SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. N/A )
Filed by the Registrant |X|
Filed by a Party other than the Registrant
Check the appropriate box:
|X| Preliminary Proxy Statement Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Computer Petroleum Corporation
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|_| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|X| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock
(2) Aggregate number of securities to which transaction applies:
3,082,035
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined): $3.8935 Transaction price is
fixed at $12,000,000.00. See (4) below.
(4) Proposed maximum aggregate value of transaction: $12,000,000.00
(5) Total fee paid: $2,400.00
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
COMPUTER PETROLEUM CORPORATION
WORLD TRADE CENTER
30 EAST 7TH STREET, SUITE S10
ST. PAUL, MINNESOTA 55101
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To The Stockholders of
COMPUTER PETROLEUM CORPORATION:
A special meeting of the stockholders of Computer Petroleum Corporation
will be held at the corporate offices of Computer Petroleum Corporation (the
"Company") at World Trade Center, 30 East Seventh Street, Suite 510, St. Paul,
Minnesota 55101, on Tuesday, August 20, 1996, at 9:00 a.m., for the following
purposes:
1. To consider and vote upon approval of an Agreement and Plan of
Merger, dated June 21, 1996, among the Company, United Communications Group
Limited Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition
Corp., a Maryland corporation and a wholly-owned subsidiary of UCG, providing
for the merger of the Company with and into UCG Acquisition Corp., pursuant to
which each outstanding share of the Company's common stock (other than shares as
to which the holders have exercised their dissenter's rights under Minnesota
law) will be converted into the right to receive approximately $3.89 in cash
without interest, all as more fully described in the accompanying Proxy
Statement and the Agreement and Plan of Merger, a copy of which is attached as
Exhibit I to the Proxy Statement.
2. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
THE BOARD OF DIRECTORS OF THE COMPANY BELIEVES THAT THE AGREEMENT AND
PLAN OF MERGER IS IN THE BEST INTERESTS OF THE STOCKHOLDERS OF THE COMPANY AND
RECOMMENDS A VOTE FOR THE APPROVAL OF THE AGREEMENT AND PLAN OF MERGER.
Only stockholders of record at the close of business on July 8, 1996
will be entitled to notice of and to vote at the meeting or any adjournment
thereof.
Pursuant to Minnesota law, each shareholder has the right to exercise
dissenter's rights. An explanation of dissenters' rights is included in the
Proxy Statement, together with a copy of Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act, as amended.
YOUR VOTE IS IMPORTANT. SINCE ADOPTION OF THE AGREEMENT AND PLAN OF
MERGER REQUIRES THE AFFIRMATIVE VOTE OF A MAJORITY OF THE COMPANY'S OUTSTANDING
SHARES OF COMMON STOCK, A FAILURE TO VOTE, IN PERSON OR BY PROXY, WILL HAVE THE
SAME EFFECT AS A NEGATIVE VOTE. PLEASE PROMPTLY COMPLETE, SIGN AND RETURN THE
ACCOMPANYING PROXY CARD IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE, WHETHER OR NOT
YOU INTEND TO BE PRESENT AT THE MEETING. YOU MAY NEVERTHELESS VOTE IN PERSON IF
YOU DO ATTEND THE MEETING. NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Charles G. Schiefelbein
Charles G. Schiefelbein
Chairman of the Board
St. Paul, Minnesota
July 23, 1996
COMPUTER PETROLEUM CORPORATION
WORLD TRADE CENTER
30 EAST SEVENTH STREET, SUITE 510
ST. PAUL, MINNESOTA S5I01
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 20, 1996
This Proxy Statement is being furnished to the stockholders of Computer
Petroleum Corporation, a Minnesota corporation (the "Company"), in connection
with the solicitation on behalf of the Company's Board of Directors of proxies
to be voted at a Special Meeting of Stockholders to be held at the Company's
offices at World Trade Center, 30 East Seventh Street, Suite 510, St. Paul,
Minnesota 55101, on Tuesday, August 20, 1996, at 9:00 a.m., and any adjournment
thereof (the "Special Meeting"). This Proxy Statement, the Notice and the
accompanying proxy card and related materials are first being mailed to the
Company's stockholders on or about July 23, 1996.
At the Special Meeting, stockholders will be asked to consider and vote
upon the approval of an Agreement and Plan of Merger, dated June 21, 1996 (the
"Merger Agreement"), among the Company, United Communications Group Limited
Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition Corp., a
Maryland corporation and a wholly-owned subsidiary of UCG ("UCG Acquisition"). A
copy of the Merger Agreement is attached as Exhibit I to this Proxy Statement.
Under the terms of the Merger Agreement, (i) the Company will be merged with and
into UCG Acquisition Corp. (the "Merger"), and (ii) each outstanding share of
the Company's Common Stock, $.01 par value ("Common Stock"), other than shares
as to which the holders have exercised their dissenter's rights in accordance
with Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act,
as amended, will be converted into the right to receive approximately $3.89 in
cash, without interest. If the Merger is not consummated for any reason, the
Board of Directors expects to continue the business of the Company as described
under "BUSINESS OF THE COMPANY. "
Pursuant to Minnesota law, each shareholder has the right to exercise
dissenter's rights. In order for a shareholder to exercise dissenter's rights,
the shareholder must not vote for the proposal to approve the Merger and must
comply with the applicable requirements of Minnesota law. An explanation of
dissenter's rights is included in this Proxy Statement, and a copy of Sections
302A.471 and 302A.473 of the Minnesota Business Corporations Act, is included as
III to this Proxy Statement.
Copies of the Company's Annual Report on Form 10-KSB for the year ended
January 31, 1996 and its Quarterly Report on Form 10-QSB for the quarter ended
April 30, 1996, are being furnished herewith to all stockholders.
PROXY STATEMENT
TABLE OF CONTENTS
Page
----
SUMMARY OF PROXY STATEMENT 1
GENERAL INFORMATION 4
THE MERGER 5
Background of the Merger 5
Recommendation of the Board of Directors 6
Opinion of Investment Banker 7
Agreement and Plan of Merger 9
Interests of Certain Persons in the Merger 12
Financing of the Merger 13
Federal Income Tax Consequences 13
Rights of Dissenting Stockholders 14
BUSINESS OF UNITED COMMUNICATIONS GROUP LIMITED PARTNERSHIP 16
BUSINESS OF THE COMPANY 17
MARKET PRICES OF COMMON STOCK 17
SELECTED FINANCIAL DATA 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 19
INDEPENDENT PUBLIC ACCOUNTANTS 20
OTHER MATTERS 20
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING 20
DOCUMENTS INCORPORATED BY REFERENCE 21
EXHIBITS:
I. Agreement and Plan of Merger, excluding Exhibits and Schedules
II. Opinion of Greene Holcomb & Lannin LLC
III. Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act
SUMMARY OF PROXY STATEMENT
THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED IN
THIS PROXY STATEMENT. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION CONTAINED ELSEWHERE IN THIS PROXY STATEMENT AND THE
EXHIBITS ATTACHED HERETO. STOCKHOLDERS ARE URGED TO READ THE ENTIRE PROXY
STATEMENT, INCLUDING THE EXHIBITS AND THE OTHER DOCUMENTS ACCOMPANYING THE PROXY
STATEMENT.
THE SPECIAL MEETING
The Special Meeting of the Stockholders (the "Special Meeting") of
Computer Petroleum Corporation, a Minnesota corporation (the "Company"), will be
held at the Company's offices at World Trade Center, 30 East Seventh Street,
Suite 510, St. Paul, Minnesota 55101, on Tuesday, August 20, 1996, at 9:00 a.m.
At the Special Meeting, stockholders will be asked (i) to consider and vote upon
approval of an Agreement and Plan of Merger, dated June 21, 1996 (the "Merger
Agreement"), among the Company, United Communications Group Limited Partnership,
a Maryland limited partnership ("UCG") and UCG Acquisition Corp., a Maryland
corporation and a wholly-owned subsidiary of UCG ("UCG Acquisition"), and (ii)
to transact such other business as may properly come before the Special Meeting,
or any adjournment thereof. The affirmative vote of the holders of a majority of
the outstanding shares of the Company's Common Stock entitled to vote is
required for approval of the Merger Agreement. See "GENERAL INFORMATION."
THE MERGER
Under the terms of the Merger Agreement, the Company will be merged with
and into UCG Acquisition Corp. (the "Merger"), and each outstanding share of
Common Stock of the Company (other than shares as to which the holders shall
have exercised their dissenter's rights under Minnesota law) will be converted
into the right to receive approximately $3.89 in cash, without interest.
Thereafter, the separate existence of the Company will cease. A copy of the
Merger Agreement is attached as Exhibit I to this Proxy Statement. See "THE
MERGER - Agreement and Plan of Merger."
RECOMMENDATION OF THE BOARD OF DIRECTORS OF THE COMPANY
The Board of Directors of the Company believes that the Merger is in
the best interests of, and is fair to, the Company's stockholders. The Board has
unanimously approved the Merger Agreement and unanimously recommends the
approval of the Merger Agreement by the stockholders of the Company. See "THE
MERGER - Recommendation of the Board of Directors."
OPINION OF INVESTMENT BANKER
Greene Holcomb & Larmin LLC, an investment banking firm, has delivered a
written opinion to the Board of Directors of the Company, based upon the review
and analysis described therein and subject to the assumptions set forth therein,
to the effect that the consideration to be received by the stockholders as a
result of the Merger is fair from a financial point of view. Stockholders are
urged to read the opinion, which is set forth as Exhibit II to this Proxy
Statement. See "THE MERGER - Opinion of Investment Banker."
EFFECTIVE TIME OF THE MERGER
The Merger shall become effective at such time as the Certificate of
Merger is duly filed with both the Secretary of State of the State of Minnesota
and the Secretary of State of the State of Maryland, or such later date set
forth in the Certificate of Merger (the "Effective Time"). See "THE MERGER -
Agreement and Plan of Merger."
CONDITIONS TO CONSUMMATION OF THE MERGER; TERMINATION; CERTAIN COVENANTS
Under the Merger Agreement, the respective obligations of the Company
and UCG to consummate the Merger are subject to satisfaction, at or before the
Effective Time, of certain conditions, including approval by the Company's
stockholders. The Merger Agreement may also be terminated for a number of
reasons, including the failure by the parties to complete the Merger by August
31, 1996. Pending completion of the Merger, the Company has agreed to conduct
its business in the ordinary course and to provide reasonable access to its
properties, books and records to representatives of UCG. See "THE MERGER -
Agreement and Plan of Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER
The Company's directors and executive officers beneficially own, in the
aggregate, 863,940 shares (29.7 percent) of the Company's outstanding Common
Stock and will receive an aggregate of approximately $3,360,727 in the Merger
for such shares. Executive officers and other employees may enter into new
employment agreements with UCG Acquisition. The Company understands that the
assets of the Payne & Associates division of the Company are being sold by UCG
to a third party upon the Closing of the Merger, and that the Company's Chief
Executive Officer and Chief Financial Officer have entered into employment
agreements with this third party. See "THE MERGER - Interests of Certain Persons
in the Merger."
FINANCING OF THE MERGER
The total funds required for the financing of the Merger will be
$12,000,000 plus transaction costs. UCG intends to finance the Merger either
with existing funds or with borrowed funds. See "THE MERGER - Financing of the
Merger."
FEDERAL INCOME TAX CONSEQUENCES
If the Merger is consummated, the receipt by stockholders of
approximately $3.89 per share in cash as a result of the Merger will be a
taxable transaction for federal income tax purposes, and each stockholder will
recognize gain or loss equal to the difference between such stockholder's basis
in the Common Stock of the Company surrendered and the amount of cash received.
Each stockholder is urged to consult a tax advisor with respect to the tax
consequences of the Merger. See "THE MERGER - Federal Income Tax Consequences."
RIGHTS OF DISSENTING STOCKHOLDERS
Stockholders of the Company who do not wish to accept the approximately
$3.89 per share in cash to be paid under the terms of the Merger Agreement may
dissent from the Merger and elect to have a judicial determination of the fair
value of their shares of Common Stock at the Effective Time of the Merger
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) by complying with the requirements of Sections
302A.471 and 302A.473 of the Minnesota Business Corporation Act, as amended, the
full text of which is attached as Exhibit III to this Proxy Statement. See "THE
MERGER - Rights of Dissenting Stockholders."
BUSINESS OF UCG
UCG is a publisher of over 70 print publications, online services and
ancillary products and sponsors trade seminars and conferences for the
energy/oil, healthcare, government, defense/military, telecommunications,
technology, mortgage banking and computer industries. See "BUSINESS OF UCG."
BUSINESS OF THE COMPANY
The Company is engaged in the business of providing information and
customized news, market analysis and commentary to the petroleum and
transportation markets through an electronic information network. See "BUSINESS
OF THE COMPANY."
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded on NASDAQ Small Cap Market.
(Symbol: CPCO). The bid price of the Common Stock has ranged from $.75 per share
to $2.875 per share between February 1, 1994, and July 8, 1996. On June 20,
1996, the last trading day prior to the public announcement of the Merger, the
high and low bid prices for the Common Stock as reported by NASDAQ were $3.00
per share and $2.50 per share, respectively. See "MARKET PRICES OF COMMON
STOCK."
GENERAL INFORMATION
At the Special Meeting, stockholders will be asked to consider and vote
upon the approval of an Agreement and Plan of Merger, dated June 21, 1996 (the
"Merger Agreement"), between the Company, United Communications Group Limited
Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition Corp., a
Maryland corporation and a wholly-owned subsidiary of UCG ("UCG Acquisition"). A
copy of the Merger Agreement is attached as Exhibit I to this Proxy Statement.
Under the terms of the Merger Agreement, (i) the Company will be merged with and
into UCG Acquisition Corp. (the "Merger"), (ii) each outstanding share of the
Company's Common Stock, $.01 par value ("Common Stock"), other than shares as to
which the holders have exercised their dissenter's rights in accordance with
Sections 302A.471 and 302A.473 of the Minnesota Business Corporation Act, as
amended, will be converted into the right to receive approximately $3.89 in
cash, without interest.
UCG has agreed to pay $12,000,000 (the "Merger Consideration") for all
of the outstanding common stock of the Company, including shares issued to
officers and employees of the Company upon conversion of their Incentive Stock
Options to Common Stock immediately before the Closing. Since the number of
shares to be issued upon such conversions could change due to employee
departures before the closing, and the consequent cancellation or exercise of
such options, it is not possible to determine the precise dollar amount payable
per share of the Company's Common Stock outstanding. However, it is very
unlikely that any variation would be more than two or three cents per share
higher or lower than the estimated $3.89 per share.
The Board of Directors has fixed the close of business on July 8, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the Special Meeting. As of such date, there were 2,904,009 shares
of Common Stock outstanding and entitled to vote, which were held of record by
approximately 63 stockholders. Each share entitles the holder thereof to one
vote, exercisable in person or by properly executed proxy, on each matter to be
considered at the Special Meeting. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
is necessary to constitute a quorum at the Special Meeting. The affirmative vote
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote is required for the approval of the Merger Agreement and the
transactions contemplated thereby. The Common Stock does not have cumulative
voting rights.
All shares represented at the Special Meeting by proxies in the form
accompanying this Proxy Statement which are received prior to or at the Special
Meeting will be voted in accordance with the instructions thereon, provided the
proxies are properly signed and dated. If no instructions are indicated thereon,
the proxies will be voted FOR the approval of the Merger Agreement. A failure to
vote on the Merger Agreement, in person or by proxy, will have the same effect
as a negative vote.
Abstentions and broker non-votes will have the effect of a vote against
the proposal to approve the Merger Agreement. With respect to abstentions, the
shares of Common Stock are considered present at the Special Meeting. They are
not, however, affirmative votes for the matter and, therefore, they will have
the same effect as votes against the matter. With respect to broker non-votes,
the shares of Common Stock are not considered present at the meeting as to which
the broker withheld authority. Consequently, broker non-votes are not counted.
The Board of Directors knows of no other matters which are expected to
come before the Special Meeting. If any other matters are presented at the
Special Meeting, the persons named in the proxies will have discretion to vote
thereon in accordance with their judgment.
Execution of a proxy will not prevent a stockholder from attending the
Special Meeting or from revoking his or her proxy and voting in person. Any
stockholder giving a proxy may revoke it at any time before it is voted by
giving the Secretary of the Company a written notice of revocation bearing a
later date than the proxy, by submitting a properly executed, later-dated proxy
or by voting in person at the Special Meeting. Attendance at the Special Meeting
will not, in and of itself, constitute a revocation of a proxy. Any written
notice revoking a proxy should be sent to Computer Petroleum Corporation, World
Trade Center, 30 East Seventh Street, Suite 510, St. Paul, Minnesota 55101,
Attention: Secretary.
The cost of solicitation of proxies pursuant to this Proxy Statement
will be borne by the Company. In addition to solicitation by use of the mails,
proxies may also be solicited by certain directors, officers and employees of
the Company in person or by telephone or telegram. Such persons will receive no
additional compensation for such services. The Company will reimburse brokerage
firms, banks and certain other institutions holding stock in their names or
those of their nominees on behalf of other persons for reasonable out-of-pocket
expenses in forwarding proxies and proxy material to such persons.
THE MERGER
BACKGROUND OF THE MERGER
From time to time over the last several years, various persons have
contacted management of the Company regarding the possibility of acquiring or
merging with the Company. None of these inquiries resulted in a definitive
agreement. However, for a number of reasons management came to believe that an
acquisition of the Company could be in the best interests of the Company's
stockholders. Prior to being approached in February, 1996 concerning a possible
acquisition of the Company, management believed that the Company's Common Stock
was undervalued in the public market. In addition, because the average daily
trading volume for the Common Stock was low historically, stockholders could not
sell a significant number of shares without adversely affecting the price. In
the opinion of management, this caused a serious lack of liquidity for the
stockholders. For additional reasons why the Company entered into the Merger
Agreement, see "Recommendations of the Board of Directors. "
In March, 1996 Greene Holcomb & Lannin LLC ("GH&L"), investment bankers,
was retained by the Company to assist the Board of Directors in evaluating
options for maximizing the value of the Company for stockholders, including the
possible sale of the Company. The Company issued a press release describing this
step. In exploring the sale alternative, GH&L reviewed over 100 potential
purchasers of the Company and, with the assistance of the Board of Directors,
selected 25 from that list to be contacted. Seventeen of that number executed
confidentiality agreements and were provided a memorandum describing the
Company. Prospective purchasers were asked to submit initial indications of
interest by April 17, 1996. Eight responded that they had an interest in
acquiring the Company. Four firms conducted due diligence visits to the Company
in May, 1996. At a special meeting of the Company's directors on May 31, the
discussions with interested acquirors were reviewed and evaluated. Consideration
was given to selling certain divisions, especially the software services
division, separately. Tax and securities law issues relating to the structuring
of the transaction, including the value of the Company's net operating loss
carry-forward, were reviewed by the Board of Directors and legal counsel. At
this time a Special Committee of the Board, comprised of non-management
directors, was appointed with authority to handle all matters relating to a
possible sale of the Company. Two firms presented written offers to acquire the
Company on June 4, 1996 and an oral indication of intent was submitted by a
third firm. Two other firms submitted offers to acquire the Company's software
services division, Payne & Associates. One of these firms intended to employ
certain members of the Company's management in operation of this division.
On June 13, 1996 the Special Committee of the Board met with its legal
counsel and representatives of GH&L to review the bidding process and evaluate
pending offers, two of which had been revised significantly upwards. The Special
Committee concluded that the best approach would be to sell the entire Company
to one purchaser, and that the $12 million cash offer from UCG, which the
Committee believed had the financial capability and strategic motivation to
complete the transaction, was higher than any other offer received and therefore
was superior to the other offer from a financial point of view for the Company's
stockholders. The Committee also concluded that, in light of the process that
has been followed, it was highly unlikely that any other bidder would now make a
superior offer. The Special Committee determined that UCG would be allowed one
week to complete its due diligence investigation and negotiate a definitive
agreement.
On June 20, 1996 the Special Committee met again with its legal counsel
and GH&L to review the draft of the Merger Agreement in detail. GH&L presented
its opinion that the proposed transaction was fair to the Company's
stockholders. The Committee approved the fairness opinion and the draft of the
Merger Agreement, subject to negotiation of certain matters. On June 21, 1996
the Committee approved the final draft of the Merger Agreement, which was then
signed by all parties. Later that afternoon, the Company made a public
announcement of its intent to merge into UCG Acquisition.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has unanimously approved the
Merger Agreement and believes that the Merger is in the best interests of the
stockholders of the Company. The Board of Directors unanimously recommends to
the stockholders that they vote FOR approval of the Merger Agreement. The Board
of Directors believes that the Company's stockholders will benefit from the
Merger.
In reaching these conclusions, the Board of Directors considered many
factors including, but not limited to, the following:
1. The terms of the Merger Agreement, including the approximately $3.89
in cash to be paid to the Company's stockholders for each share of the Company's
Common Stock.
2. The opinion of Greene Holcomb & Lannin LLC that the approximately
$3.89 per share in cash to be paid to the stockholders is fair to the
stockholders from a financial point of view.
3. The ability of UCG to consummate the Merger promptly and the
availability of sufficient financing to do so.
4. The expressions of interest to acquire the Company made by other
companies, all of which the Board believes were inferior to UCG's offer.
5. The historical and recent market prices of the Common Stock and the
relative lack of liquidity for the Company's stockholders. The Common Stock has
traded within a fairly narrow range over the past several years, at a price
significantly lower than that being offered by UCG, and the trading volume has
been low, resulting in limited liquidity for shareholders.
6. The operating results of the Company over the past several years.
OPINION OF INVESTMENT BANKER
At the June 20, 1996 meeting of the Company's Special Committee of the
Board of Directors, Greene Holcomb & Lannin LLC ("GH&L") delivered its opinion
in writing to the effect that, as of such date, the transaction contemplated by
the Merger Agreement is fair to the Company's shareholders, from a financial
point of view. See Exhibit II.
GH&L is an investment banking firm with special expertise in mergers and
acquisitions and, among other things, valuing businesses and their securities.
The Board selected GH&L because of its principals' experience and expertise in
performing valuation analyses. GH&L received a non-contingent fee of $30,000,
plus reimbursement of out-of-pocket expenses, in connection with its fairness
opinion analysis. GH&L does not beneficially own any interest in the Company.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The
following is a brief summary and general description of the valuation
methodologies followed by GH&L. The summary does not purport to be a complete
statement of the analyses and procedures applied, the judgments made or the
conclusion reached by GH&L. GH&L believes, and so advised the Board, that its
analyses must be considered as a whole, and that selecting portions of its
analyses and the factors considered by it, without considering all factors and
analyses, could create an incomplete view of the process underlying its analyses
and opinion.
In connection with its opinion, GH&L has reviewed, among other things,
(i) the Company's annual reports to shareholders and Form 10-KSB for the three
fiscal years ended January 31, 1994, 1995 and 1996, and the 10-QSB for the
quarterly period ended April 30, 1996; and (ii) the Company's internal
projections for fiscal 1997-2000. In addition, GH&L has interviewed certain of
the directors, senior management and shareholders of the Company regarding the
operations, financial condition, future prospects and projected operations and
performance of the Company and has inspected the Company's headquarters in St.
Paul, Minnesota and its facility in Peoria, IL. GH&L has also reviewed the
reported prices and trading activity of the Company's common stock, compared
certain financial and stock market information for the Company with that of
certain other similar companies with publicly-traded securities, reviewed
certain recent business combinations it deemed relevant, reviewed a summary of
discussions with other parties potentially interested in acquiring the Company,
reviewed a draft of the Merger Agreement, and performed such other studies and
analyses as it considered appropriate.
As a basis for its fairness analysis, GH&L applied the following
valuation methodologies in determining appropriate value for the Company.
Selected Comparable Public Company Analysis. GH&L reviewed selected
financial, operating and stock market information for the Company in comparison
with corresponding information of selected comparable public companies. The
selected comparable public companies in the computer information services
industry were: American Business Information, Inc., Avert, Inc., Compuflight,
Inc., Data Transmission Network Corporation, Desktop Data, Inc., Euroamerican
Group, Inc., Individual, Inc., Information Resources, Inc., PC Quote, Inc.,
Quick Response Services, Seitel, Inc., and Telescan, Inc. (collectively referred
to as the "Comparative Public Companies"). The purpose of these analyses was to
ascertain how the Company compared to its respective peers in relation to
certain financial indicators. The multiples and ratios for each of the selected
companies were based on the most recent publicly available information and
selected analyst's earnings estimates, adjusted to correlate with the Company's
respective fiscal year ending dates.
Premium Analysis. GH&L reviewed 14 transactions announced and completed
between June 1, 1995 and June 18, 1996 within industries similar to the
Company's. The purpose of this review was to compare the premium to be paid by
UCG over the Company's last trade price of $2.63 on June 14, five trading days
prior to the announcement of the offer (48.7%) with the average premium paid for
computer software, supplies and service companies during 1995 (43.3%).
Discounted Cash Flow Analysis. GH&L also performed a discounted cash
flow (DCF) analysis, relying on certain information, including financial
projections, provided by the Company to estimate the present value of a stream
of projected free cash flows, and including a terminal value that estimates
ongoing value of the Company. Discount rates utilized ranged from 17.5% to 22.5%
and terminal value multiples ranged from 8X to 12X.
Historical Stock Trading Analysis. GH&L reviewed the trading prices and
volumes for the Company's common stock.
"Special Meeting") of Computer Petroleum Corporation, a Minnesota corporation
(the "Company"), will be held at the Company's offices at World Trade Center, 30
East Seventh Street, Suite 510, St. Paul, Minnesota 55101, on a terminal value
that estimates ongoing value of the Company. Discount rates utilized ranged from
17.5% to 22.5% and terminal value multiples ranged from 8X to 12X.
Historical Stock Trading Analysis. GH&L reviewed the trading prices and
volumes for the Company's common stock.
Comparable Transaction Analysis. GH&L performed analyses of certain
recent transactions in the information retrieval services and other related
industries including but not limited to, transactions involving Information
Services, Disclosure, Inc., Datis Corp., DATEQ Information Network, Occupational
Health Services, AdvaCare, Inc., IBAX Healthcare Systems, Inc. and BRS Software
Products. With respect to each transaction, GH&L compared the final purchase
price with the trading price of the target company's common stock over varying
time periods prior to announcement of the transaction. GH&L also reviewed
certain transaction multiples determined based upon the ratio of total purchase
price over representative levels of sales, earnings and cash flow, and book
value.
These analyses were prepared solely for the purposes of GH&L providing
its opinion and are not appraisals or representations of prices at which
businesses or securities may actually be sold. Analyses based on forecasts of
future results are not necessarily indicative of actual future results, which
may be more or less favorable than suggested by such analyses. These analyses
are based upon numerous factors and events that are beyond the control of the
parties and their respective advisors. Hence, none of the Company, GH&L, or any
other person, assumes responsibility if future results are materially different
from those forecast.
GH&L has not independently verified the accuracy and completeness of
the information supplied to it with respect to the Company and does not assume
any responsibility with respect to it. GH&L has not made any independent
appraisal of any of the properties or assets of the Company. GH&L's opinion is
necessarily based on business, economic, market and other conditions as they
exist and can be evaluated by it at the date of its opinion.
AGREEMENT AND PLAN OF MERGER
General. The Merger Agreement provides that, subject to the approval of
the Merger Agreement by the stockholders of the Company and the satisfaction or
waiver of certain other conditions, the Company will be merged with and into UCG
Acquisition. and the separate existence of the Company will cease. At the
effective time of the Merger, each share of Common Stock then issued and
outstanding (other than shares held by stockholders exercising their dissenter's
rights) will, by virtue of the Merger and without any action on the part of the
holders of such shares, be converted into the right to receive approximately
$3.89 in cash, without interest. Stockholders who do not vote in favor of the
Merger Agreement and who otherwise comply with the provisions of Sections
302A.471 and 302A.473 of the Minnesota Business Corporation Act have the right
to seek a judicial determination of the fair value of their shares of Common
Stock and to be paid such amount. See "Rights of Dissenting Stockholders." After
the Merger, holders of Common Stock will possess no interest in or rights as
stockholders of the Company; their only right in respect of their shares of
Common Stock will be to receive payment as described above. The Merger will be
treated as a purchase for accounting purposes.
All references to and summaries of the Merger Agreement in this Proxy
Statement are qualified in their entirety by reference to the text of the Merger
Agreement, which is attached as Exhibit I to this Proxy Statement.
Effective Time. The effective time of the Merger will occur at such
time as the Certificate of Merger is duly filed with the Secretary of State of
the State of Minnesota and the Secretary of State of the State of Maryland or
such later date as may be set forth in the Certificate of Merger, all in
accordance with the Minnesota Business Corporation Act and the Maryland Business
Corporation Act, as amended (the "Effective Time"). The required filings are
expected to be made as soon as practicable after the approval of the Merger
Agreement by the Company's stockholders at the Special Meeting and the
satisfaction or waiver of all other conditions to the consummation of the
Merger. See "Conditions to the Merger."
Payment for Shares. The Merger Agreement provides that Norwest Bank
Minnesota, N.A. shall serve as UCG's agent (the "Exchange Agent"), for the
purpose of exchanging the certificates formerly representing shares of Common
Stock for the approximately $3.89 to be paid for each of such shares in the
Merger.
As soon as practicable after the Effective Time, the Exchange Agent
will send a Letter of Transmittal to each holder of a certificate or
certificates theretofore evidencing Common Stock of record as of the Effective
Time, other than certificates representing dissenting shares, advising such
holder of the effectiveness of the Merger and the procedure for sending the
Exchange Agent such certificates in exchange for the cash to be received
therefor as a result of the Merger.
Upon surrender to the Exchange Agent of such certificates, together
with a properly completed Letter of Transmittal and other documents as may be
reasonably requested by the Exchange Agent, such holders will be entitled to
receive a check representing approximately $3.89 multiplied by the number of
shares of Common Stock represented by such surrendered certificates. Until so
surrendered, after the Effective Time each certificate shall be deemed to
represent for all purposes only the right to receive such cash, and no other
right, with regard to the Company, UCG or UCG Acquisition. After the Effective
Time, there shall be no further registration of transfers of shares of Common
Stock. If payment for shares of Common Stock surrendered is to be paid to a
person other than the registered holder of such shares, the certificate so
surrendered must be properly endorsed or otherwise in proper form for transfer.
Any portion of the Merger consideration remaining with the Exchange
Agent six months after the Effective Time will be turned over to UCG
Acquisition, after which time stockholders will be entitled to look, subject to
applicable escheat and other similar laws, only to UCG Acquisition for payment
for their shares of Common Stock.
STOCKHOLDERS SHOULD NOT SURRENDER THEIR COMMON STOCK CERTIFICATES
BEFORE RECEIVING TRANSMITTAL MATERIALS FROM THE EXCHANGE AGENT AND, ACCORDINGLY,
SHOULD NOT SEND ANY STOCK CERTIFICATES WITH THE ENCLOSED PROXY CARD.
Conditions to the Merger. Under the Merger Agreement, the obligations
of both the Company and UCG and UCG Acquisition are subject to the satisfaction,
at or before the Effective Time, of certain conditions or the waiver thereof. If
any condition required to be satisfied by a party is not satisfied by such
party, and is not waived by the other party, the Merger will not be consummated.
Among such conditions are that, at or prior to the Effective Time, (i) the
stockholders of the Company shall have duly approved the Merger Agreement; (ii)
no final, nonappealable injunction or other order by any governmental entity
which prevents the consummation of the Merger shall have been issued and remains
in effect, and (iii) all necessary consents, authorizations and approvals shall
have been obtained. Consummation of the Merger is not subject to the receipt of
any state or federal approvals or authorizations.
The obligation of UCG and UCG Acquisition to consummate the Merger is
further subject to a number of additional conditions, any of which may be waived
in whole or in part to the extent permitted by applicable law. These additional
conditions are that, at or prior to the Effective Time, (i) all representations
and warranties of the Company contained in the Merger Agreement shall continue
to be true and correct; (ii) the Company shall have performed or complied with
those actions, undertakings, covenants or agreements set forth in the Merger
Agreement; (iii) shares held by stockholders exercising their right to dissent
shall aggregate no more than 10 percent of the outstanding Common Stock; and
(iv) there shall have been no material adverse change in the business or
financial condition of the Company.
The obligation of the Company to complete the Merger is also subject to
a number of additional conditions, any of which may be waived in whole or in
part to the extent permitted by applicable law. These additional conditions are
that, at or prior to the Effective Time, (i) all representations and warranties
of UCG and UCG Acquisition contained in the Merger Agreement shall continue to
be true and correct; (ii) UCG and UCG Acquisition shall have performed or
complied with those actions, undertakings, covenants or agreements set forth in
the Merger Agreement; and (iii) the Merger Consideration shall have been
deposited with the Exchange Agent in accordance with the Merger Agreement.
The representations and warranties made by both the Company and UCG and
UCG Acquisition in the Merger Agreement include various representations and
warranties typically found in such agreements. See Articles 2 and 3 of the
Merger Agreement attached hereto as Exhibit I.
Certain Covenants. With respect to the conduct of the Company's
business prior to the Effective Time, the Company has agreed that it will not,
among other things, (i) make any change in its Articles of Incorporation or
Bylaws; (ii) issue or sell any shares of its capital stock, issue any other
securities except upon conversion of the Company's outstanding Preferred Stock
and conversion of options outstanding under the Company's Employee Incentive
Stock Option Plans to Common Stock of the Company, or make any other changes in
its capital structure; (iii) declare, pay or make any dividend with respect to,
or purchase or redeem, any of the Common Stock; or (iv) enter into, amend,
modify or terminate any material agreement, commitment or transaction other than
in the ordinary course of business.
The Company has also agreed that it will not directly or indirectly
solicit, initiate, or participate in any discussions or proposals from any
person other than UCG or any affiliate or associate of UCG relating to any
merger with the Company or acquisition or purchase of all or a material amount
of the Company's assets or capital stock, except that the Company and the Board
of Directors can passively receive proposals from third parties and can provide
information to, or participate in discussions or negotiations with, any party
that has actually made a proposal and which the Board believes, in good faith,
would be capable of effecting an acquisition of the Company on terms that are
superior, from a financial point of view, to the transaction contemplated by the
Merger Agreement. The Company has also agreed to notify UCG promptly of any such
proposal or offer after it is made.
Termination. The Merger Agreement may be terminated at any time prior
to the Effective Time, whether before or after its approval by the stockholders
of the Company, (i) by the mutual written consent of the Company and UCG, (ii)
by either the Company or UCG if the stockholders of the Company have not
approved the Merger Agreement by August 31, 1996, (iii) by either the Company or
UCG if the Merger has not been consummated by September 30, 1996, provided that
such termination may not be effected by a party whose failure to fulfill any of
its obligations under the Merger Agreement was the reason for such
non-consummation, or (iv) by either the Company or UCG in the event of a
material misrepresentation, material breach of warranty or breach of a material
obligation by the other party. The Merger Agreement also provides that UCG may
terminate the agreement if the Company's Board of Directors withdraws or
modifies its recommendation of the Merger to the Company's stockholders. The
Merger Agreement provides that the Company may terminate the agreement if a
third party makes a bone fide tender offer or merger offer which the Company's
Board of Directors determine offers a material economic improvement to the
Company's stockholders when compared to the transaction contemplated by the
Merger Agreement.
In the event of termination of the Merger Agreement, neither party will
have any liability to the other unless the termination results from a party's
material breach of any representation, warranty covenant or obligation. In
addition, in the event the Merger Agreement is terminated by the Company by
reason of a breach by UCG, within two days after written demand UCG will pay the
Company $3,000,000 in liquidated damages. In the event the Company's Board of
Directors fail to recommend approval of the Merger Agreement to the Company's
stockholders, or withdraws or modifies such recommendation, or if the members of
the Board of Directors fail to vote shares owned by them in favor of the Merger
Agreement, or if the Merger Agreement is terminated by reason of acceptance of a
tender offer or merger offer described in the preceding paragraph, within two
days after written demand the Company will pay UCG $1,000,000.
Amendments to the Merger Agreement. The Merger Agreement may be
amended, modified or supplemented at any time before the Effective Time by
written agreement of the Company, UCG and UCG Acquisition. After approval of the
Merger by the Company's stockholders, no amendment to the Merger Agreement which
reduces the amount payable to the stockholders can be made without their
approval.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
As of July 8, 1996, directors and executive officers of the Company
beneficially owned, in the aggregate, 863,940 shares (29.7 percent) of the
Company's outstanding Common Stock. Such directors and executive officers will
receive an aggregate of approximately $3,360,727 for their shares of Common
Stock upon consummation of the Merger, and are expected to vote for the Merger.
Some of these executive officers and other employees of the Company may enter
into new employment agreements with UCG Acquisition, but no such agreements have
been entered into as of the date hereof.
It is the Company's understanding that UCG has entered into an
agreement with XATA Corporation for the sale of the assets of the Company's
software services division (Payne & Associates) following Closing of the Merger
Agreement. As part of this arrangement, the Company also understands that
William G. Leonard, President and Chief Executive Officer of the Company, and
Gary C. Thomas, Vice President and Chief Financial Officer of the Company, have
entered into agreements to be employed by XATA Corporation in the event the
Merger and that sale of assets are consummated.
FINANCING OF THE MERGER
The total funds required to pay the Merger Consideration of
approximately $3.89 per share for each outstanding share of Common Stock will be
$12,000,000. UCG intends to finance this amount, and any amount necessary to pay
transaction costs, with existing funds or, in whole or in part, with borrowed
funds. Consummation of the Merger is not contingent upon UCG's ability to obtain
borrowed funds.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general description of the federal income tax
consequences of the Merger. However, it does not take into account the facts and
circumstances of any particular stockholder of the Company. Each stockholder
should consult his or her adviser about the specific tax consequences to him or
her of the Merger, including the application and effect of state, local,
foreign, and other tax laws.
Except for shares acquired upon the exercise of stock options
immediately prior to the Merger, stockholders will recognize gain or loss for
federal income tax purposes measured by the difference between the tax basis of
their shares and the cash received therefor. Such gain or loss will be treated
as a capital gain or loss if the Company shares exchanged for cash are held as
capital assets on the Effective Date. The receipt of cash pursuant to the
exercise of dissenter's rights with respect to the Merger will be a taxable
transaction to stockholders receiving such cash, and a dissenting stockholder
will recognize gain or loss measured by the difference between the cash so
received and such stockholder's tax basis in the Company shares exchanged
therefor. Such gain or loss will be treated as a capital gain or loss if such
shares are held as capital assets on the Effective Date.
With respect to shares acquired upon exercise of stock options
immediately prior to the Merger, stockholders will recognize income for federal
tax purposes measured by the difference between their exercise price for the
options and the cash received therefor. Such income will be treated as
additional income to such stockholders taxable as ordinary income. Such income
may be subject to federal income tax withholding.
Under the backup withholding rules contained in the Internal Revenue
Code, the Exchange Agent may be required to withhold 31 percent of the gross
amount of any payments to certain stockholders. In order to avoid such backup
withholding, each stockholder (other than corporations and other persons exempt
from such backup withholding) should provide the Exchange Agent with a Form W-9
with such stockholder's taxpayer identification number (i.e., social security
number or employer identification number) in accordance with instructions to be
included in the Letter of Transmittal.
THE FEDERAL INCOME TAX DISCUSSION IN THIS PROXY STATEMENT IS BASED UPON
CURRENT LAW AND IS INTENDED FOR GENERAL INFORMATION ONLY. EACH STOCKHOLDER IS
URGED TO CONSULT HIS OR HER OWN TAX ADVISER CONCERNING THE SPECIFIC TAX
CONSEQUENCES OF THE MERGER TO SUCH STOCKHOLDER, INCLUDING THE APPLICABILITY AND
EFFECT OF STATE, LOCAL, AND OTHER TAX LAWS.
RIGHTS OF DISSENTING STOCKHOLDERS
Pursuant to Sections 302A.471 and 302A.473 (the "Sections") of the
Minnesota Business Corporation Act, holders of the Company's Common Stock are
entitled to exercise dissenter's rights in connection with the Merger and obtain
payment of the "fair value" of their Common Stock, provided that such
stockholders comply with the requirements of the Sections. The following is a
summary of the statutory procedures to be followed by holders of Common Stock
electing to exercise their dissenter's rights in order to perfect such rights
under the Sections and is qualified in its entirety by reference to the
Sections, the full text of which is attached to this Proxy Statement as Exhibit
III. The Sections should be reviewed carefully by stockholders who wish to
assert their dissenter's rights or who wish to preserve the right to do so,
since failure to comply with those procedures will result in the loss of such
dissenter's rights.
Holders of the Company's Common Stock who elect to exercise dissenter's
rights must satisfy each of the following conditions: (i) such holders must file
with the Company before the taking of the vote with respect to the Merger
written notice of their intention to demand payment of the fair value of their
shares of Common Stock (this written notice must be in addition to and separate
from any proxy or vote against the Merger; neither voting against nor a failure
to vote for the Merger will constitute such a notice within the meaning of the
Sections), and (ii) such holders must not vote in favor of the Merger (a failure
to vote will satisfy this requirement, but a vote in favor of the Merger, by
proxy or in person, will constitute a waiver of such holder's dissenter's rights
and will nullify any previously filed written notice of intent to demand
payment). The Company will consider a signed proxy that is returned by a
stockholder without indicating a direction as to how it should be voted as
constituting such a waiver and a vote for the Merger. If the Merger is
consummated, stockholders who fail to comply with either of these conditions
will be entitled to receive approximately $3.89 per share in cash as provided in
the Merger Agreement, but will have no dissenter's rights with respect to their
shares.
All written notices should be addressed to: Computer Petroleum
Corporation, World Trade Center, 30 East Seventh Street, Suite 510, St. Paul,
Minnesota, Attention: Secretary, should be filed before the taking of the vote
on the Merger at the Special Meeting and should be executed by, or with the
consent of, the holder of record. The notice must reasonably inform the Company
of the identity of the stockholder and the intention of such stockholder to
demand dissenter's rights. In the notice the stockholder's name should be stated
as it appears on the stock certificates. A notice may be given by a beneficial
owner of shares only if a written consent of the stockholder of record is
submitted to the Company at the time of or prior to the assertion of the
dissenter's rights.
After a vote approving the Merger, the Company will give written notice
to each stockholder who has filed a written notice of intent to exercise
dissenter's rights and who did not vote in favor of the Merger setting forth the
address to which a demand for payment and stock certificates must be sent by
such stockholder in order to obtain payment, and the date by which they must be
received. This notice shall also include a form for demanding payment to be
completed by the stockholder and a request for certification of the date on
which the stockholder (or the person on whose behalf the stockholder is
asserting dissenter's rights) acquired beneficial ownership of the shares of
Common Stock. Stockholders who fail to demand payment or deposit their stock
certificates as required by the notice within 30 days after the notice is given
will irrevocably forfeit their dissenter's rights and will be bound by the terms
of the Merger.
If a demand for payment and deposit of stock certificates is duly made
by a stockholder who was a beneficial owner on or before June 21, 1996, the date
of the first public announcement of the Merger (the "Public Announcement Date"),
then upon the Effective Date or the receipt of the demand, whichever is later,
the Company will pay the stockholder an amount which the Company estimates to be
the fair value of the shares of Common Stock, with interest, if any. For the
purpose of a stockholder's dissenter's rights under the Sections, "fair value"
means the value of the shares of Common Stock immediately before the Effective
Date and "interest" means interest commencing five days after the Effective Date
until the date of payment at the rate provided in the Sections.
The Company may withhold its remittance with respect to shares of
Common Stock for which the stockholder demanding payment was not the beneficial
owner on the Public Announcement Date. Following the Effective Date, the Company
shall mail to each such stockholder which has validly demanded payment its
estimate of the fair value of such stockholder's shares of Common Stock and
offer to pay this amount, with interest, if any, to the stockholder upon receipt
of such stockholder's agreement to accept this amount in full satisfaction. If
such stockholder believes that the Company's offer is for less than the fair
value of the shares of Common Stock, with interest, if any, such stockholder
must give written notice to the Company of his or her own estimate of the fair
value of the shares of Common Stock, with interest, if any, and demand payment
of this amount. This demand must be mailed to the Company within 30 days after
the mailing of the Company's offer. If the stockholder fails to make this demand
within the 30-day time period, such stockholder shall be entitled only to the
amount offered by the Company.
If the Company and the stockholder (including both a stockholder who
purchased shares of Common Stock prior to the Public Announcement Date and a
stockholder who purchased shares of Common Stock after the Public Announcement
Date who have complied with their respective demand requirements) cannot settle
the stockholder's demand within 60 days after the Company receives the
stockholder's estimate of the fair value of his or her shares of Common Stock,
then the Company shall file an action in a court of competent jurisdiction in
Ramsey County, Minnesota, requesting that the court determine the fair value of
Common Stock, with interest, if any. All stockholders whose demands are not
settled within the applicable 60-day settlement period shall be made parties to
this proceeding.
After notice to the stockholder, the court shall institute proceedings
to determine the fair value of the shares of Common Stock. The court may appoint
one or more persons as appraisers to receive evidence and make recommendations
to the court. The court shall determine the fair value of the shares of Common
Stock, taking into account any and all factors the court finds relevant,
computed by any method or combination of methods that the court, in its
discretion, sees fit to use. The fair value of the shares of Common Stock as
determined by the court is binding on all stockholders. If the court determines
that the fair value of the shares of Common Stock is in excess of the amount, if
any, which the Company has remitted to the dissenting stockholders, then the
court will enter a judgment in favor of the dissenting stockholders in an amount
equal to such excess, plus interest.
Costs of the court proceeding shall be determined by the court and
assessed against the Company except that part or all of these costs may be
assessed against stockholders whose action in demanding supplemental payments
are found by the court to be arbitrary, vexatious or not in good faith.
If the court finds that the Company did not substantially comply with
the Sections, the court may assess the fees and expenses, if any, of attorneys
or experts against the Company. Such fees and expenses may also be assessed
against any party if the court finds that such party has acted arbitrarily,
vexatiously or not in good faith.
BUSINESS OF UNITED COMMUNICATIONS GROUP LIMITED PARTNERSHIP
United Communications Group Limited Partnership (UCG) is a Maryland
limited partnership with 225 employees, headquartered in Rockville, Maryland.
UCG has additional offices in Lakewood, New Jersey, and Needham, Massachusetts.
UCG is an information provider to the energy, telecommunications, healthcare,
mortgage banking, government contracting and defense, and computer industries.
UCG publishes over 70 print products, including over 50 newsletters, provides
online information and other database products, and holds over 100 conferences
and training seminars annually. UCG's customers number in the hundreds of
thousands worldwide, including many Fortune 500 companies. UCG has won more
awards given by the Newsletter Publishers Association for editorial/content
excellence than any other company.
Founded in 1977, UCG has made over 20 acquisitions in its 19 year
history. These acquisitions have included the Center for Communications
Management Information from McGraw-Hill in 1990, the ECHO Network from Bell
Canada in 1991, and the National Information Data Center from NRP in 1993. The
executive offices of UCG are located at 11300 Rockville Pike, Suite 1100,
Rockville, Maryland 20852-3030, and its telephone number is (301) 816-8950.
BUSINESS OF THE COMPANY
Computer Petroleum Corporation is in the business of providing
information and customized news, market analysis and commentary to the petroleum
and transportation markets through an electronic information network. The
Company gathers, stores, customizes and redistributes petroleum market
information to meet particular customer needs, primarily in segments of the
petroleum industry. Over 3,600 customers are served, including many of the
world's largest oil companies such as Shell, Exxon, Texaco and British
Petroleum. Other customers include the United States government, the American
Automobile Association, and many petroleum distributors and customers.
The Company was incorporated in 1979 as a regional petroleum price
information business and has since expanded to become a national provider of
retail and wholesale price information, cash-market prices, futures market news,
market trends and projections, truckstop prices, on-line historical data,
customized software and custom-programmed pricing studies. The Company does not
trade in energy products.
MARKET PRICES OF COMMON STOCK
Since May 21, 1991, the Company's Common Stock has been traded on the
National Association of Securities Dealers Automated Quotation (NASDAQ) system
under the symbol CPCO. The following table displays the high and low bid prices
as reported by NASDAQ for the fiscal quarters during fiscal years ended January
31, 1997, 1996 and 1995. NASDAQ quotations are interdealer prices without
adjustment for retail mark-up, markdown or commissions, and may not necessarily
represent actual transactions.
<TABLE>
<CAPTION>
Fiscal 1997 Fiscal 1996 Fiscal 1995
High Low High Low High Low
---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C>
First Quarter...................... 2 1/4 1 2 1 1/4 1 3/4 3/4
Second Quarter ................... 1 3/4 1 1 1/2 1
(through July 8, 1996)....... 3 5/8 1 1/2
Third Quarter...................... - - 2 1 1 1/2 1
Fourth Quarter..................... - - 1 3/4 1 1/4 2 1
</TABLE>
On June 20, 1996, the date preceding the day the Merger Agreement was
publicly announced, the high and low bid prices of the Company's Common Stock as
reported by NASDAQ were $3.00 per share and $2.50 per share, respectively.
STOCKHOLDERS. As of July 8, 1996, there were approximately 63 record
holders of the Company's Common Stock and an estimated 500 beneficial owners
whose shares were held by nominees or broker dealers.
DIVIDENDS. The holders of Common Stock and preferred stock are entitled
to receive dividends when and as declared by the Board of Directors. Since its
incorporation, the Company has not paid any dividends on its Common Stock.
Holders of preferred stock are entitled to dividends of $.10 per share per
annum, payable semi-annually on March 15 and September 15. A $.05 per share
dividend was paid to holders of preferred stock on March 15, 1996. No Common
Stock dividend payments are contemplated in the foreseeable future.
SELECTED FINANCIAL DATA
The following selected financial data for the five years ended January
31, 1996 have been derived from the Company's Annual Report to Stockholders for
the year ended January 31, 1996, a copy of which accompanies this Proxy
Statement. The following selected financial data for the three-month periods
ended April 30, 1995 and 1996 have been derived from the Company's Quarterly
Report on Form 10-QSB for the quarter ended April 30, 1996, a copy of which
accompanies this Proxy Statement:
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenues $ 4,409,308 $ 3,927,786 $ 3,064,772 $ 2,761,824 $ 2,897,270
Net Income (Loss) 7,100 937 (558,399) (621,538) 47,847
Net Income (Loss)
Per Common Share -- -- (.20) (.21) .02
Total Assets 2,728,316 2,303,872 2,050,685 2,768,664 2,726,316
Long-Term Debt 326,565 345,539 241,960 291,744 5,751
Stockholders' Equity 1,536,077 1,444,227 1,443,290 2,031,689 2,553,227
Book Value
Per Common Share .529 .497 .497 .702 .906
</TABLE>
THREE MONTHS ENDED APRIL 30
---------------------------
1996 1995
---- ----
Revenues $1,272,521 $1,060,888
Net Income 100,914 10,573
Net Income
Per Common Share 0.03 0.00
Total Assets 2,741,185 2,270,898
Long-term Debt 312,930 311,085
Stockholders' Equity 2,741,185 1,454,800
Book Value
Per Common Share .562 .501
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth the number of shares of Common Stock of
the Company beneficially owned as of July 8, 1996 by each person known to the
Company to be the beneficial owner of five percent or more of the Company's
Common Stock, by each director and executive officer, and by all directors and
executive officers as a group, and the percentage of outstanding shares so owned
at that time:
NAME AND ADDRESS AMOUNT OF NATURE OF PERCENT
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
Charles G. Schiefelbein 604,800 20.8
2920 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
Cherry Tree Ventures II(1) 485,315 16.7
1400 Northland Plaza
3800 West 80th Street
Minneapolis, MN 55431
Ronald A. Brandow 339,972 11.7
10681 Haddington
Houston, TX 77043
Winton Family Partnerships(2) 310,001 10.7
1910 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Parship River Company 224,199 7.7
c/o Winton Partners
4422 IDS Center
80 South Eighth Street
Minneapolis, MN 55402
Bruce C. Huber(3) 48,590 1.7
Anton J. Christianson(4) 30,887 1.1
Charles M. Osborne 1,000 *
William G. Leonard(5) 156,800 5.4
All directors and officers as
a group (7 persons)(5) 863,940 29.7
- - --------------------
*Less than one percent.
(1) Anton J. Christianson, a director of the Company, is one of two
Managing General Partners of Cherry Tree Ventures II.
(2) Includes 156,918, 116,326, 27,678, 5,030 and 4,049 shares,
respectively, owned by Reynolds Creek Limited Partnership, Sutter Creek
Limited Partnership, Table River Limited Partnership, Kerry Lake
Company and Winton Associates, all of which have the same general
partner.
(3) Excludes shares of Piper Jaffray Companies, Inc. and related entity
Piper, Jaffray & Hopwood investors. Mr. Huber is a Managing Director of
Piper Jaffray Companies, Inc.
(4) Excludes shares of Cherry Tree Ventures II, of which Mr. Christianson
is one of two Managing General Partners.
(5) Includes shares deemed beneficially owned by virtue of the right to
acquire them within 60 days pursuant to exercise of options granted
under the Company's Incentive Stock Option Plan as follows: Mr. Leonard
- 112,250 shares; all directors and officers as a group - 127,500
shares.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of McGladrey and Pullen, LLP has been retained by
the Company since 1994 to examine the Company's accounts, and to perform other
appropriate accounting services. Representatives of the firm are not expected to
attend the Special Meeting.
OTHER MATTERS
As of the date of this statement, management of the Company has no
knowledge of any other business which will be presented for consideration at the
meeting. However, if any matters other than those referred to above should
properly come before the meeting, it is the intention of the persons named in
the enclosed Proxy to vote such Proxy in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
It is not now anticipated that there will be an annual meeting in 1996.
However, if the Merger is not consummated, an annual meeting will be held later
in 1996, and stockholder proposals will be submitted if received within a
reasonable period of time before the meeting.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Securities and
Exchange Commission are incorporated by reference:
(a) The Company's Annual Report on Form 10-KSB for the year ended
January 31, 1996;
(b) The Company's Quarterly Report on Form 10-QSB for the quarter ended
April 30, 1996; and
(c) All other reports filed by the Company pursuant to Section 13 or 15
of the Securities Exchange Act of 1934 since January 31, 1996.
The Company will provide without charge to each stockholder, upon
written or oral request and by first class mail or other equally prompt means
within one business day of receipt of such request, a copy of any and all of the
documents referred to above which have been incorporated in this Proxy Statement
by reference, other than exhibits to such documents which are not specifically
incorporated by reference into the information that this Proxy Statement
incorporates. Requests for such copies should be directed to Mr. William G.
Leonard, President and Chief Executive Officer, Computer Petroleum Corporation,
World Trade Center, 30 East Seventh Street, Suite 510, St. Paul, Minnesota,
telephone number (612) 225-9550.
EXHIBIT I
AGREEMENT AND PLAN OF MERGER
AMONG
COMPUTER PETROLEUM CORPORATION
AND
UNITED COMMUNICATIONS GROUP LIMITED PARTNERSHIP
AND
UCG ACQUISITION CORP.
DATED: JUNE 21, 1996
TABLE OF CONTENTS
1. The Merger. 1
1.1 Terms of the Merger 1
1.2 Merger Consideration and Conversion of Shares 2
1.3 Exchange of Certificates 3
1.4 Further Assurances 4
1.5 Board of Directors 4
1.6 Dissenter's Rights; Effect of Acceptance of the
Merger Consideration 5
1.7 Stock Options 5
1.8 Transaction Costs 6
2. Representations, Warranties and Covenants of CPC 6
2.1 Organization and Qualification 6
2.2 Jurisdictions of Qualification 6
2.3 Corporate Power and Authority 6
2.4 No Subsidiaries or Other Investments or Interests 7
2.5 Capitalization 7
2.6 Reports 8
2.7 Consents and Approvals; No Violation 8
2.8 Brokerage Fees and Commissions 9
2.9 Events Subsequent to February 1, 1996 9
2.10 Intellectual Property 11
2.11 Real Property 11
2.12 Personal Property 11
2.13 Real and Personal Property Leases 11
2.14 Litigation 11
2.15 Contracts, Lease and Agreement 11
2.16 Compliance with Applicable Law 12
2.17 Guarantees 12
2.18 ERISA Compliance 12
2.19 Labor and Employment-Related Matters 13
2.20 Insurance 13
2.21 Environmental Matters 14
2.22 Absence of Undisclosed Liabilities 14
2.23 Tax Matters 14
2.24 No Material Adverse Change 15
2.25 Related Transactions 15
2.26 Disclosure 15
3. Representations, Warranties and Covenants of
Buyer and Sub 15
3.1 Organization; Qualification 15
3.2 Authority Relative to the Merger Agreements 15
3.3 No Conflicts; Consents 16
3.4 Disclosure Materials 16
3.5 Finder's Fees 16
3.6 Financing. 17
3.7 Required Action 17
4. Covenants of the Parties 17
4.1 Conduct of Business of CPC 17
4.2 Customer Contact 19
4.3 No Solicitation 19
4.4 Best Efforts 19
4.5 Benefit Plans 20
4.6 Supplemental Information and Documents 21
4.7 Proxy Materials 21
5. Conditions to Closing. 22
5.1 Conditions Precedent to Obligations of
Buyer and Sub 22
5.2 Conditions Precedent to Obligations of CPC 24
5.3 Conditions Precedent to Obligations of
Each Party 25
6. Termination; Amendment 26
6.1 Termination 26
6.2 Effect of Termination 27
6.3 Amendment, Waiver, Etc 27
7. Closing 28
7.1 Deliveries to the Exchange Agent 28
7.2 Deliveries by Buyer and Sub 28
7.3 Deliveries by CPC 28
8. Miscellaneous. 29
8.1 Governing Law; Jurisdiction 29
8.2 Counterparts 29
8.3 Interpretation 29
8.4 Entire Agreement 29
8.5 Severability 29
8.6 Notices 29
8.8 Press Releases 30
8.9 Remedies Cumulative 30
8.10 No Construction Against Drafter 30
8.11 Parties in Interest 31
8.12 Indemnification 31
8.13 Expenses 32
Schedules
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement"), effective as of June
21, 1996, 1996, is among Computer Petroleum Corporation, a Minnesota corporation
("CPC"), United Communications Group Limited Partnership, a Maryland limited
partnership, ("Buyer"), and UCG Acquisition Corp., a Maryland corporation which
is a wholly owned subsidiary of Buyer ("Sub").
RECITALS
Buyer and the Boards of Directors of each of Sub and CPC have deemed it
advisable and in the best interests of their respective companies and such
companies' shareholders that CPC be merged with and into Sub (the "Merger") with
CPC thereby becoming a wholly owned subsidiary of Buyer, and, accordingly, have
approved this Agreement.
The parties agree as follows:
1. The Merger.
1.1. Terms of the Merger.
(a) At the Effective Time (i) CPC shall be merged
with and into Sub as the surviving corporation (the "Surviving
Corporation"), and the separate existence of CPC shall cease,
(ii) the Articles of Incorporation of Sub shall be the
Articles of Incorporation of the Surviving Corporation, and
(iii) the By-laws of Sub in effect immediately prior to the
Effective Time shall be the By-laws of the Surviving
Corporation. Sub and CPC are sometimes referred to herein as
the "Constituent Corporations."
(b) Upon the effectiveness of the Merger, all of the
property, rights, privileges, powers and franchises of the
Constituent Corporations shall be transferred to and vested in
the Surviving Corporation; and all claims, liabilities,
demands, property and other interests shall be vested in the
Surviving Corporation all as provided in Section 302A.641 of
the Minnesota Business Corporation Act and Section 3.114 of
the Maryland General Corporation Law.
(c) The directors of Sub 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
qualified in the manner provided in the Articles of
Incorporation and By-Laws of the Surviving Corporation, or as
otherwise provided by law.
(d) The officers of CPC 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 qualified in the
manner provided in the Articles of Incorporation and By-Laws
of the Surviving Corporation, or as otherwise provided by law.
(e) The closing of the Merger (the "Closing") will
occur on (i) the day on which the last of the conditions to
the Closing is satisfied or duly waived or (ii) a different
date mutually agreeable to the parties. The date on which the
Closing occurs will be referred to as the "Closing Date."
(f) Simultaneously with the Closing, CPC, Buyer and
Sub (i) will execute and file all required certificates and
documents with the appropriate governmental agencies or
authorities, and (ii) will take all such other actions as may
be required under applicable law to make the Merger effective.
The time at which the Merger shall be effective in accordance
with the Articles of Merger shall be the "Effective Time."
1.2 Merger Consideration and Conversion of Shares.
(a) For purposes of this Agreement, the following
terms will have the following meanings:
(i) "CPC Common Stock" means the shares of
common stock of CPC.
(ii) "Outstanding CPC Common Stock" means
the number of shares of outstanding CPC Common Stock
at the Effective Time of the Merger, including CPC
preferred stock converted to CPC Common Stock
pursuant to Section 1.5(d) and CPC Common Stock
issued in respect of Common Stock Options pursuant to
Section 1.7.
(iii) "Price Per Share" means the Merger
Consideration divided by the number of shares of
Outstanding CPC Common Stock.
(iv) "Merger Consideration" means the sum of
$12,000,000 in cash.
(b) The consideration to be paid by Buyer in the
Merger will be paid in currency of the United States of
America. In exchange for all of the shares of Outstanding CPC
Common Stock, Buyer will make payment pursuant to Section 1.3
to each holder of Outstanding CPC Common Stock equal to the
product of the number of shares of Outstanding CPC Common
Stock transferred by such holder to Sub multiplied by the
Price Per Share.
(c) Except as otherwise provided, at the Effective
Time of the Merger, each share of Outstanding CPC Common Stock
will be cancelled and retired and will cease to exist and will
be converted into a right to receive the Price Per Share.
(d) All shares of CPC Common Stock that are owned by
the Buyer or Sub, or any affiliate of Buyer or Sub, shall be
cancelled and retired for no value and shall cease to exist
and no consideration shall be delivered in exchange therefor.
(e) By virtue of the Merger and without any further
action, every share of Outstanding CPC Common Stock, every
share of preferred stock, every option, whether exercised or
unexercised, or right to convert into or to acquire any shares
of CPC Common Stock, outstanding as of the Effective Time of
the Merger, unless otherwise specifically provided for in
Section 1.6, will be cancelled and retired and will cease to
exist and will not be converted into stock or other
securities, or the right to acquire stock or other securities,
of the Surviving Corporation or into cash or the right to
receive cash other than the Merger Consideration.
1.3 Exchange of Certificates.
(a) Buyer has designated Norwest Bank Minnesota, N.
A. as exchange agent (the "Exchange Agent") in connection with
the Merger. The actions of the Exchange Agent, and the
exchange of any certificate representing shares of Outstanding
CPC Common Stock ("Certificate" or "Certificates") will be
governed by the terms and conditions of an Exchange Agreement
among Buyer, CPC and the Exchange Agent, in substantially the
form attached hereto as Exhibit 1.3(a) (the "Exchange
Agreement").
(b) Until surrendered and exchanged in accordance
with the Exchange Agreement, each Certificate will, after the
Effective Time of the Merger, represent solely the right to
receive the portion of the Merger Consideration for the number
of shares of Outstanding CPC Common Stock evidenced by such
Certificate and will have no other rights. From and after the
Effective Time of the Merger, the Surviving Corporation will
be entitled to treat any Certificate that has not yet been
surrendered for exchange as having been exchanged,
notwithstanding any failure to surrender such Certificate.
(c) No interest will accrue or be payable on any
Merger Consideration.
(d) At the Effective Time of the Merger, the stock
transfer books of CPC will be closed and no transfer of shares
of Outstanding CPC Common Stock will thereafter be made. If,
after the Effective Time of the Merger, any Certificate
representing any such shares is presented, it will be
cancelled, retired and exchanged as provided in this
Agreement.
1.4 Further Assurances. Each party and its officers and
directors will execute and deliver all proper documents and do all
things necessary or proper to vest title in any property or rights of
CPC in the Surviving Corporation or otherwise to carry out the purposes
of this Agreement.
1.5 Board of Directors. As soon as practicable after the date
of this Agreement, CPC, acting through its Board of Directors, will:
(a) give notice of and hold a meeting of its
shareholders, or otherwise solicit the requisite consent of
such shareholders, for the purpose of adopting and approving
this Agreement and all agreements and documents executed
and/or delivered in connection with this Agreement or the
Merger (collectively, including this Agreement, the "Merger
Agreements"), the Merger and the other transactions
contemplated by the Merger Agreements (the "Transactions");
(b) recommend, through its Board of Directors, such
shareholder approval;
(c) use its best efforts to obtain the necessary vote
or written consent of its shareholders required by applicable
law in favor of adoption and approval of the Merger Agreements
and the Transactions (and all shares of Outstanding CPC Common
Stock owned or controlled by current members of the Board of
Directors of CPC will be voted in favor of the Merger at such
shareholders meeting). The names of the current directors, the
names of the beneficial owners and the number of shares of CPC
Common Stock owned or controlled by such directors are shown
on Schedule 1.5; and
(d) convert all outstanding Preferred Stock into CPC
Common Stock or, at CPC's option, redeem such Preferred Stock
according to its terms; an amount equal to any amount paid by
CPC in such redemption shall be deducted from the Merger
Consideration.
1.6 Dissenters' Rights; Effect of Acceptance of the Merger
Consideration.
(a) Notwithstanding anything to the contrary in this
Agreement, any shares of Outstanding CPC Common Stock
outstanding immediately prior to the Effective Time of the
Merger held by a holder who has demanded and perfected the
right, if any, for appraisal of such shares in accordance with
applicable law and who, as of the Effective Time of the
Merger, has not effectively withdrawn or lost such right to
such appraisal will not be converted into or represent a right
to receive the Merger Consideration, but such holder will be
entitled only to such rights as are granted by applicable law,
and the Merger Consideration will be reduced by an amount
equal to the Price Per Share times the number of the shares of
Outstanding CPC Common Stock as to which the dissenters right
is exercised.
(b) CPC will give Buyer prompt written notice of any
documents or communications served pursuant to applicable law
or otherwise received by CPC relating to any shareholder's
rights of appraisal or dissent.
(c) CPC will not, except with the prior written
consent of Buyer or as required by applicable law, make any
payment with respect to any demands for appraisals of any
shares of Outstanding CPC Common Stock, offer to settle or
settle any such demands or approve any withdrawal of any such
demands.
(d) By voting for the Merger or by voting against the
Merger and not demanding and perfecting any appraisal or
dissenters' rights and accepting any of the Merger
Consideration, a shareholder of CPC will be deemed to have
adopted and approved the terms and conditions of the Merger
Agreements.
1.7. Stock Options. Prior to the Effective Time, the Board of
Directors of CPC (or, if appropriate, any committee of the Board
administering the Stock Option Plans) shall adopt such resolutions and
take such other actions as are necessary to convert all outstanding
stock options to purchase CPC Common Stock ("Options") heretofore
granted to employees under any stock option plan, program or
arrangement of CPC, whether or not currently fully exercisable (all
such stock option plans, employee stock purchase plans, programs and
arrangements collectively referred to herein as "Stock Option Plans")
to duly authorized, validly issued, fully paid and nonassessable CPC
Common Stock, on a conversion basis of approximately one-half share of
CPC Common Stock for each one option to purchase one share. All such
options shall be cancelled upon conversion to CPC Common Stock, the
Stock Option Plans shall terminate as of date of Closing, and no holder
of an option or any participant in any Stock Option Plan shall have any
right thereafter to acquire equity securities of CPC thereunder.
1.8 Transaction Costs. The Buyer acknowledges that CPC is and
will be indebted for certain fees, costs and expenses relating to the
transactions contemplated by this Agreement, including fees and
expenses of CPC's investment banker as provided in an agreement dated
March 6, 1996, fees and expenses of legal counsel, incentive
compensation due certain officers upon completion of the Transactions,
retirement of debt, severance payments to certain employees of CPC
pursuant to a Severance Plan, and SEC filing, proxy statement, proxy
solicitation, and related costs in an aggregate amount not exceeding
$1,542,250, not including severance payments payable pursuant to the
Severance Plan approved by the CPC Board of Directors on June 21, 1996
(the "Transaction Costs"). Each of the Transaction Costs is described
on Schedule 1.8, including best efforts estimates of those costs not
currently ascertainable. A copy of any contract with respect to a
Transaction Cost has been forwarded to Buyer. The Buyer will pay all of
CPC's Transaction Costs, and shall pay the same, except for severance
payments for certain employees not yet due under the Severance Plan, on
or before the Effective Time, or, at Buyer's option, shall make
available to CPC on or before the Effective Time, pursuant to a loan or
advance, cash in an aggregate amount necessary to pay such Transaction
Costs and shall take no action which would prevent or interfere with
payment of such Transaction Costs.
2. Representations, Warranties and Covenants of CPC. CPC represents,
warrants and covenants to Buyer and Sub that the statements made in this Section
2 are correct and complete as of the date of this Agreement and shall be deemed
to be correct and complete as of the Effective Time.
2.1 Organization and Qualification. CPC is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of Minnesota and has all requisite power and authority to
own, lease and operate its properties and to carry on its business as
it is now being conducted and as proposed to be conducted. CPC is duly
qualified or licensed and is in good standing to do business in each
jurisdiction in which the nature of the business conducted by it has
made its qualification or licensing a legal requirement, except where
failure to qualify would not have a material adverse effect on the
financial condition or results of operations of CPC.
2.2 Jurisdictions of Qualification. Schedule 2.2 attached
hereto is a true and complete list of each jurisdiction in which CPC is
qualified or licensed to do business.
2.3 Corporate Power and Authority. CPC has all requisite
corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by CPC and the consummation by CPC of the
transactions contemplated hereby have been duly authorized by the Board
of Directors of CPC and, other than approval by the shareholders of
CPC, no other corporate proceedings on the part of CPC are necessary to
authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by CPC and, assuming this Agreement constitutes a valid and
binding obligation of the Buyer and Sub, this Agreement constitutes the
legal, valid and binding obligation of CPC, enforceable against it in
accordance with its terms.
2.4 No Subsidiaries or Other Investments or Interests. Except
as described on Schedule 2.4, CPC does not have or own, or have any
right to acquire, directly or indirectly, any securities or other
direct or indirect ownership or other interest in any corporation or
other entity.
2.5 Capitalization.
(a) The authorized capital stock of CPC consists of
22,058,600 shares of CPC Common Stock, par value $.01 per
share, 2,904,009 shares of which were issued and outstanding
at June 1, 1996 and 10,000,000 shares of Preferred Stock, par
value $.01 per share, of which as of June 1, 1996 75,000
non-voting convertible shares were issued and outstanding.
(b) All the outstanding shares of CPC capital stock
are duly authorized, validly issued, fully paid, nonassessable
and free of and not issued in violation of preemptive rights.
(c) To CPC's knowledge, Schedule 2.5(c) attached
hereto lists all persons or entities who beneficially own 5%
or more of the issued and outstanding shares of CPC Common
Stock.
(d) Since June 1, 1996, CPC has not issued any shares
of CPC Common Stock or Preferred Stock.
(e) There are no voting trusts or other agreements or
understandings to which CPC is a party or of which CPC has
knowledge with respect to the voting of any of the capital
stock of CPC. As of June 1, 1996, 250,000 shares of Common
Stock were reserved for issuance under CPC's Employee Stock
Option Plans, and 200,000 shares of Common Stock were reserved
for issuance under CPC's Employee Stock Purchase Plan. As of
such date, options to purchase 197,400 shares of Common Stock
were outstanding. Except as set forth above, there are not as
of the date hereof, and at the Effective Time there will not
be, any outstanding or authorized subscriptions, options,
warrants, calls, rights, commitments or any other agreements
of any character obligating CPC to issue any additional shares
of Common Stock or any other shares of capital stock of CPC or
any other securities convertible into or evidencing the right
to subscribe for any such shares.
2.6 Reports.
(a) Since June 1, 1991, CPC has duly filed all
required forms, reports and documents with the SEC required to
be filed by it pursuant to the federal securities laws and the
SEC rules and regulations thereunder, all of which have
complied as of their respective filing dates in all material
respects with all applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules promulgated thereunder (collectively, the
"SEC Reports"). None of the SEC Reports, including without
limitation any financial statements or schedules included
therein, at the time filed, contained any untrue statement of
a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(b) The balance sheets and the related statements of
operations and statements of cash flow (including the related
notes thereto) of CPC included in the SEC Reports fairly
present the financial position of CPC as of their respective
dates, and the results of operations and changes in financial
position for the periods presented therein, all in conformity
with generally accepted accounting principles applied on a
consistent basis (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments),
except as otherwise noted therein, and except that the
quarterly financial statements do not contain all of the
footnote disclosures required by generally accepted accounting
principles.
2.7 Consents and Approvals; No Violation. Neither the
execution and delivery of this Agreement by CPC nor the consummation by
CPC of the transactions contemplated hereby will (i) conflict with or
result in a breach of any provision of the Articles of Incorporation or
by-laws of CPC; (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or
regulatory authority, except (A) pursuant to the applicable
requirements of the Securities Act and the Exchange Act, or (B) except
where the failure to obtain such consent, approval, authorization or
permit, or to make such filing or notification, would not in the
aggregate have a material adverse effect on the consummation of the
transactions contemplated hereby; (iii) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to CPC, or
(iv) conflict with or result in a breach or termination of any
provision of, or constitute a default under or give rise to a right of
termination under or result in the creation of any lien, charge or
encumbrance upon any of its properties or assets pursuant to any
mortgage, deed of trust, indenture or contract, agreement, instrument,
order, judgment, decree, lien or other transaction to which CPC is a
party or by which it or its properties are bound.
2.8 Brokerage Fees and Commissions. Except for those fees and
expenses payable to Greene Holcomb & Lannin, LLC, CPC represents and
warrants to the Buyer that no person or entity is entitled to receive
from CPC any investment banking, brokerage or finder's fee in
connection with this Agreement or the Transactions contemplated hereby
based upon arrangements made by or on behalf of CPC.
2.9 Events Subsequent to February 1, 1996. Except as described
on Schedule 2.9 or related to transactions involving the Buyer, since
February 1, 1996, CPC has operated its business in the ordinary course
and there has not been any material adverse change in the business,
financial condition, operations, results of operations, or future
prospects of CPC. Without limiting the foregoing since February 1,
1996:
(i) CPC has not sold, leased, transferred,
or assigned any asset, tangible or intangible, for
more than $10,000, other than services or products in
the ordinary course of business;
(ii) CPC has not entered into any agreement,
contract, lease, or license (or series of related
agreements, contracts, leases, and licenses)
requiring payment by CPC of more than $25,000 annual
value, or other than in the ordinary course of
business except as described on Schedule 2.9(ii);
(iii) no party (including CPC) has
accelerated, terminated, modified, or canceled or
given notice of intent to cancel any agreement,
contract, lease or license (or series of related
agreements, contracts, leases and licenses), nor does
CPC have knowledge of the intent of any party to take
any such action, with respect to any agreement,
contract, lease or license involving more than
$25,000 annual value to which CPC is a party or by
which it is bound except as described on Schedule
2.9(iii);
(iv) CPC has not imposed any security
interest upon or otherwise encumbered any of its
assets, tangible or intangible;
(v) CPC has not made any capital expenditure
(or series of related capital expenditures) involving
more than $25,000;
(vi) CPC has not issued any note, bond, or
other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or
capitalized lease obligation involving more than
$10,000 in the aggregate;
(vii) CPC has not granted any license or
sublicense of any rights under or with respect to any
intellectual property, except as described on
Schedule 2.9(vii);
(viii) CPC has not made any loan to, or
entered into any other transaction with, any of its
directors, officers, and employees , except as
described on Schedule 2.9(viii);
(ix) CPC has not granted any increase in the
base compensation of any of its directors, officers,
and employees, except as described on Schedule
2.9(ix);
(x) CPC has not adopted, amended, modified,
or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for
the benefit of any of its directors, officers, and
employees, except as described on Schedule 2.9(x);
(xi) except as described on Schedule
2.9(xi) CPC has not declared on or in respect of its
capital stock or declared or made any other
distribution to its stockholders or made any direct
or indirect redemption, purchase, or other
acquisition of its capital stock;
(xii) CPC has not made any change in its
accounting methods or practices;
(xiii) has not paid any liability before it
becomes due in accordance with its terms or otherwise
than in the ordinary course of business, except as
provided on Schedule 2.9(xiii); and
(xiv) except as provided in Section 1.5(d)
and 1.7, CPC has not and will not redeem, purchase or
otherwise acquire any capital stock or other equity
interest of CPC, including without limitation
preferred stock or stock options.
2.10 Intellectual Property. CPC owns or has the right to use
pursuant to license, sublicense, agreement, or permission all
intellectual property used in the operation of the business of CPC as
presently conducted, and there is no pending or threatened challenge to
CPC's ownership or right to use any of the foregoing. CPC has no
knowledge that any intellectual property right of any person conflicts
with or infringes upon any intellectual property right of CPC. Except
as disclosed on Schedule 2.10, there are no royalties, honoraria, fees
or other payments payable by CPC to any person by reason of the
ownership, use, license, sale or disposition of CPC's intellectual
property. Except as disclosed on Schedule 2.10, CPC has not received
from or sent to any third party any communication with respect to
infringement of any intellectual property right or any other claim by
any person with respect to any proprietary rights used by CPC. Schedule
2.10 contains a true and complete list of all applications, filing or
other formal actions made or taken pursuant to applicable laws by CPC
to perfect or protect its interest in its intellectual property rights.
2.11 Real Property. CPC does not own or have any right to
acquire any real property.
2.12 Personal Property.
(a) Except as disclosed on Schedule 2.12(a), CPC has
good and marketable title to, and the right to use, all of the
personal property reflected in the audited January 31, 1996
financial statements of CPC, or acquired since the date of
such financial statements, free and clear of all liens,
security interests, charges and claims. Personal property
acquired since January 31, 1996 is described on Schedule
2.12(a).
(b) CPC's personal property, is in good operating
condition and repair, ordinary wear and tear excepted.
2.13 Real and Personal Property Leases. Schedule 2.13
attached hereto is a true and complete list of all leases of real or
personal property to which CPC is a party, whether as lessor or lessee.
2.14 Litigation. Except as disclosed on Schedule 2.14, there
is no action, order, writ, injunction, judgment or decree outstanding
or any claim, suit, litigation, proceeding, labor dispute, arbitration
action, governmental audit or investigation pending or threatened and
CPC does not have any knowledge of an event that reasonably can be
expected to result in any of the above.
2.15 Contracts, Lease and Agreement. Except as disclosed on
Schedule 2.15, all contracts to which CPC is a party are valid and
binding and in full force and effect and the parties to such contracts
(including CPC) have performed in all material respects all obligations
required to be performed by them under such contracts. There are no
defaults thereunder or events which with notice or the passage of time
would constitute a default by CPC or by any other party thereto, except
for such defaults and events as to which requisite waivers or consents
have been obtained. Neither the execution of this Agreement nor the
Closing of the Transactions will constitute a default under or breach
of any such contract, lease or agreement.
2.16 Compliance with Applicable Law. The business and
activities of CPC (a) are presently being conducted in compliance with
all requirements of law and all requirements of any governmental
entities having jurisdiction over CPC, its business or activity and (b)
were not conducted in violation of any of such laws or such
requirements within the past five years. CPC has not failed to file
with any governmental entity or other third party any statement,
report, information or form required by applicable law, regulation
order, license or permit. CPC has not, within the past five years,
received a notice of violation of, been threatened with a charge of
violating, or been under investigation with respect to a possible
violation of, any provision of any requirement, law, regulation, order
or decree of any governmental entity which has not been complied with,
rescinded or resolved. No investigation or review by any governmental
entity concerning any such possible violation by CPC is pending or,
threatened, nor has any governmental entity indicated an intention to
conduct the same.
2.17 Guarantees. CPC does not have any power of attorney
outstanding or any obligation or liability as guarantor, surety,
cosigner, endorser, co-maker, indemnitor or in any other capacity in
respect to the obligations of any person, corporation, partnership,
joint venture, association, organization or other entity.
2.18 ERISA Compliance.
(a) Schedule 2.18(a) attached hereto contains a list
of all "employee pension benefit plans" (as defined in Section
3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) all "employee welfare benefit plans" (as
defined in Section 3(1) of ERISA) and all other bonus,
pension, profit sharing, deferred compensation, incentive
compensation, stock ownership, stock purchase, stock option,
stock bonus, phantom stock, retirement, vacation, severance,
disability, death benefit, welfare, Christmas bonus,
hospitalization, medical or other plan, arrangement or
understanding, whether or not legally binding, providing
benefits to any current or former employee, officer or
director of CPC, or maintained or contributed to by CPC for
the benefit of any employee, officer or director of CPC
currently (collectively, "Benefit Plans").
(b) Each Benefit Plan and all related trust or other
agreements conform in form and operation to, and comply with,
all applicable laws and regulations, including, without
limitation, ERISA and the Code, and all reports or information
relating to each such Benefit Plan required to be filed with
any governmental entity or disclosed to participants have been
timely filed and disclosed.
(c) Except as described in Section 1.7, CPC has not
announced a plan to create or amend, nor does it have any
legally binding commitment to create or amend, any Benefit
Plan or to create any new arrangement which would be a Benefit
Plan.
2.19 Labor and Employment-Related Matters.
(a) Except as set forth in Schedule 2.19(a) attached
hereto, CPC is in compliance with all federal, state or local
laws respecting employment and employment practices, terms and
conditions of employment and wages and hours applicable to its
business, and there are no arrears in the payment of wages,
taxes, unemployment insurance contributions or workers'
compensation assessments or penalties.
(b) None of the employees of CPC is represented by
any labor union. Except as set forth on Schedule 2.19, there
is no pending litigation or other proceeding against CPC by
any employee or group of employees of CPC, including, without
limitation, claims for contract, tort, discrimination,
employee benefits, wrongful termination or any common law or
statutory claims.
(c) CPC has provided Buyer with a true and complete
list of the payroll of CPC as of June 15, 1996 and will
provide Buyer with a revised list as of the Effective Time of
the Merger. Except as set forth on Schedule 2.19 attached
hereto, CPC has not entered into any agreement, made any
representation or taken any action that could cause any of its
employees to be terminable other than at-will, with or without
cause, or to be terminable only upon or with the incurrence or
payment of any severance or other obligation or liability,
except as provided generally to employees pursuant to
applicable state or federal law.
2.20 Insurance. Schedule 2.20 attached hereto is a true and
complete list of all policies of liability, fire, workers' compensation
and other forms of insurance owned or held by or for the benefit of CPC
or its properties or assets, including, without limitation, any self
insurance, specifying any notice or other information possessed by CPC
regarding possible claims under, cancellation of or premium increases
thereon. All current premiums have been paid with respect to all of
such policies. Each of such policies is underwritten by unaffiliated
insurers, is sufficient for all applicable requirements of law and
provides insurance, including, without limitation, liability and
products' liability insurance, in such amounts and against such risks
as is customary for companies engaged in similar business to protect
their properties, assets, business and operations.
2.21 Environmental Matters. There is no past or present
violation of, and there is no pending or threatened action, suit or
proceeding relating to any alleged violation of, any federal, state,
local, foreign or other laws, ordinances, rules, regulations, policies
or guidelines relating to the environment or the health or safety of
persons or otherwise governing the use, generation, storage, treatment,
transportation, manufacture, refinement, handling, production, release
or disposal of any hazardous substances, wastes or materials
(collectively, "Environmental Substances") in, on, under or at any of
the real or personal properties presently or formerly owned, operated,
used or leased by CPC. CPC has not received any request for
information, notice of claim, demand or other notification that it may
be potentially responsible for any threatened or actual release of any
Environmental Substances.
2.22 Absence of Undisclosed Liabilities. CPC has no material
liability, except for (i) liabilities reflected in CPC's Quarterly
Report on Form 10-Q for the period ended April 30, 1996 (the "Latest
Balance Sheet"), (ii) liabilities under contracts which have arisen in
the ordinary course of business and would not be required to be
reflected on the Balance Sheet in accordance with GAAP (none of which
results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort,
infringement or violation of law), and (iii) liabilities that have
arisen since the date of the Latest Balance Sheet in the ordinary
course of business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract,
breach of warranty, tort, infringement or violation of law). For
purposes of this Section 2.22, liability means any direct or indirect
indebtedness claim, loss, damage, deficiency, obligator or
responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, contingent or otherwise.
2.23 Tax Matters. CPC paid all taxes required to be paid by
it through the date hereof and has filed or caused to be filed in a
timely manner all tax returns with appropriate governmental entities in
all jurisdictions in which the tax returns are required to be filed. No
tax liens have been filed and CPC has not been notified by the Internal
Revenue Service or by any other taxing authority that any issues have
been raised and are currently pending by the Internal Revenue Service
or any other taxing authority in connection with any tax return. No
waivers of the statutes of limitation have been given or requested with
respect to CPC. There are no pending tax audits and no unresolved
deficiencies or additions to taxes have been proposed, asserted or
assessed against CPC.
2.24 No Material Adverse Change. Since April 30, 1996, there
has been no material adverse change or, to the best knowledge of CPC,
any development involving a prospective material adverse change, in the
general affairs, management, assets, liabilities, properties, business,
operations, conditions (financial or otherwise) or results of
operations of CPC.
2.25 Related Transactions. Except as set forth on Schedule
2.25, there are no contracts, arrangements, understandings or
transactions between CPC and any of its officers, directors or
stockholders or to which CPC and any of its officers, directors or
stockholders are parties.
2. Disclosure. The representations and
warranties contained in this Section 2 do not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained in
this Section 2 not misleading.
3. Representations, Warranties and Covenants of Buyer and Sub. Buyer
and Sub represent, warrant and covenant to CPC, as of the date of this
Agreement, through and including and as of the Effective Time of the Merger, as
follows:
3.1 Organization; Qualification. Buyer is a Maryland limited
partnership and Sub is a corporation, both duly organized, validly
existing and in good standing under the laws of the State of Maryland.
Each of Buyer and Sub have all requisite power and authority to own,
lease and operate their properties and to carry on their business as
now being conducted. Buyer is duly qualified or licensed and is in good
standing to do business in each jurisdiction in which the nature of the
business conducted by it has made its qualification or licensing a
legal requirement, except when failure to qualify would not have a
material adverse effect on the financial condition or results of
operations of Buyer and Sub.
3.2 Authority Relative to the Merger Agreements.
(a) The Buyer and the Board of Directors of Sub have
approved the execution of the Agreement, the Merger and the
Transactions and no other partnership, corporate or other
authorizations or proceedings on the part of Buyer or Sub is
necessary to consummate any of the Transactions.
(b) Each of the Merger Agreements to which Buyer or
Sub is a party has been duly and validly executed and
delivered by Buyer or Sub and constitutes valid and binding
agreements of Buyer or Sub, enforceable against Buyer and Sub
in accordance with its respective terms.
(c) Buyer and Sub have the power and authority to
enter into the Merger Agreements and to consummate the
Transactions.
3.3 No Conflicts; Consents. The execution and delivery of the
Merger Agreements, the consummation of the Transactions and compliance
by Buyer and Sub with any of the provisions of the Merger Agreements
will not:
(a) violate any provision of the Articles of
Partnership or Partnership Agreement of Buyer or the Articles
of Incorporation or Bylaws of Sub or any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or
injunction applicable to Buyer and Sub or any of its
properties or assets;
(b) violate, or conflict with, or result in a breach
of any provision of, or constitute a default under, or any
event which, with or without due notice or lapse of time, or
both, would constitute a default under, or result in the
termination of, or accelerate the performance required by, or
result in the creation of any lien upon any of the properties
or assets of Buyer or Sub under any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Buyer or Sub is a party, or
by which Buyer or Sub or any of their properties or assets may
be bound or affected; or
(c) require any consent, approval, authorization or
permit of or from, filing with or notification to, any
governmental entity.
3.4 Disclosure Materials. Any information which is provided
by Buyer or Sub about Buyer and Sub to CPC for inclusion in the proxy
materials prepared by CPC pursuant to Section 4.7(a) will be true and
complete in all material respects. None of the information supplied by
Buyer or Sub for inclusion in the proxy materials to be filed with the
Securities and Exchange Commission (the "Commission") under the
Securities Act will, at the time it becomes effective, contain any
untrue statement of a material fact or omit to state any material fact
required to bc stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are
made, not misleading in any material respect.
3.5 Finder's Fees. No broker, finder or other person or
entity is entitled to any brokerage fee, commission or finder's fee in
connection with any of the Merger Agreements or any of the Transactions
on account of any actions or agreements of Buyer or Sub or any of their
representatives.
3.6 Financing. The Buyer has and will have at Closing the
financial capacity to enable it to pay the Merger Consideration and
payment of the Transaction's Costs set forth in Section 1.8, as
provided in this Agreement. Buyer agrees to capitalize Sub with an
amount equal to the liquidated damages amount set forth in Section 6.2
below, no later than the third business day following the date of
execution of this Agreement, and to maintain such capitalization to
Closing. Buyer will deposit the full amount of the Merger Consideration
with the Exchange Agent prior to or at the Closing.
3.7 Required Action. All action required to be taken by or on
the part of Buyer and Sub to authorize the execution, delivery and
performance of the Merger Agreements by Buyer and Sub and the
consummation of the Transactions will have been duly and validly taken
by the partners of Buyer and the Board of Directors of Sub.
4. Covenants of the Parties.
4.1 Conduct of Business of CPC.
(a) Except as provided in Sections 1.5(d) and 1.7,
during the period from the date of this Agreement to the
Effective Time, CPC will conduct its operations according to
its ordinary and usual course of business and consistent with
past practice. Without limiting the generality of the
foregoing and except as set forth in Schedule 4.1, prior to
the Effective Time, CPC will not, without the prior written
consent of the Buyer, (i) issue, sell, pledge or encumber, or
authorize or propose the issuance, sale, pledge or encumbrance
of (A) any shares of capital stock of any class (including the
shares of CPC Common Stock), or securities convertible into
any such shares, or any rights, warrants or options to acquire
any such shares or other convertible securities, or grant or
accelerate any right to convert or exchange any securities of
CPC for such shares, other than as contemplated by Sections
1.5(d) and 1.7 or (B) any other securities in respect of, in
lieu of or in substitution for shares of CPC Common Stock
outstanding on the date hereof; (ii) redeem, purchase or
otherwise acquire, or propose to redeem, purchase or otherwise
acquire, any of its outstanding securities except as provided
in Section 1.5(d) (including the shares of outstanding
preferred stock and the shares of CPC Common Stock); (iii)
split, combine or reclassify any shares of its capital stock
or declare or pay any dividend or distribution on any shares
of capital stock of CPC; (iv) except pursuant to agreements or
arrangements in effect on the date hereof which have been
disclosed to the Buyer, authorize any capital expenditure in
excess of $25,000 in the aggregate, or make any acquisition or
disposition of assets for more than $10,000 (other than goods
or services in the ordinary course of business); (v) pledge or
encumber any assets of CPC; (vi) incur any long-term debt for
borrowed money or short-term debt for borrowed money except
for debt incurred in the ordinary course of business
(including, without limitation, to fund working capital needs)
in an aggregate amount not in excess of $25,000; (vii) propose
or adopt any amendments to the Articles of Incorporation or
By-Laws of CPC; (viii) adopt a plan of complete or partial
liquidation or resolutions providing for the complete or
partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of
CPC; (ix) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person; (x) make
any loans, advances or capital contributions to, or
investments in, any other person, (xi) except as required by
applicable laws, adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred
compensation, severance, termination, employment or other
employee benefit plan, agreement, trust, fund, policy or other
arrangement for the benefit or welfare of any employee or
director or former employee or director or, except as required
by applicable laws, increase the compensation or fringe
benefits of any employee or pay any employee or pay any
benefit not required by any existing plan, arrangement or
agreement; (xii) make any tax election or settle or compromise
any federal, state, local or foreign income tax liability; or
(xiii) other than in the ordinary course of business grant any
license or sublicense of any rights under or with respect to
intellectual property; (ix) enter into any agreement,
contract, license or lease outside of the ordinary course of
business; or (xv) agree in writing or otherwise to take any of
the foregoing actions.
(b) In addition, prior to the Effective Time, CPC
will not enter into any agreement, contract, lease or license,
or renew, accelerate, terminate, modify or cancel any
agreement, contract, lease or license (or series of related
agreements, contracts, leases or licenses) involving an annual
value of more than $25,000 unless it shall have provided Buyer
with a full description of such proposed transaction and
consulted with Buyer concerning the advisability of the
transaction. Following the date of execution of this
Agreement, the parties hereto shall use their respective best
efforts to secure the consents as described on Schedule 2.7;
provided, however, that for this purpose "best efforts" shall
not require CPC or the Buyer to make any payment in order to
secure any such consents. Each of CPC and the Buyer shall give
prompt notice to the other party of any notice or other
communication from any third party alleging that the consent
of such third party is or may be required in connection with
the transactions contemplated by this Agreement.
(c) Following the date of execution of this
Agreement, CPC shall consult with Buyer with respect to those
matters which will or may result in material expenses to the
Surviving Corporation, including but not limited to
commencement of an arbitration proceeding or litigation, and
commitment to trade show exhibitions.
4.2 Customer Contact. Following the date of execution of this
Agreement, CPC shall use its best efforts and shall cooperate fully
with Buyer in contacting CPC customers, redistribution accounts and
others with whom CPC does business to inform such persons of the merger
and to assure such persons that the business of CPC and the services
offered by CPC will continue. CPC shall use its best efforts to provide
assurances that any concerns with regard to the merger expressed to CPC
employees by customers or others with whom CPC does business are
promptly conveyed to Buyer.
4.3 No Solicitation. Neither CPC nor any of its respective
officers, directors, employees , representatives, agents or affiliates,
shall, directly or indirectly, encourage, solicit, initiate or
participate in any way in discussions or negotiations with, or
knowingly provide any information to, any corporation, partnership,
person or other entity or group (other than the Buyer or any affiliate
or an associate of the Buyer) concerning any merger, sale of
substantially all the assets, sale of shares of capital stock or
similar transactions involving CPC or any material division (except for
any sale of the Payne and Associates division) of CPC; provided,
however, that nothing contained in this Section 4.2 shall prohibit CPC
or its Board of Directors from (i) taking and disclosing to CPC's
stockholders a position with respect to a tender offer by a third party
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange
Act, (ii) making such disclosure to CPC's stockholders which, in the
judgment of the Board of Directors with the advice of counsel, may be
required under applicable law or (iii) providing information to, or
participating in discussions or negotiations with, any party that has
actually made a proposal, and which the Board of Directors believes in
good faith would be capable of effecting an acquisition of CPC on terms
that are superior, from a financial point of view, to the transactions
contemplated by this Agreement. CPC will promptly communicate to the
Buyer if it is furnishing information to or engaging in negotiations
with any third party with respect to the acquisition of CPC or any of
its assets or subsidiaries and CPC will promptly provide Buyer with a
copy of any such proposal by any third party.
4.4 Best Efforts. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all appropriate action, and to do, or cause
to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement.
4.5 Benefit Plans.
(a) Schedule 4.5 includes all employee benefit plans,
programs, policies and agreements which provide compensation
or other benefits upon a termination of employment, voluntary
or involuntary, for the three highest paid employees of CPC or
which include a "change of control" provision, and a complete
and correct copy (or model form) of each such plan, program,
policy and agreement has been provided to Buyer.
(b) The Buyer will honor and cause the Surviving
Corporation to honor and perform its obligations under each of
the plans, programs, policies and agreements set forth on
Schedule 4.5.
(c) If any salaried or non-union hourly employee of
CPC is or becomes a participant in any written employee
benefit plan or program of the Surviving Corporation or any
member of its controlled group within the meaning of Section
414(b) or (c) of the Internal Revenue Code of 1986, as amended
(the "Code"), such employee shall be credited under such plan
or program with all service prior to the Effective Time with
CPC to the extent credit was given by CPC for purposes of
eligibility for all purposes and vesting under such plan or
program.
(d) The Buyer acknowledges that consummation of the
Merger will constitute a change of control of CPC (to the
extent such concept is relevant) for purposes of any and all
of the agreements and plans specified on Schedule 4.5.
(e) The Buyer agrees to the amendment of the
compensation and benefit plans and programs set forth above in
this Section 4.5 to permit the acceleration of termination
payments thereunder on or after the later of the Effective
Time or five business days after the participant's termination
of employment for any reason; provided, however, that (i) all
payments under severance plans may be paid over the period of
the benefit, (ii) such termination must occur within two years
after Effective Time and (iii) no payments shall be
accelerated or made to the extent they could constitute
non-deductible excess parachute payments within the meaning of
Section 280G(b)(1) and (2)(A) of the Code. CPC has not entered
into, adopted or amended after April 30, 1996 any employee
benefit plan, program, policy or agreement, or any other
agreement or arrangement with respect to any employee or
director of CPC, except as listed on Schedule 4.5.
4.6 Supplemental Information and Documents. From time to time
prior to the Effective Time of the Merger, CPC will deliver to Buyer
and Buyer will deliver to CPC supplemental or other information and
documents, including, without limitation, concerning events, facts or
circumstances subsequent to the date of this Agreement which could
render any statement, representation, warranty, covenant or other
agreement in any of the Merger Agreements or any information contained
in any Exhibit or Schedule inaccurate or incomplete or which documents
would have been required to have been delivered if existing prior to
the date of this Agreement. CPC's obligations pursuant to this Section
4.6 will not limit or affect any right or remedy Buyer might otherwise
have under any of the Merger Agreements or otherwise with respect to
any such supplemental or other information or documents, including,
without limitation pursuant to Section 5 or Section 7 below. CPC will
cooperate, and will cause its employees to cooperate, with Buyer and
all of its representatives with respect to making available all
information requested by Buyer and its representatives.
4.7 Proxy Materials. As soon as practicable after the date of
this Agreement, CPC will prepare appropriate proxy materials for
submission to CPC's shareholders in connection with obtaining the
shareholder approval referred to in Section 1.5 of this Agreement. CPC
will include such information as, in the judgment of Buyer or its
counsel, may be required or appropriate for inclusion in the proxy
materials, including any amendments or supplements thereto. CPC will
file the appropriate proxy materials with the Commission and use its
best efforts to respond to comments of the staff of the Commission and
to clear such materials with the staff of the Commission. Promptly
after such clearance, but in no event later than 10 days after the date
of Commission clearance, CPC will mail such proxy materials to all
holders of record of shares of CPC Common Stock who are holders on the
record date for the meeting of shareholders of CPC to be held in
connection with this Agreement and the Merger and to all holders of CPC
Options. After the distribution of the proxy materials, CPC will mail
or otherwise furnish to such holders such amendments or supplements to
the proxy materials as may, in the opinion of CPC, be appropriate or
necessary so that the proxy materials will not contain any untrue
statement of material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading or
as may be necessary to comply with applicable law. CPC covenants that
the proxy materials will comply as to form in all material respects
with all proxy and other requirements of all applicable state, federal
and other securities laws, including, without limitation, the
Securities Act and the rules and regulations thereunder and the
Exchange Act and the rules and regulations thereunder and that none of
such proxy materials will, at the time of (i) any mailing thereof or
(ii) the meeting of shareholders to be held in connection with the
Merger, contain any untrue statement of material fact or omit to state
any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading. Buyer will provide CPC, promptly following
request by CPC, with the information Buyer is required by the
provisions of the Exchange Act to include in the proxy materials.
Neither CPC nor Buyer will, without giving the other prior written
notice, use any materials other than the proxy materials referenced in
this section for the purposes contemplated by this Agreement or
otherwise in connection with the Merger.
5. Conditions to Closing.
5.1 Conditions Precedent to Obligations of Buyer and Sub.
Unless waived by Buyer and Sub, the obligations of Buyer and Sub under
this Agreement are subject to the satisfaction of the following
conditions at or prior to the Effective Time of the Merger:
(a) No action or proceeding will have been instituted
against CPC which materially affects or may materially affect
its business, prospects, assets, properties or condition
(financial or otherwise). No action or proceeding will have
been instituted by any governmental entity or other person or
entity before any court, arbitrator or governmental entity to
restrain, prevent, condition or obtain material damages in
respect of any of the Merger Agreements or any of the
Transactions, which, in the opinion of Buyer and Sub, makes it
inadvisable to consummate such Transactions.
(b) All actions, undertakings, covenants or
agreements required pursuant to any of the Merger Agreements
to be performed by CPC on or prior to the Effective Time of
the Merger have been so performed or complied with in all
material respects.
(c) All representations and warranties made by CPC in
any of the Merger Agreements are true and correct in all
material respects at and as of the Effective Time of the
Merger, with the same force and effect as though such
representations and warranties had been made at and as of the
Effective Time of the Merger and any supplements to any
disclosure schedule delivered after the date of this Agreement
shall not reflect any material adverse change from the
disclosure schedule delivered to Buyer as of the date of this
Agreement, except as expressly permitted by this Agreement or
as otherwise agreed to in writing by Buyer, and Buyer will not
have discovered any material error, misstatement or omission
in any of such representations or warranties. The Chief
Executive Officer or the Chief Financial Officer of CPC will
deliver to Buyer a Certificate, dated as of the Effective Time
of the Merger, signed by them, certifying as to the matters
covered by Sections 5.1(b) and (c).
(d) All action required to be taken by or on the part
of CPC to authorize the execution, delivery and performance of
the Merger Agreements by CPC and the consummation of the
Transactions will have been duly and validly taken by the
Board of Directors and shareholders of CPC, and Buyer will
have received copies of the resolutions evidencing such
authorization certified by the Secretary of CPC.
(e) Buyer will have received from Best & Flanagan,
counsel to CPC, an opinion in form and substance satisfactory
to Buyer.
(f) All courts of law, governmental entities and
other third parties, the consent, authorization or approval of
which is necessary under any applicable law, rule, order or
regulation or under any contract, commitment or agreement of
CPC for the consummation by CPC of the Transactions, will have
consented to, authorized, permitted or approved such
Transactions.
(g) The holders of not more than 10% of Outstanding
CPC Common Stock will have perfected statutory appraisal,
dissenters' or similar rights to which such holders may be
entitled under applicable law in connection with the Merger.
(h) The Merger Agreements and the Transactions will
have been approved by the holders of CPC Common Stock in
accordance with CPC's Articles of Incorporation, Bylaws and
applicable law.
(i) CPC will have furnished Buyer with a certificate
of its officers in the form attached hereto as Exhibit 5.1(i).
(j) CPC will have executed and delivered all other
documents reasonably requested by Buyer or otherwise necessary
or appropriate for the consummation of any of the
Transactions, including, without limitation, all documents
required to be executed and/or delivered by or on behalf of
CPC at or prior to the Closing pursuant to this Agreement.
(k) There has been no adverse change in the business,
prospects, operations or condition (financial or otherwise) of
CPC or any event, condition, occurrence, action taken or
omission made which, either individually or in the aggregate,
might materially adversely affect the business, prospects,
operations or condition (financial or otherwise) of CPC;
provided, however, that departure of any number of employees,
whether voluntary or involuntary, or loss of any number of
customers, for any reason, after public announcement of the
execution of this Agreement, shall not constitute a material
adverse change giving the Buyer or Sub a right to terminate
this Agreement.
(l) CPC will have furnished to Buyer an executed copy
of the comfort letter delivered to CPC by McGladrey & Pullen,
LLP in connection with distribution of the proxy statement,
and such comfort letter shall show Buyer as an addressee.
5.2 Conditions Precedent to Obligations of CPC. Unless waived
by CPC, the obligations of CPC under this Agreement are subject to the
satisfaction of the following conditions at or prior to the Effective
Time of the Merger:
(a) No action or proceeding will have been instituted
against Buyer or Sub which materially affects or may
materially affect its business, prospects, assets, properties
or condition (financial or otherwise). No action or proceeding
will have been instituted by any Governmental Entity or other
person or entity before any court, arbitrator or Governmental
Entity to restrain, prevent, condition or obtain material
damages in respect of any of the Merger Agreements or any of
the Transactions, which, in the opinion of CPC, makes it
inadvisable to consummate such Transactions.
(b) All actions, undertakings, covenants or
agreements required pursuant to any of the Merger Agreements
to be performed by Buyer and Sub on or prior to the Effective
Time of the Merger have been so performed or complied with in
all material respects.
(c) All representations and warranties made by Buyer
and Sub in any of the Merger Agreements are true and correct
in all material respects at and as of the Effective Time of
the Merger, with the same force and effect as though such
representations and warranties had been made at and as of the
Effective Time of the Merger, except as expressly permitted by
this Agreement or as otherwise agreed to in writing by CPC,
and CPC will not have discovered any material error,
misstatement or omission in any of such representations or
warranties. Officers of Buyer and Sub will deliver to CPC a
Certificate, dated as of the Effective Time of the Merger,
signed by him or her, certifying as to the matters covered by
Sections 5.2(b) and (c).
(d) All action required to be taken by or on the part
of Buyer and Sub to authorize the execution, delivery and
performance of the Merger Agreements by Buyer and the
consummation of the Transactions will have been duly and
validly taken by the Buyer and the Board of Directors of Sub,
and CPC will have received copies of the resolutions
evidencing such authorization certified by the Buyer and the
Secretary of Sub.
(e) CPC will have received from Maryland counsel to
Buyer and Sub an opinion in form and substance satisfactory to
CPC.
(f) All courts of law, Governmental Entities and
other third parties, the consent, authorization or approval of
which is necessary under any applicable law, rule, order or
regulation or under any contract, commitment or other
agreement of Buyer and Sub, for the consummation by Buyer and
Sub of the Transactions, will have consented to, authorized,
permitted or approved such Transactions.
(g) Buyer and Sub will have furnished CPC with a
certificate of officers in the form attached hereto as Exhibit
5.2(g).
(h) Buyer and Sub will have executed and delivered
all other documents reasonably requested by CPC or otherwise
necessary or appropriate for the consummation of any of the
Transactions, including, without limitation, all documents
required to be executed and/or delivered by or on behalf of
Buyer and Sub at or prior to the Closing pursuant to this
Agreement.
(i) There has been no adverse change in the business,
prospects, operations or condition (financial or otherwise) of
Buyer or any event, condition, occurrence, action or omission
made which, either individually or in the aggregate, might
materially adversely affect the business, prospects,
operations or condition (financial or otherwise) of Buyer.
(j) Buyer shall have deposited the Merger
Consideration with the Exchange Agent in accordance with
Exchange Agreement.
5.3 Conditions Precedent to Obligations of Each Party. The
respective obligations of each party to effect the Merger are subject
to the satisfaction of the following conditions at or prior to the
Effective Time of the Merger:
(a) No final, nonappealable injunction or other order
by any Governmental Entity which prevents the consummation of
the Merger will have been issued and remain in effect.
6. Termination; Amendment.
6.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after
approval of the Merger by the shareholders of CPC, as follows:
(a) by mutual written consent of Buyer and CPC,
properly authorized by their respective Boards of Directors;
or
(b) by Buyer or CPC (i) if the Effective Time of the
Merger has not occurred on or prior to September 30, 1996,
unless the failure of such occurrence is due to the failure of
the party seeking to terminate this Agreement pursuant to this
Section 6.1(b) to perform or observe the representations,
warranties, covenants, conditions and agreements to be
performed or observed by it on or before the Effective Time of
the Merger; or
(c) by Buyer or CPC if at the time of such
termination there has been any breach in any material respect
of any representation, warranty, covenant or obligation of the
other party under any of the Merger Agreements and such breach
has not been remedied within 15 business days after receipt of
notice in writing specifying the nature of such breach and
requesting that it be remedied; or
(d) by Buyer if CPC through its Board of Directors
fails to recommend, or withdraws or modifies in a manner
adverse to Buyer its recommendation, to CPC's shareholders to
approve any of the Merger Agreements or any of the
Transactions; or
(e) by Buyer or CPC if CPC's shareholders shall not
have approved the Merger by August 31, 1996.
(f) by CPC, if (i) any corporation, partnership,
person, other entity or group, as defined in the Exchange Act
(other than Buyer or any affiliate of Buyer) (a "Person"),
shall have commenced (as such term is used in Rule 14d-2(b)
under the 1934 Act) a bona fide tender offer for all
outstanding shares of CPC's Common Stock or any Person shall
have made a bona fide written offer involving a merger or
consolidation of CPC or the acquisition of all or
substantially all of its assets, (ii) CPC's Board of Directors
shall determine, after consultation with CPC's independent
financial advisors, that such offer is a material economic
improvement to CPC's shareholders when compared to the
transactions contemplated by this Agreement, and (iii) CPC's
Board of Directors determines upon the advice of its legal
counsel that if they failed to recommend such offer or accept
such proposal then such failure would be likely to result in a
breach of the directors' fiduciary or legal duties, provided
that CPC may not terminate the Agreement pursuant to this
paragraph until the expiration of five (5) business days after
written notice of any such offer or proposal referenced in
this paragraph has been delivered to Buyer, together with a
summary of the terms of any such offer or proposal.
6.2 Effect of Termination. In the event of termination of this
Agreement pursuant to Sections 6.1 (a) or (b) no party will have any
liability or further obligation to the other party. Any termination
pursuant to the other provisions of Section 6.1 will not affect the
terminating party's right to pursue all remedies available under
applicable law arising from the other party's misrepresentation, breach
or failure to satisfy the conditions as provided in any of the Merger
Agreements. In addition to any such rights (i) in the event this
Agreement is properly terminated as provided in paragraphs (d) or (f)
of Section 6.1 or, if all shares of Outstanding CPC Common Stock owned
or controlled by the current members of the Board of Directors of CPC
are not voted in favor of the Merger at the meeting of CPC shareholders
as contemplated by Section 1.5, by paragraph (e) of Section 6.1, then
within two days after written demand from Buyer, CPC shall pay to
Buyer, in immediately available funds, the sum of $1,000,000.00, and
(ii) in the event this Agreement is properly terminated by CPC as
provided in paragraph (c) of Section 6.1, then within two days after
written demand from CPC, Buyer shall pay to CPC as liquidated damages
the sum of $3,000,000 in immediately available funds.
6.3 Amendment, Waiver, Etc. Subject to applicable law and to
this Section 6.3, at any time prior to the consummation of the Merger,
whether before or after approval of the Transactions by CPC's
shareholders, CPC, Buyer and Sub may, by action duly authorized, (a)
mutually amend this Agreement, (b) extend the time for the performance
of any of the obligations or other acts of any other person or entity,
(c) waive any inaccuracies in the representations or warranties
contained in any of the Merger Agreements, or (d) waive compliance with
any of the agreements or conditions contained in Section 5.
Notwithstanding the foregoing, after any approval of the Merger by
CPC's shareholders, there will not be, without further approval of such
shareholders, any amendment, extension or waiver of this Agreement
which reduces the amount or changes the form of consideration to be
delivered to CPC's shareholders. This Agreement may not be amended
except by a writing signed by all of the parties by persons authorized
to execute such writing. Any agreement of a party to any extension or
waiver will be valid only if set forth in a writing signed on behalf of
such party by a person authorized to execute such writing, but any
waiver or failure to insist on strict compliance with any obligation,
covenant, agreement or condition will not operate as a waiver of or
estoppel with respect to any subsequent or other failure.
7. Closing. On the Closing Date, the parties will take such actions and
execute and deliver such documents as are described in this Agreement,
including, without limitation, in this Section 7, and will take such further
actions and execute and deliver such other documents as the other party may
reasonably request or as otherwise necessary or appropriate for the consummation
of any of the Transactions.
7.1 Deliveries to the Exchange Agent. Buyer will deposit the
Merger Consideration with the Exchange Agent, and the Exchange Agent
will have executed a receipt therefor.
7.2 Deliveries by Buyer and Sub. Buyer and Sub will execute
and/or deliver or cause to be executed and/or delivered:
(a) Articles and/or Certificates of Merger to be
filed in respect of the Merger;
(b) the Exchange Agreement;
(c) officers' certificates as provided in Section
5.2(c);
(d) an opinion of counsel as provided in Section
5.2(e).
7.3 Deliveries by CPC. CPC will execute and/or deliver or
cause to be executed and/or delivered:
(a) Articles and/or Certificates of Merger to be
filed in respect of the Merger;
(b) certified Articles of Incorporation with respect
to CPC;
(c) good standing certificates with respect to CPC;
(d) resignations in form and substance acceptable to
Buyer, effective as of the Effective Time of the Merger, of
the directors of CPC;
(e) a certificate of the Secretary of CPC in such
form and substance as Buyer may request relating to bylaws,
resolutions, incumbency of officers and such other matters as
Buyer may reasonably request;
(f) the Exchange Agreement;
(g) officers' certificates as provided in Section
5.1(c);
(h) an opinion of counsel as provided in Section
5.1(e).
8. Miscellaneous.
8.1 Governing Law; Jurisdiction. This Agreement will be
governed by and construed in accordance with the laws of the State of
Minnesota, without regard to principles of conflicts of laws. The
parties consent to the personal jurisdiction of the state and federal
courts of the State of Minnesota and select such courts as the sole
proper forums within which to adjudicate disputes under or relating to
any of the Merger Agreements or any of the Transactions.
8.2 Counterparts. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
8.3 Interpretation. The headings contained in this Agreement
are solely for the purposes of reference, are not part of the agreement
of the parties and will not in any way affect the meaning or
interpretation of this Agreement.
8.4 Entire Agreement. This Agreement, including, without
limitation, the Exhibits, Schedules, documents, certificates and
instruments referred to in this Agreement, and including the Letter
Agreement between CPC and Buyer of even date herewith, embodies the
entire agreement and understanding of the parties with respect to its
subject matter. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set
forth or referred to in this Agreement. This Agreement supersedes all
prior agreements and understandings between the parties with respect to
its subject matter.
8.5 Severability. If any provision of this Agreement is
determined to be illegal or invalid, such illegality or invalidity will
have no effect on the other provisions of this Agreement, and all other
provisions of this Agreement will remain valid, operative and
enforceable.
8.6 Notices. Any notice or other communication required or
which may be given under this Agreement will be sufficient if in
writing and delivered personally, telecopied or telexed, mailed,
certified, registered or first class mail, postage prepaid, or sent by
overnight courier, and will be deemed given when so delivered
personally, telecopied or telexed, if mailed, two days after the date
of mailing, or if sent by overnight courier, one day after the date of
sending, as follows, or at such other addresses as the addressee may
from time to time designate in writing pursuant to this Section 8.6:
To Buyer: United Communications Group,
Limited Partnership
11300 Rockville Pike
Suite 1100
Rockville, Maryland 20852-3030
Attn: Mr. Bruce Levenson
with a copy to: Kaplan, Strangis and Kaplan, P.A.
5500 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Attn: Mr. Ralph Strangis
To CPC: Computer Petroleum Corporation
World Trade Center
30 East Seventh Street, Suite 510
St. Paul, Minnesota 55101
Attn: Mr. Charles G. Schieffelbein,
Chairman of the Board
with a copy to: Best & Flanagan
Professional Limited Liability Partnership
4000 First Bank Place
601 Second Avenue South
Minneapolis, MN 55402-4331
Attn: Leonard M. Addington, Esq.
8.7 Successors and Assigns. This Agreement will be binding
upon and inure to the benefit of the parties to this Agreement and
their respective successors, but will not be assignable by any party
except by operation of law.
8.8 Press Releases. On or before the Effective Time of the
Merger, no party will issue or authorize to be issued any press release
or similar announcement concerning any of the Merger Agreements or any
of the Transactions without the prior approval of the other party;
provided, however, that CPC will be permitted to make such disclosures
as necessary to comply with any applicable securities laws or the
Nasdaq Stock Market policies.
8.9 Remedies Cumulative. Rights and remedies provided by this
Agreement are cumulative and in addition to any other rights and
remedies which any party may have under any other agreement, including,
without limitation, under any of the other Merger Agreements, at law or
in equity.
8.10 No Construction Against Drafter. The Merger Agreements
have been reviewed by the parties and their counsel and are being
entered into among competent persons, who are experienced in business
and represented by counsel. Therefore, any ambiguous language in any of
such agreements will not necessarily be construed against any
particular party as the drafter of such language.
8.11 Parties in Interest. With the exception of the parties to
this Agreement, there will exist no right of any person to claim a
beneficial interest in any of the Merger Agreements or any rights by
virtue of any of the Merger Agreements.
8.12 Indemnification.
(a) The Buyer agrees that it will indemnify the
present and former officers, directors and employees of CPC,
for a period of three years following the Effective Time,
against claims made against them arising from their services
in such capacities to the fullest extent permitted by the
Articles of Incorporation and Bylaws of CPC and Chapter 302A,
Minnesota Statutes, as in existence on the date of execution
of this Agreement, provided that nothing herein shall be
deemed to prevent the merger of the Surviving Corporation into
Buyer, and the liquidation of the Surviving Corporation
following the Effective Time.
(b) The Buyer will honor and guarantee the Surviving
Corporation's performance of all contracts, agreements and
commitments of CPC which indemnify any current or former
employee or current or former director of CPC.
(c) Any indemnified party wishing to claim
indemnification under this Section, upon learning of any such
action, suit, claim, proceeding or investigation, shall
promptly notify the Buyer thereof and the Buyer shall defend
such matter; provided, however, that any failure so to notify
the Buyer of any obligation to indemnify such indemnified
party or of any other obligation imposed by this Section shall
not affect such obligations unless such failure to so notify
materially prejudices the rights of the Buyer to defend any
such action, suit, claim proceeding or investigation. The
Buyer shall retain only one counsel in each jurisdiction to
represent the indemnified parties as a group with respect to
any single action; provided, however, in the event that there
is, under applicable standards of professional conduct
reasonably applied, a conflict between the positions of any
two or more indemnified parties, the Buyer and such
indemnified parties may retain, at the expense of the Buyer,
such number of additional counsel as are necessary to
eliminate all conflicts of the type referred to above.
(d) In the event any claim is made against present or
former directors, officers or employees of CPC that is covered
or potentially covered by insurance, the Buyer shall do
nothing that would forfeit, jeopardize, restrict or limit the
insurance coverage available for that claim.
8.13 Expenses.
(a) Except as provided in Section 1.8 of this
Agreement, all costs and expenses incurred in connection with
the Transactions contemplated by this Agreement shall be paid
by the party incurring such expenses.
(b) The Buyer acknowledges and agrees that CPC has
disclosed that it is indebted for fees and expenses (including
fees and expenses of its counsel and investment advisors and
certain expenses described in Section 1.8 hereof) incurred by
it in connection with the Transactions contemplated by this
Agreement. To the best knowledge of CPC, the fees and expenses
listed in Section 1.8 represent the only fees and expenses
incurred by CPC in connection with the Transactions
contemplated by this Agreement. It is understood that certain
of such fees and expenses may be paid by CPC prior to or at
the Closing, and the Buyer agrees to refrain from taking any
action which would interfere with the payment of the foregoing
fees and expenses by CPC.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date first written above.
COMPUTER PETROLEUM CORPORATION,
A MINNESOTA CORPORATION
By /s/ Charles G. Schiefelbein
Its Chairman of the Board
UNITED COMMUNICATIONS GROUP
LIMITED PARTNERSHIP, A MARYLAND
LIMITED PARTNERSHIP
By UCG Inc., General Partner
By /s/ Bruce Levenson
Its President
UCG ACQUISITION CORP., A MARYLAND
CORPORATION
By /s/ Bruce Levenson
Its President
EXHIBIT II
OPINION OF GREENE HOLCOMB & LANNIN LLC
GREENE HOLCOMB & LANNIN
INVESTMENT BANKING LLC
June 20, 1996
Board of Directors
Computer Petroleum Corporation
Suite 510
30 East Seventh Street
St. Paul, MN 55101
Gentlemen:
We understand that Computer Petroleum Corporation ("CPC"), United Communications
Group, Limited Partnership ("UCG") and UCG Acquisition Corporation, a wholly
owned subsidiary of UCG ("Sub"), intend to enter into an Agreement and Plan of
Merger, to be dated as of June 20, 1996 (the "Agreement"), pursuant to which,
among other things, Sub will be merged with and into CPC, with CPC surviving as
a wholly owned subsidiary of UCG (the "Merger"). Pursuant to the terms of the
Agreement, UCG will pay a total of $12 million in cash (the "Merger
Consideration") to the holders of all of the outstanding equity securities of
CPC (including any securities convertible into or exchangeable for equity
securities of CPC), collectively, the "CPC Shareholders." We understand and have
assumed that, pursuant to the terms of the Merger Agreement, all of the
outstanding shares of Series A Convertible Non-Voting Preferred Stock of CPC
will be converted, on a one-to-one basis, into shares of Common Stock of CPC in
connection with the Merger.
You have requested our opinion as to the fairness, from a financial point of
view, to the CPC Shareholders of the Merger Consideration to be paid by UCG in
the Merger.
Greene Holcomb & Lannin LLC (GH&L), as a part of its investment banking
business, is engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, private placements and valuations for
corporate and other purposes. We are currently acting as financial advisor to
CPC in connection with the Merger and will receive a fee for our services that
is contingent upon the consummation of the Merger. For our services in rendering
this opinion, CPC will pay us a fee which is not contingent upon consummation of
the Merger. CPC has also agreed to indemnity us against certain liabilities in
connection with our services as financial advisor to CPC and in rendering this
opinion.
5450 Norwest Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Phone 612.904.5700
Fax 612.904.5719
June 20, 1996
Computer Petroleum Corporation
Page 2
In arriving at our opinion, we have undertaken such review, analyses and
inquiries as we deemed necessary and appropriate under the circumstances. Among
other things, we have reviewed (i) a draft of the Agreement, dated June 19, 1996
(which draft, we have assumed, will be identical, in all material respects, to
the Agreement as executed on or after the date hereof), (ii) certain publicly
available financial statements and other information of CPC, and (iii) certain
internal financial statements and other information of CPC prepared by the
management of CPC for financial planning purposes. We have visited CPC's
facilities in St. Paul, Minnesota and Peoria, Illinois and have had discussions
with members of the management of CPC concerning the financial condition,
current operating results and business outlook for CPC.
We have analyzed the historical reported market prices and trading activity of
CPC Common Stock. We have compared certain financial and stock market
information concerning CPC to similar information for certain publicly traded
companies deemed similar to CPC. We have also reviewed, to the extent publicly
available, the terms of selected relevant mergers and acquisitions, analyzed the
general economic outlook of information services companies and performed such
other studies and analyses as we considered appropriate.
We have relied upon and assumed the accuracy, completeness and fairness of the
financial statements and other information provided to us by CPC or otherwise
made available to us, and have not attempted independently to verify such
information. We have assumed, in reliance upon the assurances of the management
of CPC, that the information provided to us by CPC has been prepared on a
reasonable basis, and, with respect to financial planning data and other
business outlook information, reflects the best currently available estimates
and judgments of the management of CPC, and that the management of CPC is not
aware of any information or facts that would make the information provided to us
incomplete or misleading. We have assumed that there have been no material
changes in CPC's assets, financial condition, results of operations, business or
prospects since the date of the last financial statements of CPC made available
to us. In arriving at our opinion, we have not performed any appraisals or
valuations of specific assets of CPC and we express no opinion regarding the
liquidation value of CPC. On behalf of CPC, and at its request, we made contacts
with a number of potential purchasers of CPC and assisted in the solicitation of
proposals from and negotiations with interested prospective purchasers. This
opinion is based upon the information available to us as of, and the facts and
circumstances as they exist and are subject to evaluation on, the date hereof.
This opinion is intended for the information of the Board of Directors of CPC
only and may be published in its entirety in the proxy statement to be
distributed to the holders of Common Stock of CPC in connection with the Merger
(as so distributed, the "Proxy Statement"). Any summary of, excerpt from or
reference to this opinion in the Proxy Statement may only be made with our prior
written consent, which consent shall not be unreasonably withheld. Except as set
forth in the immediately preceding two sentences, this opinion may not be used
or referred to by CPC or quoted or disclosed to any person in any manner without
our prior written consent. This
June 20, 1996
Computer Petroleum Corporation
Page 3
opinion is not intended to be and does not constitute a recommendation to any
CPC Shareholder as to how such CPC Shareholder should vote with respect to the
Merger.
Based upon and subject to the foregoing and based upon such other factors as we
consider relevant, it is our opinion that the Merger Consideration to be
received by the CPC Shareholders pursuant to the Agreement is fair, from a
financial point of view, to the CPC Shareholders as of the date hereof.
Sincerely,
GREENE HOLCOMB & LANNIN LLC
EXHIBIT III
SECTIONS 302A.471 AND 302A.473 OF THE
MINNESOTA BUSINESS CORPORATION ACT
302A.471. RIGHTS OF DISSENTING SHAREHOLDERS
SUBDIVISION 1. ACTIONS CREATING RIGHTS. A shareholder of a corporation
may dissent from, and obtain payment for the fair value of the shareholder's
shares in the event of, any of the following corporate actions:
(a) An amendment of the articles that materially and adversely
affects the rights or preferences of the shares of the dissenting
shareholder in that it:
(1) alters or abolishes a preferential right of the
shares;
(2) creates, alters, or abolishes a right in respect
of the redemption of the shares, including a provision
respecting a sinking fund for the redemption or repurchase of
the shares;
(3) alters or abolishes a preemptive right of the
holder of the shares to acquire shares, securities other than
shares, or rights to purchase shares or securities other than
shares;
(4) excludes or limits the right of a shareholder to
vote on a matter, or to cumulate votes, except as the right
may be excluded or limited through the authorization or
issuance of securities of an existing or new class or series
with similar or different voting rights; except that an
amendment to the articles of an issuing public corporation
that provides that section 302A.671 does not apply to a
control share acquisition does not give rise to the right to
obtain payment under this section;
(b) A sale, lease, transfer, or other disposition of all or
substantially all of the property and assets of the corporation , but
not including a transaction permitted without shareholder approval in
section 302A.661, subdivision 1, or a disposition in dissolution
described in section 302A.725, subdivision 2, or a disposition pursuant
to an order of a court, or a disposition for cash on terms requiring
that all or substantially all of the net proceeds of disposition be
distributed to the shareholders in accordance with their respective
interests within one year after the date of disposition;
(c) A plan of merger, whether under this chapter or chapter
332B, to which the corporation is a party, except as provided in
subdivision 3;
(d) A plan of exchange, whether under this chapter or chapter
332B, to which the corporation is a party as the corporation whose
shares will be acquired by the acquiring corporation, if the shares of
the shareholder are entitled to be voted on the plan; or
(e) Any other corporate action taken pursuant to a shareholder
vote with respect to which the articles, the bylaws, or a resolution
approved by the board directs that dissenting shareholders may obtain
payment for their shares.
SUBD. 2. BENEFICIAL OWNERS. (a) A shareholder shall not assert
dissenters' rights as to less than all of the shares registered in the name of
the shareholder, unless the shareholder dissents with respect to all the shares
that are beneficially owned by another person but registered in the name of the
shareholder and discloses the name and address of each beneficial owner on whose
behalf the shareholder dissents. In that event, the rights of the dissenter
shall be determined as if the shares as to which the shareholder has dissented
and the other shares were registered in the names of different shareholders.
(b) The beneficial owner of shares who is not the shareholder may
assert dissenters' rights with respect to shares held on behalf of the
beneficial owner, and shall be treated as a dissenting shareholder under the
terms of this section and section 302A.473, if the beneficial owner submits to
the corporation at the time of or before the assertion of the rights a written
consent of the shareholder.
SUBD. 3. RIGHTS NOT TO APPLY. Unless the articles, the bylaws, or a
resolution approved by the board otherwise provide, the right to obtain payment
under this section does not apply to a shareholder of the surviving corporation
in a merger, if the shares of the shareholder are not entitled to be voted on
the merger.
SUBD. 4. OTHER RIGHTS. The shareholders of a corporation who have a
right under this section to obtain payment for their shares do not have a right
at law or in equity to have, a corporate action described in subdivision 1 set
aside or rescinded, except when the corporate action is fraudulent with regard
to the complaining shareholder or the corporation.
302A.473. PROCEDURES FOR ASSERTING DISSENTERS' RIGHTS
SUBDIVISION 1. DEFINITIONS. (a) For purposes of this section, the terms
defined in this subdivision have the meanings given them.
(b) "Corporation" means the issuer of the shares held by a dissenter
before the corporate action referred to in section 302A.471, subdivision 1 or
the successor by merger of that issuer.
(c) "Fair value of the shares" means the value of the shares of a
corporation immediately before the effective date of the corporate action
referred to in section 302A.471, subdivision 1.
(d) "Interest" means interest commencing five days after the effective
date of the corporate action referred to in section 302A.471, subdivision 1, up
to and including the date of payment, calculated at the rate provided in section
549.09 for interest on verdicts and judgments.
SUBD. 2. NOTICE OF ACTION. If a corporation calls a shareholder meeting
at which any action described in section 302A.471, subdivision 1 is to be voted
upon, the notice of the meeting shall inform each shareholder of the right to
dissent and shall include a copy of section 302A.471 and this section and a
brief description of the procedure to be followed under these sections.
SUBD. 3. NOTICE OF DISSENT. If the proposed action must be approved by
the shareholders, a shareholder who wishes to exercise dissenters' rights must
file with the corporation before the vote on the proposed action a written
notice of intent to demand the fair value of the shares owned by the shareholder
and must not vote the shares in favor of the proposed action.
SUBD. 4. NOTICE OF PROCEDURE; DEPOSIT OF SHARES. (a) After the proposed
action has been approved by the board and, if necessary, the shareholders, the
corporation shall send to all shareholders who have complied with subdivision 3
and to all shareholders entitled to dissent if no shareholder vote was required,
a notice that contains:
(1) The address to which a demand for payment and certificates
of certificated shares must be sent in order to obtain payment and the
date by which they must be received;
(2) Any restrictions on transfer of uncertificated shares that
will apply after the demand for payment is received;
(3) A form to be used to certify the date on which the
shareholder, or the beneficial owner on whose behalf the shareholder
dissents, acquired the shares or an interest in them and to demand
payment; and
(4) A copy of section 302A.471 and this section and a brief
description of the procedures to be followed under these sections.
(b) In order to receive the fair value of the shares, a dissenting
shareholder must demand payment and deposit certificated shares or comply with
any restrictions on transfer of uncertificated shares within 30 days after the
notice required by paragraph (a) was given, but the dissenter retains all other
rights of a shareholder until the proposed action takes effect.
SUBD. 5. PAYMENT; RETURN OF SHARES. (a) After the corporate action
takes effect, or after the corporation receives a valid demand for payment,
whichever is later, the corporation shall remit to each corporation dissenting
shareholder who has complied with subdivisions 3 and 4 the amount the
corporation estimates to be the fair value of the shares, plus interest,
accompanied by:
(1) The corporation's closing balance-sheet and statement of
income for a fiscal year ending not more than 16 months before the
effective date of the corporate action, together with the latest
available interim financial statements;
(2) An estimate by the corporation of the fair value of the
shares and a brief description of the method used to reach the
estimate; and
(3) A copy of section 302A.471 and this section, and a brief
description of the procedure to be followed in demanding supplemental
payment.
(b) The corporation may withhold the remittance described in paragraph
(a) from a person who was not a shareholder on the date the action dissented
from was first announced to the public or who is dissenting on behalf of a
person who was not a beneficial owner on that date. If the dissenter has
complied with subdivisions 3 and 4, the corporation shall forward to the
dissenter the materials described in paragraph (a), a statement of the reason
for withholding the remittance, and an offer to pay to the dissenter the amount
listed in the materials if the dissenter agrees to accept that amount in full
satisfaction. The dissenter may decline the offer and demand payment under
subdivision 6. Failure to do so entitles the dissenter only to the amount
offered. If the dissenter makes demand, subdivisions 7 and 8 apply.
(c) If the corporation fails to remit payment within 60 days of the
deposit of certificates or the imposition of transfer restrictions on
uncertificated shares, it shall return all deposited certificates and cancel all
transfer restrictions. However, the corporation may again give notice under
subdivision 4 and require deposit or restrict transfer at a later time.
SUBD. 6. SUPPLEMENTAL PAYMENT; DEMAND. If a dissenter believes that the
amount remitted under subdivision 5 is less than the fair value of the shares
plus interest, the dissenter may give written notice to the corporation of the
dissenter's own estimate of the fair value of the shares, plus interest, within
30 days after the corporation mails the remittance under subdivision 5, and
demand payment of the difference. Otherwise, a dissenter is entitled only to the
amount remitted by the corporation.
SUBD. 7. PETITION; DETERMINATION. If the corporation receives a demand
under subdivision 6, it shall, within 60 days after receiving the demand, either
pay to the dissenter the amount demanded or agreed to by the dissenter after
discussion with the corporation or file in court a petition requesting that the
court determine the fair value of the shares, plus interest. The petition shall
be filed in the county in which the registered office of the corporation is
located, except that a Surviving foreign corporation that receives a demand
relating to the shares of a constituent domestic corporation shall file the
petition in the county in this state in which the last registered office of the
constituent corporation was located. The petition shall name as parties all
dissenters who have demanded payment under subdivision 6 and who have not
reached agreement with the corporation. The corporation shall, after filing the
petition, serve all parties with a summons and a copy of the petition under the
rules of civil procedure. Nonresidents of this state may be served by registered
or certified mail or by publication as provided by law. Except as otherwise
provided, the rules of civil procedure apply to this proceeding. The
jurisdiction of the court is plenary and exclusive. The court may appoint
appraisers, with powers and authorities the court deems proper, to receive
evidence on and recommend the amount of the fair value of the shares. The court
shall determine whether the shareholder or shareholders in question have fully
complied with the requirements of this section, and shall determine the fair
value of the shares, taking into account any and all factors the court finds
relevant, computed by any method or combination of methods that the court, in
its discretion, sees fit to use, whether or not used by the corporation or by a
dissenter. The fair value of the shares as determined by the court is binding on
all shareholders, wherever located. A dissenter is entitled to judgment in cash
for the amount by which the fair value of the shares as determined by the court,
plus interest, exceeds the amount, if any, remitted under subdivision 5, but
shall not be liable to the corporation for the amount, if any, by which the
amount, if any, remitted to the dissenter under subdivision 5 exceeds the fair
value of the shares as determined by the court, plus interest.
SUBD. 8. COSTS; FEES; EXPENSES. (a) The court shall determine the costs
and expenses of a proceeding under subdivision 7, including the reasonable
expenses and compensation of any appraisers appointed by the court, and shall
assess those costs and expenses against the corporation, except that the court
may assess part or all of those costs and expenses against a dissenter whose
action in demanding payment under subdivision 6 is found to be arbitrary,
vexatious, or not in good faith.
(b) If the court finds that the corporation has failed to comply
substantially with this section, the court may assess all fees and expenses of
any experts or attorneys as the court deems equitable. These fees and expenses
may also be assessed against a person who has acted arbitrarily, vexatiously, or
not in good faith in bringing the proceeding, and may be awarded to a party
injured by those actions.
(c) The court may award, in its discretion, fees and expenses to an
attorney for the dissenters out of the amount awarded to the dissenters, if any.
Laws 1981, c. 270ss. 81, eff. July 1, 1981. Amended by Laws 1987, c. 104,ss.ss.
30 to 33.
COMPUTER PETROLEUM CORPORATION
PROXY
SPECIAL STOCKHOLDERS' MEETING
AUGUST 20, 1996
The undersigned stockholder of Computer Petroleum Corporation hereby
appoints Charles G. Schiefelbein and Anton J. Christianson, and each of them,
his or her proxy, each with full power of substitution, to attend the Special
Meeting of the stockholders of Computer Petroleum Corporation, to be held at the
corporate offices of Computer Petroleum Corporation at World Trade Center, 30
East Seventh Street, Suite 510, St. Paul, Minnesota, on Tuesday, August 20,
1996, at 9:00 a.m., and at any and all adjournments thereof, and there to act
for and to vote all stock of the corporation owned of record by the undersigned,
in the manner specified below, upon the following matters.
1. To consider and vote upon approval of an Agreement and Plan of
Merger, dated June 21, 1996, among the Company, United Communications Group
Limited Partnership, a Maryland limited partnership ("UCG") and UCG Acquisition
Corp., a Maryland corporation and a wholly owned subsidiary of UCG, providing
for the merger of the Company with and into UCG Acquisition Corp., pursuant to
which each outstanding share of the Company's common stock (other than shares as
to which the holders have exercised their dissenter's rights under Minnesota
law) will be converted into the right to receive approximately $3.89 in cash,
without interest.
|_| FOR |_| AGAINST |_| ABSTAIN
2. In their discretion on any other matter that may properly come
before the meeting or any adjournment or adjournments thereof.
PLEASE FILL IN, SIGN ON REVERSE SIDE
AND MAIL IN THE ENCLOSED ENVELOPE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE AGREEMENT AND
PLAN OF MERGER. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF NOTICE OF THE MEETING
AND OF THE PROXY STATEMENT.
DATED THIS ____ DAY OF _________________, 1996.
______________________________
______________________________
(PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS HEREON. IF SIGNED
FOR ESTATES, TRUSTS OR
CORPORATIONS, TITLE OR
CAPACITY SHOULD BE STATED. IF
SHARES HELD JOINTLY, EACH
HOLDER MUST SIGN.)
