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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): MAY 19, 1995
RECOGNITION INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-7916 75-1080346
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
2701 EAST GRAUWYLER ROAD IRVING, TEXAS 75061
(Address of principal executive office) (zip code)
Registrant's telephone number, including area code: (214) 579-6000
The Index to Exhibits is located on page 3 of this report.
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ITEM 5. OTHER EVENTS.
Pursuant to an Agreement and Plan of Merger by and among BancTec,
Inc., BTec Merger Subsidiary, Inc. and Recognition International Inc. (the
"Company"), dated as of May 19, 1995, the Company entered into an agreement
whereby each existing share of Common Stock, par value $.25 per share, of the
Company together with each Preferred Stock Purchase Right associated therewith,
will be converted into .59 of a share of the Common Stock of BancTec, Inc. The
merger is subject to regulatory approval and approval by the stockholders of
both the Company and BancTec, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS. The information required by this portion of Item 7 is
set forth on page 3 of this report.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Recognition International Inc.
Date: May 31 , 1995 By: /s/ Thomas E. Hoefert
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Thomas E. Hoefert
Vice President, Chief Financial
Officer and Controller
(Principal Financial and
Accounting Officer)
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INDEX TO EXHIBITS
Exhibit
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2.1 Agreement and Plan of Merger dated as of May 19, 1995 among BancTec,
Inc., BTec Merger Subsidiary, Inc. and Recognition International Inc.
99.1 Press release issued May 19, 1995.
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BANCTEC, INC.
BTEC MERGER SUBSIDIARY, INC.
AND
RECOGNITION INTERNATIONAL INC.
DATED AS OF MAY 19, 1995
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TABLE OF CONTENTS
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ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.2 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Directors and Officers of Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.3 Dividends; Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.4 No Fractional Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.5 Closing of Company Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.6 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.5 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.6 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.9 Information in Disclosure Documents and Registration
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.10 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.11 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.13 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.14 Trademarks, Patents and Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.15 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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Section 4.16 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.17 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.18 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.19 Environment Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.3 Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.4 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.5 Consents and Approvals; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.6 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.7 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.9 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.10 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 5.12 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.13 Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.14 Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.15 Information in Disclosure Documents and Registration
Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.16 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.17 Trademarks, Patents and Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger . . . . . . . . . . . . . . . . . . . 35
Section 6.2 Conduct of Business by Parent Pending the Merger . . . . . . . . . . . . . . . . . . . . . 37
Section 6.3 Conduct of Business of Parent Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.2 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.3 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.4 Proxy Statements; Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.5 Compliance with the Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.6 Antitrust Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.7 Employee Stock Options and Convertible Debentures . . . . . . . . . . . . . . . . . . . . . 43
Section 7.8 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
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Section 7.9 By-Law Indemnification Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.10 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 7.12 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger . . . . . . . . . . . . . . . . 46
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.3 Conditions to Obligations of Parent and Parent Subsidiary
to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX
TERMINATION
Section 9.1 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 9.2 Termination by Either Parent or the Company . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 9.3 Termination by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 9.4 Effect of Termination and Abandonment . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 9.5 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties and Agreements . . . . . . . . . . . . . . . . . . 54
Section 10.2 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 10.4 Descriptive Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.5 Entire Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.7 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 19, 1995, (the
"Agreement") by and among BancTec, Inc., a Delaware corporation ("Parent"),
BTecMerger Subsidiary, Inc., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Parent Subsidiary"), and Recognition International Inc.,
a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent and Parent Subsidiary and
the Company deem it advisable and in the best interests of their respective
stockholders that Parent acquire the Company, and such Boards of Directors
have approved the merger (the "Merger") of Parent Subsidiary with and into the
Company upon the terms and subject to the conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling of interests:
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time (as defined in
Section 1.2 hereof), Parent Subsidiary shall be merged with and into the
Company and the separate existence of Parent Subsidiary shall thereupon cease,
and the name of the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall by virtue of the Merger be "BTec Merger
Subsidiary, Inc." The Merger shall have the effects set forth in Section 259
of the General Corporation Law of the State of Delaware (the "GCL").
Section 1.2 Effective Time of the Merger. The Merger shall
become effective when a properly executed Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, which filing shall be
made as soon as practicable after the closing of the transactions contemplated
by this Agreement in accordance with Section 3.6 hereof. When used in this
Agreement, the term "Effective Time" shall mean the date and time at which such
Certificate is so filed.
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be the Certificate of
Incorporation of the Company, except as amended to change the name to BTec
Merger Subsidiary, Inc.
Section 2.2 By-Laws. The By-Laws of Parent Subsidiary as in
effect at the Effective Time shall be the By- Laws of the Company.
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Section 2.3 Directors and Officers of Surviving Corporation.
(a) The directors of Parent Subsidiary at the Effective
Time shall be the initial directors of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation or as otherwise provided
by law.
(b) The officers of the Parent at the Effective Time
shall be the initial officers of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise
provided by law.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder thereof:
(a) Each unit consisting of a share of Common Stock, par
value $.25 per share, of the Company together with each Preferred Stock
Purchase Right associated therewith (issued in accordance with the Rights
Agreement dated September 29, 1992 between the Company and Society National
Bank) (each such unit a "Share" and multiple units the "Shares") issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Parent or any subsidiary of Parent) shall be converted into the right to
receive .59 (the "Exchange Ratio") of a share of Parent Common Stock ("Parent
Common Stock" and "Parent Shares"), payable upon the surrender of the
certificate formerly representing such Share. Holders of shares of the Company
Common Stock shall also have the right to receive together with each share of
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Parent Common Stock issued in the Merger, one associated stock purchase right
(a "Right") in accordance with the Rights Agreement dated June 16, 1988 between
Parent and First Republic Bank, Dallas, as amended. References herein to the
shares of Parent Common Stock issuable in the Merger shall be deemed to include
the associated Rights.
(b) Each Share held in the treasury of the Company and
each Share held by Parent or Parent Subsidiary immediately prior to the
Effective Time shall be cancelled and retired and cease to exist;
(c) Each share of Common Stock, par value $.01 per share,
of Parent Subsidiary issued and outstanding immediately prior to the Effective
Time shall be converted into and exchangeable for one share of Common Stock of
the Surviving Corporation.
Section 3.2 Exchange of Shares. Parent shall authorize one or
more persons to act as exchange agent hereunder (the "Exchange Agent"). As
soon as practicable after the Effective Time, Parent shall make available, and
each holder of Shares will be entitled to receive, upon surrender to the
Exchange Agent of one or more certificates representing such Shares for
cancellation, certificates representing the number of Parent Shares into which
such Shares are converted in the Merger. The Parent Shares into which the
Shares shall be converted in the Merger shall be deemed to have been issued at
the Effective Time.
Section 3.3 Dividends; Transfer Taxes. No dividends that are
declared on Parent Shares will be paid to persons entitled to receive
certificates representing Parent Shares until such persons surrender their
certificates representing Shares. Upon such surrender, there shall be paid to
the person in whose name the certificates representing such Parent Shares shall
be issued, any dividends which shall have become payable with respect to such
Parent Shares between the Effective Time and the time of such surrender. In no
event shall the person entitled to receive such dividends be entitled to
receive interest on such dividends. If any certificates
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for any Parent Shares are to be issued in a name other than that in which the
certificate representing Shares surrendered in exchange therefor is registered
it shall be a condition of such exchange that the person requesting such
exchange shall pay to the Exchange Agent any transfer or other taxes required
by reason of the issuance of certificates for such Parent Shares in a name
other than that of the registered holder of the certificate surrendered or
shall establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not applicable. Notwithstanding the foregoing, neither the
Exchange Agent nor any party hereto shall be liable to a holder of Shares for
any Parent Shares or dividends thereon or, in accordance with Section 3.4
hereof, proceeds of the sale of fractional interests, delivered to a public
official pursuant to applicable escheat laws.
Section 3.4 No Fractional Securities. No certificates or scrip
representing fractional Parent Shares shall be issued upon the surrender for
exchange of certificates representing Shares pursuant to this Article III and
no dividend, stock split-up or other change in the capital structure of the
Company shall relate to any fractional security, and such fractional interests
shall not entitle the owner thereof to vote or to any rights of a security
holder. In lieu of any such fractional securities, each holder of Shares who
would otherwise have been entitled to a fraction of a Parent Share upon
surrender of stock certificates for exchange pursuant to this Article III will
be paid cash upon such surrender in an amount equal to the product of such
fraction multiplied by the closing sale price of Parent Shares on the National
Association of Securities Dealers Automated Quotations National Market System
(the "NASDAQ") on the day of the Effective Time, or, if the Parent Shares are
not so traded on such day, the closing sale price on the next preceding day on
which such stock was traded on the NASDAQ.
Section 3.5 Closing of Company Transfer Books. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer
of Shares shall thereafter be
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made. If, after the Effective Time, certificates representing Shares are
presented to the Surviving Corporation, they shall be cancelled and exchanged
for certificates representing Parent Shares.
Section 3.6 Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Vinson & Elkins L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas 75201,
at 10:00 a.m., local time, on the later of (a) the date of the stockholders'
meetings referred to in Section 7.4 hereof or (b) the day on which all of the
conditions set forth in Article VIII hereof are satisfied or waived, or at such
other date, time and place as Parent and the Company shall agree.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
The Parent represents and warrants to the Company and its subsidiaries
as follows:
Section 4.1 Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now
being conducted or presently proposed to be conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary, except
where the failure to be so qualified will not have a material adverse effect on
Parent and its subsidiaries taken as a whole. Parent Subsidiary is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Parent Subsidiary has not engaged in any
business since the date of its incorporation.
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Section 4.2 Capitalization. The authorized capital stock of
Parent consists of 45,000,000 shares of Common Stock, par value $.01 per share,
and 1,000,000 shares of Preferred Stock, par value $.01 per share. As of
December 25, 1994, (a) 10,614,667 Parent Shares were issued and outstanding,
(b) no shares of Parent Preferred Stock were issued and outstanding, (c)
employee stock options to acquire 1,728,170 Parent Shares (the "Parent Employee
Stock Options") were outstanding under all stock option plans of Parent and (d)
2,817,155 Parent Shares were reserved for issuance pursuant to all employee
benefit plans of Parent. All of the issued and outstanding Parent Shares are
validly issued, fully paid and nonassessable and free of preemptive rights.
All of the Parent Shares issuable in exchange for Shares at the Effective Time
in accordance with this Agreement will be, when so issued, duly authorized,
validly issued, fully paid and nonassessable. The authorized capital stock of
Parent Subsidiary consists of 1,000 shares of Common Stock, par value $.01 per
share, 1,000 shares of which are validly issued and outstanding, fully paid and
nonassessable and are owned by Parent.
Section 4.3 Subsidiaries. Except as set forth on Schedule 4.3
hereto, the Parent does not directly or indirectly own any interest in any
other corporation, partnership, joint venture or other business association or
entity, foreign or domestic. Such corporations, partnerships, joint ventures
or other business entities of which the Parent or any of its other subsidiaries
owns, directly or indirectly, greater than fifty percent of the shares of
capital stock or other equity interests (including partnership interests)
entitled (without regard to the occurrence of any contingency) to cast at least
a majority of the votes that may be cast by all shares or equity interests
having ordinary voting power for the election of directors or other governing
body of such entity are herein after referred to as the "subsidiaries". Each
subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of
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incorporation. Each subsidiary has the corporate power, as the case may be, to
carry on its business as it is now being conducted or presently proposed to be
conducted. Each subsidiary that is a corporation is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary except where
the failure to be so qualified will not have a material adverse effect on the
Parent and its subsidiaries taken as whole. Each subsidiary that is a
partnership is duly qualified as a foreign partnership authorized to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary except where the failure to be so qualified will
not have a material adverse effect on Parent and its subsidiaries taken as a
whole. All of the outstanding shares of capital stock of the subsidiaries
that are corporations are validly issued, fully paid and nonassessable. Except
as set forth on Schedule 4.3 hereto, all of the outstanding shares of capital
stock of, or other ownership interests in, each of the subsidiaries are owned
by Parent or by a subsidiary of Parent free and clear of any liens, claims,
charges or encumbrances. Except as set forth in Schedule 4.3 hereto, there are
not now, and at the Effective Time there will not be, any outstanding options,
warrants, subscriptions, calls, rights, convertible securities or other
agreements or commitments obligating Parent or any subsidiary to issue,
transfer or sell any securities of any such subsidiary. There are not now, and
at the Effective Time there will not be, any voting trusts or other agreements
or understandings to which Parent or any of the its subsidiaries is a party or
is bound with respect to the voting of the capital stock of Parent or any its
subsidiaries.
Section 4.4 Authority Relative to this Agreement. Each of Parent
and Parent Subsidiary has the corporate power to enter into this Agreement and
to carry out its obligations hereunder. The execution and delivery of this
Agreement by Parent and Parent Subsidiary and
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the consummation by Parent and Parent Subsidiary of the transactions
contemplated hereby have been duly authorized by the Boards of Directors of
Parent and Parent Subsidiary, and by Parent as the sole stockholder of Parent
Subsidiary, and, except for the approvals of Parent's stockholders to be sought
at the stockholders' meeting contemplated by Section 7.4(b) hereof, no other
corporate proceedings on the part of Parent or Parent Subsidiary are necessary
to authorize this Agreement or the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by each of Parent
and Parent Subsidiary and constitutes a valid and binding agreement of each of
Parent and Parent Subsidiary, enforceable against Parent and Parent Subsidiary
in accordance with its terms.
Section 4.5 Consents and Approvals; No Violations. Except for
applicable requirements of the Hart-Scott- Rodino Antitrust Improvements Act of
1976 (the "HSR Act"), the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
state or foreign laws relating to takeovers, if applicable, state securities or
blue sky laws, and the filing and recordation of a Certificate of Merger as
required by the GCL, no filing with, and no permit, authorization, consent or
approval of, any public body or authority is necessary for the consummation by
Parent and Parent Subsidiary of the transactions contemplated by this
Agreement. Neither the execution and delivery of this Agreement by Parent or
Parent Subsidiary nor the consummation by Parent or Parent Subsidiary of the
transactions contemplated hereby, nor compliance by Parent or Parent Subsidiary
with any of the provisions hereof, will (a) conflict with or result in any
breach of any provisions of the Certificate of Incorporation or By-Laws of
Parent or of Parent Subsidiary, (b) except as set forth on Schedule 4.5 hereto,
result in a violation or breach of, or constitute (with or without due notice
or lapse of time or both) a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or
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provisions of any note, bond, mortgage, indenture, license, contract, agreement
or other instrument or obligation to which Parent or any of its subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound or (c) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent, any of its subsidiaries or any of their
properties or assets, except in the case of clauses (b) and (c) for violations,
breaches or defaults which are not in the aggregate material to Parent and its
subsidiaries taken as a whole.
Section 4.6 Reports and Financial Statements. Parent has filed
all reports required to be filed with the Securities and Exchange Commission
(the "SEC") pursuant to the Exchange Act since January 1, 1992 (collectively,
the "SEC Reports"), and has previously furnished the Company with true and
complete copies of all such SEC Reports. None of such SEC Reports, as of their
respective dates, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Each of the balance sheets (including the related notes)
included in the SEC Reports presents fairly in all material respects the
consolidated financial position of Parent and its subsidiaries as of the
respective dates thereof, and the other related statements (including the
related notes) included therein present fairly in all material respects the
results of operations and the changes in financial position of Parent and its
subsidiaries for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein.
Section 4.7 Absence of Certain Changes or Events. Except as set
forth in Schedule 4.7 hereto or in the SEC Reports, since December 25, 1994,
Parent and its subsidiaries have not: (a) taken any of the actions set forth
in Sections 6.2(b) or 6.2(c) hereof; (b) suffered any material adverse change
in the business, financial condition, results of operations,
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properties, assets or liabilities of Parent and its subsidiaries taken as a
whole; or (c) conducted its business and operations other than in the ordinary
course of business and consistent with past practices.
Section 4.8 Litigation. Except for litigation disclosed in the
notes to the financial statements included in Parent's Annual Report to
Stockholders for the year ended March 27, 1994 or in the SEC Reports there is
no suit, action or proceeding pending or, to the best knowledge of Parent,
threatened against or affecting Parent or any of its subsidiaries, the outcome
of which, in the reasonable judgment of Parent, is likely to materially and
adversely affect the business, financial condition or results of operations of
Parent and its subsidiaries taken as a whole; nor is there any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or arbitrator outstanding against Parent
nor any of its subsidiaries having, or which, insofar as can reasonably be
foreseen, in the future may have, any such effect.
Section 4.9 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by Parent or Parent
Subsidiary for inclusion in (a) the Registration Statement to be filed with the
SEC by Parent on Form S-4 under the Securities Act for the purpose of
registering the Parent Shares to be issued in the Merger (the "Registration
Statement") and (b) the joint proxy statement to be distributed in connection
with the Parent's and the Company's meeting of stockholders to vote upon this
Agreement (the "Proxy Statement") will in the case of the Registration
Statement, at the time it becomes effective and at the Effective Time, or, in
the case of the Proxy Statement or any amendments thereof or supplements
thereto, at the time of the mailing of the Proxy Statement and any amendments
or supplements thereto, and at the time of the meeting of stockholders to be
held in connection with the Merger, contain any untrue statement of a material
fact or omit to state any material fact
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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. The Registration Statement will comply as to form in all material
respects with the provisions of the Securities Act, and the rules and
regulations promulgated thereunder.
Section 4.10 Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in Parent's
financial statements (or reflected in the notes thereto) included in the Parent
SEC Reports or which were incurred after December 25, 1994 in the ordinary
course of business and consistent with past practices, Parent and its
subsidiaries do not have any liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of a nature required by generally accepted
accounting principles to be reflected in a corporate balance sheet (or
reflected in the notes thereto).
Section 4.11 No Default. Neither Parent nor any of its
subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provisions of (a) its Certificate of Incorporation or
By-Laws, (b) any note, bond, mortgage, indenture, license, agreement, contract,
lease, commitment or other obligation to which Parent or any of the its
subsidiaries is a party or by which they or any of their properties or assets
may be bound, or (c) any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or any of its subsidiaries, except in the case
of clauses (b) and (c) above for defaults or violations which would not have a
material adverse effect on Parent and its subsidiaries, taken as a whole.
Section 4.12 Taxes.
(a) Parent has heretofore delivered or will make available to the
Company true, correct and complete copies of the consolidated federal, state,
local and foreign income, franchise, sales and use and other Tax Returns (as
hereinafter defined) filed by Parent and its
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subsidiaries for each of the Parent's years ended March 31, 1990, 1991, 1992,
1993 and 1994 inclusive. Parent has duly filed, and each of its subsidiaries
has duly filed, all material federal, state, local and foreign income,
franchise, sales and other Tax Returns required to be filed by Parent or
subsidiaries. All such Tax Returns are true, correct and complete, in all
material respects, and Parent and its subsidiaries have duly paid, all Taxes
(as hereinafter defined) required to be paid in respect of the periods covered
by such returns and have paid or made adequate provisions for payment of all
accrued but unpaid Taxes in respect of all periods since the periods covered by
such Tax Returns. Except as set forth in Schedule 4.12 hereof, there are no
material tax liens on the assets of Parent or its subsidiaries. Except as set
forth in Schedule 4.12 hereof, no deficiencies have been assessed as a result
of any examination of Tax Returns of Parent or its subsidiaries by federal,
state, local or foreign tax authorities, and no deficiencies for Taxes have
been proposed or asserted against Parent and its subsidiaries. Except as
disclosed in Schedule 4.12 hereof, no issue has been raised during the past
five years by any federal, state, local or foreign taxing authority which, if
raised with regard to any period not so examined, could reasonably be expected
to result in a proposed deficiency for any period not so examined. Except as
disclosed in Schedule 4.12 hereof, neither Parent nor any of its subsidiaries
has granted any extension or waiver of the statutory period of limitations
applicable to any claim for Taxes. Parent and each of its subsidiaries have
complied (and until the Closing will comply) in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes, including the withholding and reporting requirements under Sections
1441 through 1464, 3401 through 3406 and 6041 through 6049 of the Code (or
similar provisions under any foreign laws) and have, within the time and in the
manner prescribed by law, paid over to the proper governmental authorities all
amounts required to be so withheld and paid over under applicable laws.
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(b) For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, property, sales and use, transfer,
license, payroll, disability, unemployment, estimated, withholding, capital
stock and franchise taxes, imposed by the United States, or any state, local or
foreign government or subdivision or agency thereof, including any interest,
penalties or additions thereto. For purposes of this Agreement, the term "Tax
Return" shall mean any report, return or other information or document required
to be supplied to a taxing authority in connection with Taxes.
Section 4.13 Title to Properties; Encumbrances. Except as
described in the following sentence, each of Parent and its subsidiaries has
good, valid leasehold interest in, all of its properties and assets (real,
personal and mixed, tangible and intangible), including, without limitation,
all the properties and assets reflected in the consolidated balance sheet of
Parent and its subsidiaries as of December 25, 1994 included in Parent's
Quarterly Report on Form 10-Q for the period ended on such date (except for
properties and assets disposed of in the ordinary course of business and
consistent with past practices since December 25, 1994). None of such
properties or assets are subject to any liability, obligation, claim, lien,
mortgage, pledge, security interest, conditional sale agreement, charge or
encumbrance of any kind (whether absolute, charge or encumbrance of any kind
(whether absolute, accrued, contingent or otherwise), except (i) as set forth
in Schedule 4.13 hereto, and (ii) imperfections of title and encumbrance, if
any, which are not substantial in amount, do not materially detract from the
value of the property or assets subject thereto and do not impair the
operations of Parent and the its subsidiaries.
Section 4.14 Trademarks, Patents and Copyrights. Parent and its
subsidiaries own or possess adequate licenses or other valid rights to use all
material patents, patent rights,
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trademarks, trademark rights, trade names, trade name rights, copyrights,
service marks, trade secrets, applications for trademarks and for service
marks, know-how and other proprietary rights and information used or held for
use in connection with the business of Parent and its subsidiaries as currently
conducted or as contemplated to be conducted, and Parent, except as set forth
in Schedule 4.14 hereof, is unaware of any assertion or claim challenging the
validity of any of the foregoing. To the best knowledge of the Parent, the
conduct of the business of Parent and the subsidiaries as currently conducted
does not conflict in any way with any patent, patent rights, license,
trademark, trademark right, trade name, trade name right, service mark or
copyright of any third party, except as set forth in Schedule 4.14 hereof. To
the best knowledge of Parent there are no infringements of any proprietary
rights owned by or licensed by or to Parent or any of its subsidiaries.
Section 4.15 Compliance with Applicable Law. Each of Parent and
its subsidiary is in compliance with all applicable laws (whether statutory or
otherwise), rules, regulations, orders, ordinances, judgments or decrees of all
governmental authorities (federal, state, local, foreign or otherwise), where
the failure to be in such compliance would have a material adverse effect on
Parent and its subsidiaries, taken as a whole.
Section 4.16 Labor Matters. Neither Parent nor any of its
subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization. There is no unfair labor practice or labor arbitration
proceeding pending or, to the knowledge of Parent, threatened against Parent or
its subsidiaries relating to their business, except for any such preceding
pending which would not have a material adverse effect on Parent and its
subsidiaries, taken as a whole. To the knowledge of Parent, there are no
organizational efforts with respect to the formation of a
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collective bargaining unit presently being made or threatened involving
employees of Parent or any of its subsidiaries.
Section 4.17 Employee Benefit Plans.
(a) Schedule 4.17 hereto sets forth a true and complete list of
all the following: each "employee benefit plan," as such term is defined in
Section 3(3) of Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder ("ERISA"), pursuant to
which the Parent or any of its subsidiaries has (A) any liability with respect
to current or former employees, agents, directors, or independent contractors
of the Parent or its subsidiaries ("Employees") or (B) any obligation to issue
capital stock of the Parent or any of its subsidiaries (each, an "Employee
Plan"), and each other plan, program, policy, contract or arrangement providing
for bonuses, deferred pay, stock or stock related awards, severance pay, salary
continuation or similar benefits, life insurance or other employee benefits, or
compensation to or for any Employees or any beneficiaries or dependents of any
Employees (other than directors' and officers' liability policies), whether or
not insured or funded, (A) pursuant to which the Parent or any of its
subsidiaries has any liability or (B) constituting an employment or severance
agreement or arrangement with any officer or director of the Parent or any
subsidiary (each, a "Benefit Arrangement"). Parent has provided Company with
respect to each Employee Plan and Benefit Arrangement: (i) a true and complete
copy of all written documents comprising such Employee Plan or Benefit
Arrangement (including amendments and individual agreements relating thereto)
or, if there is no such written document, an accurate and complete description
of such Employee Plan or Benefit Arrangement; (ii) Form 5500 or similar form
(including all schedules thereto), if applicable; for the last two years; (iii)
the most recent financial statements and actuarial reports, if any; (iv) the
summary plan description currently in
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effect and all material modifications thereof, if any; and (v) the most recent
Internal Revenue Service determination letter, if any.
(b) Each Employee Plan and Benefit Arrangement has been
established and maintained in all material respects in accordance with its
terms and in material compliance with all applicable laws, including, but not
limited to, ERISA and the Code. Neither the Parent nor any of its subsidiaries
nor any of their respective current or former directors, officers, or
employees, nor, to the best knowledge of the Parent, any other disqualified
person or party-in-interest with respect to any Employee Plan, have engaged
directly or indirectly in any "prohibited transaction," as such term is defined
in section 4975 of the Code or section 406 of ERISA, with respect to which the
Parent or its subsidiaries could have or has any material liability. All
contributions required to be made to the Employee Plans and Benefit
Arrangements have been made in a timely fashion. Each Employee Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified, and
each related trust is exempt from taxation under Section 501(a) of the Code.
(c) No Employee Plan is subject to Title IV of ERISA or Section
412 of the Code.
(d) No Employee Plan is a "multiemployer plan" as that term is
defined in Section 3(37) of ERISA or a "multiple employer plan" described in
Section 4063(a) of ERISA, nor has the Parent or any ERISA Affiliate at any time
since September 2, 1974, contributed to or been obligated to contribute to such
a multiemployer plan or multiple employer plan. "ERISA Affiliate" means any
entity that is required to be aggregated with Parent or any of its subsidiaries
under Sections 414(b),(c),(m) or (o) of the Code.
(e) Except with respect to an Employee Plan, neither the Parent
nor any ERISA Affiliate has any Controlled Group Liability, nor do any
circumstances exist that could result in any of them having any Controlled
Group Liability. "Controlled Group Liability" means any
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and all liabilities under (i) Title IV of ERISA, (ii) section 302 of ERISA,
(iii) sections 412 and 4971 of the Code and (iv) the continuation coverage
requirements of section 601 et seq. of ERISA and section 4980B of the Code.
(f) Except as provided on Schedule 4.17 hereto, neither the
execution or delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, constitutes an event under any Employee Plan,
Benefit Arrangement, loan to, or individual agreement or contract with, an
Employee that may result in any payment (whether of severance pay or
otherwise), restriction or limitation upon the assets of any Employee Plan or
Benefit Arrangement, acceleration of payment or vesting, increase in benefits
or compensation, or required funding, with respect to any Employee, the
forgiveness of any loan or other commitment of any Employees, or result in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available.
(g) There are no actions, suits, arbitrations, inquiries,
investigations or other proceedings (other than routine claims for benefits)
pending or, to the Parent's knowledge, threatened, with respect to any Employee
Plan or Benefit Arrangement.
(h) Except as provided on schedule 4.17 hereto, no amounts paid or
payable by the Parent or any subsidiary to or with respect to any Employee will
fail to be deductible for federal income tax purposes by reason of Section 280G
of the Code.
(i) No Employees and no beneficiaries or dependents of Employees
are or may become entitled under any Employee Plan or Benefit Arrangement to
post-employment welfare benefits of any kind, including without limitation
death or medical benefits, other than coverage mandated by Section 4980B of the
Code.
(j) Neither Parent, any subsidiary or any ERISA Affiliate, nor any
of the Employee Plans, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in
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a transaction with any of the Employee Plans in connection with which Parent,
any subsidiary or any ERISA Affiliate, any of the Employee Plans, any such
trust, or any trustee or administrator thereof, or any party dealing with the
Employee Plans or any such trust could be subject to either a material civil
liability under section 409 of ERISA or Section 502(i) of ERISA, or a material
tax imposed pursuant to Section 4975 or 4976 of the Code.
Section 4.18 Opinion of Financial Advisor. The Board of Directors
of Parent (at a meeting duly called and held) has unanimously determined that
the transactions contemplated hereby are fair to and in the best interests of
the holders of the Common Stock. Parent has received the opinion of Merrill
Lynch & Co., Parent's financial advisor, substantially to the effect that the
Exchange Ratio and the Merger is fair to Parent from a financial point of view.
Section 4.19 Environment Matters. Except as set forth on Schedule
4.19, neither the Parent nor any of its subsidiaries is in violation of any
laws, regulations, or ordinances whose primary purpose is the protection of the
environment or human health, the Parent and each subsidiary possesses all
permits and authorizations required for its operations under such laws, and the
Parent has filed or submitted all notifications and reports required under such
laws. The Parent and each subsidiary has disposed of all of its hazardous
wastes, hazardous substances, solid wastes, and any other pollutants or
contaminants only at facilities authorized to receive such wastes. Neither the
parent nor any of it subsidiaries has received notice of any actual or
potential liability arising from the disposal or release of hazardous wastes,
hazardous substances, solid wastes, or any other pollutant or contaminant (a)
generated by the Parent or any subsidiary, (b) transported to a disposal
facility by the Parent or any subsidiary, (c) at a facility owned or operated
by the Parent or any subsidiary or (d) where such disposal or release was
arranged for by the Parent and each subsidiary within the meaning of 42 U.S.C.
Section 9607(a)(3) or any analogous state or local law.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, and Parent Subsidiary
as follows:
Section 5.1 Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now
being conducted or presently proposed to be conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified will not have a material adverse
effect on the Company and its subsidiaries taken as a whole.
Section 5.2 Capitalization. The authorized capital stock of the
Company consists of (a) 30,000,000 shares of Common Stock, par value $.25 per
share, (b) 800,000 shares of Preferred Stock, no par value, (c) 200,000 shares
of Series A Junior Participating Preferred Stock, (d) 7 1/4% Convertible
Subordinated Debentures Due 2011, (the "Convertible Debentures") and (e)
Preferred Stock Purchase Rights. As of the date hereof, (a) 15,355,740 Shares
were issued and outstanding, (b) no shares of preferred stock were outstanding,
(c) employee and director stock options to acquire 2,528,136 Shares (the
"Employee Stock Options") were outstanding under all stock option plans and
agreements of the Company (d) 3,087,882 shares were reserved for issuance under
the Convertible Debentures, and (e) 15,355,740 Preferred Stock Purchase Rights
were issued and outstanding. All of the issued and outstanding Shares are
validly issued, fully paid and nonassessable and free of preemptive rights.
Except as set forth above and as otherwise provided for in this Agreement,
there are not now, and at the
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Effective Time there will not be, any shares of capital stock of the Company
issued or outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating the
Company to issue, transfer or sell any shares of its capital stock. Except as
provided in this Agreement, after the Effective Time, the Company will have no
obligation to issue, transfer or sell any shares of its capital stock pursuant
to any employee benefit plan or otherwise.
Section 5.3 Company Subsidiaries. Except as set forth on
Schedule 5.3 hereto, the Company does not directly or indirectly own any
interest in any other corporation, partnership, joint venture or other business
association or entity, foreign or domestic. Such corporations, partnerships,
joint ventures or other business entities of which the Company or any of its
other subsidiaries owns, directly or indirectly, greater than fifty percent of
the shares of capital stock or other equity interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
cast at least a majority of the votes that may be cast by all shares or equity
interests having ordinary voting power for the election of directors or other
governing body of such entity are hereinafter referred to as the
"Subsidiaries". Except as set forth in Schedule 5.3 hereto, each Subsidiary is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has the corporate power to carry
on its business as it is now being conducted or presently proposed to be
conducted. Each Subsidiary is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary except where the failure to be so qualified will
not have a material adverse effect on the Company and its Subsidiaries taken as
a whole. Except as set forth on Schedule 5.3 hereof, all of the outstanding
shares of capital stock of the Subsidiaries are validly issued, fully paid and
nonassessable and are owned
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by the Company or by a Subsidiary free and clear of any liens, claims, charges
and encumbrances. There are not now, and at the Effective Time there will not
be, any outstanding options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or other commitments obligating the
Company or any Subsidiary to issue, transfer or sell any securities of any
Subsidiary. There are not now, and at the Effective Time there will not be,
any voting trusts or other agreements or understandings to which the Company or
any of the Subsidiary is a party or is bound with respect to the voting of the
capital stock of the Company or any of the Subsidiary.
Section 5.4 Authority Relative to this Agreement. The Company
has the corporate power to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by the Company's Board of Directors and,
except for the approval of its stockholders to be sought at the stockholders
meeting contemplated by Section 7.4 hereof, no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms.
Section 5.5 Consents and Approvals; No Violations. Except for
applicable requirements of the HSR Act, the Securities Act, the Exchange Act,
and state or foreign laws relating to takeovers, if applicable, state
securities or blue sky laws and the filing and recordation of a Certificate of
Merger as required by the GCL, no filing with, and no permit, authorization,
consent or approval of, any public body or authority is necessary for the
consummation by the Company of the transactions contemplated by this Agreement.
Neither
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the execution and delivery of this Agreement by the Company, nor the
consummation by the Company of the transactions contemplated hereby, nor
compliance by the Company with any of the provisions hereof, will (a) conflict
with or result in any breach of any provisions of the Certificate of
Incorporation or By-Laws of the Company or any Subsidiary, (b) except as set
forth on Schedule 5.5, result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) 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 Company or
any Subsidiary is a party or by which any of them or any of their properties or
assets may be bound or (c) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any Subsidiary or any of
their properties or assets, except in the case of clauses (b) and (c) for
violations, breaches or defaults which are not in the aggregate material to the
Company and Subsidiaries taken as a whole.
Section 5.6 Reports and Financial Statements. The Company has
filed all reports required to be filed with the SEC pursuant to the Exchange
Act since January 1, 1992 (such reports, and its Prospectus dated April 20,
1993 relating to its Common Stock, being hereinafter collectively referred to
as the "Company SEC Reports"), and has previously furnished Parent with true
and complete copies of all such Company SEC Reports. None of such Company SEC
Reports, as of their respective dates, contained any untrue statement or a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Each of the balance sheets
(including the related notes) included in the Company SEC Reports presents
fairly in all material respects the consolidated financial position of the
Company and the Subsidiaries as of the respective dates thereof, and the other
related statements (including the related notes)
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included therein present fairly in all material respects the results of
operations and the changes in financial position of the Company and the
Subsidiaries for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein.
Section 5.7 Absence of Certain Changes or Events. Except as set
forth in Schedule 5.7 hereto or in the Company SEC Reports, since January 31,
1995, neither the Company nor any of the Subsidiaries has: (a) taken any of
the actions set forth in Sections 6.1(b), except in the ordinary course of
business and consistent with past practices, Section 6.1(c) or except in the
ordinary course of business and consistent with past practices Section 6.1(e)
hereof; (b) suffered any material adverse change in the business, financial
condition, results of operations, properties, assets or liabilities of the
Company and the Subsidiaries taken as a whole; or (c) conducted its business
and operations other than in the ordinary course of business and consistent
with past practices.
Section 5.8 Litigation. Except for litigation disclosed in the
Company SEC Reports or in Schedule 5.8 there is no suit, action or proceeding
pending or, to the best knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries, the outcome of which, in the
reasonable judgment of the Company, may materially and adversely affect the
business, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole; nor is there any judgment, decree, injunction,
rule or order of any court, governmental department, commission, agency,
instrumentality or arbitrator outstanding against the Company nor any of its
Subsidiaries having, or which, insofar as can reasonably be foreseen, in the
future may have, any such effect.
Section 5.9 Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in the
Company's financial statements (or reflected in the
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notes thereto) included in the Company SEC Reports or which were incurred after
January 31, 1995 in the ordinary course of business and consistent with past
practices, the Company and the Subsidiaries do not have any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by generally accepted accounting principles to be reflected in a
corporate balance sheet (or reflected in the notes thereto).
Section 5.10 No Default. Neither the Company nor any of the
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provisions of (a) its Certificate of Incorporation or
By-Laws, (b) any note, bond, mortgage, indenture, license, agreement, contract,
lease, commitment or other obligation to which the Company or any Subsidiary is
a party or by which they or any of their properties or assets may be bound, or
(c) any order, writ, injunction, decree, statute, rule or regulation applicable
to the Company or any Subsidiary, except in the case of clauses (b) and (c)
above for defaults or violations which would not have a material adverse effect
on the Company and the Subsidiaries, taken as a whole.
Section 5.11 Taxes.
(a) The Company has heretofore delivered or will make available to
Parent true, correct and complete copies of the consolidated federal, state,
local and foreign income, franchise, sales and other Tax Returns filed by the
Company and Subsidiaries for each of the Company's years ended October 31,
1990, 1991, 1992, 1993 and 1994 inclusive. The Company has duly filed, and
each Subsidiary has duly filed, all material federal, state, local and foreign
income, franchise, sales and use and other Tax Returns required to be filed by
the Company or the Subsidiary. All such Tax Returns are true, correct and
complete, in all material respects, and the Company and the Subsidiaries have
duly paid all Taxes required to be paid in respect of the periods shown as due
in such returns and have made adequate provision for payment of
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all accrued but unpaid Taxes anticipated in respect of all periods since the
periods covered by such Tax Returns except as set forth in Schedule 5.11
hereof. Except as set forth in Schedule 5.11 hereof, there are no material tax
liens on the assets of the Company and the Subsidiaries. Except as set forth
in Schedule 5.11 hereof, no deficiencies have been assessed as a result of any
examination of Tax Returns of the Company or the Subsidiaries by federal,
state, local or foreign tax authorities, and no deficiencies for Taxes have
been proposed or asserted against the Company and the Subsidiaries. Except as
disclosed in Schedule 5.11 hereof, no issue has been raised during the past
five years by any federal, state, local or foreign taxing authority which, if
raised with regard to any period not so examined, could reasonably be expected
to result in a proposed deficiency for any period not so examined. Except as
disclosed in Schedule 5.11 hereof, neither the Company nor any of the
Subsidiaries has granted any extension or waiver of the statutory period of
limitations applicable to any claim for Taxes. Except as set forth on Schedule
5.11 hereof, neither the Company nor any of the Subsidiaries is a party to any
agreement, contract or arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code. The Company and each of the Subsidiaries have
complied (and until the Closing will comply) in all material respects with all
applicable laws, rules and regulations relating to the payment and withholding
of Taxes including the reporting and withholding requirements under Sections
1441 through 1464, 3401 through 3406 and 6041 through 6049 of the Code or
similar provisions under any foreign laws) and have, within the time and in the
manner prescribed by law, paid over to the proper governmental authorities all
amounts required to be so withheld and paid over under applicable laws.
Section 5.12 Employee Benefit Plans; ERISA.
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(a) Schedule 5.12 hereto sets forth a true and complete list of
all the following: each "employee benefit plan," as such term is defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder ("ERISA"), other
than any plans or arrangements required by local law, pursuant to which the
Company or any Subsidiary has (A) any liability with respect to current or
former employees, agents, directors, or independent contractors of the Company
or any Subsidiary ("Company Employees") or (B) any obligation to issue capital
stock of the Company or any Subsidiaries (each, a "Company Employee Plan"), and
each other plan, program, policy, contract or arrangement providing for
bonuses, deferred pay, stock or stock related awards, severance pay, salary
continuation or similar benefits, life insurance or other employee benefits, or
compensation to or for any Company Employees or any beneficiaries or dependents
of any Company Employees (other than directors' and officers' liability
policies), whether or not insured or funded, (A) pursuant to which the Company
or any Subsidiary has any liability or (B) constituting an employment or
severance agreement or arrangement with any officer or director of the Company
or any Subsidiary (each, a "Benefit Arrangement"). The Company has provided,
or will provide, Parent with respect to each Company Employee Plan and Benefit
Arrangement: (i) a true and complete copy of all written documents comprising
such Company Employee Plan or Benefit Arrangement (including amendments and
individual agreements relating thereto) or, if there is no such written
document, an accurate and complete description of such Company Employee Plan or
Benefit Arrangement; (ii) the most recent Form 5500 or similar form (including
all schedules thereto), if applicable; (iii) the most recent financial
statements and actuarial reports, if any; (iv) the summary plan description
currently in effect and all material modifications thereof, if any; and (v) the
most recent Internal Revenue Service determination letter, if any.
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(b) Each Company Employee Plan and Benefit Arrangement has been
established and maintained in all material respects in accordance with its
terms and in material compliance with all applicable laws, including, but not
limited to, ERISA and the Code. Neither the Company nor any Subsidiaries nor
any of their respective current or former directors, officers, or employees,
nor, to the best knowledge of the Company, any other disqualified person or
party-in- interest with respect to any Company Employee Plan, have engaged
directly or indirectly in any "prohibited transaction," as such term is defined
in section 4975 of the Code or section 406 of ERISA, with respect to which the
Company or its Subsidiaries could have or has any material liability. All
contributions required to be made to the Company Employee Plans and Benefit
Arrangements have been made in a timely fashion. Each Company Employee Plan
that is intended to be qualified under Section 401(a) of the Code is so
qualified, and each related trust is exempt from taxation under Section 501(a)
of the Code.
(c) No Company Employee Plan is subject to Title IV of ERISA or
Section 412 of the Code.
(d) No Company Employee Plan is a "multiemployer plan" as that
term is defined in Section 3(37) of ERISA or a "multiple employer plan"
described in Section 4063(a) of ERISA, nor has the Company or any ERISA
Affiliate of the Company at any time since September 2, 1974, contributed to or
been obligated to contribute to such a multiemployer plan or multiple employer
plan. "ERISA Affiliate" means any entity that is required to be aggregated
with the Company or any Subsidiary under Sections 414(b),(c),(m) or (o) of the
Code.
(e) Except with respect to a Company Employee Plan, neither the
Company nor any ERISA Affiliate has any Controlled Group Liability, nor do any
circumstances exist that could result in any of them having any Controlled
Group Liability. "Controlled Group Liability" means any and all liabilities
under (i) Title IV of ERISA, (ii) section 302 of ERISA, (iii)
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sections 412 and 4971 of the Code and (iv) the continuation coverage
requirements of section 601 et seq. of ERISA and section 4980B of the Code.
(f) Except as provided on Schedule 5.12, neither the execution or
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, constitutes an event under any Company Employee Plan,
Benefit Arrangement, loan to, or individual agreement or contract with, a
Company Employee that may result in any payment (whether of severance pay or
otherwise), restriction or limitation upon the assets of any Company Employee
Plan or Benefit Arrangement, acceleration of payment or vesting, increase in
benefits or compensation, or required funding, with respect to any Company
Employee, the forgiveness of any loan or other commitment of any Company
Employees, or resulting any prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not available.
(g) Except as provided in Exhibit 5.12 hereto, there are no
actions, suits, arbitrations, inquiries, investigations or other proceedings
(other than routine claims for benefits) pending or, to the Company's
knowledge, threatened, with respect to any Company Employee Plan or Benefit
Arrangement.
(h) Except as provided in Schedule 5.12 hereto, no amounts paid or
payable by the Company or any Subsidiary to or with respect to any Company
Employee will fail to be deductible for federal income tax purposes by reason
of Section 280G of the Code.
(i) No Company Employees and no beneficiaries or dependents of
Company Employees are or may become entitled under any Company Employee Plan or
Benefit Arrangement to post-employment welfare benefits of any kind, including
without limitation death or medical benefits, other than coverage mandated by
Section 4980B of the Code.
(j) Neither the Company, any Subsidiary or any ERISA Affiliate, nor
any of the Company Employee Plans, nor any trust created thereunder, nor any
trustee or administrator
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thereof has engaged in a transaction with any of the Employee Plans in
connection with which the Company, and Subsidiary or any ERISA Affiliate, any
of the Company Employee Plans, any such trust, or any trustee or administrator
thereof, or any party dealing with the Company Employee Plans or any such trust
could be subject to either a material civil liability under section 409 of
ERISA or Section 502(i) of ERISA, or a material tax imposed pursuant to section
4975 or 4976 of the Code.
Section 5.13 Title to Properties; Encumbrances. Except as
described in the following sentence, each of the Company and the Subsidiaries
has good, valid and marketable title to, or a valid leasehold interest in, all
of its properties and assets (real, personal and mixed, tangible and
intangible), including, without limitation, all the properties and assets
reflected in the consolidated balance sheet of the Company and the Subsidiaries
as of January 31, 1995 included in the Company's Quarterly Report on Form 10-Q
for the period ended on such date (except as set forth in Schedule 5.13 hereof
and except for properties and assets disposed of in the ordinary course of
business and consistent with past practices since January 31, 1995). None of
such properties or assets is subject to any liability, obligation, claim, lien,
mortgage, pledge, security interest, conditional sale agreement, charge or
encumbrance of any kind (whether absolute, accrued, contingent or otherwise),
except (i) as set forth in Schedule 5.13 hereto, and (ii) imperfections of
title and encumbrances, if any, which are not substantial in amount, do not
materially detract from the value of the property or assets subject thereto and
do not impair the operations of the Company and the Subsidiaries.
Section 5.14 Compliance with Applicable Law. Each of the Company
and the Subsidiaries is in compliance with all applicable laws (whether
statutory or otherwise), rules, regulations, orders, ordinances, judgments or
decrees of all governmental authorities (federal, state, local, foreign or
otherwise) (collectively, the "Laws"), where the failure to be in such
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compliance would have a material adverse effect of the Company and the
Subsidiaries, taken as a whole.
Section 5.15 Information in Disclosure Documents and Registration
Statement. None of the information to be supplied by the Company for inclusion
in the Proxy Statement or the Registration Statement will, in the case of the
Registration Statement, at the time it becomes effective and at the Effective
Time, or, in the case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy Statement and any
amendments or supplements thereto, and at the time of the meeting of
stockholders of the Company to be held in connection with the Merger, 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. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act, and the rules and regulations
promulgated thereunder.
Section 5.16 Opinion of Financial Advisor. The Board of Directors
of the Company (at meetings duly called and held) has unanimously determined
that the transactions contemplated hereby are fair to and in the best interests
of the holders of the Shares. The Company has received the written opinion of
Bear, Stearns & Co., Inc., the Company's financial advisor, substantially to
the effect that the consideration to be received in the Merger by the holders
of the Shares is fair to such stockholders from a financial point of view.
Section 5.17 Trademarks, Patents and Copyrights. The Company and
the Subsidiaries own or possess adequate licenses or other valid rights to use
all material patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and
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the Subsidiaries as currently conducted or as contemplated to be conducted, and
the Company except as set forth in Schedule 5.17 hereof, is unaware of any
assertion or claim challenging the validity of any of the foregoing. To the
best knowledge of the Company, the conduct of the business of the Company and
the Subsidiaries as currently conducted does not conflict in any way with any
patent, patent right, license, trademark, trademark right, trade name, trade
name right, service mark or copyright of any third parties except as set forth
in Schedule 5.17 hereof. To the best knowledge of the Company there are no
infringements of any proprietary rights owned by or licensed by or to the
Company or any Subsidiary, except as set forth in Schedule 5.17 hereof.
Section 5.18 Labor Matters. Except as set forth on Schedule 5.18,
neither the Company nor any of the Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. There is no unfair labor practice or
labor arbitration proceeding pending or, to the knowledge of the Company,
threatened against the Company or the Subsidiaries relating to their business,
except for any such preceding which would not have a material adverse effect on
the Company and the Subsidiaries, taken as a whole. To the knowledge of the
Company, there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of the Company or any of the Subsidiaries.
Section 5.19 Environmental Matters. Except as set forth on Schedule
5.19, and notwithstanding the materiality qualification in Sections 5.10 and
5.14, neither the Company nor a Subsidiary is in violation of any laws,
regulations, or ordinances whose primary purpose is the protection of the
environment or human health, the Company and its Subsidiaries possess all
permit and authorizations required for its operations under such laws, and the
Company and its Subsidiaries have filed or submitted all notifications and
reports required under such laws. The
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Company and its Subsidiaries have disposed of all of its hazardous wastes,
hazardous substances, solid wastes, and any other pollutants or contaminants
only at facilities authorized to receive such wastes. Except as set forth in
Schedule 5.19, the Company and its Subsidiaries have not received notice of any
actual or potential liability arising from the disposal or release of hazardous
wastes, hazardous substances, solid wastes, or any other pollutant or
contaminant (a) generated by the Company or any Subsidiary or any of their
operations, (b) transported to a disposal facility by the Company or any
Subsidiary, (c) at a facility owned or operated by the Company or (d) where
such disposal or release was arranged for by the Company or any Subsidiary,
within the meaning of 42 U.S.C. Section 9607(a)(3) or any analogous state or
local law.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the
Merger. Prior to the Effective Time, unless Parent shall otherwise agree in
writing, or as otherwise contemplated by this Agreement:
(a) the respective businesses of the Company and the
Subsidiaries shall be conducted only in the ordinary and usual course of
business and consistent with past practices, and there shall be no material
changes in the conduct of the Company's and the Subsidiaries' operations;
(b) the Company shall not (i) sell or pledge or agree to
sell or pledge any stock owned by it in any of the Subsidiaries; (ii) amend its
Certificate of Incorporation or By-laws; or (iii) split, combine or reclassify
any shares of its outstanding capital stock or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property,
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or redeem or otherwise acquire any shares of its capital stock or shares of the
capital stock of any of the Subsidiaries;
(c) neither the Company nor any of the Subsidiaries shall
(i) authorize for issuance, issue or sell or agree to issue or sell any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), except for unissued Shares reserved for issuance upon the exercise
of currently outstanding Employee Stock Options; (ii) except for product sales,
dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or
other assets other than in the ordinary course of business and in any event, in
amounts greater than $1,500,000 in the aggregate for the Company and the
Subsidiaries collectively; (iii) incur, assume or prepay any indebtedness or
any other material liabilities other than in the ordinary course of business
and consistent with past practices; (iv) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person other than a Subsidiary in
the ordinary course of business and consistent with past practices; (v) make
any loans, advances or capital contributions to, or investments in, any other
person, other than to a Subsidiary in the ordinary course of business; (vi)
authorize capital expenditures in excess of $250,000 per expenditure and
$6,000,000 in the aggregate for the Company and the Subsidiaries collectively;
(vii) permit any insurance policy naming the Company or any Subsidiary as a
beneficiary or a loss payee to be cancelled or terminated by failure to pay
premiums; or (viii) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing;
(d) the Company shall use its best efforts to preserve
intact the business organization of the Company and the Subsidiaries, to keep
available the services of their present
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officers and key employees, and to preserve the goodwill of those having
business relationships with it and the Subsidiaries;
(e) neither the Company nor any of the Subsidiaries will
enter into any new agreements with any of their respective officers, directors
or employees or grant any increases in the compensation of their respective
officers, directors and employees, or enter into, adopt or amend any employee
compensation or benefit plans or any Plan (as that term is defined in Schedule
5.12 hereto); and
(f) neither the Company nor any of the Subsidiaries shall
(i) knowingly take or allow to be taken any action which would jeopardize the
treatment of Parent's acquisition of the Company as a pooling of interests for
accounting purposes; or (ii) knowingly take any action which would jeopardize
qualification of the Merger as a reorganization within the meaning of Section
386(a) of the Code.
Section 6.2 Conduct of Business by Parent Pending the Merger.
Prior to the Effective Time, unless the Company shall otherwise agree in
writing, or as otherwise contemplated by this Agreement:
(a) the respective businesses of Parent and its
subsidiaries shall be conducted only in the ordinary and usual course of
business and consistent with past practices, and there shall be no material
changes in the conduct of Parent's operations;
(b) Parent shall not (i) sell or pledge or agree to sell
or pledge any stock owned by it in any of its subsidiaries; (ii) amend its
Certificate of Incorporation or By-Laws; or (iii) split, combine or reclassify
any shares of its outstanding capital stock or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property, or redeem or
otherwise acquire any shares of its capital stock or shares of the capital
stock of any of its subsidiaries;
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(c) neither Parent nor any of the its subsidiaries shall
(i) authorize for issuance, issue or sell or agree to issue or sell any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), except for unissued shares of Parent Common Stock granted or
reserved for issuance upon the exercise of Parent Employee Stock Options and
except for grants of options under the Parent Employee Stock Option Plan, in
the ordinary course of business; (ii) incur, assume or prepay any indebtedness
or any other material liabilities other than in the ordinary course of business
and consistent with past practices; (iii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person other than its subsidiary in
the ordinary course of business.
(d) Parent shall use its best efforts to preserve intact
the business organization of the Parent and its subsidiaries, to keep available
the services of their present officers and key employees, and to preserve the
goodwill of those having business relationships with it and its subsidiaries;
and
(e) neither Parent nor any of its subsidiaries shall (i)
knowingly take or allow to be taken any action which would jeopardize the
treatment of Parent's acquisition of the Company as a pooling of interests for
accounting purposes; or (ii) knowingly take any action which would jeopardize
qualification of the Merger as a reorganization within the meaning of Section
368(a) of the Code.
Section 6.3 Conduct of Business of Parent Subsidiary. During the
period from the date of this Agreement to the Effective Time, Parent Subsidiary
shall not engage in any activities of any nature except as provided in or
contemplated by this Agreement.
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information. Except for information
relating to any claims either party may have against the other, the Company and
Parent shall each afford to the other and to the other's financial advisors,
legal counsel, accountants, consultants and other representatives full access
during normal business hours throughout the period prior to the Effective Time
to all of its books, records, properties, plants and personnel and, during such
period, each shall furnish promptly to the other (a) a copy of each report,
schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws, and (b) all other information
as such other party may reasonably request, provided that no investigation
pursuant to this Section 7.1 shall affect any representations or warranties
made herein or the conditions to the obligations of the respective parties to
consummate the Merger. Each party shall hold in confidence all nonpublic
information until such time as such information is otherwise publicly available
and, if this Agreement is terminated, each party will deliver to the other all
documents, work papers and other material (including copies) obtained by such
party or on its behalf from the other party as a result of this Agreement or in
connection herewith, whether so obtained before or after the execution hereof.
Section 7.2 Acquisition Proposals. Company agrees (a) that,
neither it nor its Subsidiaries shall, and that it and they will use their best
efforts to cause their respective directors, officers, employees, financial
advisors, legal counsel, accountants and other agents and representatives not
to, initiate or solicit, directly or indirectly, any inquiries or the making of
any proposal with respect to, engage in negotiations concerning, provide any
confidential information or data to or have any discussions with any person
relating to, any acquisition, business combination or purchase of all or any
significant portion of the assets of, or any equity
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interest in such party or any subsidiary of such party (an "Acquisition
Proposal"), other than the Merger, (b) that it will immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
person conducted heretofore with respect to any of the foregoing, and (c) that
it will notify the other party immediately in writing if any such inquiries or
proposals are received by, any such information is requested from, or any such
negotiations or discussions are sought to be initiated or continued with, it;
provided, however, that nothing contained in this Section 7.2 shall prohibit
the Board of Directors of the Company from (i) furnishing information or
entering into discussions or negotiations with, any person or entity that makes
an unsolicited bona fide proposal to acquire such party pursuant to a merger,
consolidation, share exchange, purchase of a substantial portion of the assets,
business combination or other similar transaction, if and only to the extent
that, (1) the Board of Directors of the Company determines in good faith that
such action is required for the Board of Directors to comply with its fiduciary
duties to stockholders imposed by law, (2) prior to furnishing such information
to, or entering into discussions or negotiations with, such person or entity,
the Company provides written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person or entity, and (3) subject to any confidentiality agreement with
such person or entity (which the Company determined in good faith was required
to be executed in order for the Board of Directors to comply with its fiduciary
duties to stockholders imposed by law), the Company keeps the Parent informed
of the status (not the terms) of any such discussions or negotiations; and (ii)
to the extent applicable, complying with Rule 14e-2 promulgated under the
Exchange Act with regard to an Acquisition Proposal. Nothing in this Section
7.2 shall (1) permit the Company to terminate this Agreement (except as
specifically provided in Article IX hereof), (2) permit the Company to enter
into any agreement with respect to an Acquisition Proposal during the term
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of this Agreement (it being agreed that during the term of this Agreement, the
Company shall not enter into any agreement with any person that provides for,
or in any way facilitates, an Acquisition Proposal (other than a
confidentiality agreement in customary form), or (3) affect any other
obligation of any party under this Agreement.
Section 7.3 Registration Statement. As promptly as practicable,
Parent and the Company shall prepare and file with the SEC the Proxy Statement
and Parent shall prepare and file with the SEC the Registration Statement.
Each of Parent and the Company shall use its best efforts to have the
Registration Statement declared effective. Parent will also use its best
efforts to take any action required to be taken under state securities or blue
sky laws in connection with the issuance of the Parent Shares pursuant hereto.
The Company shall furnish Parent with all information concerning the Company
and the holders of its capital stock and shall take such other action as Parent
may reasonably request in connection with such Registration Statement and
issuance of Parent Shares.
Section 7.4 Proxy Statements; Stockholder Approvals.
(a) The Company, acting through its Board of Directors,
shall, in accordance with applicable law and its Certificate of Incorporation
and By-Laws:
(i) promptly and duly call, give notice of,
convene and hold as soon as practicable following the date upon which
the Registration Statement becomes effective a meeting of its
stockholders for the purpose of voting to approve and adopt this
Agreement and shall use its best efforts to obtain such stockholder
approval; and
(ii) recommend approval and adoption of this
Agreement by the stockholders of the Company and include in the Proxy
Statement such recommendation, and take all lawful action to solicit
such approval.
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(b) Parent, acting through its Board of Directors, shall,
in accordance with applicable law and its Certificate of Incorporation and
By-Laws:
(i) promptly and duly call, give notice of,
convene and hold as soon as practicable following the date upon which
the Registration Statement becomes effective a meeting of its
stockholders for the purpose of voting to approve and adopt this
Agreement and shall use its best efforts to obtain such stockholder
approval; and
(ii) recommend approval and adoption of this
Agreement by the stockholders of Parent and include in the Proxy
Statement such recommendation, and take all lawful action to solicit
such approval.
(c) Parent and the Company, as promptly as practicable,
shall cause the definitive Proxy Statement to be mailed to their stockholders.
At the stockholders' meetings, each of Parent and the Company shall vote or
cause to be voted in favor of approval and adoption of this Agreement all
Shares as to which it holds proxies at such time.
Section 7.5 Compliance with the Securities Act.
(a) Prior to the Effective Time the Company shall cause
to be delivered to Parent a list identifying all persons who were, in its
reasonable judgment, upon consultation with Locke Purnell Rain Harrell, at the
record date for the Company stockholders' meeting convened in accordance with
Section 7.4 hereof, "affiliates" of the Company as that term is used in
paragraphs (c) and (d) of Rule 145 under the Securities Act (the "Affiliates").
(b) The Company shall use its best efforts to cause each
person who is identified as an Affiliate in the list referred to in (a) above
to deliver to Parent at or prior to the Effective Time a written agreement in
the form attached hereto as Exhibit A (the "Affiliate Letters").
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Section 7.6 Antitrust Laws. As promptly as practicable, the
Company, Parent and Parent Subsidiary shall make all filings and submissions
under the HSR Act as may be reasonably required to be made in connection with
this Agreement and the transactions contemplated hereby. Subject to Section
7.1 hereof, the Company will furnish to Parent and Parent Subsidiary, and
Parent and Parent Subsidiary will furnish to the Company, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. Subject to Section 7.1 hereof,
the Company will provide Parent and Parent Subsidiary, and Parent and Parent
Subsidiary will provide the Company, with copies of all correspondence, filings
or communications (or memoranda setting forth the substance thereof) between
such party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby.
Section 7.7 Employee Stock Options and Convertible Debentures.
The Company has not since December 1994 accelerated the vesting or
exercisability of or otherwise modified and, except as provided in this Section
7.7, from the date hereof the Company will not accelerate the vesting or
exercisability of or otherwise modify, the terms and conditions applicable to
the Employee Stock Options whether set forth in the governing stock option
plans of the Company (the "Company Stock Option Plans"), the option agreement
with the employee or otherwise. At the Effective Time, each of the Employee
Stock Options which is outstanding and unexercised both as of the date hereof
and at the Effective Time shall continue and be assumed by the Surviving
Corporation and any successor corporation and shares of Parent Common Stock in
such number as determined pursuant to the Exchange Ratio shall be substituted
for the Shares for which such options are or will be exercisable. In
accordance with the requirements of Section 14.07 of that certain Indenture
(the "Indenture") dated as of April 3, 1986 between
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the Company and the trustee thereof relating to $51,750,000 of 7 1/4%
Convertible Subordinated Debentures due 2011 (the "Debentures"), Company shall
cause to be filed with the Trustee at each office or agency maintained for the
purpose of conversion of the Debentures and shall cause to be mailed to the
holders of the Debentures a notice stating the date on which the Merger is
expected to become effective and the date, if any is to be fixed, as of which
it is expected that holders of Company Common Stock of record shall be entitled
to exchange their shares of Company Common Stock for Parent Common Stock. Such
notice shall be mailed at least 20 days prior to the date set forth in the
notice and shall otherwise comply with the requirements of Section 14.07 of the
Indenture.
Section 7.8 Public Announcements. Parent and Parent Subsidiary,
on the one hand, and the Company, on the other hand, agree that they will not
issue any press release or otherwise make any public statement or respond to
any press inquiry with respect to this Agreement or the transactions
contemplated hereby without the prior approval of the other party, except as
may be required by law.
Section 7.9 By-Law Indemnification Provision.
(a) Parent shall cause the Surviving Corporation and any
successor of the Surviving corporation to keep in effect in its By-Laws a
provision for a period of not less than five years from the Effective Time
which provides for mandatory indemnification of the past and present officers
and directors of the Company and each other person who has been afforded
indemnification by the Company as of the date of this Agreement to the fullest
extent permitted by the GCL.
(b) Parent shall cause to be maintained in effect for a
period ending not sooner than the fifth anniversary of the Effective Time
directors' and officers' liability insurance providing at least the same
coverage with respect to the Company's officers and directors and
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each other person who has been insured by the Company as of the date of this
Agreement as afforded under policies maintained by the Company with respect to
its directors and officers prior to the Effective Time which insurance if
available within the price Cap as described below shall provide coverage for
alleged wrongful acts or omissions occurring with respect to the transactions
contemplated by this Agreement and alleged wrongful acts or omissions occurring
prior to the Effective Time; provided, however, that Parent shall not be
required in order to maintain or procure such coverage to pay annual premiums
in excess of two hundred percent (200%) of the current annual premiums paid by
the Company for its existing coverage (the "Cap"); and provided, further, that
if such coverage cannot be obtained, or can be obtained only by paying annual
premiums in excess of the Cap, Parent shall only be required to obtain as much
coverage as can be obtained by paying annual premiums equal to the Cap.
Section 7.10 Expenses. Whether or not the Merger is consummated
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby and thereby shall be paid by the party
incurring such expenses except that the filing fees in connection with the HSR
Act filing and those expenses incurred in connection with printing the
Registration Statement and the related Proxy Statement, as well as the filing
fee relating to the Registration Statement will be shared equally by Parent and
the Company.
Section 7.11 Employment Agreements. Without limiting any other
contractual obligations of the Surviving Corporation, Parent expressly shall
cause the Surviving Corporation and any successor to comply with the provisions
of the employment agreements set forth at Schedule 7.11.
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Section 7.12 Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable 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 regulation to consummate and make effective the transactions
contemplated by this Agreement, including using all reasonable efforts to
obtain all necessary waivers, consents and approvals and to effect all
necessary registrations and filings. In case 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 and/or directors of Parent, Parent
Subsidiary and the Company shall take all such necessary action.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and no
action shall have been instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of this
transaction, which action shall have not been withdrawn or terminated.
(b) The Registration Statement shall have become
effective in accordance with the provisions of the Securities Act and shall
have provided for the Merger to be accounted for on a pooling of interest
basis.
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(c) This Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite vote of the
stockholders of each of the Company and Parent in accordance with applicable
law.
(d) No preliminary or permanent injunction or other order
by any federal or state court in the United States which prohibits the
consummation of the Merger shall have been issued and remain in effect.
(e) Each of the Company and Parent shall have received an
opinion from its financial advisors that the merger is fair from a financial
point of view to such entity and its shareholders and such opinion shall not be
withdrawn or modified on or before the Effective Time.
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger. In addition to the conditions on 8.1 hereof, the obligation of the
Company to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following additional conditions:
(a) Each of Parent and Parent Subsidiary shall have
performed in all material respects its obligations under this Agreement
required to be performed by it at or prior to the Effective Time and the
representations and warranties of Parent and Parent Subsidiary contained in
this Agreement shall have been true and correct in all material respects at the
time made.
(b) There shall have not have been a Parent Material
Adverse Change since the date of this Agreement. For the purposes of this
Agreement, a Parent Material Adverse Change shall mean an event, change or
development that individually or in the aggregate with other such events,
changes or developments materially and adversely affects the business,
financial condition or results of operations of the Parent and its subsidiaries
taken as a whole. Any adverse impact on the revenues, income, balance sheet,
or operations of the Parent or its subsidiaries caused by adverse changes in
orders, backlog, bidding qualifications, relations with
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resellers, integrators, OEM customers, cancellations and rescheduling of
orders, or the ability to retain agreed upon employees or attract new
employees, will be presumed, unless there is clear evidence to the contrary, to
have occurred as a result of the transaction contemplated by this Agreement or
the announcement thereof and in any such event will not be deemed to be an
event, change or development which is or will be material and adverse for
purposes of this definition.
(c) The Company shall have received an opinion of Locke
Purnell Rain Harrell counsel to the Company, in form and substance reasonably
satisfactory to the Company, dated as of the Effective Time, substantially to
the effect that the Merger will constitute a reorganization for federal income
tax purposes within the meaning of Section 368(a) of the Code and that
accordingly:
(i) No gain or loss will be recognized by the
stockholders of the Company who exchange their Shares solely for
Parent Shares pursuant to the Merger (except to the extent that cash
is received in lieu of a fractional share interest);
(ii) The aggregate basis of the Parent Shares
received by stockholders in the Merger will be the same as the
aggregate basis of the Shares surrendered in exchange therefor
(reduced by any amount allocable to a fractional share interest for
which cash is received); and
(iii) The holding period of the Parent Shares
received by stockholders in the Merger will include the period during
which the Shares surrendered in exchange therefor were held, provided
such Shares were held as a capital asset at the Effective Time.
In rendering such opinion counsel may require and rely upon
representations contained in certificates of officers of Parent, Parent
Subsidiary, Company and others as well
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<PAGE> 51
as certificates of shareholders who beneficially own five percent or more of
the votes or value of any class of stock of Parent, Parent Subsidiary, Company
and others.
(d) In accordance with the requirements of Section 14.06
of the Indenture, Parent and Parent Subsidiary shall have executed and
delivered to Trustee a supplemental indenture providing that the holder of each
Debenture then outstanding shall have the right to convert such Debenture into
the amount of Parent Common Stock and other securities and property (including
cash) receivable after the Effective Time by a holder of the number of shares
of Company Common Stock deliverable upon conversion of such Debenture
immediately prior to the Effective Time. Such supplemental indenture shall
provide for adjustments of the Conversion Price (as such term is defined in the
Indenture) which shall be as nearly equivalent as may be practicable to the
adjustments of the Conversion Price provided for in Article XIV of the
Indenture.
Section 8.3 Conditions to Obligations of Parent and Parent
Subsidiary to Effect the Merger. The obligations of Parent and Parent
Subsidiary to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following additional conditions:
(a) The Company shall have performed in all material
respects its obligations under this Agreement required to be performed by it at
or prior to the Effective Time and the representations and warranties of the
Company contained in this Agreement shall be true and correct in all material
respects at the time made. Based upon its review of the matters described in
that certain disclosure letter referencing this section dated the date of this
Agreement, the Parent shall not have determined in its reasonable judgment that
such matters are likely to have a material and adverse affect upon the
business, financial condition or results of operations of the Company and its
Subsidiaries taken as a whole.
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(b) There shall have not have been a Company Material
Adverse Change since the date of this Agreement. For the purposes of this
Agreement, a Company Material Adverse Change shall mean an event, change or
development that individually or in the aggregate with other such events,
changes or developments materially and adversely affects the business,
financial condition or results of operations of the Company and its
Subsidiaries taken as a whole. Any adverse impact on the revenues, income,
balance sheet, or operation of the Company caused by adverse changes in orders,
backlog, bidding qualifications, relations with resellers, integrators, OEM
customers, cancellations and rescheduling of orders, or the ability to retain
agreed upon employees or attract new employees, will be presumed, unless there
is clear evidence to the contrary, to have occurred as a result of the
transaction contemplated by this Agreement or the announcement thereof and in
any such event will not be deemed to be an event, change or development which
is or will be material and adverse for purposes of this definition.
(c) Parent shall have received an opinion of Vinson &
Elkins L.L.P.. in the form of substance reasonably satisfactory to Parent,
dated as of the Effective Time, substantially to the effect that the Merger
will constitute a reorganization for federal income tax purposes within the
meaning of Section 368(a) of the Code and that accordingly for federal income
tax purposes:
(i) No gain or loss will be recognized by the
stockholders of the Company who exchange their Shares solely for
Parent Shares pursuant to the Merger (except to the extent that cash
is received in lieu of a fractional share interest);
(ii) The aggregate basis of the Parent Shares
received by stockholders in the Merger will be the same as the
aggregate basis of the Shares surrendered in
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exchange therefor (reduced by any amount allocable to a fractional
share interest for which cash is received);
(iii) The holding period of the Parent Shares
received by stockholders in the Merger will include the period during
which the Shares surrendered in exchange therefor were held, provided
such Shares were held as a capital asset at the Effective Time; and
(iv) No gain or loss will be recognized by the
Company, Parent or Parent Subsidiary as a result of the Merger.
In rendering such opinion, Vinson & Elkins may require and rely upon
representations contained in certificates of officers of Parent, Parent
Subsidiary, Company and others as well as certificates of shareholders who
beneficially own five percent or more of the votes or value of any class of
stock of Parent, Parent Subsidiary, Company and others.
ARTICLE IX
TERMINATION
Section 9.1 Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the approval of this Agreement by the stockholders of the
Company or Parent, by the mutual consent of Parent and the Company.
Section 9.2 Termination by Either Parent or the Company. This
Agreement may be terminated and the Merger may be abandoned by action of the
Board of Directors of either Parent or the Company if (a) the Merger shall not
have been consummated by December 31, 1995, or (b) the approval of the
Company's stockholders required by Section 8.1(c) shall not have been obtained
at a meeting duly convened therefor or at any adjournment thereof, or (c)
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the approval of Parent's stockholders required by Section 8.1(c) shall not have
been obtained at a meeting duly convened therefor or at any adjournment
thereof, or (d) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement and such
order, decree, ruling or other action shall have become final and
non-appealable; provided, that the party seeking to terminate this Agreement
pursuant to this clause (d) shall have used all reasonable efforts to remove
such injunction, order or decree, and, provided, in the case of a termination
pursuant to clause (a) above, that the terminating party shall not have
breached in any material respect its obligations under this Agreement in any
manner that shall have proximately contributed to the occurrence of the failure
referred to in said clause.
Section 9.3 Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, before or after the adoption and approval by the Stockholders of the
Company if (i) the Board of Directors receives a written opinion from the
Company's financial advisors that an Acquisition Proposal is superior to the
Merger, and (ii) in the exercise of its good faith judgment as to its fiduciary
duties to its stockholders imposed by law, the Board of Directors of the
Company determines, after receipt of a written opinion of Locke Purnell Rain &
Harrell, that such termination is required by its fiduciary duties by reason
of an Acquisition Proposal being made.
Section 9.4 Effect of Termination and Abandonment.
(a) If the Company terminates this Agreement pursuant to
Section 9.3 or either Parent or the Company terminates this Agreement pursuant
to Section 9.2(b) and prior to the meeting of the Company's stockholders a
competing Acquisition Proposal was received by the
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Company then, upon such termination, the Company (or the successor thereto)
shall pay Parent a fee (the "Alternative Proposal Fee") in cash of $5,500,000.
(b) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 9, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 9.4 and Section 7.1 and except for the provisions of Sections
7.10 and 10.2. Moreover, in the event of termination of this Agreement
pursuant to Section 9.2 or 9.3, nothing herein shall prejudice the ability of
the non- breaching party from seeking damages from any other party for any
breach of this Agreement, including without limitation, attorneys' fees and the
right to pursue any remedy at law or in equity; and provided further, that in
the event Parent has received the Alternative Proposal Fee, it shall not (i)
assert or pursue in any manner, directly or indirectly, any claim or cause of
action based in whole or in part upon alleged tortious or other interference
with rights under this Agreement against any entity or person submitting an
Acquisition Proposal or (ii) assert or pursue in any manner, directly or
indirectly, any claim or cause of action against the Company or any of its
officers or directors based in whole or in part upon its or their receipt,
consideration, recommendation, or approval of an Acquisition Proposal of the
company's exercise of its right of termination under Section 9.3.
Notwithstanding the foregoing, in the event the Parent is required to file suit
to seek such Alternative Proposal Fee, and it ultimately succeeds on the
merits, it shall be entitled to all expenses, including attorneys' fees, which
it has incurred in enforcing its rights hereunder.
Section 9.5 Extension; Waiver. At any time prior to the
effective time, any party hereto, by action taken by its Board of Directors,
may, to the extent legally allowed, (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
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herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Survival of Representations, Warranties and
Agreements. No representations, warranties or agreements contained herein
shall survive beyond the Effective Time except that the agreements contained in
the Confidentiality Letter between the Company and Parent dated April 29, 1995
and executed by Parent on May 2, 1995, and the agreements contained in Sections
3.1, 3.2, 3.3, 3.4, 3.5, 3.6, 7.8, 7.9, 7.10, 7.12 and 10.2 hereof shall
survive beyond the Effective Time.
Section 10.2 Brokers. The Company represents and warrants that,
(a) except for its financial advisors, Bear, Stearns & Co. Inc., no broker,
finder or financial advisor is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the Company and
(b) the Company's fee arrangements with Bear, Stearns & Co. Inc., have been
disclosed to Parent. Parent represents and warrants that, except for its
financial advisor, Merrill Lynch & Co., (c) no broker, finder or financial
advisor is entitled to any brokerage, finder's or other fee or commission in
connection with the Merger or the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent or Parent Subsidiary and
(d) Parent's fee arrangements with Merrill Lynch & Co., have been disclosed to
the Company.
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Section 10.3 Notices. All notices, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by telex or telegram or mailed by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Parent or Parent Subsidiary, to:
Grahame N. Clark, Jr.
BancTec, Inc.
4435 Spring Valley Road
Dallas, Texas 75244
with a copy to: Jim A. Watson
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201-2975
(b) if to the Company, to:
Robert A. Vanourek
Recognition International Inc.
2701 E. Grauwyler Road
Irving, Texas 75061
with a copy to:
Don M. Glendenning.
Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, TX 75201
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Section 10.4 Descriptive Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.5 Entire Agreement; Assignment. This Agreement
(including the Exhibits, Schedules and other documents and instruments referred
to herein) (a) constitutes the entire agreement and supersedes all other prior
agreements and understandings, both written and oral among the parties or any
of them, with respect to the subject matter hereof; (b) is not intended to
confer upon any other person any rights or remedies hereunder; and (c) shall
not be assigned by operation of law or otherwise, provided that Parent or
Parent Subsidiary may assign its rights and obligations hereunder to a direct
or indirect subsidiary of Parent, but no such assignment shall relieve Parent
or Parent Subsidiary, as the case may be, of its obligations hereunder.
Section 10.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the provisions thereof relating to conflicts of law.
Section 10.7 Specific Performance. The parties hereto agree that
irreparable damages would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 10.8 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed to be an original but all
of which shall constitute one and the same agreement.
IN WITNESS WHEREFORE, each of Parent, Parent Subsidiary and the
Company has caused this Agreement to be executed on its behalf by its officers
thereunto duly authorized, all as of the date first above written.
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BancTec,Inc.
By: /s/ Grahame N. Clark, Jr.
------------------------------------------------
Name: Grahame N. Clark, Jr.
Title: President and Chief Executive Officer
BTec Merger Subsidiary, Inc.
By: /s/ Grahame N. Clark, Jr.
------------------------------------------------
Name: Grahame N. Clark, Jr.
Title: President and Chief Executive Officer
Recognition International Inc.
By: /s/ Robert A. Vanourek
------------------------------------------------
Name: Robert A. Vanourek
Title: President and Chief Executive Officer
55
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LIST OF EXHIBITS AND SCHEDULES TO THE AGREEMENT
AND PLAN OF MERGER BY AND AMONG BANCTEC, INC.,
BTEC MERGER SUBSIDIARY, INC. AND RECOGNITION INTERNATIONAL INC.
DATED AS OF MAY 19, 1995
Exhibit A Form of Affiliate Letter
Schedule 4.3 Subsidiaries of Parent
Schedule 4.5(b) Consents and Approvals; No Violations
Schedule 4.7 Absence of Certain Changes or Events
Schedule 4.12 Taxes
Schedule 4.13(i) Title to Properties; Encumbrances
Schedule 4.14 Trademarks, Patents, and Copyrights
Schedule 4.17 Employee Benefit Plans
Schedule 4.19 Environmental Matters
Schedule 5.3 Company Subsidiaries
Schedule 5.5 Consents and Approvals; No Violations
Schedule 5.7 Absence of Certain Changes or Events
Schedule 5.8 Litigation
Schedule 5.11 Taxes
Schedule 5.12 Employee Benefit Plans
Schedule 5.12(g) Claims Pending
Schedule 5.13 Title to Properties; Encumbrances
Schedule 5.17 Trademarks, Patents and Copyrights
Schedule 5.18 Labor Matters
Schedule 5.19 Environmental Matters
Schedule 7.11 Certain Employment Agreements
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<PAGE> 1
EXHIBIT 99.1
Contact: Larry H. Lattig John E. Moss
Recognition BancTec
(214) 579-6314 (214) 450-7753
BANCTEC AND RECOGNITION TO MERGE
Dallas, Texas, May 19, 1995
BancTec, Inc. (BancTec) and Recognition Inc. (Recognition) jointly announced
today that their respective boards of directors have unanimously approved a
definitive agreement to merge the two corporations through an exchange of stock
in a transaction valued at approximately $180 million. Under the terms of the
agreement, Recognition shareholders will receive .59 share of BancTec stock for
each share of Recognition stock owned. Combined, the Companies will have
annual revenues of approximately $500 million and at the time of closing it is
expected that a restructuring charge of approximately $65 million will be
incurred to accommodate the expected costs of consolidating the operations of
both Companies.
The agreement is subject to regulatory approval as well as shareholder approval
at both firms and is expected to be completed in early Fall of this year. The
transaction is expected to be tax free to both companies' shareholders and to
be accounted for on a "pooling of interest" basis.
<PAGE> 2
The combined company will develop, manufacture and market integrated document
processing systems; imaging, workflow and applications software, network
services; and customer maintenance and support services worldwide through
direct sales, OEM customers, and channel partners.
Grahame N. Clark, Jr., chairman and chief executive officer of BancTec, who
will serve as chairman and chief executive officer of the combined company said
of the planned merger, "There are significant savings that can be achieved by
this combination and those savings should enhance our ability to create new
products and better serve our customers in this dynamic market."
Robert Vanourek, president and chief executive officer of Recognition said,
"The fit between these companies is excellent. For example, Recognition has
established operations in Japan and Canada and BancTec has a large United
Kingdom operation. The combined company can offer customers a comprehensive
line of document processing systems, coupled with award winning imaging,
workflow, and applications software."
Both companies are headquartered in Dallas. In fiscal 1995 BancTec will report
revenues of approximately $295 million and employs approximately 2500 people
while Recognition had fiscal 1994 revenues of $219 million and employs 1500
people. Combined, the companies will have over 5,000 customers -- many of whom
are among the largest document processing organizations in the world.
<PAGE> 3
BancTec is being advised by Merrill Lynch & Co. Inc., and Recognition is being
advised by Bear Stearns & Co. Inc.
