect;
(l) Enter into any collective bargaining agreement;
(m) Make any addition to or modification of the Company
Benefits Plans;
(n) Take, agree to take, or knowingly permit to be taken any
action, or do or, with respect to anything within the Company's control,
knowingly permit to be done anything in the conduct of its business which would
be contrary to or in breach of any of the terms or provisions of this Agreement,
or which would cause any of the representations of the Company to be or become
untrue in any material respect; or
(o) Agree to do any of the foregoing.
6.02. Notification of Certain Matters. The Company shall give
prompt notice to the Parent of: (a) any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement; (b) any
notice or other communication from any regulatory authority in connection with
the transactions contemplated by this Agreement; and (c) any claims, actions,
proceedings or investigations commenced or, to the best of its knowledge,
threatened, involving or affecting the Company or any of its properties or
assets, which, if pending on
<PAGE> 57
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the date hereof, would have been required to have been disclosed in the Company
Disclosure Letter pursuant to the provisions of Section 4.14; and (d) the
occurrence of any event having, or which insofar as can be reasonably foreseen
would have, a Material Adverse Effect.
6.03. Access to Information. (a) Between the date of
this Agreement and the Effective Time, the Company will during ordinary business
hours and upon reasonable advance notice, (i) give the Parent and the Parent's
authorized representatives all access the Parent shall reasonably request to all
of its books, records (including, without limitation, the workpapers of the
Company's outside accountants), contracts, commitments, plants, offices and
other facilities and properties, and its personnel, representatives, accountants
and agents; provided, however, that all such access shall take place after
appropriate prior consultation with the officers of the Company, (ii) permit the
Parent to make such inspections thereof as it may reasonably request (including,
without limitation, observing the Company's physical inventory of its assets),
(iii) cause its officers and advisors to furnish to the Parent its financial and
operating data and such other existing information with respect to its business,
properties, assets, liabilities and personnel (including, without limitation,
title insurance reports, real property surveys and environmental reports, if
any), as the Parent may from time to time reasonably request, (iv) take such
actions as the Parent reasonably deems appropriate to verify the existence and
condition of equipment leased by the Company to its customers, and (v)
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permit the Parent's accountants to conduct such confirmation and testing
procedures with respect to the Company's receivables as the Parent reasonably
deems appropriate; provided, however, that (A) any such investigation shall be
conducted in such a manner as not to interfere unreasonably with the operation
of the business of the Company, (B) the Company shall not be required to take
any action which would constitute a waiver of the attorney-client privilege, (C)
the Company need not supply the Parent with any information which it is under a
legal obligation not to supply, and (D) until such time as the Parent and/or its
affiliates are the beneficial owners of a majority of the outstanding Shares,
any such activities by the Parent prior to the purchase by the Purchaser of
Shares pursuant to the Offer shall be for the purposes of verifying the accuracy
of representations and warranties of the Company and the compliance by the
Company with its covenants contained in this Agreement.
(b) Any information provided pursuant to this Agreement shall
be held by the Parent in accordance with and shall be subject to the terms of
the Confidentiality Agreement dated July 19, 1994 between the Company and the
Parent (the "Confidentiality Agreement").
6.04. Further Information. The Company and the Parent
shall give prompt written notice to the other of (i) any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect (including the Company, the Parent or the Purchaser
receiving knowledge of any fact, event or circumstance which may cause any
representation
<PAGE> 59
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qualified as to knowledge to be or become untrue in any material respect) or
(ii) the failure by it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or satisfied by it under
this Merger Agreement; provided, however, that no such notification shall affect
the representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement. The Company
acknowledges that if, after the date of this Agreement, the Company or the
Parent receives knowledge of any fact, event or circumstance that would cause
any representation or warranty that is conditioned as to the knowledge of the
Company to be or become untrue or inaccurate in any respect, the receipt of such
knowledge shall constitute a breach of the representation or warranty that is so
conditioned as of the date of such receipt.
6.05. Further Assurances. Consistent with the terms and
conditions hereof, each party hereto will execute and deliver such instruments
and take such other action as the other parties hereto may reasonably require in
order to carry out this Agreement and the transactions contemplated hereby and
thereby.
6.06. Interim Financial Statements. Within 45 days
after the end of each fiscal quarter and 90 days after the end of any fiscal
year after the date of this Agreement, and until the Effective Time, the Company
will deliver to the Parent its Form 10-QSB's or 10-KSB's, as the case may be,
for such quarter or year. The financial statements contained therein shall
fairly present their respective financial condition, results of
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operations and cash flows and changes in financial position as at the date or
for the periods indicated in accordance with generally accepted accounting
principles consistently applied in accordance with past practice, shall be
prepared in conformity with the requirements of Regulation S-X under the
Exchange Act and Item 303 of Regulation S-B and shall be accompanied by a
certificate of the principal financial officer (or independent certified public
accountant in the case of year end financials) of the Company to such effect.
6.07. Fairness Opinion. Within three business days of
the execution of this Agreement, the Company shall provide to the Parent a
signed copy of the written opinion of DLJ that the Offer is fair to the Company
shareholders from a financial point of view, which DLJ has advised the Company
it fully expects to be able to deliver at such time.
6.08. Best Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use their best efforts to take,
or cause to be taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and shall use its best efforts to satisfy the conditions to the transactions
contemplated hereby and to obtain all waivers, permits, consents and approvals
and to effect all registrations, filings and notices with or to third parties or
governmental or public bodies or authorities which are necessary or desirable in
connection with the transactions contemplated by this Agreement,
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including, but not limited to, filings to the extent required under the Exchange
Act and HSR Act, and obtaining consent to the Merger from The Chase Manhattan
Bank, N.A. pursuant to the Credit Agreement. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers or directors of each of the parties hereto
shall take such action. Without limiting the generality of the foregoing, the
Parent as the sole shareholder of the Purchaser, and the Purchaser as a
shareholder of the Company, will consent and/or vote in favor of the
transactions contemplated hereunder, and Company, the Parent, and the Purchaser
will vigorously defend against any lawsuit or proceeding, whether judicial or
administrative, challenging this Agreement or the consummation of any of the
transactions contemplated hereby. From time to time after the date hereof,
without further consideration, the Company will, at its own expense, execute and
deliver such documents to the Parent as the Parent may reasonably request in
order to consummate such transactions. From time to time after the date hereof,
without further consideration, the Parent will, at its own expense, execute and
deliver such documents to the Company as the Company may reasonably request in
order to consummate the Merger. Notwithstanding the foregoing, a party shall not
be obligated to take any action pursuant to the foregoing if the taking of such
action or the obtaining of any waiver, consent, approval or exemption is
reasonably likely (x) to be materially burdensome to such party and its
subsidiaries taken as a whole or to impact in a materially adverse manner the
<PAGE> 62
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economic or business benefits of the transactions contemplated by this Agreement
so as to render inadvisable the consummation of the transactions contemplated by
this Agreement or (y) to result in the imposition of a condition or restriction
of the type described in paragraph (iii)(a) of Annex A hereto. In connection
with and without limiting the foregoing, the Company and its Board of Directors
shall (i) take all action necessary to ensure that no state takeover statute or
similar statute or regulation is or becomes applicable to the Offer, the Merger,
this Agreement or any of the other transactions contemplated by this Agreement,
and (ii) if any state takeover statute or similar statute or regulation becomes
applicable to the Offer, the Merger, this Agreement or any other transaction
contemplated by this Agreement, take all action necessary to ensure that the
Offer, the Merger and the other transactions contemplated by this Agreement may
be consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute or regulation on
the Offer, the Merger and the other transactions contemplated by this Agreement.
6.09. Filings. (a) The Company and the Parent will
file, or cause to be filed, as promptly as possible and, in the case of the
Parent in no event later than five business days after the date hereof, with the
United States Federal Trade Commission (the "FTC") and the Antitrust Division of
the United States Department of Justice (the "Department of Justice") pursuant
to the HSR Act the notification required by the HSR Act, including all requisite
documents, materials and information therefor, and
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request early termination of the waiting period under the HSR Act. Each of the
Company and the Parent shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR Act.
The Company and the Parent shall each keep the other apprised of the status of
any inquiries or requests for additional information made by any governmental
authority and shall comply promptly with any such inquiry or request.
(b) The Company and the Parent or the Purchaser shall make any
necessary filings with the New York State Department of Taxation and Finance and
shall furnish all supplemental information requested by said Department to
obtain, prior to the completion of the Merger, a statement of any real estate
transfer tax and transfer gains tax due pursuant to Article 31 or 31-B of the
New York Tax Law as a result of the completion of the Offer. The Company shall
pay, when due and payable, any transfer gains tax and real estate transfer tax
assessed by the New York State Department of Taxation and Finance, if
applicable, as well as all fees and charges incurred in connection with any such
filings. The Parent and the Purchaser shall cooperate in providing any documents
or affidavits necessary for any filings.
6.10. Public Announcements. The initial press release
to the transactions contemplated hereby shall be a joint press release, and
thereafter the Company and the Parent shall consult with each other before
issuing any press release or otherwise making any public statements with respect
to the transactions
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contemplated hereby and shall not issue any such press release or make any such
public statement prior to such consultation, except as may be required by law or
any listing agreement with a national securities exchange or with National
Association of Securities Dealers, Inc., or in order to carry out the fiduciary
duties of the Board, as advised by counsel.
6.11. Indemnity; D&O Insurance. (a) The Parent shall
cause all rights to indemnification by the Company now existing in favor of each
present and former director or officer of the Company (hereinafter referred to
in this Section as the "Indemnified Parties") as provided in the Company's
By-Laws to survive the Merger and to continue in full force and effect as rights
to indemnification by the Surviving Corporation for a period of at least six
years following the Effective Time.
(b) Subject to the terms set forth herein, the Surviving
Corporation shall indemnify and hold harmless, to the fullest extent permitted
under applicable law (and shall also advance expenses as incurred by an
Indemnified Party to the extent permitted under applicable law, provided the
person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to
indemnification), each Indemnified Party against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to any action, alleged
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action, omission or alleged omission occurring on or prior to the Effective Time
in their capacity as director or officer (including, without limitation, any
claims, actions, suits, proceedings and investigations which arise out of or
relate to the transactions contemplated by this Agreement) for a period of six
years after the Effective Time, provided that, in the event any claim or claims
are asserted or made within such six year period, all rights to indemnification
in respect of any such claim or claims shall continue until final disposition of
any and all such claims.
(c) Any Indemnified Party wishing to claim indemnification
under this Section 6.11, upon learning of any such claim, action, suit,
proceeding or investigation, shall promptly notify the Surviving Corporation
thereof, but the failure to so notify shall not relieve the Surviving
Corporation of any obligation to indemnify such Indemnified Party or of any
other obligation imposed by this Section 6.11 unless and to the extent that such
failure prejudices the Parent or the Surviving Corporation; it being understood
that it shall be deemed to materially prejudice the Parent or the Surviving
Corporation, as the case may be, if, as a result of such failure to notify, the
Parent or the Surviving Corporation is not given an opportunity to assume the
defense of such claim, action, suit, proceeding or investigation within a
reasonably prompt time after such claim, action, suit, proceeding or
investigation is asserted or initiated. In the event of any such claim, action,
suit, proceeding or investigation, (i) the Surviving Corporation or the
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Parent shall have the right to assume the defense thereof and shall not be
liable to such Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Party in connection
with the defense hereof, except that if the Parent or Surviving Corporation
elects not to assume such defense or counsel for the Indemnified Party advises
that there are issues which raise conflicts of interest between the Parent or
Surviving Corporation and the Indemnified Party, the Indemnified Party may
retain counsel satisfactory to it, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Party promptly
as statements therefore are received; provided, however, that in no event shall
the Parent or Surviving Corporation be required to pay fees and expenses,
including disbursements and other charges, for more than one firm of attorneys
in any one legal action or group of related legal actions unless (A) counsel for
the Indemnified Party advises that there are issues which raise conflicts of
interest that require more than one firm of attorneys, or (B) local counsel of
record is needed in any jurisdiction in which any such action is pending, (ii)
the Parent and the Indemnified Party shall cooperate in the defense of any such
matter, and (iii) the Parent and the Surviving Corporation shall not be liable
for any settlement effected without the prior written consent of one of them
(which consent shall not be unreasonably withheld); and provided, further, that
the Parent and Surviving Corporation shall not have any obligation hereunder to
any Indemnified Party if and to the extent a court of competent jurisdiction
ultimately
<PAGE> 67
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determines, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
(d) For three years after the Effective Time, the Parent
shall cause the Surviving Corporation to use its best reasonable efforts to
maintain, if available for an annual premium not in excess of $60,000, officers'
and directors' liability insurance covering the Indemnified Parties who are
presently covered by the Company's officers' and directors' liability insurance,
(copies of which have been delivered to the Parent), with respect to acts or
omissions occurring at or prior to the Effective Time, on terms no less
favorable than those in effect on the date hereof or at the Effective Time, or
if such insurance coverage is not available for an annual premium not in excess
of $60,000 to obtain the amount of coverage that is available for an annual
premium of $60,000.
(e) The covenants contained in this Section 6.11 shall
survive the Effective Time until fully discharged and are intended to benefit
each of the Indemnified Parties.
6.12. Company Benefit Plans. The Company has heretofore
delivered to the Parent a true and complete copy of the Company's employee
severance plan, as in effect on the date of this Agreement (the "Severance
Plan"). The Parent will, and will cause the Surviving Corporation to, provide
severance benefits to all of the employees of the Company as of the date of
acceptance for payment of the Shares of equal or greater value to those set
forth in the Severance Plan for a period of two years following
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the date of acceptance for payment of the Shares. The covenant set forth in the
immediately preceding sentence shall survive the Effective Time until fully
discharged and is intended to benefit all of the employees of the Company as of
the date of acceptance for payment of the Shares. The Parent will not terminate
or cause the termination of any employee or employees of the Company in a manner
that would be in violation of the federal Workers Adjustment, Retraining and
Notification Act.
6.13. Other Potential Bidders. The Company, its
affiliates and their respective officers, directors, employees, investment
bankers, attorneys and other representatives and agents shall immediately cease
any existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any acquisition of all or any material portion of the
assets of, or any equity interest in, the Company or any business combination
with the Company. Prior to the acceptance for payment of Shares, the Company,
directly or indirectly, (a) may furnish information and access, in each case
only in response to unsolicited requests therefor, to any corporation,
partnership, person or other entity or group pursuant to confidentiality
agreements that do not prohibit or restrict disclosure of any matter to the
Parent, and (b) may participate in discussions and negotiate with such entity or
group concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction involving the Company or any division of the Company, only
if such entity or group to which information or access is furnished or
discussions or negotiations are held has submitted a written proposal to the
Board relating to
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any such transaction and the Board by a majority vote has determined in its good
faith judgment, based as to legal matters on the written opinion of legal
counsel, that failing to take such action would constitute a breach of the
Board's fiduciary obligations under applicable law. Except as set forth above,
neither the Company or any of its affiliates, nor any of its or their respective
officers, directors, employees, representatives or agents, shall, directly or
indirectly, encourage, solicit, participate in or initiate discussions or
negotiations with, or provide any information to, any corporation, partnership,
person or other entity or group (other than the Parent and the Purchaser, any
affiliate or associate of the Parent and the Purchaser or any designees of the
Parent and the Purchaser) concerning any merger, sale of assets, sale of shares
of capital stock or similar transaction involving the Company or any substantial
portion of the assets of the Company, or take any other action to facilitate the
making of a proposal that constitutes or could reasonably be expected to lead to
an acquisition proposal. Without limiting the foregoing, it is understood that
any violation of the restrictions set forth in the preceding sentence by any
executive officer of the Company or any of its subsidiaries, shall be deemed to
be a breach of this Section 6.13 by the Company. The Company shall use its best
efforts to ensure that the officers, directors and employees of the Company and
its subsidiaries and any investment banker or other advisor or representatives
retained by the Company are aware of the restrictions set forth in the preceding
sentences, and the Company hereby represents that the Board has
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adopted resolutions directing the officers, directors and employees of the
Company and its subsidiaries to comply with such restrictions. The Company
promptly shall advise the Parent orally and in writing of any takeover proposal
and any inquiries or developments with respect thereto. Neither the Board nor
any committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to the Parent or the Purchaser the approval or
recommendation by the Board of the Offer, the Merger or this Agreement or (ii)
approve or recommend, or propose to approve or recommend, any takeover proposal
or any other acquisition of Shares other than the Offer and the Merger.
Notwithstanding the foregoing, nothing contained in this Agreement shall prevent
the Board from approving or recommending to the Company shareholders any
unsolicited tender offer or exchange offer by a third party as contemplated by
Rules 14d-9 and 14d-2 promulgated under the Exchange Act (and, in connection
therewith, withdrawing or modifying the approval or recommendation by the Board
of the Offer, the Merger or this Agreement) in the event any unsolicited
takeover proposal shall have been made by a third party if, in the good faith
judgment of the Board, based as to legal matters on the written opinion of legal
counsel, that withdrawing or modifying such approval or recommendation is
required under applicable law in the proper discharge of its fiduciary duties.
6.14. Employees of the Company. Until the Effective
Time or the date of termination of this Agreement, whichever shall occur, and
for a period of one year from the date of termination
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(if termination should occur), neither the Parent nor any affiliate of the
Parent shall directly or indirectly employ, retain or agree to employ or retain
or solicit the employment or retention of any employee of the Company as an
employee or in any other capacity other than pursuant to any general employee
solicitation program conducted by the Parent in a manner consistent with past
practices.
ARTICLE VII
CONDITIONS TO THE MERGER
7.01. Conditions to Each Party's Obligation to Effect the
Merger. If the Offer is consummated, the respective obligations of each
party to this Agreement to consummate the Merger shall be subject to the
following conditions, which have not been waived at or prior to the Closing:
(a) The Purchaser shall have accepted for payment Shares
tendered pursuant to the Offer;
(b) This Agreement and the Merger shall have been approved
and adopted by the requisite vote or consent, if any is required, of the
shareholders of the Company required by the Company's Restated Certificate and
the BCL;
(c) Any waiting period (and any extension thereof) applicable
to the Merger under the HSR Act shall have expired or been terminated; and
(d) No order, statute, rule, regulation, execution order,
stay, decree, judgment, or injunction shall have been enacted, entered, issued,
promulgated or enforced by any court or
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governmental authority which prohibits or restricts the consummation of the
Merger.
7.02. Conditions to the Obligations of the Parent and the
Purchaser to Effect the Merger. The obligation of the Purchaser and the
Parent to effect the Merger shall be further subject to satisfaction of the
conditions, unless waived by the Parent, that (i) the Company shall have
performed and complied in all material respects with the agreements and
obligations contained in this Agreement required to be performed and complied
with by it at or prior to the Effective Time, (ii) all outstanding Options shall
have been surrendered to the Company as provided in Section 3.05(a) of this
Agreement and cancelled by the Company, and (iii) the Parent shall have received
a comfort letter, in form and substance reasonably requested by the Parent, from
Price Waterhouse LLP regarding the updating of the Company's most recent
financial statements.
7.03. Conditions to the Obligations of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be further
subject to the Parent and the Purchaser having performed and complied in all
material respects with the agreements and obligations contained in this
Agreement required to be performed and complied with by each of them at or prior
to the Effective Time.
ARTICLE VIII
CLOSING
8.01. Time and Place. The closing of the Merger (the
"Closing") shall take place at the offices of Jones, Day, Reavis &
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Pogue, 599 Lexington Avenue, New York, New York 10022, at 10:00 a.m. local time
on a date to be specified by the parties which shall be no later than the third
business day after the date on which the last of the closing conditions set
forth in Article VII is satisfied or waived (if waivable) unless another time,
date or place is agreed upon in writing by the parties hereto. The date on which
the Closing actually occurs is herein referred to as the "Closing Date."
8.02. Filings at the Closing. At the Closing, the
Purchaser shall cause the New York Certificate of Merger to be filed and
recorded with the Secretary of State of the State of New York in accordance with
the provisions of Section 904 or 905 of the BCL, and shall take any and all
other lawful actions and do any and all other lawful things necessary to cause
the Merger to become effective.
ARTICLE IX
TERMINATION; AMENDMENT; WAIVER
9.01. Termination. This Agreement may be terminated and the
Offer and the Merger may be abandoned at any time prior to the Effective Time:
(a) by mutual written consent of the Parent, the Purchaser
and the Company;
(b) by the Parent and the Purchaser or the Company if any
court of competent jurisdiction in the United States or other United States
governmental body shall have issued an order, decree or ruling or taken any
other final action restraining, enjoining or otherwise prohibiting the Merger or
the acceptance for payment
<PAGE> 74
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and payment for the Shares in the Offer and such order, decree, ruling or other
action is or shall have become nonappealable;
(c) by the Parent and the Purchaser if, due to an occurrence
or circumstance which results in a failure to satisfy any of the conditions set
forth in Annex A hereto, the Purchaser shall have (A) failed to commence the
Offer within five days following the date of the initial public announcement of
the Offer, (B) terminated the Offer or (C) failed to pay for Shares pursuant to
the Offer within 75 days following the commencement of the Offer;
(d) by the Company if (i) there shall not have been a
material breach of any representation, warranty, covenant or agreement on the
part of the Company and the Purchaser shall have (A) failed to commence the
Offer within five days following the date of the initial public announcement of
the Offer, (B) terminated the Offer or (C) failed to pay for Shares pursuant to
the Offer within 75 days following the commencement of the Offer, or (ii) prior
to the purchase of Shares pursuant to the Offer, a corporation, partnership,
person or other entity or group shall have made a bona fide offer that the Board
by a majority vote, determines in its good faith judgment and in the discharge
of its fiduciary duties, based as to legal matters on the written opinion of
legal counsel, is more favorable to the Company's shareholders than the Offer
and the Merger, provided that such termination under this clause (ii) shall not
be effective until payment of the fee required by Section 9.03(b) hereof;
<PAGE> 75
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(e) by the Parent and the Purchaser prior to the purchase of
Shares pursuant to the Offer, if (i) there shall have been a breach of any
representation or warranty on the part of the Company having a Material Adverse
Effect or materially adversely affecting (or materially delaying) the
consummation of the Offer, (ii) there shall have been a breach of any covenant
or agreement on the part of the Company resulting in a Material Adverse Effect
or materially adversely affecting (or materially delaying) the consummation of
the Offer, (iii) the Company shall engage in negotiations with any entity or
group (other than the Parent or the Purchaser) that has proposed a Third Party
Acquisition (as defined below), (iv) the Board shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) in a manner adverse to the
Purchaser, its approval or recommendation of the Offer, this Agreement or the
Merger or shall have recommended another offer, or shall have adopted any
resolution to effect any of the foregoing, or (v) the Minimum Condition shall
not have been satisfied by the expiration date of the Offer and on or prior to
such date an entity or group (other than the Parent or the Purchaser) shall have
made and not withdrawn a proposal with respect to a Third Party Acquisition; or
(f) by the Company if (i) there shall have been a breach of any
representation or warranty on the part of the Parent or the Purchaser which
materially adversely affects (or materially delays) the consummation of the
Offer or (ii) there shall have been a material breach of any covenant or
agreement on the part of
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the Parent or the Purchaser and which materially adversely affects (or
materially delays) the consummation of the Offer.
"Third Party Acquisition" means the occurrence of any of the
following events (i) the acquisition of the Company by merger or otherwise by
any person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) or entity other than the Parent, the Purchaser or
any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party
of more than 30% of the total assets of the Company, taken as a whole; (iii) the
acquisition by a Third Party of 30% or more of the outstanding Shares; (iv) the
adoption by the Company of a plan of liquidation or the declaration or payment
of an extraordinary dividend; or (v) the repurchase by the Company of more than
20% of the outstanding Shares.
9.02. Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 9.01, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its affiliates, directors, officers or shareholders, other
than the provision of this Section 9.02 and Sections 6.03(b) and 9.03 hereof.
Nothing contained in this Section 9.02 shall relieve any party from liability
for any breach of this Agreement.
9.03. Fees and Expenses. (a) In the event the Company
terminates this Agreement pursuant to Section 9.01(d)(ii), the Company shall
reimburse the Parent, the Purchaser and their affiliates (not later than one
business day after submission of statements therefore) for all actual
documented out-of-pocket fees
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and expenses, actually and reasonably incurred by any of them or on their behalf
in connection with the Offer and the Merger and the consummation of all
transactions contemplated by this Agreement (including, without limitation,
attorneys' fees, fees payable to financing sources, investment bankers, counsel
to any of the foregoing, and accountants and filing fees and printing costs)
(the "Expense Reimbursement Amount"). In the event the Parent and the Purchaser
terminate this Agreement pursuant to Section 9.01(c) (but only if such
termination is based on a failure to satisfy clause (i) or clause (iii)(c), (e)
or (f) of Annex A hereto) or 9.01(e), (i) the Company shall reimburse the
Parent, the Purchaser or their affiliates for up to $250,000 of the Expense
Reimbursement Amount and (ii) such amount shall be paid to Parent, the Purchaser
or their affiliates, as directed by the Parent, together with interest thereon
at the rate of 8% per annum, in 24 consecutive monthly installments of an amount
equal to 1/24 of the lesser of $250,000 or the Expense Reimbursement Amount,
commencing on the first business day of the month immediately following the
month in which the Parent, the Purchaser or such affiliate(s) became entitled to
receive such amount. The Parent and the Purchaser have provided the Company with
an estimate of the amount of fees and expenses incurred by them through the date
of this Agreement and if the Parent, the Purchaser or their affiliates submit a
request for reimbursement hereunder, the Parent, the Purchaser or such
affiliate(s) will provide the Company in due course with invoices or other
reasonable evidence of such fees and expenses upon request.
<PAGE> 78
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(b) In the event the Company terminates this Agreement
pursuant to Section 9.01(d)(ii) or in the event the Parent and the Purchaser
terminate this Agreement pursuant to 9.01(e)(ii), (iii), (iv) or (v) hereof, the
Parent and the Purchaser would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate the Parent
and the Purchaser for such damages, the Company shall pay to the Purchaser the
amount of $1,000,000 less the Shareholder Amount (as defined below), if any, as
liquidated damages immediately upon such a termination as well as all amounts to
which the Parent and the Purchaser would be entitled pursuant to Section
9.03(a). It is specifically agreed that the amount to be paid pursuant to this
Section 9.03 represents liquidated damages and not a penalty. "Shareholder
Amount" means the aggregate amount paid by the shareholders of the Company who
are parties to Shareholder Tender Agreements to the Purchaser pursuant to
Section 12 thereof.
(c) Except as specifically provided in this Section 9.03
each party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
ARTICLE X
MISCELLANEOUS
10.01. Survival of Representations, Warranties, Covenants
and Agreements. The representations, warranties and agreements of the
parties contained in Sections 2.06, 3.01, 3.02 (but only to the extent that such
Section expressly relates to actions to be taken after the Effective Time),
3.03, 3.04, 3.05, 6.05, 6.08, 6.09, 6.11, 6.12 and Article X hereof, shall
survive
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the consummation of the Offer and the Merger. The agreements of the
parties contained in Sections 6.03, 9.02, 9.03 and Article X hereof and the
representations and warranties in Sections 4.22 and 5.07 shall survive the
termination of this Agreement without termination. All other representations,
warranties, agreements and covenants in this Agreement shall not survive the
consummation of the Offer or the termination of this Agreement.
10.02. Amendment and Modification. Subject to
applicable law, this Agreement may be amended, modified or supplemented only by
written agreement of the Parent (for itself and the Purchaser) and the Company
at any time prior to the Effective Time with respect to any of the terms
contained herein executed by duly authorized officers of the respective parties
except that after the earlier of (a) the purchase by the Purchaser of more than
50% of the outstanding Shares on a fully diluted basis, and (b) the meeting of
shareholders to approve the Merger contemplated by this Agreement, the price per
Share to be paid pursuant to this Agreement to the holders of Shares shall in no
event be decreased and the form of consideration to be received by the holders
of such Shares in the Merger shall in no event be altered without the approval
of such holders.
10.03. Waiver of Compliance; Consents. At any time
prior to the Effective Time, the parties hereto may extend the time for
performance of any of the obligations or other acts or waive any inaccuracies in
the representations and warranties contained herein or in the documents
delivered pursuant hereto. Any failure of the Parent (for itself and the
Purchaser), on the
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one hand, or the Company, on the other hand, to comply with any obligation,
covenant, agreement or condition herein may be waived in writing by the Parent
(for itself and the Purchaser) or the Company, respectively, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of or estoppel with respect
to any subsequent or other failure. Whenever this Agreement requires or permits
consent by or on behalf of any party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of compliance
as set forth in this Section 10.03.
10.04. Counterparts. This Agreement may be executed in any
number of counterparts each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
10.05. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws rules.
10.06. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail (return receipt requested) or by
overnight courier service to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
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(a) If to the Company, to:
Prior to the Effective Time,
Griffin Technology Incorporated
1133 Corporate Drive
Farmington, New York 14425
Attention: Robert S. Urland
President and Chief Executive Officer
After the Effective Time,
Robert S. Urland
297 Whispering Hills
Victor, New York 14564
with a copy to:
Nixon, Hargrave, Devans & Doyle
Clinton Square
P.O. Box 1051
Rochester, New York 14603
Attention: John C. Partigan, Esq.
(b) if to the Parent or the Purchaser, to:
If By Mail
Diebold, Incorporated
818 Mulberry Rd. S.E.
P.O. Box 8230
Canton, Ohio 44711-8230
Attention: Gerald F. Morris
Executive Vice President and
Chief Financial Officer
<PAGE> 82
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If by Courier Service or Personal Delivery
Diebold, Incorporated
5995 Mayfair Road
North Canton, Ohio 44720
Attention: Gerald F. Morris
Executive Vice President and
Chief Financial Officer
with copies to:
If By Mail
Diebold, Incorporated
818 Mulberry Rd. S.E.
P.O. Box 8230
Canton, Ohio 44711-8230
Attention: Warren W. Dettinger
Vice President and General Counsel
and
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
If by Courier Service or Personal Delivery
Diebold, Incorporated
5995 Mayfair Road
North Canton, Ohio 44720
Attention: Warren W. Dettinger
Vice President and General Counsel
and
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske, Esq.
10.07. Entire Agreement, Assignment Etc. This Agreement,
which hereby incorporates the Company Disclosure Letter, the Parent Disclosure
Letter, the Confidentiality Agreement and the Shareholder Tender Agreements,
embodies the entire agreement and understanding of the parties hereto in
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respect of the subject matter hereof and, except for Section 6.11 and 6.12, is
not intended to confer upon any other person any rights or remedies hereunder.
This Agreement supersedes all prior agreements and understanding of the parties
with respect to the subject matter hereof other than the Confidentiality
Agreement. This Agreement and all of the provisions hereof shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and permitted assigns, but neither this Agreement nor any of the rights,
interest or obligations hereunder shall be assigned by any party hereto without
the prior written consent of the other parties hereto except that the Parent
shall have the right to assign the rights of the Purchaser to any other
(directly or indirectly) wholly-owned subsidiary of the Parent without the prior
written consent of the Company.
10.08. Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
10.09. Headings. The Articles and Section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
Agreement of the parties and shall not effect in any way the meaning or
interpretation of this Agreement.
10.10. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is
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accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
[INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto on the date
first above written.
GRIFFIN TECHNOLOGY INCORPORATED
By: /s/ Robert S. Urland
-----------------------------
Name: Robert S. Urland
Title: President and CEO
DIEBOLD, INCORPORATED
By: /s/ Gerald F. Morris
-----------------------------
Name: Gerald F. Morris
Title: Executive Vice President
and Chief Financial Officer
D-GT ACQUISITION, INCORPORATED
By: /s/ Gerald F. Morris
-----------------------------
Name: Gerald F. Morris
Title: Vice President
<PAGE> 86
ANNEX A
The capitalized terms used herein have the meanings
set forth in the Agreement and Plan of Merger
to which this Annex A is attached
Notwithstanding any other provision of the Agreement and Plan
of Merger to which this Annex A is attached (the "Merger
Agreement") or the Offer, the Purchaser shall not be required to accept for
payment, purchase or pay for any Shares of the Company tendered, and may
terminate or, subject to the terms of the Merger Agreement, amend the Offer and
may postpone the acceptance for payment of any Shares, if prior to the time of
acceptance for payment of Shares tendered pursuant to the Offer:
(i) at least two-thirds of then outstanding Shares on a fully
diluted basis shall not have been validly tendered and, if tendered,
not withdrawn immediately prior to the expiration of the Offer (the
"Minimum Condition");
(ii) any waiting period applicable to the Offer pursuant to
the HSR Act shall not have expired or been terminated;
(iii) at any time before the time of acceptance for payment for
any such Shares any of the following shall occur or exist:
(a) there shall have been instituted or be pending any
action, proceeding, application, claim or counterclaim by any
government or governmental authority or agency, domestic or
foreign, before any court or governmental regulatory or
administrative agency, authority or tribunal, domestic or
foreign, (i) challenging the acquisition by the Parent or the
Purchaser of the Shares, seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or seeking to
obtain from the Parent or the Purchaser any damages that would
result in a Material Adverse Effect if such were assessed
against the Company, (ii) seeking to prohibit or materially
limit the ownership or operation by the Parent or the Surviving
Corporation of all or any material portion of the business or
assets of the Company or compel the Parent or the Surviving
Corporation to dispose of or to hold separate all or any
material portion of the business or assets of the Company, or
to impose any material limitation on the ability of the Company
or the Surviving Corporation to conduct such business or own
such assets, or (iii) seeking to impose material limitations on
the ability of the Parent (or any other affiliate of the
Parent) to acquire or hold or to exercise full rights of
ownership of the Shares, including, but not limited to,
<PAGE> 87
the right to vote the Shares purchased by them on all matters
properly presented to the stockholders of the Company; or
(b) there shall be any statute, rule, regulation,
judgment, order or injunction enacted, promulgated, entered,
enforced or deemed applicable to the Offer, the Merger or the
Merger Agreement, or any other action shall have been taken by
any government, governmental authority or court, domestic or
foreign, other than the routine application to the Offer or the
Merger of waiting periods under the HSR Act, that has, or has a
substantial likelihood of resulting in, any of the consequences
referred to in clauses (i) through (iii) of paragraph (a)
above; or
(c) the Company shall have breached or failed to
perform in any material respect any of its obligations,
covenants or agreements contained in the Merger Agreement, or
any of the representations and warranties of the Company set
forth in the Merger Agreement shall not have been true and
correct in any material respect when made or, except for any
representations and warranties made as of a specific date,
shall have ceased to be true and correct in any material
respect as if made on and as of the scheduled expiration of the
Offer, as it may be extended from time to time (the
"Expiration Date") (or, in the case of representations
and warranties that are specifically qualified as to
materiality, shall not have been true and correct when made or
shall have ceased to be true and correct on and as of the
Expiration Date); or
(d) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for,
securities on the New York Stock Exchange, Inc. (ii) the
declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States (whether or
not mandatory), (iii) the commencement of a war, armed
hostilities or other international or national calamity
directly or indirectly involving the United States and having a
Material Adverse Effect on or materially adversely affecting
(or materially delaying) the consummation of the Offer, (iv)
any limitation (whether or not mandatory), by any U.S.
governmental authority or agency on, or any other event that,
in the judgment of the Parent, is substantially likely to
materially adversely affect, the extension of credit by banks
or other financial institutions, or (v) from the date of the
Merger Agreement through the date of termination or expiration
of the Offer, a decline of at least 25% in the Standard &
Poor's 500 Index; or
<PAGE> 88
(e) prior to the purchase of Shares pursuant to the
Offer, the Company Board of Directors shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a
manner adverse to the Parent its approval or recommendation of
the Offer, the Merger Agreement or the Merger or shall have
recommended another offer for the purchase of the Shares,
which, in the sole judgment of the Parent in any such case, and
regardless of the circumstances (including any action or
omission by the Parent) giving rise to such condition, makes it
inadvisable to proceed with such acceptance for payment except
where as a result of the Company's receipt of an unsolicited
acquisition proposal from a third party (A) the Company issues
to its stockholders a communication that contains only the
statements permitted by Rule 14d-9(e) under the Securities
Exchange Act of 1934 (and does not otherwise withdraw, modify
or amend its approval or recommendation of the transactions
contemplated hereby) and (B) within five business days of
issuing such communication the Company publicly reconfirms its
approval and recommendation of the transactions contemplated by
the Offer and the Merger Agreement; or
(f) There shall have occurred since June 30, 1995, a
change, occurrence or circumstance in the Company's business
having a Material Adverse Effect thereon.
<PAGE> 1
EXHIBIT 2
Form of Shareholder Tender Agreement between Purchaser and each
Tender Shareholder of the Company
<PAGE> 2
- --------------------------------------------------------------------------------
SHAREHOLDER TENDER AGREEMENT
BY AND BETWEEN
D-GT ACQUISITION, INCORPORATED
AND
DATED AS OF OCTOBER 20, 1995
- --------------------------------------------------------------------------------
<PAGE> 3
SHAREHOLDER TENDER AGREEMENT
SHAREHOLDER TENDER AGREEMENT, dated as of October 20, 1995 (this
"Agreement"), by and between D-GT ACQUISITION, INCORPORATED, a New York
corporation ("Purchaser"), and ________________________________________________
("Shareholder").
WHEREAS, the Shareholder is the owner of __ shares (the "Shares") of Common
Stock, $.05 par value per share (the "Common Stock"), of Griffin Technology
Incorporated, a New York corporation (the "Company"); and
WHEREAS, Diebold, Incorporated, an Ohio corporation ("Parent"), the
Purchaser and the Company, have entered into an Agreement and Plan of Merger,
dated as of the date hereof (as amended from time to time, the "Merger
Agreement"), which provides, among other things, that, upon the terms and
subject to the conditions therein, Purchaser will make a cash tender offer (the
"Offer") for all of the outstanding shares of Common Stock and will merge with
the Company (the "Merger"); and
WHEREAS, as a condition to the willingness of Parent and Purchaser to enter
into the Merger Agreement, Purchaser has requested that the Shareholder agree,
and in order to induce Parent and Purchaser to enter into the Merger Agreement,
the Shareholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth herein,
the parties hereto hereby agree as follows:
1. Representations and Warranties of the Shareholder. The Shareholder
represents and warrants to the Purchaser as follows:
(a) The Shareholder is the sole lawful, record and beneficial owner
of, and has good, valid and marketable title to, all the Shares, and there
exist no liens, claims, security interests, options, proxies, voting
agreements, charges or encumbrances of whatever nature ("Liens") affecting
the Shares.
(b) Upon transfer to the Purchaser by the Shareholder of the Shares
upon consummation of the Offer or the Merger (whichever is earlier),
Purchaser will have good, valid and marketable title to the Shares, free
and clear of all Liens.
(c) The Shares constitute all of the securities (as defined in Section
3(10) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which definition will apply for all purposes of this Agreement) of
the Company beneficially owned (as defined in Rule 13d-3 under the Exchange
Act, which meaning will apply for all purposes of this Agreement), directly
or indirectly, by the Shareholder (excluding any securities beneficially
owned by any of its affiliates or associates (as such terms are defined in
Rule 12b-2 under the Exchange Act, which definition will apply for all
purposes of this Agreement) as to which it does not have voting or
investment power).
(d) Except for the Shares, the Shareholder does not, directly or
indirectly, beneficially own or have any option, warrant or other right to
acquire any securities of the Company that are or may by their terms become
entitled to vote or any securities that are convertible or exchangeable
into or exercisable for any securities of the Company that are or may by
their terms become entitled to vote, nor is the Shareholder subject to any
contract, commitment, arrangement, understanding or relationship (whether
or not legally enforceable) that allows or obligates it to vote or acquire
any securities of the Company.
(e) The execution and delivery of this Agreement by the Shareholder
does not, and the performance by the Shareholder of its obligations
hereunder will not, constitute a violation of, conflict with, result in a
default (or an event which, with notice or lapse of time or both, would
result in a default) under, or result in the creation of any Lien on any
Shares under, (i) any contract, commitment, agreement, understanding,
arrangement or restriction of any kind to which Shareholder is a party or
by which the Shareholder is bound or (ii) any judgment, writ, decree, order
or ruling applicable to the Shareholder.
2
<PAGE> 4
(f) Neither the execution and delivery of this Agreement not the
performance by the Shareholder of its obligations hereunder will violate
any order, writ, injunction, judgment, law, decree, statute, rule or
regulation applicable to the Shareholder or require any consent,
authorization or approval of, filing with or notice to, any court,
administrative agency or other governmental body or authority, other than
any required notices or filings pursuant to the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder (the "HSR Act") or the federal securities laws.
2. Representations and Warranties of Purchaser. Purchaser represents and
warrants to the Shareholder as follows:
(a) Purchaser is duly organized and validly existing and in good
standing under the laws of the State of New York, has the requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes a legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except that (i) the enforceability hereof may be
subject to applicable bankruptcy, insolvency or other similar laws, now or
hereinafter in effect, affecting creditors' rights generally, and (ii) the
availability of the remedy of specific performance or injunctive or other
forms of equitable relief may be subject to equitable defenses and would be
subject to the discretion of the court before which any proceeding therefor
may be brought.
(b) The execution and delivery of this Agreement by Purchaser does
not, and the performance by Purchaser of its obligations hereunder will
not, constitute a violation of, conflict with, or result in a default (or
an event which, with notice or lapse of time or both, would result in a
default) under, its certificate of incorporation or bylaws or any contract,
commitment, agreement, understanding, arrangement or restriction of any
kind to which Purchaser is a party or by which Purchaser is bound or any
judgment, writ, decree, order or ruling applicable to Purchaser.
(c) Neither the execution and delivery of this Agreement nor the
performance by Purchaser of its obligations hereunder will violate any
order, writ, injunction, judgment, law, decree, statute, rule or regulation
applicable to Purchaser or require any consent, authorization or approval
of, filing with, or notice to, any court, administrative agency or other
governmental body or authority, other than any required notices or filings
pursuant to the HSR Act or the federal securities laws.
3. Tender of Shares. The Shareholder will tender and sell (and not
withdraw) pursuant to and in accordance with the terms of the Offer all of the
Shares. Upon the purchase of all the Shares pursuant to the Offer in accordance
with this Section 3, this Agreement will terminate. In the event,
notwithstanding the provisions of the first sentence of this Section 3, any
Shares are for any reason withdrawn from the Offer or are not purchased pursuant
to the Offer, such Shares will remain subject to the terms of this Agreement.
The Shareholder acknowledges that Purchaser's obligation to accept for payment
and pay for the Shares in the Offer is subject to all the terms and conditions
of the Offer.
4. Transfer of the Shares. During the term of this Agreement, except as
otherwise provided herein, the Shareholder will not (a) offer to sell, sell,
pledge or otherwise dispose of or transfer any interest in or encumber with any
Lien any of the Shares, (b) acquire any shares of Common Stock or other
securities of the Company (otherwise than in connection with a transaction of
the type described in Section 7 and any such additional shares or securities
will be deemed Shares and included in the Shares subject to this Agreement), (c)
deposit the Shares into a voting trust, enter into a voting agreement or
arrangement with respect to the Shares or grant any proxy or power of attorney
with respect to the Shares, or (d) enter into any contract, option or other
arrangement or undertaking with respect to the direct or indirect acquisition or
sale, assignment or other disposition of or transfer of any interest in or the
voting of any shares of Common Stock or any other securities of the Company.
5. Voting of Shares. The Shareholder, by this Agreement, does hereby
constitute and appoint Purchaser, or any nominee thereof, with full power of
substitution, during and for the term of this Agreement,
3
<PAGE> 5
as his true and lawful attorney and proxy for and in his, her or its name, place
and stead, to vote each of such Shares at any annual, special or adjourned
meeting of the stockholders of the Company (and this appointment will include
the right to sign its name (as stockholder) to any consent, certificate or other
document relating to the Company which the laws of the State of New York may
require or permit) (a) in favor of the Merger, the execution and delivery by the
Company of the Merger Agreement and the approval and adoption of the terms
thereof and hereof; (b) against any action or agreement that would result in a
breach in any respect of any covenant, agreement, representation or warranty of
the Company under the Merger Agreement; and (c) against the following actions
(other than the Merger and the and the other transactions contemplated by the
Merger Agreement): (i) any extraordinary corporate transaction, such as a
merger, consolidation or other business combination involving the Company or its
subsidiaries; (ii) a sale, lease or transfer of a material amount of assets of
the Company or one of its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (iii) (A) any
change in a majority of the persons who constitute the board of directors of the
Company as of the date hereof; (B) any change in the present capitalization of
the Company or any amendment of the Company's Certificate of Incorporation or
By-Laws, as amended to date; (C) any other material change in the Company's
corporate structure or business; or (D) any other action which, in the case of
each of the matters referred to in clauses (iii)(A), (B), (C) and (D), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or adversely affect the Merger and the other transactions contemplated
by this Agreement and the Merger Agreement. This proxy and power of attorney is
a proxy and power coupled with an interest, and the Shareholder declares that it
is irrevocable. The Shareholder hereby revokes all and any other proxies with
respect to the Shares that it may have heretofore made or granted.
6. Enforcement of the Agreement. The Shareholders acknowledge that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that Purchaser will be entitled to
an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which it is entitled at law or in equity, including without limitation
under Section 13 hereof.
7. Adjustments. The number and type of securities subject to this
Agreement will be appropriately adjusted in the event of any stock dividends,
stock splits, recapitalizations, combinations, exchanges of shares or the like
or any other action that would have the effect of changing the Shareholder's
ownership of the Company's capital stock or other securities.
8. Compliance with Merger Agreement. Shareholder shall comply with the
requirements of Section 6.13 of the Merger Agreement.
9. Termination. Except for Section 13 hereof which will only terminate as
and when provided therein, this Agreement will terminate on the date the Merger
Agreement is terminated in accordance with its terms.
10. Expenses. All fees and expenses incurred by either of the parties
hereto will be borne by the party incurring such fees and expenses.
11. Brokerage. Purchaser and the Shareholder represent and warrant to the
other that the negotiations relevant to this Agreement have been carried on by
Purchaser, on the one hand, and the Shareholder, on the other hand, directly
with the other, and that there are no claims for finder's fees or brokerage
commissions or other like payments in connection with this Agreement or the
transactions contemplated hereby. Purchaser, on the one hand, and the
Shareholder, on the other hand, will indemnify and hold harmless the other from
and against any and all claims or liabilities for finder's fees or brokerage
commissions or other like payments incurred by reason of action taken by it or
any of them, as the case may be.
12. Fee. If (a) Purchaser or the Company terminates the Merger Agreement
pursuant to Article IX thereof (other than Sections 9.01(d) (i) or 9.01(f)
thereof) and (b) on or after the date hereof and not later than two years from
the date of such termination, (i) the Board of Directors of the Company approves
or recommends any proposal or offer (an "Acquisition Proposal") concerning any
merger, sale or assets, sale of shares of capital stock or similar transaction
involving the Company other than from Purchaser, or (ii) the
4
<PAGE> 6
Company enters into an agreement with respect to a merger, acquisition,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving, or any purchase of all or a substantial portion of the assets or
equity securities of, the Company, or (iii) Shareholder disposes of any or all
of its Shares to any person not an affiliate or an associate of Purchaser or to
the Company or any affiliate thereof (or realizes cash proceeds in respect of
such Shares as a result of a distribution to the Shareholder by the Company
following the sale of a material amount of the Company's assets) in connection
with a transaction proposed, described or set forth in such Acquisition Proposal
or agreement or the Company issues an extraordinary dividend or other
distribution in accordance with such Acquisition Proposal or agreement (each, a
"Subsequent Transaction") at a per share price or with equivalent per share
proceeds, as the case may be (the "Subsequent Price"), with a value in excess of
$7.75 (the "Offer Price"), then the Shareholder will promptly pay to Purchaser
an amount equal to the product of (x) the excess of the Subsequent Price over
the Offer Price and (y) the number of Shares disposed of or otherwise
participating in the Subsequent Transaction. In the event of any stock
dividends, stock splits, recapitalizations, combinations, exchanges of shares or
the like or any other action that would have the effect of changing the
Shareholder's ownership of the Company's capital stock or other securities, the
Offer Price will be appropriately adjusted for the purpose of this Section 12.
13. Miscellaneous.
(a) All representations and warranties contained herein will survive the
termination hereof.
(b) Any provision of this Agreement may be waived at any time by the party
that is entitled to the benefits thereof. No such waiver, amendment or
supplement will be effective unless in a writing which makes express reference
to this Section 13(b) and is signed by the party or parties sought to be bound
thereby. Any waiver by any party of a breach of any provision of this Agreement
will not operate as or be construed to be a waiver of any other breach of such
provision or of any breach of any other provision of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement or one
or more sections hereof will not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement.
(c) This Agreement contains the entire agreement among Purchaser and the
Shareholder with respect to the subject matter hereof, and supersedes all prior
agreements among Purchaser and the Shareholder with respect to such matters.
This Agreement may not be amended, changed, supplemented, waived or otherwise
modified, except upon the delivery of a written agreement executed by the
parties hereto.
(d) This Agreement will be governed by and construed in accordance with the
laws of the State of New York applicable to contracts made and performed in that
state.
(e) The descriptive headings contained herein are for convenience and
reference only and will not affect in any way the meaning or interpretation of
this Agreement.
(f) All notices and other communications hereunder will be in writing and
will be given (and will be deemed to have been duly given upon receipt) by
delivery in person, by telecopy, or by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
If to the Shareholder to:
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
5
<PAGE> 7
If to the Purchaser to:
If By Mail
Diebold, Incorporated
818 Mulberry Rd. S.E.
P.O. Box 8230
Canton, Ohio 44711-8230
Attention: Gerald F. Morris
Executive Vice President and Chief Financial Officer
If By Personal Delivery:
Diebold, Incorporated
5995 Mayfair Road
North Canton, Ohio 44720
Attention: Gerald F. Morris
Executive Vice President and Chief Financial Officer
with copies to:
If By Mail
Diebold, Incorporated
818 Mulberry Rd. S.E.
P.O. Box 8230
Canton, Ohio 44711-8230
Attention: Warren W. Dettinger
Vice President and General Counsel
and
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske
If by Personal Delivery:
Diebold, Incorporated
5995 Mayfair Road
North Canton, Ohio 44720
Attention: Warren W. Dettinger
Vice President and General Counsel
and
Jones, Day, Reavis & Pogue
North Point
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Lyle G. Ganske
or to such other address as any party may have furnished to the other parties in
writing in accordance herewith.
(g) This Agreement may be executed in any number of counterparts, each of
which will be deemed to be an original, but all of which together will
constitute one agreement.
6
<PAGE> 8
(h) This Agreement is binding upon and is solely for the benefit of the
parties hereto and their respective successors, legal representatives and
assigns. Neither this Agreement nor any of the rights, interests or obligations
under this Agreement will be assigned by any of the parties hereto without the
prior written consent of the other parties, except that Purchaser will have the
right to assign to Purchaser or any other direct or indirect wholly owned
subsidiary of Parent any and all rights and obligations of Purchaser under this
Agreement, including the right to purchase Shares tendered by the Shareholder
pursuant to the terms hereof and the Offer, provided that any such assignment
will not relieve Purchaser from any of its obligations hereunder.
(i) If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other terms
and provisions of this Agreement will nevertheless remain in full force and
effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party hereto.
Upon any such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto will negotiate in good faith
to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible.
(j) The Shareholder hereby irrevocably and unconditionally (i) consents to
submit to the jurisdiction of the courts of the State of New York and of the
federal courts located in the City of New York for any disputes arising out of
or relating to this Agreement, (ii) waives any objection to the laying of venue
of any action, suit or proceeding arising out of this Agreement in any such
court, and (iii) waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
(k) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity will be cumulative and
not alternative, and the exercise of any thereof by either party will not
preclude the simultaneous or later exercise of any other such right, power or
remedy by such party.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the date first above written.
D-GT ACQUISITION, INCORPORATED
By:
---------------------------------
Name:
Title:
SHAREHOLDER
---------------------------------
7
<PAGE> 1
EXHIBIT 3
Fairness Opinion delivered by DLJ to the Board of Directors
of the Company dated October 20, 1995
<PAGE> 2
October 20, 1995
Board of Directors
Griffin Technology Incorporated
1133 Corporate Drive
Farmington, New York 14425
Dear Sirs and Madams:
You have requested our opinion as to the fairness from a financial point of
view to the shareholders of Griffin Technology Incorporated (the "Company") of
the consideration to be received by such shareholders pursuant to the terms of
the Agreement and Plan of Merger dated as of October 20, 1995, among Diebold
Incorporated ("Diebold"), the Company and D-GT Acquisition, Incorporated, a
wholly owned subsidiary of Diebold (the "Agreement").
Pursuant to the Agreement, Diebold will commence a tender offer for any and
all outstanding shares of the Company's common stock at a price of $7.75 per
share. The tender offer is to be followed by a merger in which the shares of all
shareholders who did not tender would be converted into the right to receive
$7.75 per share in cash.
In arriving at our opinion, we have reviewed financial and other
information that was publicly available or furnished to us by the Company
including information provided during discussions with management. Included in
the information provided during discussions with management were certain
financial projections of the Company for the period beginning September 1995 and
ending December 1996 prepared by the management of the Company. In addition, we
have compared certain financial and securities data of the Company with various
other companies whose securities are traded in public markets, reviewed the
historical stock prices and trading volumes of the common stock of the Company,
reviewed prices and premiums paid in other business combinations and conducted
such other financial studies, analyses and investigations as we deemed
appropriate for purposes of this opinion.
In rendering our opinion, we have relied upon and assumed the accuracy,
completeness and fairness of all of the financial and other information that was
available to us from public sources, that was provided to by the Company or its
representatives, or that was otherwise reviewed by us. With respect to the
financial projections supplied to us, we have assumed that they have been
reasonably prepared on the basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
operating and financial performance of the Company. We have not assumed any
responsibility for making an independent evaluation of the Company's assets or
liabilities or for making any independent verification of any of the information
reviewed by us. We have relied as to all legal matters on advice of counsel to
the Company.
Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as of,
the date of this letter. It should be understood that, although subsequent
developments may affect this opinion, we do not have any obligation to update,
revise or reaffirm this opinion. Our opinion does not constitute a
recommendation to any shareholder as to how such shareholder should vote on the
proposed transaction.
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of its
investment banking services, is regularly engaged in the valuation of businesses
and securities in connection with mergers, acquisitions, underwritings, sales
and distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes.
<PAGE> 3
Based upon the foregoing and such other factors as we deem relevant, we are
of the opinion that the consideration to be received by the shareholders of the
Company pursuant to the Agreement is fair to the shareholders of the Company
from a financial point of view.
Very truly yours,
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ SAFRA A. CATZ
----------------------------------
Safra A. Catz
Senior Vice President
2
<PAGE> 1
EXHIBIT 4
Joint Press Release of the Company and Parent dated October 23, 1995
<PAGE> 2
October 23, 1995
DIEBOLD ANNOUNCES AGREEMENT TO PURCHASE
GRIFFIN TECHNOLOGY INCORPORATED
CANTON, Ohio -- Diebold, Incorporated (NYSE:DBD) today announced that it
has entered into a merger agreement to purchase the stock of Griffin Technology
Incorporated (NASDAQ:GRIF), based in Farmington, N.Y. Pursuant to the merger
agreement, Diebold will commence a tender offer for all issued and outstanding
shares of Griffin for $7.75 per share in cash.
In connection with the transaction, certain major shareholders have agreed
to tender to Diebold their shares (representing approximately 32 percent of the
issued and outstanding common stock of Griffin).
Griffin, with 1995 fiscal year (June 30, 1995) revenues of $17.9 million,
is a provider of computerized campus-wide, card-based systems for colleges and
universities in the United States. Two years ago Diebold started offering an
integrated access management (ICAM) system that combines transaction and
security capabilities on a single card. Griffin, with more than 20 years
experience, develops, manufactures, sells and services systems for meal plans,
facility access control, photo imaging, vending and electronic payment systems.
The new alliance will have nearly 300 installations.
Robert W. Mahoney, Diebold chairman, president and chief executive officer,
said, "The purchase of Griffin accelerates the strategic initiative we undertook
to expand our presence in the higher education marketplace, as well as in other
campus-type environments. Griffin is well respected in the college and
university market. Our customers will benefit not only from Griffin's market
expertise, but also from Diebold's corporate reputation and financial strength,
nationwide service organization and technology expertise.
"We also benefit from expanded sales opportunities for both companies'
existing products," Mahoney said.
Robert S. Urland, Griffin president and chief executive officer, said,
"Griffin gains by affiliating with Diebold, a much larger company with capital
to finance new products and geographic expansion for campus card systems. There
are also natural synergies between out companies in products and software,
research and development, service, manufacturing and other operations. For
instance, we will now be in a position to offer existing Griffin customers an
enhanced security product line to integrate with their installed card systems.
It will be a definite plus for Griffin and our college and university
customers," he said.
Diebold, Incorporated, headquartered in Canton, Ohio, is a world leader in
providing card-based transaction systems, security and service solutions to the
financial, education and healthcare industries. Founded in 1859 as a security
equipment company, Diebold currently provides integrated solutions incorporating
its automated teller machines (ATMs), electronic and physical security systems,
electronic payment systems, professional services and software.
<PAGE> 1
EXHIBIT 5
Information concerning the Purchaser
Designees to the Board of Directors
of the Company.
<PAGE> 2
INFORMATION CONCERNING THE PURCHASER DESIGNEES
TO THE BOARD OF DIRECTORS OF THE COMPANY
(ALL ARE CITIZENS OF THE UNITED STATES)
<TABLE>
<CAPTION>
NAME AND AGE (AS OF PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
10/23/95) FIVE-YEAR EMPLOYMENT HISTORY
- ---------------------------------------------------------------------------------------------
<S> <C>
William T. Blair (62) 1993-present, Executive Vice President, Diebold; 1989-93 Vice
c/o Diebold, Incorporated President and General Manager, North American Sales and Services,
5995 Mayfair Road Diebold
North Canton, OH 44720
Gerald F. Morris (52) 1993-present, Executive Vice President and Chief Financial
c/o Diebold, Incorporated Officer, Diebold; 1994-present, Vice President, Treasurer and
5995 Mayfair Road Director, D-GT Acquisition; 1990-93, Senior Vice President and
North Canton, OH 44720 Chief Financial Officer, Diebold
Gregg A. Searle (47) 1993-present, Executive Vice President, Diebold; 1994-present,
c/o Diebold, Incorporated President and Director, D-GT Acquisition; 1990-1993, Vice
5995 Mayfair Road President, Diebold; 1991-93, General Manager, InterBold; 1990-91,
North Canton, OH 44720 Vice President, U.S. Sales & Marketing, InterBold
Alben W. Warf (57) 1994-present, Group Vice President, Self-Service Systems,
c/o Diebold, Incorporated Diebold; 1993-94, Vice President, Diebold, and General Manager,
5995 Mayfair Road InterBold; 1990-93, Vice President, Development and
North Canton, OH 44720 Manufacturing, Diebold
Robert J. Warren (49) 1990-present, Vice President and Treasurer, Diebold;
c/o Diebold, Incorporated 1994-present, Director, D-GT Acquisition
5995 Mayfair Road
North Canton, OH 44720
</TABLE>
<PAGE> 1
EXHIBIT 6
1986 Employee Stock Purchase Plan
<PAGE> 2
GRIFFIN TECHNOLOGY INCORPORATED
1986 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose of the Plan. This Plan shall be known as the "Griffin
Technology Incorporated 1986 Employee Stock Purchase Plan". The purpose of the
Plan is to permit employees of Griffin Technology Incorporated ("the Company")
to obtain or increase a proprietary interest in the Company by permitting them
to make installment purchases of shares of the Company's Common Stock (as
hereinafter defined) through payroll deductions. The Plan is intended to qualify
as an "employee stock purchase plan" within the meaning of Section 423 of the
Internal Revenue Code of 1954, as amended (the "Code").
2. Definitions.
(a) Common Stock. The Company's $.05 par value common stock as presently
constituted and shares of common stock which may be issued by the Company in
exchange for or reclassification thereof.
(b) Offering Date. Such day in the month of July each year as fixed by the
Board of Directors.
(c) Enrollment Period. The two week period commencing on the Offering
Date.
(d) Purchase Date. Last day of Purchase Period.
(e) Purchase Period. Period of one year beginning on Offering Date.
(f) Purchase Price. The purchase price per share at which shares are sold
in an offering under the Plan is the lower of (i) 85% of the fair market value
of a share of Common Stock on the Offering Date or (ii) 85% of the fair market
value of a share of Common Stock on the Purchase Date (but in any event not less
than par value). The fair market value of the Common Stock on a given date shall
be the mean between the closing bid and ask prices of the Common Stock reported
in the NASDAQ National Market System on such date, or if the Common Stock is
listed on a stock exchange, the mean between the high and low prices quoted on
such date.
(g) Eligible Employees. Those persons who on the Offering Date are regular
full-time employees of the Company except those who, immediately prior to the
Offering Date, would be deemed under Section 423(b)(3) of the Code to own stock
possessing 5 percent or more of the total combined voting power or value of all
classes of stock of the Company or any other corporation which constitutes a
parent or subsidiary corporation of the Company within the meaning of that
section. A full-time employee is one whose customary employment is not less than
twenty (20) hours per week or five months in any calendar year.
(h) Participant. An Eligible Employee who subscribes for the purchase of
shares of Common Stock under the Plan in accordance with Section 4 of the Plan.
(i) Compensation. For an Eligible Employee on the payroll of the Company
at the Offering Date the compensation paid to such Eligible Employee shall be
the annual base rate of compensation in effect immediately prior to the Offering
Date.
3. The Offering. Each person who is an Eligible Employee on the Offering
Date shall automatically be granted as of such Offering Date an option to
purchase on the Purchase Date that number of full shares of Common Stock
determined by dividing the amount credited to the Participant's Account under
Section 7 on the Purchase Date by the Purchase Price as of such Purchase Date.
Any such purchases shall be subject to the limitations of Section 4(b) and 15.
In addition, the maximum number of shares of Common Stock that may be issued
under this Plan is 200,000 shares. These shares may be authorized and unissued
or treasury shares.
4. Subscriptions.
(a) During the Enrollment Period, each Eligible Employee shall be entitled
to enroll in a payroll deduction program to accumulate the Purchase Price for
the purchase of whole shares of the Company's Common Stock. The deductions may
not be less than 1% of Compensation, nor exceed 6% of the Compensation.
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(b) Notwithstanding Section 4(a) above, the maximum number of shares which
may be subscribed for by an Eligible Employee shall be further limited and
reduced to the extent that the number of shares owned by such Eligible Employee
immediately after the Offering Date for purposes of Section 423(b)(3) of the
Code would exceed 5 percent of the total combined voting power or value of all
classes of stock of the Company or any parent or subsidiary within the meaning
set forth in Section 423(b)(3) of the Code.
(c) Subscriptions pursuant to the Plan shall be evidenced by the completion
and execution of a subscription agreement in the form provided by the Company
and its delivery to the Company, at the place designated by the Company, during
the Enrollment Period. Subscription agreement shall have the right to
termination or reduction in accordance with Sections 9 and 10.
(d) In the event that the aggregate number of shares subscribed for
pursuant to the Plan as of any Purchase Date shall exceed 200,000, then each
subscription pursuant to which a purchase is effected shall be reduced to the
number of shares which such subscription would cover in the event of a
proportionate reduction of all subscriptions outstanding on such Purchase Date
so that the aggregate number of shares subject to all subscriptions would not
exceed 200,000. In making such reductions, fractions of shares shall be
disregarded and each subscription shall be for a whole number of shares.
5. Approval of Shareholders. The Plan shall be submitted for approval by
shareholders of the Company on June 18, 1986. If not so approved on such date,
the Plan shall terminate.
6. Payment of Purchase Price. The Purchase Price of all shares purchased
hereunder shall be paid solely through payroll deduction from the Participant's
compensation during the Purchase Period, without the right of prepayment.
7. Application of Funds; Participants' Accounts. All amounts withheld from
and paid by Participants hereunder shall be deposited in the Company's general
corporate account to be used for any corporate purposes; provided, however, that
the Company shall maintain a separate bookkeeping account for each Participant
hereunder reflecting all amounts withheld from and paid by such Participant
pursuant to the Plan. No interest shall be credited to such separate accounts.
8. Issuance of Shares. Shares purchased under the Plan shall, for all
purposes, be considered to have been issued, sold and purchased at the close of
business on the Purchase Date. Prior to any Purchase Date, no Participant shall
have any rights as a holder of any shares covered by a subscription agreement.
Promptly after the Purchase Date, the Company shall issue and deliver to the
Participant a stock certificate or certificates representing the whole number of
shares purchased by him and refund to the Participant in cash any excess amount
in his account in the Plan. No adjustment shall be made for dividends or for
other rights for which the record date is prior to the Purchase Date, except as
may otherwise be provided in Section 13.
9. Right to Terminate Subscription. Each Participant shall have the right,
at any time after the Enrollment Period and two weeks prior to the Purchase
Date, to terminate his/her subscription by written notice to the Company and
receive a prompt refund in cash of the total amount in his/her account.
10. Right to Reduce Accumulation of Purchase Price. Each Participant shall
have the right, at any time after the expiration of the Enrollment Period and
two weeks prior to the Purchase Date, to make, by written notice to the Company,
a 100% reduction in the amount being accumulated for the purchase of the
Company's Common Stock or a reduction in the amount being withheld but the
reduction cannot be below 1% of Compensation. Upon such reduction, an
appropriate reduction shall be made in the Participant's future payroll
deductions and the excess amount in the Participant's account resulting from
such reduction shall be promptly refunded to the Participant in cash in cases of
100% reduction and withdrawal from the Plan.
11. Termination of Employment. Upon termination of employment of a
Participant for any reason, prior to two weeks before the Purchase Date, a
Participant will receive a refund in cash of the total amount of his account.
12. Interest. Any person who becomes entitled to receive any amount of
cash refund from his account pursuant to any provision of the Plan shall be
entitled to receive cash. No interest will be paid on such cash refunded.
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13. Effect of Certain Stock Transactions. No adjustment shall be made
under this Plan or any subscription agreement by reason of any dividend or other
distribution declared or paid by the Company except in the event any changes in
capitalization of the Company, such as stock splits or stock dividends,
resulting in an increase or decrease in the number of shares of Common Stock,
effected without receipt of consideration by the Company, appropriate
adjustments will be made by the Company in the shares subject to purchase and in
the purchase price per share.
14. Merger, Consolidation, Liquidation or Dissolution. In the event of any
merger or consolidation of which the Company is not to be the survivor (or in
which the Company is the survivor but becomes a subsidiary of another
corporation), or the liquidation or dissolution of the Company, each Participant
shall have the right immediately prior to such event to elect to receive the
number of whole shares which can be purchased at the Purchase Price with the
full amount which has been withheld from and paid by him pursuant to the Plan,
together with any remaining excess cash in his account. If such election is not
made, the Participant's subscription agreement shall terminate and he shall
receive a prompt refund in cash of the total amount in his account.
15. Limitation on Right to Purchase Notwithstanding any provision of the
Plan to the contrary, if at any time a Participant is entitled to purchase
shares of Common Stock on a Purchase Date, taking into account such
Participant's rights, if any, to purchase Common Stock under all other employee
stock purchase plans of the Company and of other corporations which constitute
parent or subsidiary corporations of the Company within the meaning of Sections
425(e) and (f) of the Code, the result would be that, during the then current
calendar year, such Participant would have first become entitled to purchase
under this Plan and all such other employee stock purchase plans a number of
shares of Common Stock of the Company whose aggregate fair market value
(measured at the time the right to purchase is granted) exceeds $25,000, then
the number of shares which such Participant shall be entitled to purchase
pursuant to this Plan shall be reduced by the number which is one more than the
number of shares which represents the excess, and any excess amount in his
account resulting from such reduction shall be promptly refunded to him in cash.
16. Non-Assignability. None of the rights of an Eligible Employee under
the Plan or any subscription agreement entered into pursuant hereto shall be
transferable by such Eligible Employee otherwise than by will or the laws of
descent and distribution, and during the lifetime of an Eligible Employee such
rights shall be exercisable only by him.
17. Shares Not Purchased. Shares of Common Stock under the Plan which are
not subscribed for during the Enrollment Period and shares subscribed for which
thereafter cease to be subject to any subscription agreement hereunder shall be
free from reservation for use in connection with the Plan.
18. Construction; Administration. All questions with respect to the
construction and application of the Plan and subscription agreements thereunder
and the administration of the Plan shall be settled by the determination of the
Board of Directors or of one or more other persons designated by it, which
determinations shall be final, binding and conclusive on the Company and all
employees and other persons. All Eligible Employees shall have the same rights
and privileges hereunder.
19. Termination or Amendment. This Plan may be terminated or amended in
any way by the Board of Directors at any time prior to approval hereof by the
shareholders of the Company pursuant to Section 5. Subsequent to such approval
of the Plan by the shareholders of the Company, this Plan may be amended by the
Board of Directors, provided that no such amendment shall (a) adversely affect
the rights of employees under subscription agreements theretofore entered into
pursuant hereto or (b) increase the maximum number of shares of Common Stock
offered hereby or decrease the price per share, except pursuant to Section 13.
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<PAGE> 1
EXHIBIT 7
1988 Stock Option Plan
<PAGE> 2
GRIFFIN TECHNOLOGY INCORPORATED
1988 STOCK OPTION PLAN
1. Purpose. The purpose of the 1988 Stock Option Plan ("Plan") is to
promote the future development and growth of Griffin Technology Incorporated
("Company") by providing a means of attracting and retaining capable and
effective executive officers and key employees through the grant of stock
options. Except as provided in Paragraph 6(c), it is intended that options
issued pursuant to this Plan shall constitute "Incentive Stock Options" within
the meaning of Section 422A of the Internal Revenue Code of 1986, as amended
(the "Code"). The Plan shall be administered in such a manner to effectuate such
intention and shall be construed and interpreted in accordance with such
provisions and regulations. Each option grant shall be subject to, and no
exercise of any option shall be effective unless and until there shall have
been, compliance, to the extent the Committee shall deem advisable, with the
requirements of all applicable Federal, state and other pertinent regulatory
authority.
2. Administration. The Plan shall be administered by a Stock Option
Committee ("Committee") appointed by the Board of Directors and serving at its
pleasure. The Committee shall consist of three members of the Board, none of
whom shall be eligible to participate in the Plan or any other stock option plan
of the Company.
In addition to such other rights of indemnification as they may have as
directors or members of the Committee, members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, to which
they or any of them may be a party by reason of any action taken or a failure to
act under or in connection with the Plan or any option thereunder, and against
all amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by them
in satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that any such action or failure of such Committee member was
committed in bad faith or was the result of active and deliberate dishonesty and
was material to the cause of action so adjudicated, or that he personally gained
in fact a financial profit or other advantage to which he was not legally
entitled; provided that within sixty days after institution of any such action,
suit or proceeding a Committee member shall in writing offer the Company the
opportunity, at its own expense, to handle and defend the same.
3. Committee Powers. Subject to the limitations contained in this Plan,
and subject to such review and approval as the Board of Directors may prescribe,
the Committee in its absolute discretion is empowered and directed to:
(a) Determine which officers and employees of the Company shall be
participants under this Plan pursuant to paragraph 4.
(b) Allot such number of available shares of Common Stock for options to
any participant as it may determine.
(c) Authorize any officer to execute Stock Option Agreements in such form
as may be approved by the Committee covering shares allotted for option.
(d) Establish such rules, regulations and procedures consistent with the
provisions of this Plan as the Committee may deem appropriate for the
administration of the Plan.
(e) Interpret the provisions of the Plan and of any rules and regulations
issued thereunder.
(f) Consult such officers and employees and inspect such records as the
Committee may require to assist it in the administration of the Plan. Decisions
of the Committee shall be final and binding on the Company and all participants.
(g) Approve the use of Company Common stock by the optionee in payment of
the purchase price of options or federal, state and social security withholding
taxes.
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4. Participants. Participants shall be selected by the Committee from the
executive officers and other key employees of the Company or of any 50% or more
subsidiary who in the opinion of the Committee occupy responsible managerial,
technical or professional positions and who have the capability or potential
capability of making a substantial contribution to the success of the Company.
In making this selection and in determining the number of shares allotted, the
Committee shall give consideration to the functions and responsibilities of the
individual, past and potential contributions to profitability and sound growth,
the value of his or her services tot he Company, the remaining years of service
before retirement, and any other factors deemed relevant by the Committee.
5. Shares Available for Option.
(a) An aggregate of not more than 200,00 shares of the common stock of the
Company ("Common Stock") shall be available for grant of options under this
Plan. Such shares may be authorized and unissued shares or may be "treasury
shares" as defined in Section 102(a)(14) of the Business Corporation Law of New
York. Any shares subject to an option which for any reason expires or is
terminated unexercised as to such shares may again be subject to an option under
the Plan.
(b) All incentive stock options granted to a participant under the Plan and
any other incentive stock option plan maintained by the Company or its
subsidiaries shall restrict to $100,000 in each calendar year the aggregate fair
market value (determined on the date of grant) of the Common Stock with respect
to which incentive stock options are exercisable for the first time by the
participant.
6. Options.
(a) Option Grants. The Committee may from time to time grant to any
participant the option to purchase the number of shares allotted by the
Committee at the option price and subject to the conditions set forth in the
Plan. Any participant may concurrently hold more than one option. The date an
option is granted shall mean the date the Committee acts to allot a specific
number of shares to a participant pursuant to the Plan.
(b) Option Agreements. The grant of an option shall be evidenced by a
written Stock Option Agreement in a form approved by the Committee, which shall
among others contain provisions substantially in accordance with the following:
(i) The option price per share of any incentive stock option shall not
be less than the fair market value per share of the Common Stock on the
date such option is granted. The Committee shall determine such purchase
price. Notwithstanding any other provisions of the Plan to the contrary, an
incentive stock option shall not be granted to anyone owning directly (or
indirectly through attribution under Section 425(d) of the Code) at the
date of grant, stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company (a "10-percent shareholder")
unless the option price of such option is at least 110% of the fair market
value of the shares subject to such option on the date the option is
granted.
(ii) Each option by its terms shall not be exercisable after the
expiration of ten years from the date such option is granted. In the case
of an option granted to a 10-percent shareholder, the option by its terms
shall not be exercisable after the expiration of five years from the date
such option is granted.
(iii) Each option granted hereunder shall be exercisable in one or
more installments as may be determined by the Committee at the time of the
grant. In the event of more than one installment, the right to purchase
shares shall be cumulative so that when the right to purchase any shares
has accrued such shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the option.
(iv) A participant electing to exercise an option shall give written
notice of such election to the Company. Stock purchases pursuant to an
option agreement shall be paid in full at the time of purchase. Payment
shall be made in cash or, if authorized by the Committee, in whole or in
part in Common Stock valued at fair market value. To the extent payment is
permitted to be made in Common Stock, the participant may either (a)
deliver to the Company shares of the same class as the option shares, or
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<PAGE> 4
(b) direct the Company to withhold shares covered by the option being
exercised. If payment is made under either (a) or (b) in the preceding
sentence, the stock used shall have a fair market value on the date of
delivery (as determined by the Committee) equal to the amount of the
purchase price. Any such election shall be irrevocable.
(v) Options are exercisable during the participant's lifetime only by
the participant or by the participant's guardian or legal representative.
Options are not transferable during the lifetime of the participant. Upon
the death of the participant any rights to the extent exercisable on the
date of death may be exercised by the participant's estate or by a person
who acquires the right to exercise such option by bequest or inheritance,
or by reason of the death of the participant, provided that such exercise
occurs within the remaining effective term of the option but not later than
one year after the participant's death. If a participant's employment
terminates by reason of disability (within the meaning of Section 105(d)(4)
of the Code), the participant's option may be exercised at any time prior
to the earlier of the expiration of the option or the expiration of one
year following the date employment terminated due to disability or death.
(vi) Upon termination of employment of a participant for any reason
other than death, the participant may at any time within a period of thirty
(30) days after such termination, exercise an option to the extent it was
exercisable by the participant on the date of termination of employment.
(vii) Each option shall be subject to the requirement that, if at any
time the Board of Directors shall determine in its discretion that the
listing, registration or qualification of the shares subject to such option
upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of such
option or the issue or purchase of shares thereunder, such option may not
be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board of Directors.
(viii) In the case of any participant on an approved leave of absence,
the Committee may make such provision respecting continuance of the option
while in the employ of the Company as it may deem equitable, except that in
no event shall an option be exercised after the expiration of ten (10)
years from the date such option was granted.
(ix) The Committee may in its discretion provide such further terms
and conditions not inconsistent herewith as it deems proper.
(c) Non-Qualified Options. Options other than incentive stock options may
be granted under the Plan. Such non-qualified options shall be evidenced by
stock option agreements as provided in the Plan and shall contain all of the
provisions except Paragraphs 5(b) and 6(b)(i), plus any other terms that the
Committee may include. Election to pay federal, state or social security
withholding tax shall be made in cash or, if authorized by the Committee, in
whole or in part in Common Stock. To the extent payment is permitted to be made
in Common Stock, the participant may either (a) deliver to the Company shares of
the same class as the option shares, or (b) direct the Company to withhold
shares covered by the option being exercised. If payment is being made under
either (a) or (b) in the preceding sentence, the stock used shall have a fair
market value on the date of delivery (as determined by the Committee) equal to
the amount of the tax. Any election by a participant who is subject to Section
16 of the Securities Exchange Act of 1934 to pay under (a) or (b) must be made
(i) at least six months after the date of the grant of the related option and
(ii) at least six months prior to the date on which the amount required to be
withheld with respect to the exercise is determined or during the period
beginning on the third business day following the date of release for
publication by the Company of financial data specified under Rule
16b-3(e)(1)(ii) under the Securities Exchange Act of 1934 and ending on the
twelfth business day following such date. To the extent that an option exceeds
the limitations of Paragraph 5(b), it shall be deemed a non-qualified option and
shall otherwise remain in full force and effect.
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<PAGE> 5
7. Rights to Terminate Employment. Nothing contained in the Plan or in any
Stock Option Agreement shall restrict the right of the Company or the employer
corporation to terminate the employment of any participant at any time with or
without cause.
8. Recapitalization. In the event there is during any fiscal year of the
Company one or more stock dividends, distributions, splits, subdivisions or
combinations of shares of Common Stock of the Company, resulting in an increase
or decrease in the number of shares outstanding at the beginning of the year,
the number of shares available under the Plan may in the discretion of the
Committee at any time thereafter be increased or decreased proportionately, as
the case may be, and the number of shares deliverable upon the exercise
thereafter of any option theretofore granted may in the discretion of the
Committee at any time thereafter be increased or decreased proportionately, as
the case may be, without change in the aggregate purchase price.
9. Reorganization. In case the Company is merged or consolidated with
another corporation, or in case the property or stock of the Company is acquired
by another corporation, or in case of a separation, reorganization or
liquidation of the Company, the Committee, or the Board of Directors of any
corporation assuming the obligations of the Company hereunder, shall either (i)
make appropriate provision for the protection of any outstanding options by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to the shares of Common Stock of the Company, provided only
that the excess of the aggregate fair market value of the shares subject to such
options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such options immediately before such substitution over the purchase
price thereof, or (ii) upon written notice to the participant provide that the
option must be exercised within sixty (60) days of the date of such notice or it
will be terminated. In any such case the Committee may, in its discretion, waive
the waiting period prior to exercise.
10. Amendment. The Plan may be amended, modified or terminated by the
shareholders of the company or by the Board of Directors, except that the Board
may not, without approval of the shareholders, materially increase the benefits
accruing to participants under the Plan, increase the maximum number of shares
as to which options may be granted under the Plan, change the minimum option
price, materially modify the requirements as to eligibility for participation in
the Plan, extend the period for which options may be granted or exercised, or
withdraw the authority to administer the Plan from a committee consisting of
Directors not eligible to receive options under the Plan. No amendment,
modification or termination of the Plan shall affect the rights of a participant
under an option without the consent of the participant.
11. Effective Date. The Plan shall take effect upon approval of the
shareholders.
12. Duration of Plan. The Plan shall remain in effect until all shares
subject to, or which may become subject to, the Plan shall have been purchased
pursuant to options granted under the Plan, provided that options under the Plan
must be granted if at all by April 7, 1998.
5
<PAGE> 6
AMENDMENT NO. 1
TO THE
GRIFFIN TECHNOLOGY INCORPORATED
1988 STOCK OPTION PLAN (ADOPTED SEPTEMBER 13, 1991)
Pursuant to Paragraph 10 of the 1988 Stock Option Plan, the Board of
Directors hereby amends the Plan effective September 13, 1991, in the following
respects:
Paragraph 5(a) of the Griffin Technology Incorporated 1988 Stock
Option Plan is amended to read as follows:
An aggregate of not more than 400,000 shares of the common stock of
the Company ("Common Stock") shall be available for grant of options under
this Plan. Such shares may be authorized and unissued shares or may be
"treasury shares" as defined in Section 102(a)(14) of the Business
Corporation Law of New York. Any shares subject to an option which for any
reason expires or is terminated unexercised as to such shares may again be
subject to an option under the Plan.
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<PAGE> 7
AMENDMENT NO. 2
TO THE
GRIFFIN TECHNOLOGY INCORPORATED
1988 STOCK OPTION PLAN (ADOPTED NOVEMBER 20, 1991)
Pursuant to Paragraph 10 of the 1988 Stock Option Plan, the Board of
Directors hereby amends the plan effective November 20, 1991, in the following
respects:
The first sentence of Section 18 of the 1986 Stock Purchase Plan is hereby
amended to read as follows:
All questions respect to the construction and application of the Plan
and subscription agreements thereunder and the administration of the Plan
shall be settled by the determination of a committee of the Board of
Directors (not less than two members) consisting of all of the directors
excluding those who are also employees of the Company and those who have
been employees of the Company at any time during the year preceding
commencement of administration, or of two or more persons designated by the
Board of Directors and who are similarly disinterested, which
determinations shall be final, binding and conclusive on the Company and
all other employees and other persons.
The second sentence of the first paragraph in paragraph numbered 2 of the
1988 stock Option Plan is hereby amended to read as follows:
The Committee shall consist of three members of the Board, none of
whom shall (a) during the 12 months preceding service as a committee member
hereunder have participated in, or (b) be eligible to participate in, the
Plan or any other benefit plan of the Company except the 1991 Directors
Stock Plan.
The sixth sentence of paragraph numbered 6(c) of the 1988 Stock Option Plan
is hereby amended to read as follows:
Any election by a participant who is subject to Section 16 of the
Securities Exchange Act of 1934 to pay under (a) or (b) must be made (i)
during the period beginning on the third business day following the date of
release for publication by the Company of financial data specified under
Rule 16b-3(e)(1)(ii) under the Securities Exchange Act of 1934 and ending
on the twelfth business day following such date (a "window period") or (ii)
at least six months prior to exercise of the related option and must be
irrevocable during that period; in the case of an election under (i) above,
the exercise of the related option must also occur during a window period
unless the election is irrevocable and at least six months have elapsed
since the election. The exercise of any option must be made at least six
months after the date of grant of the option.
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<PAGE> 1
EXHIBIT 8
1991 Directors Stock Plan
<PAGE> 2
GRIFFIN TECHNOLOGY INCORPORATED
1991 DIRECTORS STOCK PLAN
1. Purpose. The purpose of the Plan is to advance the interests of Griffin
Technology Incorporated, a New York corporation, referred to herein as the
"Company," and its shareholders by providing an incentive for its directors to
participate in the growth of the Company. It is intended that this purpose will
be effected through the granting of stock awards (sometimes collectively
referred to as "grants") in lieu of monetary compensation, as provided herein.
2. Effective Date. The Plan shall be effective immediately following the
Annual Meeting of the Company in November 1991. The effectiveness of the Plan is
conditioned upon its approval by the shareholders of the Company at its Annual
Meeting to be held in November 1991.
3. Administration of the Plan. The Plan shall be administered by the
Directors Compensation Committee of the Board of Directors of the Company,
referred to herein as the "Committee," which shall consist of at least two
directors. A Committee member shall not cease to be eligible to receive any
grants hereunder if he or she is otherwise eligible. The Board of Directors may
from time to time remove members from, or add members to, the Committee.
Vacancies on the Committee, howsoever caused, shall be filled by the Board of
Directors. The Committee shall hold meetings at such times and places as it may
determine. A vote of a majority of the Committee at which a quorum is present,
or acts reduced to or approved in writing by a majority of the members of the
Committee, shall be the valid acts of the Committee. The Committee shall have
authority to adopt rules and regulations for carrying out the Plan. Decisions of
the Committee shall be binding on the Company and on all directors eligible to
participate in the Plan. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any grant
under it.
4. Stock Grants and Stock Subject to the Plan. Each director who is
eligible for and elects to participate in the Plan on the effective date shall
be granted on that date 2,000 shares of the Common Stock of the Company. For any
person becoming a director subsequent to such effective date, 2,000 shares of
the Common Stock of the Company shall be granted to such director on the date of
his or her election (provided that he or she has agreed to accept them as
provided in the Plan).
The aggregate number of such shares for all directors shall be 20,000
(subject to substitution or adjustment as provided in Section 7 or 8). Such
shares may be authorized and unissued shares or may be treasury shares. Approval
by a majority vote of the directors of the Company shall constitute
authorization to use such shares for the purposes of the Plan.
5. Eligible Persons. Grants shall be made only to directors of the Company
who agree to accept them in writing prior to the effective date of the Plan as
to them and who become directors on or before the fifth anniversary of the
effective date of the Plan. No director who is also an officer or other employee
of the Company shall be eligible to receive a grant. Any director at any time
may waive the right to receive any grant or any part thereof. Any such waiver
shall be irrevocable.
6. Restrictions. Each grant shall be subject to the following conditions
and restrictions:
A. The Common Stock under the grant (hereinafter called "Restricted
Stock") may not be sold or otherwise transferred by the director until
ownership vests. Subject to the other provisions hereof, vesting of
ownership shall occur according to the following provisions of this Section
6A. For eligible directors on the effective date of the Plan, 400 shares
shall vest on the first day of November in each of the years 1992 through
1996 inclusive. For persons subsequently becoming directors and who have
agreed to participate in the Plan, (i) the effective date as to such
persons and the grant of shares shall be the day on which he or she is
elected as a directors and (ii) 400 of the shares granted to him or her
shall vest on the first day of the eleventh month following the month of
the effective date of the Plan as to such person (the "first anniversary
date") and 400 of the shares shall vest on each of the next four
anniversaries of the first anniversary date, i.e., until vesting of all
2,000 shares has occurred. Except as provided in Section 6C, the holder of
the grant must be a director of the Company at the time of vesting for
vesting to occur.
2
<PAGE> 3
B. Restricted Stock shall be issued to a director as of the effective
date of the Plan as to such director and a certificate evidencing shares
shall be delivered by the Company to the director within a reasonable
period of time after those shares cease to be Restricted Stock upon
expiration of the applicable restricted period.
C. If the holder of Restricted Stock shall cease to be a director of
the Company by reason of death or disability prior to the lapse of
restrictions, the director or his or her legal representatives, heirs or
devisees, as the case may be, shall be entitled to receive a certificate
for a number of shares of Common Stock equal to that portion of his or her
Restricted Stock remaining from any grant, determined by multiplying the
total number of shares of Restricted Stock remaining from such grant which
would otherwise vest on the next vesting date, by a fraction, the numerator
of which shall be the number of days since the last vesting date (or
effective date of the Plan if the first vesting date has not yet occurred)
to the date the holder ceases to be a director, and the denominator of
which shall be 365.
D. Upon the acquisition by an unaffiliated person, entity or group of
30 percent or more of the Company's outstanding shares of stock having
general voting rights, the restrictions shall immediately expire as to all
Restricted Stock.
E. Except as provided in Section 6C, all right and title to Restricted
Stock of the holder thereof under the Plan shall terminate and be forfeited
upon termination of the holder's status as a director of the Company or
other failure to fulfill all conditions and restrictions applicable to such
Restricted Stock. Any such forfeited shares shall be available for other
grants under this Plan.
F. Except for the restrictions set forth herein, a holder of
Restricted Stock shall possess all the rights of a holder of the Company's
Common Stock, provided that dividends or distributions on such Common Stock
in the form of securities of the Company shall be subject to the same
restrictions herein.
7. Recapitalization. In the event there is any recapitalization in the
form of a stock dividend, distribution, split, subdivision or combination of
shares of Common Stock of the Company, resulting in an increase or decrease in
the number of common shares outstanding, the number of common shares available
or authorized under the Plan shall be increased or decreased proportionately, as
the case may be, and the number of shares covered by each outstanding grant
shall be increased or decreased proportionately, as the case may be.
8. Reorganization. If, pursuant to any reorganization, sale or exchange of
assets, consolidation or merger, outstanding Common Stock is or would be
exchanged for other securities of the Company or of another company which is a
party to such transaction, or for property, any grant under the Plan theretofore
granted shall apply to the securities or property into or for which the Common
Stock covered thereby would have been exchanged had such Common Stock been
outstanding at the time. In any of such events the total number and class of
shares then remaining available for issuance under the Plan (including shares
reserved for outstanding grants and shares available for future grants under the
Plan) shall likewise be adjusted so that the Plan shall thereafter cover the
number and class of shares equivalent to the shares covered by the Plan
immediately prior to such event.
9. General Restriction. Each grant shall be subject to the requirement
that if at any time the listing, registration or qualification of the shares
subject to such grant upon any securities exchange or under any state or federal
law, or that the consent or approval of any government regulatory body, is
necessary or desirable as a condition of, or in connection with, such grant or
the issue of shares thereunder or the subsequent sale of such shares, such grant
shall be subject to the condition that such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
10. Payment of Taxes. Prior to the delivery of any certificates for shares
acquired pursuant to the vesting of a grant under Section 6, the holder must
satisfy Federal, State and local withholding tax obligations, if any, by
remitting to the Company a sufficient amount of cash to satisfy the withholding
requirements.
3
<PAGE> 4
11. Definitions. Any terms or provisions used herein which are defined in
Section 83 of the Internal Revenue Code of 1986 or the regulations thereunder or
corresponding provisions of subsequent laws and regulations in effect at the
time grants are made hereunder shall have the meanings as therein defined.
12. No Director Rights. The Plan and any grants under the Plan shall not
confer upon any holder any right with respect to continuance as a director of
the Company, nor shall they interfere in any way with the right, if any, of the
Company to terminate the holder's position as a director at any time.
13. Governing Law. To the extent not inconsistent with the provisions of
the Internal Revenue Code that relate to stock awards, this Plan and any other
agreement adopted pursuant to it shall be construed under the laws of the State
of New York.
14. Amendment of the Plan. The Board of Directors of the Company may, from
time to time, terminate the Plan or make such amendments or revisions as the
Board shall deem advisable in order to conform the Plan to any change in any law
or regulation applicable thereto. The shareholders, by affirmative vote of a
majority of shares of Common Stock, may terminate the Plan or may modify or
amend its terms or the terms of any grant agreement hereunder in any respect
whatsoever. No termination, modification or amendment of the Plan or any
agreement thereunder shall, without the consent of the participating director to
whom any grant shall theretofore have been made, alter or impair the rights of
such director thereunder and no modification or amendment may be made without
shareholder approval which would result in any member of the Board of Directors
ceasing to be a disinterested person with respect to the Plan under Rule 16b-3
of the Securities Exchange Act of 1934.
15. Duration of the Plan. The Plan shall remain in effect until all shares
subject to, or which may become subject to, the Plan shall have been conveyed
pursuant to the provisions of the Plan.
4
<PAGE> 1
EXHIBIT 9
1994 Severance Plan
<PAGE> 2
GRIFFIN TECHNOLOGY INCORPORATED
SEVERANCE PLAN
Griffin Technology Incorporated (the "Employer") hereby establishes,
effective January 1, 1994, the Griffin Technology Incorporated Severance Plan
(the "Plan") for the exclusive benefit of eligible employees of the Employer.
The purpose of the Plan is to provide specified benefits to eligible employees
whose employment is terminated by the Employer.
1. Eligible Employees
This Plan covers all employees except the following:
- part-time employees
- temporary employees
- leased employees
2. Benefits
Subject to the limitations set forth in succeeding paragraphs, if the
Employer terminates an eligible employee's employment, the employee shall be
paid a severance benefit as follows:
Hourly Employees
A person employed less than two (2) years shall receive one (1) week's
notice or one (1) week's pay in lieu of notice; a person employed two
(2) or more years shall receive two (2) week's notice or two weeks' pay
in lieu of notice.
Level I Employees
A person employed for more than one (1) year but less than three (3)
years shall receive one (1) week's notice or one (1) week's pay in lieu
of notice; a person employed three (3) or more years shall receive two
(2) weeks' notice or two weeks' pay in lieu of notice.
Level II Employees
A person employed for more than one (1) year but less than three (3)
years shall receive one-half (1/2) month's notice or one-half (1/2)
month's pay in lieu of notice; a person employed three (3) or more years
shall receive one (1) month's pay in lieu of notice.
Level III Employees
A person employed for more than one (1) year but less than three (3)
years shall receive one (1) month's notice or one (1) month's pay in
lieu of notice; a person employed three (3) or more years shall receive
two (2) months' pay in lieu of notice.
Level IV Employees
A person employed for more than one (1) year but less than three (3)
years shall receive one (1) month's notice or one (1) month's pay in
lieu of notice; a person employed three (3) or more years shall receive
six (6) months' pay in lieu of notice.
Level V Employees
A person employed for more than one (1) year shall receive twelve (12)
months' pay in lieu of notice.
3. Limitations on Benefits
- No benefits shall be paid to an employee who voluntarily terminates
employment or whose employment terminates on account of disability or
death.
- No benefit shall be paid to an employee whose employment is terminated
for cause.
2
<PAGE> 3
- No benefit will be paid due to any sale, spinoff, merger or other
corporate reorganization if an employee is offered employment with any
successor organization.
4. Payment of Benefits
Benefits shall be paid in a lump sum amount as soon as reasonably
practicable following termination. All benefits are paid solely from the
Employer's general assets.
5. Nonguarantee of Employment
Nothing contained in this Plan shall be construed as a contract of
employment between the Employer and any employee, or as a right of any employee
to be continued in the employment of the Employer, or as a limitation on the
right of the Employer to discharge any of its employees, with or without cause.
6. Nonalienation of Benefits
Benefits payable under this Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
charge, garnishment, execution, or levy of any kind, either voluntary or
involuntary, prior to actually being received by the person entitled to the
benefit. Any attempt to anticipate, alienate, sell, transfer, assign, pledge,
encumber, charge or otherwise dispose of any right to benefits payable
hereunder, shall be void. The Employer shall not in any manner be liable for, or
subject to, the debts, contracts, liabilities, engagements or torts of any
person entitled to benefits hereunder.
7. Claims for Benefits
All claims for benefits under this Plan must be submitted to the Employer
within 60 days following termination of employment. In the event a claim for
benefits is denied, the Employer will provide the employee with a written notice
stating the specific reason or reasons for denial, including specific provisions
of the Plan relied upon. The notice will also explain what is necessary to
perfect the claim, if possible, and inform the employee that the denial may be
appealed. Such denial may be appealed by written request to the Employer within
a reasonable time. Within 60 days of receiving a request for review of a denied
claim, the Employer shall provide a written decision to the employee.
8. Plan Administration
The Plan is administered by the Employer, which shall have the sole
discretion to determine eligibility for benefits and to interpret the Plan and
shall possess all powers necessary to administer the Plan. The Employer may
designate in writing one or more of the Employer's employees or one or more
other persons to carry out its duties under this Plan. The Employer is the Named
Fiduciary and Plan Administrator as these terms are used in the Employee
Retirement Income Security Act of 1974 ("ERISA").
To the extent not covered by insurance, the Employer will indemnify any
employee acting in its behalf against any and all claims, loss, damages, expense
and liability arising from any action or failure to act.
9. Amendment and Termination
Although it is intended that this Plan will be maintained indefinitely, the
Employer has the right to make any amendment to the Plan at any time or to
terminate the Plan at any time.
10. Plan Year
The Plan's fiscal year is the calendar year.
11. Governing Law
To the extent not preempted by federal law, the Plan shall be interpreted
and enforced in accordance with the laws of the State of New York.
3
<PAGE> 4
12. Miscellaneous Information
Plan Sponsor, Plan Administrator and Agent for Service of Legal Process:
Griffin Technology Incorporated
1133 Corporate Drive
Farmington, NY 14425
Employer Identification Number:
16-0864416
Telephone:
(716) 924-7121
Plan Number:
510
13. Statement of Participant Rights
As a participant in the Plan you are entitled to certain rights and
protections under the Employee Retirement Income Security Act of 1974 ("ERISA").
These rights and protections have been summarized in government regulations
which require that we inform you of them in the following statement:
ERISA provides that all plan participants shall be entitled to:
Examine, without charge, at the plan administrator's office and at
other specified locations, such as worksites, all plan documents, including
insurance contracts, and copies of all documents filed by the plan with the
U.S. Department of Labor, such as detailed annual reports and plan
descriptions.
Obtain copies of all plan documents and other plan information upon
written request to the plan administrator. The administrator may make a
reasonable charge for the copies.
Receive a summary of the plan's annual financial report. The plan
administrator is required by law to furnish each participant with a copy of
this summary annual report.
In addition to creating rights for plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the
employee benefit plan. The people who operate your plan, called
"fiduciaries" of the plan, have a duty to do so prudently and in the
interest of you and other plan participants and beneficiaries. No one,
including your employer, or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a welfare
benefit or exercising your rights under ERISA. If your claim for a welfare
benefit is denied in whole or in part you must receive a written
explanation of the reason for the denial.
You have the right to have the plan review and reconsider your claim.
Under ERISA, there are steps you can take to enforce the above rights. For
instance, if you request materials from the plan and do not receive them
within 30 days, you may file suite in a federal court. In such a case, the
court may require the plan administrator to provide the materials and pay
you up to $100 a day until you receive the materials, unless the materials
were not sent because of reasons beyond the control of the administrator.
If you have a claim for benefits which is denied or ignored, in whole or in
part, you may file suit in a state or federal court. If it should happen
that you are discriminated against for asserting you rights, you may seek
assistance from the U.S. Department of Labor, or you may file suite in a
federal court. The court will decide who should pay court costs and legal
fees. If you are unsuccessful the court may order to pay these costs and
fees, for example, if it finds your claim is frivolous. If you have any
questions above your plan, you should contact the plan administrator. If
you have any questions under this statement or about your rights under
ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
4
<PAGE> 5
Although this government statement emphasizes your right to bring a lawsuit
in federal court or to seek Labor Department assistance, most disputes can
probably be resolved short of such actions. The Employer may be able to help you
without need to resort to government assistance.
14. Effective Date
The effective date of this Plan is January 1, 1994.
GRIFFIN TECHNOLOGY INCORPORATED
By
-----------------------------------
Title
--------------------------------
Dated:
5
<PAGE> 1
EXHIBIT 10
Page 3 of 1995 Proxy Statement
<PAGE> 2
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OWNED BENEFICIALLY
AS OF PERCENT OF
NAME AND ADDRESS SEPTEMBER 28, 1995(1) COMMON STOCK
---------------- --------------------- ------------
<S> <C> <C>
James T. Henderson.................................... 33,244(2) 1.393
183 Monteroy Road, Rochester, NY 14618
Graeme MacLetchic..................................... 4,000 .168
One Dunham Place, Irvington, NY 10533
John C. Partigan...................................... -- --
c/o Nixon Hargrave Devans & Doyle LLP
PO Box 1051, Rochester, NY 14603
Ned W. Roman.......................................... 9,540 .400
c/o Clover Capital Management
11 Tobey Village Office Park, Pittsford, NY 14534
Virginia S. Pacala.................................... 687,804 28.813
3515 Elmwood Avenue, Rochester, NY 14610
Robert S. Urland...................................... 49,922 2.091
297 Whispering Hills, Victor, NY 14564
John C. Darjany....................................... 62,487 2.618
4037 Bouton Drive, Lakewood, CA 90712
Gary W. Lorenz........................................ 76,953 3.224
4016 Pine Avenue, Long Beach, CA 90807
Joseph A. Murrer...................................... 25,148(3) 1.051
96 Eileen Drive, Rochester, NY 14616
Anthony J. Ryanczak................................... -- --
64 Cambric Circle, Pittsford, NY 14534
All directors and executive officers as a group (10
persons)............................................ 949,098(4) 39.660
</TABLE>
- ---------------
(1) For all shares listed, the director or officer possesses sole voting and
sole investment power except as otherwise indicated in the footnotes below.
Amounts for Mrs. Pacala and Messrs. Henderson, and MacLetchie include 800
restricted shares granted to each of them under the 1991 Directors Stock
Plan.
(2) Includes 22,044 shares held in the name of Mrs. Henderson, beneficial
interest in which is disclaimed by Mr. Henderson.
(3) Includes 6,000 shares which may be acquired by Mr. Murrer within 60 days
following September 28, 1995 through exercise of stock options.
(4) Includes 22,044 shares held by, or for the benefit of, the immediate
families and other relatives of the directors and officers, where shared
voting power may be deemed to exist, but beneficial ownership of which is
disclaimed. Amount also includes 6,000 shares which may be acquired by an
officer within 60 days following September 28, 1995, through exercise of
stock options.
Mr. John C. Partigan is a partner in the law firm of Nixon Hargrave Devans &
Doyle LLP, which Griffin has retained as its general counsel since 1970.
2
<PAGE> 1
EXHIBIT 11
Confidentiality Agreement between Parent and Company dated July 19, 1994
<PAGE> 2
DONALDSON, LUFKIN & JENRETTE
Donaldson, Lufkin & Jenrette Securities Corporation
140 Broadway, New York, NY 10005-1235 (212) 504-3000
July 19, 1994
Mr. Peter Rackov
Senior Financial Analyst
Diebold Incorporated
5995 Mayfair Road
North Canton, Ohio 44750
Attention: Mr. Peter Rackov
Senior Financial Analyst
Gentlemen:
In connection with your evaluation of a possible negotiated transaction by
you or one or more of your affiliates, involving Griffin Technology Incorporated
(the "Company") (a "Transaction"), the Company, Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ"), acting as the Company's exclusive financial
advisor in connection with the proposed Transaction, and their respective
advisors and agents are prepared to make available to you certain information
which is non-public, confidential or proprietary in nature.
As used herein, "Evaluation Material" includes, without limitation, all
information, data, reports, interpretations, projections, forecasts, and records
that contain or otherwise reflect information concerning the Company provided to
you by or on behalf of the Company in connection with your evaluation of a
possible Transaction, together with all analyses, compilations, studies, and
other information, whether prepared by you, your Representatives or others,
which contain or otherwise reflect or are based on any such Evaluation Material
("Notes"). This Agreement shall be inoperative as to those particular portions
of the Evaluation Material that (i) become generally available to the public
other than as result of a disclosure by your or any of your Representatives,
(ii) were available to you on a non-confidential basis prior to the disclosure
of such Evaluation Material to you pursuant to this Agreement, provided that the
source of such information was not known by you or any of your Representatives
(as defined herein), to be bound by a confidentiality agreement with or other
contractual, legal or fiduciary obligation of confidentiality to the Company or
any of its affiliates with respect to such material or (iii) become available to
you on a non-confidential basis from a source other than the Company or its
agents, advisors or representatives provided that the source of such information
was not known by you or any of your Representatives, to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the Company or any of its affiliates with
respect to such material.
In consideration of the Company's providing you with Evaluation Material,
by your execution of this letter agreement (the "Agreement"), you agree for a
period of two years after the date herein to treat all Evaluation Material as
confidential and to use Evaluation Material only for the purpose of evaluating a
possible transaction. You also agree that you will disclose Evaluation Material
only to those of your directors, officers, employees, partners, affiliates,
agents, advisors or representatives ("Representatives") who need to know the
Evaluation Material in order to assist you in your evaluation of the Transaction
(it being understood that such Representatives shall be informed by you of the
confidential nature of such Evaluation Material and shall be directed by you to
keep such Evaluation Material confidentially in accordance with the provisions
of this Agreement, and you shall be satisfied that they will do so. You will
also agree to assist in the enforcement of this Agreement against any such
Representatives, including institution of any action in your name, where the
same may be necessary or desirable.)
In addition, you agree that you will not make any disclosure other than to
relevant regulatory authorities that you or the Company are having or have had
discussions related to a possible Transaction, or that you have received
Evaluation Material, that you are considering a possible Transaction or any of
the terms, conditions or other facts with respect thereto; provided that you may
make such disclosure if you have received the opinion of your counsel that such
disclosure is required by applicable law, exchange requirement or similar
obligation and, prior to such disclosure, you advise and consult with the
Company and its legal counsel concerning the information you propose to
disclose.
<PAGE> 3
Mr. Peter Rackov
Diebold Incorporated
Page 2 July 19, 1994
Although the Company and DLJ have endeavored to include in the Evaluation
Material information known to them which they believe to be relevant for the
purpose of your investigation, you understand and agree that none of the
Company, DLJ or any of their affiliates, agents, advisors or representatives (i)
have made or make any representation or warranty, expressed or implied, as to
the accuracy or completeness of the Evaluation Material or (ii) shall have any
liability whatsoever to you or your Representatives relating to or resulting
from the use of the Evaluation Material or any errors therein or omissions
therefrom. Nothing contained in this paragraph and no investigation made by you
under this Agreement shall limit or be deemed to modify any representations or
warranties made by the Company in a definitive agreement relating to a
Transaction.
In the event that you or anyone to whom you transmit any Evaluation
Material in accordance with this Agreement are requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoenas, civil investigative demand or similar process), in
connection with any proceeding, to disclose any Evaluation Material, you will
give the Company prompt notice of such request or requirement so that the
Company may seek an appropriate protective order or other remedy and/or waive
compliance with the provisions of this Agreement, and you will cooperate with
the Company at the Company's expense to obtain such protective order. The
Company will advise you promptly of the action that it intends to take. In the
event that such protective order or other remedy is not obtained or the Company
waives compliance with the relevant provisions of this Agreement, you (or such
other persons to whom such request is directed) will furnish only that portion
of the Evaluation Material which is legally required to be disclosed. It is
further agreed that, if in the absence of a protective order you (or such other
persons to who such request is directed) are nonetheless legally compelled to
disclose such information, you may make such disclosure without liability
hereunder, provided that you give the Company notice of the information to be
disclosed as far in advance of its disclosure as is practicable and, upon the
Company's request and at its expense, request that confidential treatment will
be accorded to such information.
If you decide that you do not wish to proceed with a Transaction, you will
promptly notify DLJ of that decision. In that case, or if the Company shall
elect at any time to terminate further access by you to the Evaluation Material
for any reason, you will within promptly redeliver to us all copies of the
Evaluation Material in the possession of you or your affiliates or your
Representatives, will destroy all Notes and will further deliver to DLJ and the
Company a certificate executed by one of your officers indicating that the
requirements of this sentence have been satisfied. Notwithstanding the return or
destruction of Evaluation Material and Notes, you and your Representatives will
continue to be bound by your obligations of confidentiality and other
obligations hereunder.
You hereby acknowledge that you are aware that the securities laws of the
United States prohibiting any person who has material, non-public information
concerning the Company or a possible Transaction involving the Company from
purchasing or selling securities in reliance upon such information or from
communicating such information to any such person or entity under circumstances
in which it is reasonably foreseeable that such person or entity is likely to
purchase or sell such securities in reliance upon such information.
You understand that (i) the Company and DLJ shall conduct the process for a
possible Transaction as they in their sole discretion shall determine
(including, without limitation, negotiating with any prospective buyer and
entering into definitive agreements without prior notice to you or any other
person), (ii) any procedures relating to such a Transaction may be changed at
any time without notice to you or any other person, (iii) the Company shall have
the right to reject or accept any potential buyer, proposal or offer, for any
reason whatsoever, in its sole discretion, and (iv) neither you nor any of your
Representatives shall have any claims whatsoever against the Company or DLJ or
any of their respective directors, officers, stockholders, owners, affiliates or
agents arising out of or relating to the Transaction (other than those against
the parties to a definitive agreement with you in accordance with the terms
thereof).
It is further understood and agreed that DLJ will arrange for appropriate
contacts for due diligence purposes. It is also understood and agreed that,
except as the Company or DLJ may direct or permit, all (i) communications
regarding a possible Transaction, (ii) request for additional information, (iii)
requests for facility tours or management meetings and (iv) discussions or
questions regarding procedures, will be
<PAGE> 4
Mr. Peter Rackov
Diebold Incorporated
Page 3 July 19, 1994
submitted or directed exclusively to DLJ, and that none of you, your affiliates
or your Representatives who are aware of the Evaluation Material and/or the
possibility of a Transaction will initiate or cause to be initiated any
communication with any director, officer or employee of the Company concerning
the Evaluation Material or a Transaction.
You agree that unless and until a definitive agreement between the Company
and you with respect to any Transaction has been executed and delivered, neither
the Company nor you will be under any legal obligation of any kind whatsoever
with respect to such Transaction.
All modifications of, waivers of and amendments to this Agreement or any
part hereof must be in writing signed on behalf of you and the Company or by you
and DLJ, as agent for the Company. You acknowledge that the Company is intended
to be benefited by this Agreement and that the Company shall be entitled, either
alone or together with DLJ, to enforce this Agreement and to obtain for itself
the benefit of any remedies that may be available for the breach hereof.
It is further understood and agreed that no failure or delay by any party
in exercising any right, power or privilege under this Agreement shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise of any right, power or privilege hereunder.
In the event that any provision or portion of this letter is determined to
be invalid or unenforceable for any reason, in whole or in part, the remaining
provisions of this letter shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by applicable law.
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.
If you are in agreement with the foregoing, please so indicate by signing,
dating and returning one copy of this Agreement, which will constitute our
agreement with respect to the matters set forth herein.
Very truly yours,
GRIFFIN TECHNOLOGY INCORPORATED
By: /s/ ROBERT S. URLAND
----------------------------------
Robert S. Urland
President and Chief Executive
Officer
Griffin Technology Incorporated
By: /s/ SAFRA A. CATZ
----------------------------------
Safra A. Catz
Senior Vice President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
as Exclusive Agent
Agreed and Accepted:
DIEBOLD INCORPORATED
By: /s/ ROBERT J. WARREN
----------------------------------
Title: President and Treasurer
Date: 7-19-94
<PAGE> 1
EXHIBIT 12
Letter to Shareholders of the Company.
<PAGE> 2
[GRIFFIN TECHNOLOGY INCORPORATED LETTERHEAD]
Dear Stockholder:
On October 23, 1995, Griffin Technology Incorporated (the "Company")
announced that it had entered into an Agreement and Plan of Merger ("Agreement")
with Diebold, Incorporated, ("Parent"), pursuant to which D-GT Acquisition,
Incorporated ("Purchaser"), a New York corporation and a wholly-owned subsidiary
of Parent, agreed to offer to purchase all of the issued and outstanding shares
of the Company's Common Stock at a price of $7.75 net per share payable in cash
through a tender offer to the stockholders of the Company (the "Offer"). The
Agreement provides for a subsequent merger of Purchaser into the Company at the
same price per share paid pursuant to the Offer.
Based in part on the opinion of Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ"), the Company's financial advisor, that the consideration to
be paid to stockholders of the Company in the Agreement is fair to such
stockholders from a financial point of view, your Board of Directors has
unanimously approved the Agreement and determined that the Agreement is in the
best interests of stockholders. ACCORDINGLY, THE BOARD UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS TENDER THEIR SHARES PURSUANT TO THE OFFER.
In arriving at its decision to recommend the Offer, the Board of Directors
gave careful consideration to a number of factors, which are described in the
Schedule 14D-9 filed by the Company with the Securities and Exchange Commission
and enclosed with this letter. I urge you to read the Schedule 14D-9 carefully.
Finally, the Annual Meeting of the Company scheduled for November 16, 1995
will be adjourned until further notice in view of the proposed transactions
contemplated by the Agreement.
Sincerely,
ROBERT S. URLAND
President and
Chief Executive Officer
