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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
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PROXIMA CORPORATION
(Name of Subject Company)
PROXIMA CORPORATION
(Name of Person Filing Statement)
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COMMON STOCK, PAR VALUE $.001 PER SHARE
(Title of Class of Securities)
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744287103
(CUSIP Number of Class of Securities)
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KENNETH E. OLSON
CHAIRMAN OF THE BOARD, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
PROXIMA CORPORATION
9440 CARROLL PARK DRIVE
SAN DIEGO, CALIFORNIA 92121
(619) 457-5500
(Name, Address and Telephone Number of Persons Authorized to Receive
Notices and Communications on behalf of the person filing this Statement)
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Copies to:
STEVE L. CAMAHORT, ESQ.
BROBECK, PHLEGER & HARRISON LLP
SPEAR STREET TOWER, ONE MARKET
SAN FRANCISCO, CALIFORNIA 94105-1000
(415) 442-0900
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INTRODUCTION
This Solicitation/Recommendation Statement on Schedule 14D-9 (this
"Schedule 14D-9" or this "Statement") relates to an offer by BD Acquisition
Corp., a Delaware corporation and wholly-owned subsidiary of ASK asa, a
Norwegian corporation, to purchase all of the Shares (as defined below) of
Proxima Corporation, a Delaware corporation. Capitalized terms used herein and
not otherwise defined shall have the meaning assigned to them in the Offer to
Purchase dated March 13, 1998.
ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Proxima Corporation, a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 9440 Carroll Park Drive, San Diego, California 92121. The
title of the class of equity securities to which this statement relates is the
Company's common stock, par value $.001 per share (the "Shares").
ITEM 2. TENDER OFFER OF THE BIDDER.
This Statement relates to the tender offer (the "Offer") described in the
Tender Offer Statement on Schedule 14D-1 dated March 13, 1998 (as amended or
supplemented, the "Schedule 14D-1"), filed by BD Acquisition Corp., a Delaware
corporation ("Purchaser"), which is a wholly owned subsidiary of ASK asa, a
Norwegian corporation ("Parent"), and Parent with the Securities and Exchange
Commission (the "Commission") relating to an offer by Purchaser to purchase all
the issued and outstanding Shares at a price of $11.00 per Share, net to the
seller in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in Purchaser's Offer to Purchase dated March
13, 1998, as amended or supplemented, and the related Letter of Transmittal
(which together constitute the "Offer Documents"). The Offer Documents indicate
that the principal executive offices of Parent and Purchaser are located at K.G.
Meldahlsvei 9, N-1602 Fredrikstad, Norway.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of March 8, 1998 (the "Merger Agreement"), among the Company, Parent and
Purchaser. A copy of the Merger Agreement is filed as Exhibit 1 to this Schedule
14D-9 and is incorporated herein by reference in its entirety. Pursuant to the
Merger Agreement, following the consummation of the Offer, upon the satisfaction
or waiver of certain conditions, Purchaser will be merged with and into the
Company (the "Merger"). In the Merger, each Share outstanding immediately prior
to the effective time of the Merger (other than Shares held in the treasury of
the Company, Shares owned by Parent, Purchaser or any other subsidiary of
Parent, or Shares held by stockholders who properly exercise their dissenters'
rights under the General Corporation Law of the State of Delaware ("Delaware
Law")) will, by virtue of the Merger and without any action by the holder
thereof, be converted into the right to receive $11.00 per Share (or any higher
price paid per Share in the Offer), net to the seller in cash, without interest
thereon (the "Merger Consideration"), upon the surrender of the certificate
formerly representing such Share. The Merger Agreement is summarized in Item 3
of this Schedule 14D-9.
ITEM 3. IDENTITY AND BACKGROUND.
a. The name and address of the Company, which is the person filing this
Schedule 14D-9, are set forth in Item 1 above. Unless the context otherwise
requires, references to the Company in this Schedule 14D-9 are to the "Company"
and its direct and indirect subsidiaries, viewed as a single entity.
b. Certain contracts, agreements, arrangements or understandings between
the Company or its affiliates and certain of its executive officers, directors
or affiliates are described in Annex A attached to this Schedule 14D-9 and
incorporated herein by reference. See "Executive Compensation and Other
Information Concerning Directors and Executive Officers" therein.
In addition, in July 1997 the Company's Board of Directors authorized, and
the Company subsequently entered into, severance agreements (the "Agreements")
with its executive officers (Messrs. Gillies, Hansen, Kampfer, Tampkin, Vogt,
Waites and Whittler). Each of the Agreements provides that, upon a termination
of the individual's employment by the Company without "Cause," the individual is
entitled to receive (i) all compensation and bonuses due prior to the date of
discharge, (ii) continuing base salary (and, in the case of Messrs. Gillies and
Vogt, commission income based on average monthly commissions during the twelve
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months preceding discharge) for the periods set forth below (the "Continuation
Periods"), (iii) continuing medical and dental benefits during the applicable
Continuation Periods and (iv) executive outplacement services. The above
entitlements are subject to mitigation and the beneficiary signing and accepting
a release of the Company. The Agreements are identical other than the length of
the applicable Continuation Period and as otherwise set forth above. The form of
such agreement is filed as Exhibit 11 to this Schedule 14D-9 and is incorporated
herein by reference.
For the purpose of the Agreements, "Cause" is defined as a major company
infraction such as theft, fraud, dishonesty, willful insubordination, threats or
harassment of any kind, illegal drug use, use of or being under the influence of
alcohol in the workplace, possession of a weapon, commission of a crime
involving moral turpitude, etc. The Continuation Periods are nine months, nine
months, seven months, nine months, nine months, six months and nine months for
Messrs. Gillies, Hansen, Kampfer, Tampkin, Vogt, Waites and Whittler,
respectively.
Except as described or incorporated by reference herein, to the knowledge
of the Company, as of the date hereof, there exists no material contract,
agreement, arrangement or understanding and no actual or potential conflict of
interest between the Company or its affiliates and (i) the Company's executive
officers, directors or affiliates or (ii) Purchaser or its executive officers,
directors or affiliates.
THE MERGER AGREEMENT
The following summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit 1 to
this Schedule 14D-9 and is incorporated herein by reference. The Merger
Agreement should be read in its entirety for a more complete description of the
matters summarized below.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that the
Purchaser may modify the terms of the Offer, including without limitation,
except as provided below, extending the Offer beyond any scheduled Expiration
Date, except that, without the prior written consent of the Company, the
Purchaser will not decrease the purchase price paid in the Offer, decrease the
number of Shares sought in the Offer, change the form of consideration payable
in the Offer, make any other change which is materially adverse to the holders
of Shares or modify or add to the conditions of the Offer as described below.
Pursuant to the terms of the Merger Agreement, (i) the Purchaser may, in its
sole discretion and without the consent of the Company, (A) extend the Offer, at
any time up to May 5, 1998 (the "Outside Termination Date"), for one or more
periods of not more than ten business days each, if any condition of the Offer
has not been satisfied; (B) extend the Offer at any time (but on not more than
one occasion), for a period not to exceed ten business days if at that time the
number of Shares duly tendered pursuant to the Offer and not subsequently
withdrawn represents less than 90% of the shares of common stock of the Company,
par value $.001 per share ("Common Stock") then outstanding; or (C) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Commission or the staff thereof applicable to the Offer; and
(ii) if at any scheduled expiration date of the Offer any condition to the Offer
has not been satisfied or waived by the Purchaser, at the written request of the
Company delivered no later than the scheduled expiration date of the Offer, the
Purchaser shall, and shall continue to, extend the Offer from time to time for
one or more periods of not more than five business days each until a date not
later than the Outside Termination Date. In addition, the amount payable per
share (the "Per Share Amount") may be increased and the Offer may be extended to
the extent required by law in connection with such increase, in each case
without the consent of Company. Subject to the terms and conditions of the
Offer, the Purchaser shall pay, as soon as reasonably practicable after it is
permitted to do so under applicable law, for all Shares validly tendered and not
withdrawn.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with Delaware law, the Purchaser shall be
merged with and into the Company as soon as practicable after satisfaction or
waiver of the conditions set forth in the Merger Agreement (the "Effective
Time"). The Merger will become effective upon the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware (or such later date
as is specified in the Certificate of Merger). As a result of
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the Merger, the separate corporate existence of the Purchaser will cease and the
Company will continue as the surviving corporation (the "Surviving
Corporation"). In the Merger, each issued and outstanding Share (other than
Shares owned directly or indirectly by Parent or any of its subsidiaries or by
the Company as treasury stock and Shares the holder of which has perfected
appraisal rights under Delaware law) will be converted into the right to receive
$11.00 per Share, without interest, and each issued and outstanding share of
common stock of the Purchaser will be converted into one fully paid and
non-assessable share of common stock of the Surviving Corporation (which will
constitute the only issued and outstanding capital stock of the Surviving
Corporation).
The Merger Agreement provides that the certificate of incorporation and
bylaws of the Purchaser at the Effective Time will be the certificate of
incorporation and bylaws of the Surviving Corporation, except that the name of
the Surviving Corporation will be "Proxima Corporation." The Merger Agreement
also provides that the directors of the Purchaser at the Effective Time will be
the directors of the Surviving Corporation, and the officers of the Purchaser at
the Effective Time will be the officers of the Surviving Corporation.
The Company's Board of Directors. The Merger Agreement provides that,
commencing upon the purchase of Shares pursuant to the Offer or pursuant to the
Option Agreement, and from time to time thereafter, Parent will be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as is equal to the product of (i) the total
number of directors on the Board (giving effect to any directors elected as
described in this sentence) and (ii) the percentage that (A) the aggregate
number of shares of Common Stock beneficially owned by Purchaser or any of its
affiliates (including Shares accepted for payment in the Offer, provided funds
therefor have been deposited with the Depositary, and shares of Common Stock
issued to the Purchaser under the Option Agreement) represents or (B) the total
number of Shares then outstanding. The Company has agreed to take all actions
necessary to cause the Purchaser's designees to be elected or appointed to the
Company's Board of Directors (including by increasing the size of such Board or
securing the resignations of incumbent directors or both). The Company also has
agreed to use its best efforts to cause persons designated by the Purchaser to
constitute the same percentage of each committee of the Board of Directors of
the Company, each board of directors of each subsidiary of the Company and each
committee of each such board as such persons represent on the Board of Directors
of the Company. However, the Merger Agreement further provides that until the
Effective Time, the Company will retain as members of its Board of Directors at
least two directors who are directors of the Company at the date of the Merger
Agreement ("Company Designees") and that in the event of the death, resignation
or removal of any of the Company Designees (or, if no other Company Designee
will remain on the Board, the last remaining Company Designee and, if no Company
Designee will remain on the Board, a majority of the other members of the Board)
will have the right to appoint a successor or successors to fill the vacancies
so created, which successor or successors will not be an affiliate or associate
of Parent or the Purchaser and who will be deemed to be a Company Designee for
purposes of the Merger Agreement. In the Merger Agreement, the Company has
agreed to take all actions necessary to cause the Purchaser's designees to be so
elected, including mailing to the Company's stockholders an Information
Statement containing the information required by Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, and, if necessary, seeking the
resignation of one or more existing directors. The Merger Agreement also
provides that following the election or appointment of the Purchaser's designees
to the Company's Board of Directors, any amendment of the Merger Agreement, any
termination of the Merger Agreement by the Company, any extension of time for
performance of any of the obligations of the Purchaser or Parent under the
Merger Agreement, any waiver of any condition to the obligations of the Company
or of any of the Company's rights under the Merger Agreement or other action by
the Company under the Merger Agreement may be effected only by the action of a
majority of the Company Designees.
Stockholders Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, duly call and
hold a special meeting of its stockholders (the "Special Meeting") as soon as
practicable following the acceptance for payment and purchase of Shares by the
Purchaser pursuant to the Offer, for the purpose of voting upon the Merger and
the adoption of the Merger Agreement. The Merger Agreement provides that in
connection with the Special Meeting, the Company will (i) as soon as reasonably
practicable after the consummation of the Offer, prepare and file with the
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Commission a proxy statement and other proxy materials relating to the Merger
and the Merger Agreement and (ii) use its best efforts to have such proxy
statement cleared by the SEC. If the Purchaser acquires at least a majority of
the outstanding Shares (or if the number of Shares acquired by the Purchaser
together with the number of shares of Common Stock purchased under the Option
Agreement total at least a majority of the outstanding Shares), the Purchaser
will have sufficient voting power to approve the Merger, even if no other
stockholder votes in favor of the Merger. The Company has agreed, subject to the
limitations described below under the heading "No Solicitations," to include in
the proxy statement the recommendation of the Board of Directors that
stockholders of the Company vote in favor of the approval of the Merger and the
adoption of the Merger Agreement.
Interim Operations. In the Merger Agreement, the Company has agreed that,
except as expressly permitted by the Merger Agreement or the Option Agreement or
agreed to in writing by Parent, prior to the Effective Time the business of the
Company and its subsidiaries shall be conducted only in the ordinary course, in
substantially the same manner as previously conducted and in substantial
compliance with all applicable laws and regulations, and, to the extent
consistent therewith, the Company and each of its subsidiaries will use
reasonable efforts to preserve intact their present business organizations and
reputation, keep available the services of their present officers and employees,
maintain their assets and properties in good working order and condition,
ordinary wear and tear excepted, maintain insurance on their tangible assets and
businesses in such amounts and against such risks and losses as are currently in
effect, and preserve their relationships with customers, suppliers, licensors,
licensees, distributors, and others having business relationships with them. In
addition, except as expressly contemplated by the Merger Agreement or agreed to
in writing by Parent, each of the Company and its subsidiaries will not:
(i) adopt or amend in any material respect any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, pension, retirement, employment or other employee benefit agreement,
trust plan or other arrangement for the benefit or welfare of any director,
officer or employee of the Company or any of its subsidiaries or increase
in any manner the compensation or fringe benefits of any director, officer
or employee of the Company or any of its subsidiaries or pay any benefit
not required by any existing agreement or place any assets in any trust for
the benefit of any director, officer or employee of the Company or any of
its subsidiaries;
(ii) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, or make any loans, advances or
capital contributions to, or investments in, any other person, other than
to the Company or any direct or indirect wholly owned subsidiary of the
Company;
(iii) expend funds for capital expenditures or research and
development, which in the aggregate exceed $1,100,000;
(iv) sell, lease, license, mortgage or otherwise encumber or subject
to any lien or otherwise dispose of any of its properties or assets except
for disposition of inventory or immaterial assets, in either case, in the
ordinary course of business consistent with past practice;
(v) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock (except for dividends
paid by subsidiaries to the Company with respect to capital stock), (y)
split, combine or reclassify any of its capital stock or issue or authorize
the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, or (z) purchase, redeem or
otherwise acquire any shares of capital stock of the Company or any of its
subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(vi) authorize for issuance, issue, deliver, sell or agree to commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise), pledge or otherwise encumber any shares of its capital stock or
the capital stock of any of its
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subsidiaries, any other voting securities or any securities convertible
into, or any rights, warrants or options to acquire, any such shares,
voting securities or convertible securities or any other securities or
equity equivalents (including without limitation stock appreciation rights)
(other than issuances upon exercise of Company Stock Options (as
hereinafter defined) outstanding on the date hereof);
(vii) amend its Certificate of Incorporation, Bylaws or equivalent
organizational documents or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any material subsidiary of the Company;
(viii) acquire or agree to acquire, including, without limitation, by
merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof;
(ix) settle or compromise any stockholder derivative suits arising out
of the transactions contemplated by the Merger Agreement or any other
litigation (whether or not commenced prior to the date of the Merger
Agreement) or settle, pay or compromise any claims not required to be paid,
other than in consultation and cooperation with Parent, and, with respect
to any such settlement, with the prior written consent of Parent (except
such consent shall not be required for payments to be made under any such
agreements existing on the date of the Merger Agreement and described in
connection with the Merger Agreement), which consent shall not be
unreasonably withheld;
(x) make any material tax election or settle or compromise any
material tax liability (whether with respect to amount or timing);
(xi) except in the ordinary course of business, materially modify,
amend or terminate any material contract or waive or release or assign any
material rights or claims; or
(xii) (A) fail to pay in the ordinary course of business consistent
with past practice any amount ("Payable") due owing or payable to any trade
creditor or supplier or (B) other than in the ordinary course of business
consistent with past practice, alter the terms or scheduled payment dates
of any Payable; or
(xiii) take or agree to take any action that would make any
representation and warranty of the Company contained in the Merger
Agreement inaccurate at, or as of any time prior to, the Effective Time, or
omit or agree to omit to take any action necessary and prudent to prevent
any such representation or warranty from being inaccurate at any such time.
Employee Benefits. Parent has agreed to cause the Surviving Corporation to
honor the Company's employee benefit plans or policies (other than those based
on shares of Common Stock) in effect at the date of the Merger Agreement until
the second anniversary of the Effective Time or, to the extent such plans or
policies (other than those based on shares of Common Stock) are not continued,
Parent will maintain or cause the Surviving Corporation to maintain until such
date benefit plans or policies for the benefit of the employees of the Company
which are no less favorable, in the aggregate, than the plans and policies
existing at the date of the Merger Agreement. All benefit plans under which the
employees' interests are based on shares of Common Stock will be terminated
immediately prior to the Effective Time. The Company's employees shall be given
credit, for purposes of any service requirements for participation in the Parent
employee benefit plans for which they become eligible, if any, for their period
of service with the Company prior to the Effective Time, and the Company
employees shall also, with respect to participation in any such Parent plans or
programs for which they may become eligible, which have co-payment, deductible
or other co-insurance features, receive credit for any amounts such employees
have paid to date in 1998 in co-payments, deductibles or co-insurance under
comparable programs maintained by the Company prior to the Effective Time. In
addition, no employee of the Company who participates in any medical/health plan
of the Company at the Effective Time shall be denied coverage under any Parent
medical/health plan for which they may become eligible, by reason of any
preexisting condition exclusions, to the extent applicable subsequent to the
Effective Time. Parent has agreed (and has agreed to cause the Surviving
Corporation) to honor without modification all employee severance plans (or
policies) and employment and severance agreements of the Company or any
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of its subsidiaries in existence on the date of the Merger Agreement as such
agreements shall be in effect in accordance with the terms of the Merger
Agreement at the Effective Time.
No Solicitations. In the Merger Agreement, the Company has agreed that,
except as provided below, until the earlier of the termination of the Merger
Agreement or the Effective Date, neither the Company nor any of its subsidiaries
shall, nor shall they authorize or permit or any of their respective officers,
directors, employees, financial advisors, investment bankers, attorneys,
accountants or other advisors or representatives to directly or indirectly, (i)
take any action to knowingly solicit, initiate, continue, facilitate or
encourage (including by way of furnishing or disclosing non-public information)
any offer or proposal for a merger, consolidation or other business combination
involving the Company or any of its subsidiaries or any proposal or offer to
acquire in any manner, directly or indirectly, 15% or more of the shares of any
class of voting securities of the Company or any of its subsidiaries or a
substantial portion of the assets of the Company or any of its subsidiaries,
other than the transactions contemplated by the Merger Agreement or the Option
Agreement (any of the foregoing being referred to as an "Acquisition Proposal"),
or (ii) knowingly engage in negotiations, discussions or communications
regarding or disclose any information relating to the Company or any of its
subsidiaries or afford access to the properties, books or records of the Company
or any of its subsidiaries to any person, corporation, partnership or other
entity or group (a "Potential Acquiror") that may be considering making, or has
made, an Acquisition Proposal. In addition, the Merger Agreement prohibits the
Board of Directors of the Company (including any committee thereof) from
withdrawing or modifying in a manner adverse to Parent the approval and
recommendation of the Offer, the Merger Agreement, the Option Agreement or the
Merger or approving or recommending any Acquisition Proposal. Notwithstanding
the foregoing, the Merger Agreement provides that (i) the Company may
participate in discussions or negotiations with or furnish information to any
third party which makes a written Acquisition Proposal which either (x) is not
subject to a financing contingency and involves the purchase for cash of 100% of
the Common Stock at a price per share greater than the purchase price of the
Offer or (y) provides for the acquisition of 100% of the Common Stock for
consideration, not consisting entirely of cash, which the Company's Board of
Directors determines, based on the advice of its financial advisor, is
financially superior to the purchase price of the Offer (in the case of either
(x) or (y), a "Superior Proposal"), and (ii) the Board of Directors or any
committee thereof may withdraw or modify in a manner adverse to Parent the
approval or recommendation of the Merger Agreement, the Offer or the Merger and
may approve or recommend any such Superior Proposal, if, in the case of either
(i) or (ii), the Board of Directors of the Company determines (and is advised by
its outside legal counsel) that the failure to take such action would constitute
a breach of its fiduciary duties and the Company enters into a confidentiality
agreement with the Potential Acquiror with respect to any non-public information
relating to the Company or its subsidiaries upon terms substantially the same as
(and in no event more beneficial to the Potential Acquiror than) those contained
in the Confidentiality Agreement dated July 21, 1997 between Parent and the
Company. The Company has agreed to (i) notify Parent promptly (and in any event
within one business day) after receipt of any Acquisition Proposal (or any
indication that any person is considering making an Acquisition Proposal) or any
request for non-public information relating to the Company or any of its
subsidiaries or for access to the properties, books or records of the Company or
any of its subsidiaries by any person that may be considering making, or has
made, an Acquisition Proposal, (ii) notify Parent promptly of any material
change to any such Acquisition Proposal, indication or request and (iii) upon
reasonable request by Parent, provide Parent with all material information about
any such Acquisition Proposal, indication or request. The Merger Agreement
further provides that the Company will not, and will cause its affiliates not
to, enter into an agreement with respect to a Superior Proposal unless Parent
has been advised in writing of the identity of the parties making the Superior
Proposal and the material terms thereof at least two business days prior to the
entering into of such agreement.
Directors' and Officers' Insurance; Indemnification. The Merger Agreement
provides that until the sixth anniversary of the Effective Time, Parent and the
Surviving Corporation (each an "Indemnifying Party") shall indemnify, defend and
hold harmless each person who was an officer or director of the Company or any
of its subsidiaries on the date of the Merger Agreement or any time prior to the
date thereof ("Indemnified Parties") against all losses, claims, damages, costs,
expenses (including attorneys' fees and expenses), liabilities or judgments or
amounts that are paid in settlement with the approval of the indemnifying party
(which approval shall not be unreasonably withheld) of or in connection with any
threatened or actual claim,
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action, suit, proceeding or investigation (whether civil, criminal,
administrative or investigative and whether asserted or claimed prior to, at or
after the Effective Time) based in whole or in part on, or arising in whole or
in part out of, the fact that such Indemnified Party is or was a director or
officer, of the Company or any of its subsidiaries (including service as a
fiduciary of any employee benefit plan), whether pertaining to any matter
existing or occurring at or prior to the Effective Time, to the fullest extent
permitted by Delaware law, or based in whole or in part on the Merger Agreement
or the transactions contemplated by the Merger Agreement ("Indemnified
Liabilities"). However, in the event any claims are asserted or made within such
six-year period, all rights to indemnification in respect of any such claims
shall continue until disposition of any and all such claims. Without limiting
the foregoing, in the event that any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Party (whether arising prior to
or after the Effective Time), (w) the Indemnifying Parties will pay expenses in
advance of the final disposition of any such claim, action, suit, proceeding or
investigation to each Indemnified Party to the full extent permitted by
applicable law provided that the person to whom expenses are advanced provides
an undertaking to repay such advance if it is ultimately determined that such
person is not entitled to indemnification; (x) the Indemnified Parties shall
retain counsel reasonably satisfactory to the Indemnifying Parties; (y) the
Indemnifying Parties shall pay all reasonable fees and expenses of such counsel
for the Indemnified Parties (subject to the final sentence of this paragraph)
promptly as statements therefor are received; and (z) the Indemnifying Parties
shall use all commercially reasonable efforts to assist in the vigorous defense
of any such matter. Any Indemnified Party wishing to claim indemnification under
the Merger Agreement as described above, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Indemnifying
Parties, but the failure so to notify an Indemnifying Party shall not relieve it
from any liability which it may have as described above except to the extent
such failure materially and irreparably prejudices such party.
The Merger Agreement also provides that the Surviving Corporation shall (i)
until the sixth anniversary of the Effective Time, cause to be maintained in
effect, to the extent available, the policies of directors' and officers'
liability insurance maintained by the Company and its subsidiaries as of the
date of the Merger Agreement (or policies of at least the same coverage and
amounts containing terms that are no less advantageous in any material respect
to the insured parties) or (ii) purchase a policy of directors' and officers'
liability insurance of at least the same coverage and amounts and containing
terms that are no less advantageous in any material respect to the insured
parties and for a term of six years after the Effective Time, in each case with
respect to claims arising from facts or events that occurred prior to the
Effective Time. The Merger Agreement further provides, however, that in no event
will the Surviving Corporation be obligated to expend in order to maintain or
procure insurance coverage pursuant to clause (i) of this paragraph any amount
per annum in excess of 125% of the last premium paid by the Company prior to the
date of the Merger Agreement, and if the annual premium of such insurance
coverage exceeds that amount, the Surviving Corporation shall purchase as much
coverage as possible for such amount.
Company Stock Options. Pursuant to the Merger Agreement, immediately prior
to the Effective Time, each of the then outstanding employee stock options to
purchase Common Stock (the "Company Stock Options") granted under any employee
stock option or compensation plan or arrangement of the Company (the "Company
Stock Plans"), whether or not then vested or exercisable, automatically shall be
cancelled, and each holder of any such Company Stock Option shall be paid by the
Company at the Effective Time for each such Company Stock Option an amount in
cash (subject to any applicable withholding taxes) determined by multiplying (i)
the excess, if any, of the price per Share paid in the Offer over the applicable
exercise price of such Company Stock Option by (ii) the number of shares of
Common Stock such holder could have purchased (assuming full vesting of all
Company Stock Options) had such holder exercised such Company Stock Option in
full immediately prior to the Effective Time. Prior to the Effective Time, the
Company will use its best efforts to obtain any necessary consents and make any
amendments to the terms of the Company Stock Plans to the extent such consents
or amendments are necessary to give effect to the foregoing. Payment by the
Company may be withheld in respect of any Company Stock Option until necessary
consents are obtained.
Conditions to the Merger. The Merger Agreement provides that the respective
obligations of the Company, Parent and the Purchaser to consummate the Merger
are subject to the satisfaction of the following
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conditions: (i) the Merger Agreement shall have been adopted by the requisite
vote of the stockholders of the Company, if required by applicable law, in order
to consummate the Merger; (ii) any applicable waiting period (and any extension
thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended ("HSR Act"), and the rules that have been promulgated thereunder by the
Federal Trade Commission (the "FTC") relating to the Merger shall have expired
or been terminated; (iii) no court of competent jurisdiction or other
governmental or regulatory authority shall have enacted, issued, promulgated,
enforced or entered any law or order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making illegal or
otherwise restricting, preventing or prohibiting consummation of the Offer or
the Merger or the transactions contemplated by the Merger Agreement, the Option
Agreement or the Stockholders Agreement; and (iv) the Purchaser or its permitted
assignee shall have purchased all Shares validly tendered and not withdrawn
pursuant to the Offer.
Representations and Warranties. In the Merger Agreement, the Company has
made customary representations and warranties to Parent and the Purchaser with
respect to, among other things, its organization, capitalization, financial
statements, public filings, labor relations, conduct of business, employee
benefit plans, insurance, compliance with laws, litigation, environmental
matters, tax matters, property, contracts and agreements, non-contravention,
consents and approvals, opinions of financial advisors, undisclosed liabilities
and the absence of certain changes with respect to the Company since December
31, 1997.
Termination; Fees. The Merger Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company: (i) by the mutual written consent of the Company and Parent; (ii)
by the Company (A) if there has been a material breach of any representation,
warranty, covenant or agreement on the part of Parent set forth in the Merger
Agreement which breach has not been cured, in the case of a representation or
warranty, prior to the Effective Time or, in the case of a covenant or
agreement, within 30 days following receipt by Parent of notice of such breach
(provided that such right to terminate shall expire on the date on which Parent
or the Purchaser beneficially owns a majority of the outstanding Shares), or (B)
if there shall be any law or regulation that makes consummation of the Merger
illegal or if any judgment, injunction or other order of a court or other
authority having jurisdiction preventing the consummation of the Merger shall
have become final and non-appealable; (iii) by Parent (A) (i) if any
representation or warranty of the Company shall not be true and correct (x) in
all material respects as of the date of the Merger Agreement or (y) as of the
time of termination of the Merger Agreement, and, in a case described in this
subclause (y), the failure of such representation or warranty to be true and
correct (1) has a material adverse effect on the Company, (2) if capable of
being made true and correct within 30 days following receipt by the Company of
notice of such representation or warranty not being true and correct is not in
fact made true and correct within such 30-day period and (3) did not result from
the announcement of the Merger Agreement or the transactions contemplated
thereby or (ii) if there has been a material breach of any covenant or agreement
on the part of the Company set forth in the Merger Agreement or the Option
Agreement which breach of a covenant or agreement has not been cured within 30
days following receipt by the Company of notice of such breach (provided that
such right to terminate shall expire on the date on which Parent or the
Purchaser beneficially owns a majority of the outstanding shares of Common Stock
and Parent's designees constitute or shall have been afforded the opportunity,
without the imposition by the Company of adverse conditions, to constitute the
requisite percentage (but not less than a majority) of the members of the Board
of Directors of the Company specified in the Merger Agreement), (B) if there
shall be any law or regulation that makes consummation of the Merger illegal or
if any judgment, injunction or other order of a court or other competent
authority preventing the consummation of the Merger shall have become final and
non-appealable or (C) if the Offer shall have expired or been terminated without
any Shares being purchased as a result of the occurrence of any of the
conditions to the Offer; (iv) by either the Company or Parent if the Offer has
not been consummated by the Outside Termination Date, provided that the
terminating party is not then in material breach of any provision of the Merger
Agreement; (v) by Parent upon the occurrence of a Trigger Event (as defined
below), provided that such right to terminate shall expire on the date on which
Parent or the Purchaser beneficially owns a majority of the outstanding shares
of Common Stock and Parent's designees constitute the requisite percentage (but
not less than a majority) of the members of the Board of Directors of the
Company specified in the Merger Agreement; and (vi) by Parent, if the FTC or the
Antitrust Division has initiated litigation or an administrative proceeding
challenging
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the transactions contemplated by the Merger Agreement under U.S. antitrust laws,
which litigation or administrative proceeding will include a motion seeking an
order or injunction prohibiting the consummation of any of the transactions
contemplated by the Merger Agreement.
In the event that Parent terminates the Merger Agreement pursuant to clause
(iii)(A)(i), (iii)(A)(ii) or (v) of the previous paragraph, then the Company
shall pay to Parent (x) a termination fee in the amounts and at the times
specified in the next paragraph and (y) an amount (not to exceed $500,000 in the
aggregate) equal to all out-of-pocket expenses and fees certified by Parent to
have been incurred by Parent and its subsidiaries in connection with the Merger
Agreement and the transactions contemplated thereby. In the event that Parent
terminates the Merger Agreement pursuant to clause (iii)(C) of the previous
paragraph, then the Company shall pay to Parent a termination fee in the amount
and at the time specified in the next paragraph.
The termination fee payable pursuant to the preceding paragraph shall be as
follows: (i) if the termination of the Merger Agreement occurred pursuant to
clause (v) of the second preceding paragraph based on a Trigger Event described
in clause (i) or (v) of the following paragraph, a termination fee of $3,000,000
shall be payable immediately upon such termination; (ii) if the termination of
the Merger Agreement occurred pursuant to clause (iii)(A) of the second
preceding paragraph or pursuant to clause (v) of the second preceding paragraph
based on a Trigger Event described in clause (ii), (iii) or (iv) of the
following paragraph, a termination fee of $1,500,000 (the "Initial Termination
Fee") shall be payable immediately upon such termination, and an additional
termination fee of $1,500,000 shall be payable immediately upon the occurrence
during the 12 months following the receipt of the Initial Termination Fee of a
Trigger Event described in clause (i) or (v) of the following paragraph; and
(iii) if (A) the termination of this Agreement occurred pursuant to clause
(iii)(C) of the second preceding paragraph, (B) at any time prior to termination
of the Merger Agreement pursuant to clause (iii)(c) of the second preceding
paragraph, the Company shall have received an Acquisition Proposal and (C)
within 12 months of termination of the Merger Agreement pursuant to clause
(iii)(c) of the second preceding paragraph, the Company shall have entered into,
or shall have publicly announced its intention to enter into, an agreement or
agreement in principle with respect to, or consummated any business combination
or transaction with any person or entity that made the Acquisition Proposal
referred to in the immediately preceding subclause (B) or with any affiliate of
such person or entity, a termination fee of $3,000,000 shall be payable
immediately upon such termination. Notwithstanding anything to the contrary in
the Merger Agreement, any termination fees otherwise payable as described herein
shall be reduced to the extent such payment otherwise would cause the Total
Profit (as defined below under "-- The Option Agreement") to exceed $4,500,000.
A "Trigger Event" means any of the following events: (i) the Company shall
have entered into, or shall have publicly announced its intention to enter into,
an agreement or agreement in principle with respect to, or, at any time within
12 months after the termination of the Merger Agreement, consummated any
Acquisition Proposal or similar business combination or transaction other than
the transactions contemplated by the Merger Agreement; (ii) the Board of
Directors of the Company or any committee thereof shall have withdrawn its
approval or recommendation of the Offer, the Merger Agreement or the Merger, or
modified its approval or recommendation in a manner adverse to Parent or the
Purchaser; (iii) the Board of Directors of the Company or any committee thereof
shall have made any recommendation with respect to an Acquisition Proposal by
any person (other than Parent or the Purchaser) other than a recommendation
rejecting or against such Acquisition Proposal; (iv) the Company receives any
Acquisition Proposal by any person (other than Parent or the Purchaser), and the
Company's Board of Directors takes a neutral position or makes no recommendation
with respect to such Acquisition Proposal after a reasonable amount of time (and
in no event more than five business days) has elapsed for the Company's Board of
Directors to review and make a recommendation with respect to such Acquisition
Proposal consistent with the Board's fiduciary duties; or (v) (x) any
corporation, partnership or other entity or "person" (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
other than Parent, the Company or any of their respective affiliates shall have,
at any time prior to the termination of the Merger Agreement, commenced, or
announced an intention to commence, (A) a "solicitation" of "proxies" or become
a "participant" in such a solicitation (as such terms are defined in Regulation
14A under the Exchange Act)
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<PAGE> 11
or (B) a tender offer, exchange offer or other extraordinary transaction (in
each case with respect to Shares) and as a result thereof, if the Merger
Agreement were not terminated promptly thereafter, Parent or the Purchaser would
be required to incur substantial expenditures in addition to those otherwise
required for the transactions contemplated by the Merger Agreement and (y) such
corporation, partnership or other entity or "person" or its affiliates and
associates (as defined in the Exchange Act) collectively shall be or become the
beneficial owners (determined pursuant to Rule 13d-3 under the Exchange Act) of
at least 15% of any class of shares of capital stock of the Company (including
the shares of Common Stock) or shall have acquired, directly or indirectly, at
least 15% of the assets or earning power of the Company.
Appraisal Rights. Stockholders do not have dissenters' rights as a result
of the Offer. However, if the Merger is consummated, stockholders of the Company
at the time of the Merger who do not vote in favor of or consent in writing to
the Merger will have the right under the Delaware Law to dissent and demand
appraisal of their Shares in accordance with Section 262 of the Delaware Law.
Under the Delaware Law, dissenting stockholders who comply with the applicable
statutory procedures will be entitled to receive a judicial determination of the
fair value of their Shares (exclusive of any element of value arising from the
accomplishment or expectation of the Merger) and to receive payment of such fair
value in cash, together with a fair rate of interest, if any. Any such judicial
determination of the fair value of the Shares could be based upon considerations
other than or in addition to the price paid in the Offer (or the Merger) and the
market value of the Shares. Stockholders should recognize that the value so
determined could be higher or lower than the price per Share paid pursuant to
the Offer or the Merger. Moreover, Parent or Purchaser may argue in an appraisal
proceeding that, for purposes of such a proceeding, the fair value of the Shares
is less than the price paid in the Offer (or the Merger). THE FOREGOING SUMMARY
OF THE RIGHTS OF DISSENTING STOCKHOLDERS DOES NOT PURPORT TO BE A COMPLETE
STATEMENT OF PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE
THEIR DISSENTERS' RIGHTS.
THE OPTION AGREEMENT
The following summary of the option agreement, by and between the Parent,
Purchaser and the Company (the "Option Agreement") is qualified in its entirety
by reference to the Option Agreement, a copy of which is filed as Exhibit 2
hereto. The Option Agreement should be read in its entirety for a more complete
description of the matters summarized below.
As a condition and inducement to Parent and the Purchaser entering into the
Merger Agreement, concurrently with the execution of the Merger Agreement
Parent, the Purchaser and the Company entered into the Option Agreement.
Pursuant to the Option Agreement, the Company granted to the Purchaser an
irrevocable option (the "Option") to purchase 1,427,914 newly issued shares of
Common Stock (representing 19.9% of the Company's issued and outstanding Shares
at the date of the Option Agreement). The number of shares of Common Stock
issuable on exercise of the Option is subject to adjustment under certain
circumstances. Among other things, if the number of issued and outstanding
shares of Common Stock increases prior to the exercise of the Option, the number
of shares of Common Stock issuable on exercise of the Option will be increased
to a number equal to 19.9% of the number of shares of Common Stock issued and
outstanding following the increase. The Option is exercisable, in whole or in
part, if (i) any corporation, partnership, individual, trust, unincorporated
association, or other entity or "person" (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent, the Company or any of their respective
"affiliates" (as defined in the Exchange Act) shall have solicited "proxies" in
a "solicitation" subject to the proxy rules under the Exchange Act, executed any
written consent or become a "participant" in any "solicitation" (as such terms
are defined in Regulation 14A under the Exchange Act), in each case with respect
to the Shares; (ii) the Company shall have received an Acquisition Proposal; or
(iii) any of the events described in clause (c) under the first paragraph of
"-- The Merger Agreement -- Termination; Fees" above or any Trigger Event shall
have occurred, unless a termination fee would not be paid or payable if the
Merger Agreement were terminated as a result of such event (but without the
necessity of Parent having terminated the Merger Agreement). If prior to the
expiration of the Option any of the events described in the preceding sentence
shall have occurred, then the Purchaser (or its designee) shall have the right,
in lieu of exercising the
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Option, at any time thereafter (for so long as the Option is exercisable) to
request in writing that the Company pay, and promptly (but in any event not more
than five business days) after the giving by the Purchasers (or its designee) of
such request, the Company shall pay to the Purchasers (or its designee), in
cancellation of the Option, an amount in cash equal to (i) the excess over the
$11.00 of the greater of (A) the last sale price of a Share as reported on the
Nasdaq National Market (or any national or other exchange on which the Common
Stock may be traded) on the last trading day prior to the date of the notice, or
(B) (1) the highest price per Share offered to be paid or paid pursuant to or in
connection with an Acquisition Proposal that involves Shares and that has not
been terminated or withdrawn prior to the date of the notice or (2) the
aggregate consideration offered to be paid or paid in an Acquisition Proposal
that involves the assets of the Company and that has not been terminated or
withdrawn prior to the notice, divided by the number of shares then outstanding,
multiplied by (ii) the number of shares of Common Stock then covered by Option.
If all or a portion of the price per Share offered, paid or payable or the
aggregate consideration offered, paid or payable for the assets of the Company,
each as contemplated by the preceding sentence, consists of non-cash
consideration, such price or aggregate consideration shall be the cash
consideration, if any, plus the fair market value of the non-cash consideration
as determined by the investment bankers of the Purchaser (or its designee) and
the investment bankers of the Company. The Option Agreement terminates, and the
Option expires on , the earliest of (1) the Effective Time, (ii) the termination
of the Merger Agreement as described in clause (i), (ii), (iii)(B) or (iii)(C)
(other than a termination as described in clause (iii)(C) after an Acquisition
Proposal is made or an intent to make an Acquisition Proposal is publicly
announced), (iv) or (v) of the first paragraph of "-- The Merger
Agreement -- Termination; Fees" above and (iii) to the extent that no notice of
exercise of the Option has therefore been given by the Purchaser three months
after any other termination of the Merger Agreement as described in clause (i),
(ii), (iii)(B) or (iii) (C) of the first paragraph of "-- The Merger
Agreement -- Termination; Fees."
The Option Agreement provides that in no event shall the Purchaser's (or
its designee's) Total Profit (as defined below) exceed $4,500,000 and, if it
otherwise would exceed such amount, the Purchaser (or its designee) at its sole
election, must either (a) reduce the number of Shares subject to the Option, (b)
deliver to the Company for cancellation Shares previously purchased by the
Purchaser (or its designee), (c) pay cash to the Company or (d) take any actions
described in any one or more of the preceding clauses (a), (b) and (c), so that
the Purchaser's (or its designee's) Total Profit will not exceed $4,500,000
after taking into account the foregoing actions.
"Total Profit" means (i) except in the case of the cancellation of the
Option as described in the preceding paragraph, the sum of (A) (x) the aggregate
net cash amounts (before taxes) received by the Purchaser (or its designee)
pursuant to the sale of Shares (or any other securities into which such Shares
are converted or exchanged) to any unaffiliated party, less (y) the Purchaser's
(or its designee's) purchase price of such Shares and (B) the aggregate amount
of termination fees paid under the Merger Agreement or (ii) in the case of the
cancellation of the Option as described in the preceding paragraph, the sum (A)
net cash amount (before taxes) received by the Purchaser (or its designee) as
described in the preceding paragraph and (B) the aggregate amount of termination
fees paid under the Merger Agreement.
THE STOCKHOLDERS AGREEMENT
The following summary of the stockholders agreement, by and between the
Parent, Purchaser and the stockholders listed on Schedule I thereto (each a
"Stockholder") (the "Stockholders Agreement") is qualified in its entirety by
reference to the Stockholders Agreement, a copy of which is filed as Exhibit 3
hereto. The Stockholders Agreement should be read in its entirety for a more
complete description of the matters summarized below.
As a condition and inducement to Parent and the Purchaser's entering into
the Merger Agreement, the Stockholders, who have voting power and dispositive
power with respect to an aggregate of 219,796 Shares, representing approximately
3.1% of the Shares outstanding on March 8, 1998, concurrently with the execution
and delivery of the Merger Agreement, entered into the Stockholders Agreement.
The Stockholders are Patrick Arrington, Richard E. Belluzzo, Robert W. Johnson,
Jeffrey M. Nash, Kenneth E. Olson, and John M. Seiber and comprise the Board of
Directors of the Company. Pursuant to the Stockholders
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Agreement, each of the Stockholders has agreed to tender all of his Shares into
the Offer promptly, and in no event later than 10 business days after the date
of this Offer to Purchase. Each Stockholder agreed not to withdraw his Shares so
tendered unless the Offer is terminated or expired. The Purchaser has agreed to
purchase all the Shares so tendered at a price per Share equal to $11.00 per
Share or any higher price that may be paid in the Offer; however, Purchaser's
obligation to accept for payment and pay for such Shares in the Offer is subject
to all the terms and conditions of the Offer set forth in the Stockholders
Agreement and in the Merger Agreement.
Each of the Stockholders has granted Parent an irrevocable proxy with
respect to the voting of such Shares in favor of the Merger and against any
action or agreement which would impede, interfere with or prevent the Merger,
including any Acquisition Proposal.
Each of the Stockholders has agreed that, prior to the termination of the
Stockholders Agreement pursuant to its terms, he will not (i) transfer, or
consent to the transfer, of any or all of his Shares or any interest therein;
(ii) enter into any contract, option or other agreement or understanding with
respect to any transfer of any or all of his Shares or any interest therein;
(iii) grant any proxy, power-of-attorney or other authorization in or with
respect to his Shares; (iv) deposit his Shares into a voting trust or enter into
a voting agreement or arrangement with respect to his Shares; or (v) take any
other action that would in any way restrict, limit or interfere with the
performance of such Stockholder's obligations under the Stockholders Agreement.
Each of the Stockholders has granted to Parent and Purchaser an
irrevocable, exclusive option (the "Stockholder Option") to purchase all Shares
of such Stockholder at a price of $11.00 per Share, net to such Stockholder in
cash, subject to any amounts required to be withheld under applicable income tax
laws and regulations. The Stockholder Option shall be exercisable by Parent or
Purchaser at any time after consummation of the Offer and prior to the
termination of the Stockholders Agreement.
The Stockholders Agreement, and all rights and obligations of the parties
thereto, shall terminate immediately upon the earlier of (i) the acquisition by
Parent, through the Purchaser or otherwise of the Shares that are the subject of
the Stockholders Agreement, (ii) the termination of the Merger Agreement in
accordance with its terms or (iii) the Effective Time.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
Recommendation of the Board of Directors
The Company's Board of Directors has by a unanimous vote of those present
(one member being absent) approved the Merger Agreement and determined that the
Merger Agreement and the transactions contemplated thereby, including the Offer
and the Merger, taken together, are fair to and in the best interests of the
stockholders of the Company and recommends that all stockholders of the Company
accept the Offer and tender all their Shares pursuant to the Offer. This
recommendation is based in part upon an opinion, dated March 8, 1998, received
by the Company from Broadview Associates LLC ("Broadview"), financial advisor to
the Company, that, as of such date, the proposed cash consideration to be
received by the Company's stockholders in the Offer and the Merger is fair to
the stockholders from a financial point of view. The full text of the fairness
opinion received by the Company from Broadview is filed as Exhibit 4 to this
Schedule 14D-9 and is also attached hereto as Annex B. Stockholders are urged to
read such opinion in its entirety.
As set forth in the Offer Documents, Purchaser will purchase Shares
tendered prior to the close of the Offer if there shall have been validly
tendered and not withdrawn a majority of Shares outstanding on a fully diluted
basis (the "Minimum Condition") by that time and if all other conditions to the
Offer have been satisfied (or waived). Stockholders considering not tendering
their Shares in order to wait for the Merger should note that if the Minimum
Condition is not satisfied or any of the other conditions to the Offer are not
satisfied, Purchaser is not obligated to purchase any Shares, and can terminate
the Offer and the Merger Agreement and not proceed with the Merger. Under the
Delaware Law, the approval of the Company's Board of Directors and the
affirmative vote of the holders of a majority of the outstanding Shares are
required to approve the Merger. Accordingly, if the Minimum Condition is
satisfied, Purchaser will have sufficient voting power to cause the approval of
the Merger without the affirmative vote of any other stockholder. Further,
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under the Delaware Law, if Purchaser acquires at least 90% of the outstanding
shares, Purchaser will be able to approve the Merger without a vote of the
Company's stockholders.
The Offer is scheduled to expire at 12:00 Midnight, New York City time, on
Thursday, April 9, 1998, unless Parent, in its sole discretion, elects to extend
the period of time for which the Offer is open. A copy of the press release
issued by the Company and Parent on March 8, 1998 announcing the Merger and the
Offer is filed as Exhibit 5 to this Schedule 14D-9 and is incorporated herein by
reference in its entirety.
Background of the Offer
The market for multimedia projection products is characterized by rapidly
evolving technology and short product lives with intense price competition. In
addition, the Company competes against some of the largest electronics
manufacturers in the world (such as Epson, Hitachi, 3M, Polaroid, Matsushita,
Philips, NEC, Sanyo, Sharp, Sony, Toshiba and others) and many of these
competitors have greater financial, technical, manufacturing and marketing
resources than the Company. The Company believes that these market conditions
and other factors have caused the Company to experience volatility in its
financial results from quarter-to-quarter during the last two fiscal years.
As a result of the foregoing market conditions and other factors, in
February 1997, the Company sought to retain a financial adviser to assist
management and the Company's Board of Directors in the analysis of potential
strategic opportunities. On February 20, 1997, Broadview, an investment banking
firm, was retained. Over the following year Broadview conducted a review of
opportunities available to the Company and Broadview and the Company had
discussions with approximately fifteen different potential alliance partners.
These contacts included many of the world's leading manufacturers of multimedia
projection equipment, including the Company's primary sourced product suppliers.
With the exception of Parent, none of these contacts resulted in any offer
regarding a business combination with the Company.
On April 18, 1997, Broadview contacted Parent indicating that it
represented a client which offered a strategic opportunity for Parent. Mr. Ole
Fredriksen, president of Parent, responded by indicating that Parent would be
interested in further discussions. On May 7, 1997, Broadview replied to Mr.
Fredriksen disclosing the identity of its client as the Company and suggesting
continued discussions.
On June 5 and 6, 1997, while attending an industry trade show in Los
Angeles, CA, Mr. Fredriksen met with Mr. Kenneth E. Olson, chairman, president
and CEO of the Company, to generally discuss each company and a potential
business combination or alliance.
On June 9, 1997, Mr. Richard Dalton, Managing Director, and Ms. Maryfrances
Galligan, Principal, of Broadview met in San Francisco, CA with Mr. Fredriksen,
Mr. John Rehfeld, the Company's former CEO who had been retained by Parent at
the time as a consultant, and Mr. Robert Meshel, legal advisor to Parent at the
time. At this meeting, both parties provided a general corporate overview to the
other. At the conclusion of the meeting, Mr. Fredriksen indicated that Parent
might be interested in acquiring the Company for a price equal to the Company's
book value, as estimated by Parent. Broadview suggested that this valuation
would likely be inadequate; however, representatives of Parent were encouraged
to visit with Company management at the Company's headquarters in San Diego,
California to further understand the Company's prospects.
Parent and the Company executed a confidentiality agreement with customary
terms effective as of July 24, 1997.
On July 30, 1997, Broadview wrote to Mr. Fredriksen suggesting the
potential benefits of a business combination transaction. This letter was sent
in anticipation of an August 7 and 8, 1997 meeting at the Company's headquarters
in San Diego, California. On said dates, management representatives of the
Company met with Mr. Fredriksen, Mr. Svein Jacobsen, Chairman of the Board of
Parent, and Mr. Jorn Eriksen, Vice President of Technology and Development.
Company representatives covered a general overview of the Company including
financial results, sales and business plans, manufacturing capabilities and a
status on then-pending securities litigation. At the conclusion of the meeting
Mr. Fredriksen extended an invitation to Mr. Dalton to make a presentation to
Parent's Board in Norway.
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During the time period of June 1997 through August 20, 1997, Bain & Company
("Bain"), an international management consulting firm, conducted an analysis of
the Company in order to recommend various strategic options for the Company.
After extensive analysis, Bain made presentations to the Company's Board on July
23, 1997 and August 20, 1997, concluding that a sale of the Company offered the
best opportunity for maximizing stockholder value.
On August 27, 1997, Mr. Dalton made a presentation to Parent's Board in
Fredrikstad, Norway providing an overview of the Company, an analysis and
forecast of combined results, and potential transaction structures. On September
8, 1997, the Company received a letter from Alfred Berg Norge A/S, an investment
banking firm retained by Parent at the time, which provided an indication of
interest to offer to purchase the stock of the Company for $7.00 cash per share.
A Company Board meeting was held on September 10, 1997 to discuss the indication
of interest. The Company's Board of Directors determined during the meeting that
it was in the best interests of the Company and its stockholders to reject the
$7.00 per share indication as inadequate and to seek to negotiate further the
terms of a potential transaction. The Company's Board of Directors' position was
communicated to Mr. Fredriksen on September 11, 1997.
On September 28, 1997, Mr. Jacobsen contacted Mr. Dalton and stated that
the Parent would defer further analysis of a potential transaction until the
Company had publicly released its financial results for its second quarter of
fiscal 1998 (ending September 28, 1997).
On October 20, 1997, the Company publicly released its second quarter
financial results. On November 6, 1997, Mr. Fredriksen informed Mr. Olson that
Parent continued to be interested in pursuing a business combination with the
Company.
On December 3, 1997, while returning from a European business trip, Mr.
Olson arranged to meet with Mr. Fredriksen in Fredrikstad, Norway. Mr.
Fredriksen reiterated his interest in a potential business combination and
committed to revisit the matter with Parent's Board.
On December 16, 1997, Mr. Fredriksen contacted Mr. Dalton and stated that
Parent's Board had a serious interest in a possible business combination and
that Parent intended to retain financial and legal advisors to assist it in
evaluating the Company. Mr. Dalton indicated that any purchase of the Company
would need to be at a higher price than may have been possible in the fall of
1997 because the Company's financial performance and the trading price of its
common stock recently had improved. On January 14, 1998, Mr. Dalton was
contacted by a representative of BT Alex. Brown Incorporated ("BT Alex. Brown")
who stated that BT Alex. Brown had been retained to assist Parent in evaluating
a possible business combination with the Company. On January 20, 1998, Mr.
Fredriksen contacted Mr. Olson and repeated that BT Alex. Brown had been
retained, and Broadview informed representatives of BT Alex. Brown that the
Company was discussing a possible acquisition by means of a stock-for-stock
merger with a privately held company. On January 21, 1998, representatives from
BT Alex. Brown visited the Company for the purpose of conducting a limited
business review. Various financial data was provided to BT Alex. Brown.
On February 2, 1998, Parent submitted a written acquisition proposal to the
Company proposing a purchase price of $10.50 cash per share, subject to
negotiation of definitive documentation and other conditions.
On February 6, 1998, the Company's Board met with management and its
financial advisors to discuss the acquisition proposal. Broadview presented
various valuation arguments and suggested various negotiation strategies, all of
which, as well as other options, were discussed by the Board. After extensive
deliberation, the Board determined during the meeting that it was in the best
interests of the Company and its stockholders to seek to negotiate further the
terms of a potential transaction.
On February 9, 1998, representatives from both companies and their
financial advisors met in New York, NY to discuss the acquisition proposal.
After a period of intense negotiations, Parent agreed to increase its proposal
to $11.00 cash per share, but subjected such offer to a number of conditions
including the payment of a termination fee and the grant of an issuer stock
option on which the parties were not able to agree.
14
<PAGE> 16
During the period from February 10 through March 8, 1998, representatives
of the parties exchanged drafts, and met via teleconference to discuss and
negotiate the terms, of the definitive merger agreement, including the terms of
the issuer stock option, if any, the terms of the Stockholders Agreement,
provisions imposing restrictions on the Company's ability to enter into a
competing transaction and the conditions to the Offer. During this period,
representatives of the parties also met in connection with conducting due
diligence and discussing integration plans. Near the end of this period, the
Company's negotiating team ultimately agreed to recommend the Option Agreement
to the Company's Board only when Parent made it clear that it would not proceed
with the transaction without such concession.
On March 8, 1998, the Company's Board held a special meeting at the
Company's offices to consider the Merger Agreement, the Offer, the Merger, the
Option Agreement and the transactions contemplated thereby. Mr. Belluzzo could
not attend the meeting due to an unavoidable international travel conflict. At
the meeting, the Company's Board of Directors reviewed the Merger Agreement, the
Offer, the Merger, the Option Agreement, and the transactions contemplated
thereby with the Company's management, representatives of Brobeck, Phleger &
Harrison, LLP, legal advisors to the Company, and representatives of Broadview.
The Company's Board of Directors heard a presentation by its legal counsel and
by representatives of Broadview with respect to the financial terms of the
proposed Offer and the Merger. The Board discussed among themselves and with the
Company's management and advisors alternatives reasonably available to the
Company. At the conclusion of their presentation, representatives of Broadview
delivered their written opinion to the Company's Board of Directors that, as of
such date, the proposed cash consideration to be received by the stockholders of
the Company pursuant to the Offer and the Merger is fair to such stockholders
from a financial point of view.
Based upon such discussions, presentations and opinion, the members of the
Company's Board of Directors in attendance unanimously (i) approved the Offer,
the Merger, the Merger Agreement and the Option Agreement, in the form presented
to the Board, and the transactions contemplated by the Merger Agreement and the
Option Agreement, and (ii) recommended that the Company's stockholders accept
the Offer and tender their Shares pursuant to the Offer and approve and adopt
the Merger Agreement and the transactions contemplated thereby. Later that same
day, (i) representatives of the Company, Parent and Purchaser signed the Merger
Agreement, (ii) representatives of the Company, Parent and Purchaser signed the
Option Agreement, (iii) the stockholders and representatives of Parent and
Purchaser signed the Stockholders Agreement and (iv) the Company and Parent
issued separate press releases with respect to the Offer and the Merger.
Board Considerations
In reaching its conclusions described above, the Company's Board of
Directors considered a number of factors, including, without limitation, the
following:
1. the financial and other terms and conditions of the Offer, the Merger
Agreement and the Option Agreement;
2. the Company's business, financial condition, results of operations,
assets, liabilities, business strategy and prospects, as well as various
uncertainties associated with those prospects, including the view of the
Company's management that the Company would likely face increasing difficulties
as a stand-alone company in its changing competitive environment because, among
other things, the Company lacks proprietary technology, faces intense
competition from much larger entities, and has become increasingly reliant on
sourced product suppliers which sell substantially the same product in direct
competition with, and can sell such product at lower prices than, the Company;
3. the facts that the $11.00 per Share price to be received by the
Company's stockholders in both the Offer and the Merger represents a 32.3%
premium over the closing market price of $8.31 per Share on March 6, 1998, the
last full trading day prior to the approval of the Merger Agreement by the
Company's Board of Directors, a premium of 23.9% over the closing market price
of $8.88 per share on February 6, 1998, the 20th full trading day prior to the
approval of the Merger Agreement by the Company's Board of Directors, and a
premium of 30.4% over the average closing prices for the 20-trading-day period
preceding March 8, 1998, and that such price would be payable in cash, thus
eliminating any uncertainties in valuing the consideration to be received by the
Company's stockholders;
15
<PAGE> 17
4. the opinion of Broadview, dated March 8, 1998, that, as of such date,
the proposed cash consideration to be received by the Company's stockholders
pursuant to the Offer and the Merger was fair to such stockholders from a
financial point of view; a copy of Broadview's written opinion is attached to
this Schedule 14D-9 as Annex B and is incorporated herein by reference. Such
opinion should be read in its entirety for a description of the procedures
followed, assumptions and qualifications made, matters considered and
limitations of the review undertaken by Broadview. In connection with delivering
its opinion, Broadview made a presentation to the Company's Board of Directors
at its meeting on March 8, 1998, as to various financial and other matters
underlying such opinion including, among other things, (a) a review of the
public market value and trading multiples of certain publicly traded information
technology hardware distribution companies; (b) a review of certain transactions
in the information technology hardware distribution market segment with revenue
between $50 million and $300 million; (c) a review of premiums paid in merger
and acquisition transactions involving hardware vendors with values between $20
million and $250 million since January 1, 1995; and (d) a review of the present
value of the Company's potential future share price;
5. the results of the process undertaken by Broadview beginning in
February 1997 to approach and contact potential transaction candidates and the
fact that, despite these contacts, only Parent had made an offer regarding a
business combination with the Company;
6. the fact that the Offer and the Merger would not be subject to any
financing condition and that Parent has represented that it has sufficient cash
and/or available credit facilities to acquire all of the Shares in the Offer and
the Merger and to make all necessary payments or fees and expenses in connection
with the Merger Agreement;
7. the likelihood that the proposed Merger would be consummated,
including the terms of the Merger Agreement related thereto and the reputation
and experience of Parent;
8. the opinion of the Company's management that the strategic fit
between Parent and the Company would likely yield business and operational
synergies, a portion of which is being passed on to the Company's current
stockholders in the form of a premium over the preexisting market price for the
Shares;
9. the requirement by Parent, as a condition to entering into the Merger
Agreement, that the Company enter into the Option Agreement and the Stockholders
Agreement, the extent to which those agreements might deter competing takeover
proposals and the likelihood of any competing tender offer being made; and
10. the fact that, to the extent required by the fiduciary obligations
of the Company's Board of Directors to the stockholders under the Delaware Law,
the Company's Board of Directors may withdraw its recommendation with respect to
the Offer and the Merger in order to approve a tender offer or exchange offer
for the Shares or other business combination that might be made or proposed by a
third party on terms more favorable to the Company's stockholders than the Offer
and the Merger taken together, and the fact that under the Merger Agreement,
following such action by the Company's Board of Directors, Parent would have the
right to terminate the Merger Agreement and receive from the Company up to a
$3.0 million termination fee and up to $0.5 million of Parent's expenses
associated with the Offer and the Merger and exercise the option granted under
the Option Agreement, subject to the limitation that in no event may the
aggregate of the termination fee and profits realized upon exercise of the
option exceed $4.5 million. See Item 3. "Identity and Background -- The Merger
Agreement -- Termination; Fees."
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company retained Broadview as its financial advisor in connection with
the Offer and the Merger. Pursuant to its agreements with the Company, dated
February 19, 1997, Broadview became entitled to receive a fee of (i) $35,000
upon execution of the agreements; (ii) $350,000 upon delivery of a fairness
opinion and (iii) is entitled to upon consummation of the Merger an amount equal
to $1,050,000 (less amounts paid pursuant to (ii) above). In addition, the
Company has agreed to reimburse Broadview monthly for its reasonable
out-of-pocket expenses incurred in connection with the Merger. In addition, the
Company has agreed to indemnify Broadview, its affiliates, and each of
Broadview's and its affiliates and their respective
16
<PAGE> 18
members, directors, officers, agents, employees and legal representatives, and
each person, if any, controlling Broadview or any of its affiliates against
certain liabilities (and certain related expenses) relating to or arising out of
its engagement.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the stockholders of the Company on its
behalf with respect to the Offer and the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) During the past sixty days, no transactions in the Shares have been
effected by the Company or, to the best of the Company's knowledge, by any
executive officer, director, affiliate, or subsidiary of the Company.
(b) To the best knowledge of the Company, all of its executive officers and
directors currently intend to tender pursuant to the Offer all Shares held of
record or beneficially owned by them.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth herein, no negotiation is being undertaken or is
underway by the Company in response to the Offer which relates to or would
result in (i) an extraordinary transaction, such as a merger or reorganization,
involving the Company or any subsidiary thereof; (ii) a purchase, sale or
transfer of a material amount of assets by the Company or any subsidiary
thereof; (iii) a tender offer for or other acquisition of securities by or of
the Company; or (iv) any material change in the present capitalization or
dividend policy of the Company.
(b) Except as set forth herein, there is no transaction, board resolution,
agreement in principle or signed contract in response to the Offer that relates
to or would result in one or more of the events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
SECTION 203
As a Delaware corporation, the Company is subject to Section 203 ("Section
203") of the Delaware Law. Section 203 would prevent an "Interested Shareholder"
(generally defined as a person beneficially owning 15% or more of a
corporation's voting stock) from engaging in a "Business Combination" (as
defined in Section 203) with a Delaware corporation for three years following
the date such person became an Interested Shareholder unless: (i) before such
person became an Interested Shareholder, the board of directors of the
corporation approved the transaction in which the Interested Shareholder became
an Interested Shareholder or approved the Business Combination, (ii) upon
consummation of the transaction which resulted in the Interested Shareholder
becoming an Interested Shareholder, the Interested Shareholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced (excluding for purposes of determining the number of
shares of outstanding stock held by directors who are also officers and by
employee stock ownership plans that do not allow plan participants to determine
confidentially whether to tender shares), or (iii) following the transaction in
which such person became an Interested Shareholder, the Business Combination is
(x) approved by the board of directors of the corporation and (y) authorized at
a meeting of shareholders by the affirmative vote of the holders of at least
66 2/3% of the outstanding voting stock of the corporation not owned by the
Interested Shareholder. In accordance with the provisions of the Company's
Certificate of Incorporation and Section 203, the Company's Board of Directors
has approved the Merger Agreement, the Option Agreement and the Stockholders
Agreement and Purchaser's acquisition of Shares pursuant to the Offer and the
Merger and the transactions contemplated by the Merger Agreement and, therefore,
the restrictions of Section 203 are inapplicable to the Merger, the Offer and
the related transactions.
17
<PAGE> 19
ANTITRUST
Under the HSR Act certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division of the
United States Department of Justice (the "Antitrust Division") and the FTC and
certain waiting period requirements have been satisfied. The acquisition of
Shares by Purchaser pursuant to the Offer is subject to such requirements.
Pursuant to the requirements of the HSR Act, Parent intends to file the
required Notification and Report Forms (the "Forms") with the Antitrust Division
and the FTC on March 13, 1998, and the Company expects to file the Forms with
such agencies on March 13, 1998. The statutory waiting period applicable to the
purchase of Shares pursuant to the Offer is to expire at 11:59 P.M., New York
City time, on Friday, March 28, 1998. However, prior to such date, the Antitrust
Division or the FTC may extend the waiting periods by requesting additional
information or documentary material relevant to the acquisition. If such a
request is made, the waiting period will be extended until 11:59 P.M., New York
City time, on the tenth day after substantial compliance by Parent with such
request. Thereafter, such waiting periods can be extended only by court order. A
request is being made pursuant to the HSR Act for early termination of the
applicable waiting period. There can be no assurance, however, that the waiting
period will be terminated early. The Merger Agreement provides that, if by the
expiration of the Offer, the applicable waiting period under the HSR Act shall
not have expired or been terminated, Parent may, without the consent of the
Company, extend the Offer from time to time until the date that such waiting
period has expired or been terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions. At any time before or after the consummation
of any such transactions, the Antitrust Division or the FTC could,
notwithstanding termination of the waiting period, take such action under the
antitrust laws as it deems necessary or desirable in the public interest,
including seeking to enjoin the purchase of Shares pursuant to the Offer or
seeking divestiture of the Shares so acquired or divestiture of substantial
assets of Parent or the Company. Private parties may also bring legal actions
under the antitrust laws. There can be no assurance that a challenge to the
Offer on antitrust grounds will not be made, or if such a challenge is made,
what the result will be. See Item 3, "Identity and Background -- The Merger
Agreement -- Conditions to the Merger."
CERTAIN LITIGATION
On March 9, 1998, a purported class action lawsuit was initiated in the
Court of Chancery of Delaware by Marc Tisch, who purports to bring the action
individually and on behalf of other stockholders of the Company similarly
situated against the Company, its directors and Parent. The lawsuit is styled
Marc Tisch v. Kenneth E. Olson et. al. (C.A.No.16234-NC) and seeks, among other
things, a preliminary and permanent injunction against the Offer and the Merger,
rescission of the Offer and the Merger if they are consummated, and compensatory
damages. The complaint asserts, among other things, that (i) the directors of
the Company breached fiduciary duties owed to the public stockholders of the
Company; (ii) the intrinsic value of the Company is far greater than that
reflected in the market price of the Company's stock; (iii) the terms of the
proposed Merger and Offer were not the result of an auction process or active
market check and were arrived at without a full and thorough investigation by
the individual defendants and are intrinsically unfair and inadequate from the
stand point of the Company's stockholders; and (iv) the individual defendants
failed to make an informed decision, as no market check of the Company's value
was obtained, and in agreeing to the Merger, the individual defendants failed to
properly inform themselves of the Company's highest transactional value. The
complaint also alleges that the individual defendants' fiduciary obligations
under these circumstances require them to (i) undertake an appropriate
evaluation of the Company's net worth as a merger/acquisition candidate; and
(ii) engage in a meaningful auction with third parties in an attempt to obtain
the best value for the Company's public stockholders. The Company believes that
the putative class action suit is without merit and intends to defend it
vigorously.
18
<PAGE> 20
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
1 Agreement and Plan of Merger dated as of March 8, 1998 among
Parent, Purchaser and the Company
2 Option Agreement dated as of March 8, 1998 among Parent,
Purchaser and the Company
3 Stockholders Agreement dated as of March 8, 1998 among
Parent, Purchaser and Patrick Arrington, Richard E.
Belluzzo, Robert W. Johnson, Jeffrey M. Nash, Kenneth E.
Olson and John M. Seiber as selling stockholders.
4 Opinion of Broadview Associates L.L.C., dated March 8, 1998
(Attached to Schedule 14D-9 mailed to stockholders as Annex
B)
5 Press Release of the Company, issued March 8, 1998
6 Press Release of Parent, issued March 9, 1998
7 Article Ninth of the Amended and Restated Certificate of
Incorporation of the Company
8 Article Six of the By-Laws of the Company
9 Letter dated March 13, 1998 from Kenneth E. Olson to the
stockholders of the Company (Included with Schedule 14D-9
mailed to stockholders)
10 Complaint in Tisch v. Proxima Corporation, et al., Civil
Action No. 16234NC, Court of Chancery in the State of
Delaware.
11 Form of Severance Agreement between the Company and each of
its Executive Officers.
</TABLE>
19
<PAGE> 21
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
PROXIMA CORPORATION
By: /s/ KENNETH E. OLSON
-----------------------------------
Chairman of the Board,
President and Chief Executive
Officer
March 13, 1998
20
<PAGE> 22
ANNEX A
PROXIMA CORPORATION
9440 CARROLL PARK DRIVE
SAN DIEGO, CALIFORNIA 92121
(619) 457-5500
---------------
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
---------------
GENERAL
This Information Statement is being mailed on or about March 13, 1998, with
the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") of Proxima Corporation (the "Company") with respect to the Offer to
Purchase dated March 13, 1998 (as supplemented, the "Offer to Purchase") of BD
Acquisition Corp. ("Purchaser"), a Delaware corporation and a wholly owned
subsidiary of ASK asa ("Parent"). Purchaser is offering to purchase all
outstanding shares of Common Stock, par value $.001 per share (the "Common
Stock") of the Company at a price of $11.00 per share, net to the seller in cash
(the "Offer"). The Offer is being made pursuant to the Agreement and Plan of
Merger, dated as of March 8, 1998 (the "Merger Agreement"), by and among Parent,
Purchaser and the Company. You are receiving this Information Statement in
connection with the possible election of persons designated by Purchaser (the
"Purchaser Designees") to at least a majority of the seats on the Board of
Directors (the "Board") of the Company pursuant to the Merger Agreement. The
Merger Agreement is more fully described under Item 3 of the Schedule 14D-9, to
which this Information Statement is attached as Annex A. Capitalized terms used
and not defined herein have the meanings assigned to them in the Schedule 14D-9.
The information with respect to the Purchaser Designees has been supplied
to the Company by Purchaser for inclusion or incorporation by reference herein,
and the Company assumes no responsibility for the accuracy or completeness of
such information.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and Rule 14f-1
thereunder. You are urged to read this Information Statement carefully. You are
not, however, required to take any action.
THE PURCHASER DESIGNEES
Pursuant to the Merger Agreement and subject to compliance with applicable
law, commencing upon the purchase by Purchaser of Shares pursuant to the Offer
or the Option Agreement, Purchaser shall be entitled to designate the number of
directors, rounded up to the next whole number, on the Board of Directors of the
Company that equals that percentage of the total number of directors on the
Board of Directors (giving effect to the election of any such directors) equal
to the percentage of then outstanding Shares owned by Parent or Purchaser. The
foregoing notwithstanding, the Merger Agreement provides that until the
effectiveness of the Merger, the Company shall retain as members of its Board of
Directors at least two directors who are directors of the Company on the date of
the Merger Agreement (the "Company Designees"). In the event of the death,
resignation or removal of any of the Company Designees, any remaining Company
Designee (or, if no other Company Designee shall remain on the Board of
Directors, the last remaining Company Designee and, if no Company Designee shall
remain on the Board of Directors, a majority of the other members of the Board)
shall have the right to appoint a successor or successors to fill the vacancies
so created, which successor shall not be an affiliate or associate (as those
terms are defined in Section 203 of the Delaware Law) of Purchaser or Parent.
The Company has agreed to take all actions necessary to cause Purchaser's
designees to be elected
A-1
<PAGE> 23
or appointed as directors of the Company, including, without limitation, by
increasing the size of the Board of Directors of the Company or securing the
resignations of incumbent directors or both.
Purchaser has informed the Company that it will choose the Purchaser
Designees from the directors and executive officers listed in Schedule I to the
Purchaser's Offer to Purchase, a copy of which is being mailed to the Company's
stockholders together with the Schedule 14D-9. Purchaser has informed the
Company that each of the directors and executive officers listed in Schedule I
to Purchaser's Offer to Purchaser has consented to act as a director, if so
designated. The business address of each such person is as set forth in Schedule
I to Purchaser's Offer to Purchase.
It is expected that the Purchaser Designees may assume office at any time
following the purchase by Parent or Purchaser, as applicable, of the specified
minimum number of shares of Common Stock pursuant to the Offer, which purchase
cannot be earlier than 12:00 midnight, April 9, 1998.
CERTAIN INFORMATION CONCERNING THE COMPANY
The authorized stock of the Company consists of (a) 40,000,000 shares of
Common Stock and (b) 5,000,000 shares of preferred stock, $.001 par value. The
shares of Common Stock constitute the only class of voting securities of the
Company. As of the close of business on March 8, 1998, there were 7,175,445
shares of Common Stock outstanding. Each share of Common Stock entitles its
record holder to one vote. Stockholders of the Company do not have cumulative
voting rights. None of the Company's 5,000,000 authorized shares of preferred
stock have been issued. The Board currently consists of six members.
THE CURRENT MEMBERS OF THE BOARD AND EXECUTIVES OFFICERS OF THE COMPANY
To the extent the Board will consist of persons who are not Purchaser
Designees, the Board is expected to continue to consist of those persons who are
currently directors of the Company who do not resign. The current directors and
executive officers of the Company, their ages, and their positions and terms of
office with the Company are set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- --------
<S> <C> <C> <C>
Kenneth E. Olson................. 61 Chairman of the Board, President and 1984
Chief Executive Officer
Ronald J. Gillies................ 38 Vice President, North American Sales
Gerald Hansen.................... 62 Vice President, Display Products
Thomas D. Kampfer................ 34 General Counsel and Secretary
Michael S. Tamkin................ 56 Vice President, Manufacturing
Michael Vogt..................... 56 Vice President, International Sales
Nigel Waites..................... 32 Vice President, Product Development
Dennis Whittler.................. 47 Vice President, Finance and Chief Financial Officer
Patrick Arrington(1)(3)(4)....... 55 Director 1994
Richard E. Belluzzo(4)........... 44 Director 1995
Robert W. Johnson(1)(2).......... 48 Director 1985
Jeffrey M. Nash(2)(4)............ 50 Director 1993
John M. Seiber(2)(3)............. 63 Director 1988
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Finance Committee
(4) Member of the Nominating Committee
Mr. Olson has served as Chairman of the Board since 1984. In March 1997,
the Board appointed him Interim President and Chief Executive Officer. Prior to
leaving the Company in 1996, he had been Chief
A-2
<PAGE> 24
Executive Officer from December 1990 to February 1996 and was also President of
the Company from April 1995 to February 1996. Mr. Olson is a director of LIDAK
Pharmaceuticals and Applied Digital Access, Inc.
Mr. Gillies has been Vice President, North American Sales since July 1997.
Mr. Gillies joined the Company in September 1984 and during that time has served
in various sales positions in both Europe and the United States.
Mr. Hansen has been Vice President, Display Products since September 1997.
Mr. Hansen joined the Company in December 1991 and prior to his current position
served in various product management positions.
Mr. Kampfer has been General Counsel and Secretary since June 1997. Mr.
Kampfer joined the Company as Director of Legal Affairs in January 1996 and was
named General Counsel and Secretary in June 1997. He was with IBM Corporation
from 1985 to 1995 where he held a variety of positions in engineering,
contracting and IBM's legal department, most recently as Counsel.
Mr. Tamkin has been Vice President, Manufacturing since 1994. From 1992
through March 1994, Mr. Tamkin was V.P., Operations, at Midwestco Enterprises,
Inc. From 1990 to 1992, he was V.P., Manufacturing and Quality, with Motorola
Lighting, Inc., a manufacturer of electronic ballasts. From 1963 to 1990, he was
with Zenith Electronics Corporation, most recently as V.P. and General Manager
of the Video Display Division.
Mr. Vogt has been Vice President, International Sales since 1995. From
January 1984 to December 1989, he served in a variety of senior management
positions with the Company, including V.P., Finance, CFO and Secretary of the
Company.
Mr. Waites has been Vice President, Product Development since November
1997. Mr. Waites joined the Company as Manager of Hardware Engineering in March
1996. He was Manager of Test Engineering at Polycom, Inc., from 1995 to 1996,
and Hardware Manager Entry Level PowerBook Division at Apple Computer, Inc.,
from 1994 to 1995. From 1988 to 1994 he held a variety of engineering positions
at National Instruments, Inc.
Mr. Whittler has been Vice President, Finance and Chief Financial Officer
of the Company since December 1989. From 1980 to December 1989, Mr. Whittler
held a variety of financial positions with Topaz, Inc., including Chief
Financial Officer and Controller.
Mr. Arrington has been engaged in the practice of law since 1968 and is a
member of the law firm of Brobeck, Phleger and Harrison LLP, Newport Beach,
California.
Mr. Belluzzo is the Chairman and Chief Executive Officer at Silicon
Graphics, Inc. Prior to joining Silicon Graphics, Inc., Mr. Belluzzo held
various positions at Hewlett-Packard during the last twenty years.
Mr. Johnson has been a private venture capital investor since July 1988.
Mr. Johnson is a director of STAC Electronics, Inc. and of ViaSat, Inc.
Mr. Nash is a private investor. From August 1995 to December 1997 he was
the President of TransTech Information Management Systems, Inc., a software
development company. From June 1994 to July 1995, Mr. Nash served as President
of Digital Perceptions, Inc., a software development company. From 1989 to June
1994, he was President of VISqUS Corporation, a computer disk drive/magnetic
recording technology development company which he co-founded and which is a
subsidiary of Conner Peripherals, a disk drive company. Mr. Nash is a director
of Remec, Inc. and of ViaSat, Inc.
Mr. Seiber is a Senior Vice President of PaineWebber, Inc., an investment
company. He has served in a variety of positions with PaineWebber, Inc. since
1962.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of eight meetings during
the fiscal year ended March 31, 1997.
A-3
<PAGE> 25
The Audit Committee, currently consisting of directors Arrington and
Johnson, met once during the last fiscal year. This Committee recommends
engagement of the Company's independent public accountants and is primarily
responsible for approving the services performed by such accountants and for
reviewing and evaluating the Company's accounting principles and its system of
internal accounting controls.
The Compensation Committee, currently consisting of directors Johnson, Nash
and Seiber, met once during the last fiscal year. This Committee establishes the
salary and incentive compensation of the executive officers of the Company and
administers the Company's employee benefit plans.
The Finance Committee, which during the fiscal year ended March 31, 1997
consisted of directors Seiber and Olson, held two meetings during the last
fiscal year. The Finance Committee reviews matters concerning financing
strategies and strategic alliances.
The Nominating Committee, currently consisting of directors Nash, Arrington
and Belluzzo, met once during the last fiscal year. The Nominating Committee
reviews candidates and makes recommendations for nominees to serve on the Board
of Directors. The Committee will consider recommendations by stockholders for
vacancies on the Board. Suggestions may be submitted to the Secretary of the
Company. In addition, the Committee also reviews the criteria for the position
of CEO and President and interviews the final candidates.
During fiscal year 1997, all directors attended at least 75% of the
meetings of the Board of Directors and meetings of Committees on which such
director served with the exception of Mr. Arrington, who attended 50% of the
Board meetings held.
BOARD COMPENSATION
Non-employee directors are compensated at the rate of $1,000 per meeting of
the Board of Directors and $500 per meeting of a committee that is held on a day
when a meeting of the entire Board is not held. Non-employee directors also
receive a $1,000 quarterly retainer.
Directors may be compensated for special assignments from time to time on
an hourly, per diem or per project basis. During the period Mr. Olson was a
non-employee director, he was engaged to provide services to the Company
principally in connection with its business relationship with its affiliate,
Laser Power Corporation. He was compensated in the amount of $18,814, which is
included in the Summary Compensation Table under the heading "All Other
Compensation."
In addition, all directors are eligible to receive options to purchase
stock under the Company's Amended and Restated 1996 Stock Plan.
A-4
<PAGE> 26
REPORT OF THE COMPENSATION COMMITTEE
The following is the Report of the Compensation Committee of the Company,
describing the compensation policies and rationale applicable to the Company's
officers with respect to the compensation paid to the officers for the year
ended March 31, 1997.
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for reviewing and evaluating the compensation of the Company's
officers. The duties of the Compensation Committee include reviewing and making
recommendations regarding salaries, bonuses and equity-based compensation to the
Board. All recommendations by the Committee submitted to the Board are reviewed
and approved by the non-employee directors. The Committee is composed of Messrs.
Robert Johnson, Jeffrey Nash and John Seiber, all of whom are independent,
outside directors of the Company.
Base Salaries
The Committee establishes the base salaries of the officers by considering
the salaries of officers in similar positions at comparably sized companies in
the electronics industry using survey information contained in the Radford
Associates Management Total Compensation Report. The Committee benchmarks
salaries to the 50th percentile of the survey range and also considers the
Company's performance over the past year in such areas as profitability and
progress toward long-term goals. The base salaries are reviewed annually.
Annual Bonuses
The Committee establishes target bonus levels which vary between 20% and
50% of base salary for officers. The Committee also predetermines a minimum
performance level below which no bonus is earned and the performance goal at
which the full target bonus is earned. Additional bonus amounts are earned for
achievement of results above the targets. The target bonus is prorated for
achievement of results between the minimum level and the performance goal. For
fiscal 1997, annual bonuses were based upon earnings goals, individual goal
achievements and also upon revenue goals for certain officers who are primarily
involved with selling. No performance bonuses were paid during fiscal 1997.
Equity-Based Compensation
The Committee views stock options as an important part of the Company's
long-term performance-based compensation plan. The Committee bases grants of
stock options to the officers upon its estimation of each executive's potential
contribution to the long-term growth and profitability of the Company. The
program is intended to provide additional incentives to the officers to maximize
stockholder value. An extensive review of industry practices was conducted
during fiscal 1997 which served as the basis for equity-based compensation in
fiscal 1997. All options are granted at the fair market value of the Company's
Common Stock at the date of grant. The stock options vest over time to encourage
key employees to remain with the Company.
Chief Executive Officer Compensation
The compensation of the Company's Chief Executive Officer was based upon
the same criteria described above. Specifically, the Committee considered (i)
salaries of chief executive officers for comparably sized companies in the
electronics industry, (ii) the profitability goals of the Company and the
performance of similar companies, and (iii) the Company's performance for fiscal
year 1997.
Section 162(m) of the United States Internal Revenue Code of 1986 (the
"Code") limits deductibility of compensation in excess of $1 million paid to a
company's chief executive officer and four other highest paid executive officers
unless such compensation qualifies as "performance based." The Company will not
be affected by this limitation for the 1997 fiscal tax year. The Compensation
Committee intends to review this issue periodically to determine whether further
changes to the Company's compensation policies and practices are advisable in
order to preserve deductibility.
A-5
<PAGE> 27
SPECIAL REPORT ON THE FISCAL YEAR 1997 REPRICING OF OPTIONS
In fiscal year 1997, the Committee determined that factors affecting the
stock price of the Company's shares made it necessary to consider a program to
reprice certain options to purchase common stock of the Company. Stock options
are intended to incentivize employees, and they form a major component of an
employee's compensation package. The Committee believes that stock options
strengthen the Company's ability to attract and retain key employees who
contribute to the Company's success. The Committee deemed it necessary to
reprice specific outstanding stock options held by employees, including the
Company's executive officers. Prior to this action, the Company's stock price
had been depressed. In order to retain key employees, the Committee concluded it
was important that out-of-the-money options be repriced to reflect the current
market value. Option grants to directors were not eligible for participation in
this program.
After consideration and upon recommendation of the Compensation Committee,
on July 10, 1996, the Board of Directors approved the repricing of all
outstanding options for non-officer employees and directed management to convey
the information to the employees. A repricing program was implemented and
communicated to the affected employees. Under the program, non-officer employees
holding outstanding options with an exercise price higher than the closing price
of a share of Proxima Corporation common stock on the repricing date of August
14, 1996 were eligible to participate in the repricing program. Each optionee
holding an out-of-the-money option was offered the opportunity to either retain
the existing option or to accept a repricing of the affected option at an
exercise price of $11.50. No change was made in the number of options granted,
but employees who accepted the repricing offer agreed to a new vesting schedule.
Under the new vesting schedule options vest over a period of four years at the
rate of 25% per annum commencing on the first anniversary of the date of the
repricing.
On September 25, 1996, the Board of Directors approved the repricing of all
options held by officers with prices exceeding the closing price of Proxima
Corporation common stock on September 26, 1996. Such closing price was $12.00.
The program for officers was consistent with that offered to the general
employees with the exception of the exercise price which was governed by the
market price of the stock at the repricing date specified in the Board
resolution.
The Committee and the Board of Directors believe that with the repricing
program, employees will continue to view their options as a valuable part of
their total compensation. The Company believes that this will aid it in
retaining critical employees. It will, however, be necessary for the employees
who elected to participate in the repricing program to continue employment with
the Company for another four years in order to receive the maximum benefit from
the repriced options, and then only if the market value of the stock rises above
the stated option price.
Following the close of the fiscal year, and as the price of the common
stock continued to decrease, the Committee again reviewed the value of the
outstanding stock options and recommended a second repricing program. On April
24, 1997, the Board approved this second repricing program for all employees and
executive officers. All employees have the opportunity to accept a lower
exercise price in exchange for the commencement of a new vesting period, so that
only employees remaining with the Company for a minimum of four years would have
an opportunity to take full advantage of the repricing program. The amended
price of the options was $5.19.
COMPENSATION COMMITTEE:
ROBERT W. JOHNSON, Chairman
JEFFREY M. NASH, Committee Member
JOHN M. SEIBER, Committee Member
A-6
<PAGE> 28
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee was or is an officer or employee of
the Company or any of its subsidiaries.
There is no family relationship between any director or executive officer
of the Company.
PRINCIPAL HOLDERS OF VOTING SECURITIES
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information with respect to the only persons
who (to the Company's knowledge) beneficially owned more than 5% of the Shares
of the Company as of March 8, 1998.
<TABLE>
<CAPTION>
BENEFICIAL AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP OF PERCENT OF CLASS
------------------------------------ ---------- -------------------
<S> <C> <C>
Dimensional Fund Advisors, Inc.............................. 521,300 6.9%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
SC Fundamental, Inc......................................... 704,600 9.8%
712 5th Ave. 19th floor
New York, NY 10019
</TABLE>
A-7
<PAGE> 29
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of March 11, 1998, for each of (i) each
member of the Board, any person acting as the Company's Chief Executive Officer
during the last completed fiscal year and each of the next four most highly
compensated executive officers of the Company who were serving as executive
officers at the end of the last completed fiscal year and (ii) all directors and
executive officers as a group the number of shares and percentage of outstanding
Common Stock of the Company beneficially owned. Each person named in the table
has sole investment power and sole voting power with respect to the shares of
the Common Stock set forth opposite such person's name, except as otherwise
indicated.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF INDIVIDUAL OR SHARES BENEFICIALLY COMMON STOCK
NUMBER OF PERSONS IN GROUP(1) OWNED(2)(3) OUTSTANDING(2)
----------------------------- ------------------- --------------
<S> <C> <C>
Kenneth E. Olson.............................. 319,472 4.5%
Philip G. Baker(4)............................ 1,075 *
Michael H. Chaffin, Jr.(5).................... 282 *
John E. Rehfeld(6)............................ 1,075 *
Michael S. Tamkin............................. 13,291 *
Dennis Whittler............................... 47,451 *
Patrick Arrington............................. 15,156 *
Richard E. Belluzzo........................... 9,154 *
Robert W. Johnson............................. 25,280 *
Jeffrey M. Nash............................... 16,476 *
John M. Seiber................................ 23,126 *
All Executive Officers and Directors as a
Group
(13 Persons excluding officers and directors
who are listed but no longer employed by the
Company).................................... 534,013 7.6%
</TABLE>
- ---------------
* Less than 1%
(1) Unless otherwise indicated, the address of each individual named in the
table is c/o Proxima Corporation, 9440 Carroll Park Drive, San Diego,
California 92121.
(2) The shares listed on the table include the following stock options
exercisable on or within 60 days after March 11, 1998: Mr. Olson -- 115,842;
Mr. Tamkin -- 11,750; Mr. Whittler -- 20,124; Mr. Arrington -- 15,156; Mr.
Belluzzo -- 9,154; Mr. Johnson -- 16,020; Mr. Nash -- 16,476; Mr.
Seiber -- 16,020; and all directors and executive officers as a
group -- 251,401.
(3) The shares shown as beneficially owned by Messrs. Arrington, Belluzzo,
Johnson, Nash, Olson and Seiber are the subject of a Stockholders Agreement
dated March 8, 1998, between Parent and those stockholders, pursuant to
which beneficial ownership may be deemed shared with Parent. The Stockholder
Agreement is more fully described in the Schedule 14D-9.
(4) Mr. Baker's employment with the Company terminated on May 9, 1997.
(5) Mr. Chaffin's employment with the Company terminated on May 9, 1997.
(6) Mr. Rehfeld's employment with the Company terminated on March 30, 1997.
A-8
<PAGE> 30
EXECUTIVE COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the three most recently ended fiscal years,
the compensation paid or accrued for those years to any person acting as Chief
Executive Officer of the Company and to each of the four most highly compensated
executive officers of the Company other than the Chief Executive Officer who
were serving as executive officers at the end of the last fiscal year whose
aggregate annual salary and bonus paid in compensation for services rendered in
all the capacities in which they served exceeded $100,000 for the Company's last
fiscal year (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING ALL OTHER
FISCAL -------------------- OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS(#) ($)(1)
--------------------------- ------ --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Kenneth E. Olson.......................... 1997(2) 54,221 6,160 2,500 95,040
President and CEO; Chairman of 1996 221,538 -- -- 17,278
the Board 1995 220,000 220,000 37,000 13,865
Philip G. Baker........................... 1997 160,000 50,000 47,000(3) 36,314
Vice President, Product Development 1996(2) 31,597 15,000 40,000 30,422
1995 -- -- -- --
Michael H. Chaffin, Jr.................... 1997 207,392 -- 67,500(3) 14,450
Executive Vice President, 1996(2) 115,822 -- 60,000 37,895
Business Development 1995 -- -- -- --
John E. Rehfeld........................... 1997(2) 311,312 75,000 215,000(3) 580,937
Former President and CEO 1996(2) 55,386 25,000 200,000 3,068
1995 -- -- --
Michael S. Tamkin......................... 1997 161,000 -- 26,000(3) 8,301
Vice President, Manufacturing 1996 155,000 -- 20,000 5,833
1995(2) 136,635 68,345 30,000 52,617
Dennis A. Whittler........................ 1997 158,461 3,060 15,500(3) 6,322
Vice President, Finance; 1996 149,000 -- -- 5,041
Chief Financial Officer 1995 129,000 81,041 10,000 4,962
</TABLE>
- ---------------
(1) Includes for fiscal year 1997: Key executive insurance premiums
(Olson -- $2,670; Baker -- $255; Chaffin -- $670; Rehfeld -- $3,958;
Tamkin -- $818; Whittler -- $191); Matching contributions to Company's
401(k) plan (Olson -- $3,661; Baker -- $7,177; Chaffin -- $5,128;
Rehfeld -- $10,313; Tamkin -- $5,151; Whittler -- $6,131); Relocation
expenses (Baker -- $28,587; Chaffin -- $2,352; Rehfeld -- $257,066); Change
in status or termination payments (Olson -- $60,000; Rehfeld -- $300,000);
Automobile allowances (Olson -- $1,255; Chaffin -- $6,300;
Rehfeld -- $9,600; Tamkin -- $2,332); Amounts as a non-employee director
(Olson -- $18,814 consulting fees and $8,640 director's fees).
(2) Employed for a portion of the last completed fiscal year.
(3) See also "Special Report on the Fiscal Year 1997 Repricing of Options" and
"Information Regarding Repricing, Cancellation or Regrant of Options."
A-9
<PAGE> 31
STOCK OPTION GRANTS
The following table sets forth each grant of stock options made during the
fiscal year ended March 31, 1997, to each of the executive officers named in the
Summary Compensation Table:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------
% OF TOTAL POTENTIAL REALIZABLE
OPTIONS VALUE AT ASSUMED
GRANTED ANNUAL RATES OF
SECURITIES TO STOCK APPRECIATION FOR
UNDERLYING EMPLOYEES EXERCISE OPTION TERM(1)
OPTIONS IN FISCAL OR BASE ----------------------
NAME GRANTED YEAR PRICE EXPIRATION 5% 10%
---- ---------- ----------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth E. Olson.......... 2,500 .7 $ 11.50 8-14-03 $ 11,704 $ 27,276
Philip G. Baker........... 7,000 2.0 11.50 8-14-03 32,772 76,372
40,000 (2) 12.00 9-25-03 195,408 455,384
Michael H. Chaffin, Jr.... 7,500 2.2 11.50 8-14-03 35,112 81,827
60,000 (2) 12.00 9-25-03 283,112 683,076
John E. Rehfeld........... 15,000 4.4 11.50 8-14-03 70,225 163,654
200,000 (2) 12.00 9-25-03 977,041 2,276,921
Michael S. Tamkin......... 6,000 1.7 11.50 8-14-03 28,090 65,461
20,000 (2) 12.00 9-25-03 97,704 227,692
Dennis A. Whittler........ 5,500 1.6 11.50 8-14-03 25,749 60,006
10,000 (2) 12.00 9-25-03 48,852 113,846
</TABLE>
- ---------------
(1) Potential realizable value is based on an assumption that the stock price
appreciates at the annual rate shown (compounded annually) from the date of
grant until the end of the seven year option term. These numbers are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth.
(2) These options were repriced during fiscal 1997, but were granted in prior
years and, therefore, are not included in the calculations for this column.
STOCK OPTION EXERCISES
This table sets forth, for each of the executive officers named in the
Summary Compensation Table, each exercise of stock options during the fiscal
year ended March 31, 1997, and the year-end value of unexercised options:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON OPTIONS AT YEAR-END(#): AT YEAR-END:
NAME EXERCISE(#) VALUE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(2)
---- ----------- ----------------- --------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth E. Olson..... 176,414 $1,282,481 500 2,000 -- --
Philip G. Baker...... -- -- -- 47,000 -- --
Michael H. Chaffin,
Jr................. -- -- -- 67,500 -- --
John E. Rehfeld...... -- -- -- 215,000 -- --
Michael S. Tamkin.... -- -- 8,589 38,411 -- --
Dennis A. Whittler... -- -- 37,037 23,462 -- --
</TABLE>
- ---------------
(1) Market value of underlying securities minus exercise price at time of
exercise.
(2) None of these options were in-the-money.
A-10
<PAGE> 32
INFORMATION REGARDING REPRICING, CANCELLATION OR REGRANT OF OPTIONS
As set out above in the Special Report on Fiscal 1997 Repricing of Options,
the Company implemented an option repricing program for executive officers and
other employees holding out-of-the-money options. The repricing was effective
August 14, 1996 as to employees and September 26, 1996 as to executive officers.
At the employee's election, each option was repriced to the fair market value of
the common stock pursuant to the criteria established in the Board's resolutions
($11.50 on August 14, 1996 for employees and $12.00 on September 26, 1996 for
executive officers) and became subject to a new vesting schedule.
The following table sets forth (i) information with respect to each of the
Company's Named Executive Officers who participated in the option repricing
program effected September 26, 1996, and (ii) information with respect to all
former or current executive officers of the Company concerning their
participation in any option repricing programs implemented by the Company during
the last ten fiscal years.
<TABLE>
<CAPTION>
NUMBER OF MARKET EXERCISE LENGTH OF
SECURITIES PRICE PRICE AT ORIGINAL OPTION
UNDERLYING OF STOCK AT TIME OF TERM REMAINING
OPTIONS/SARS TIME OF REPRICING NEW AT DATE OF
REPRICED OR REPRICING OR OR EXERCISE REPRICING OR
NAME AND POSITION DATE AMENDED(#) AMENDMENT AMENDMENT PRICE AMENDMENT
----------------- ------- ------------ ------------ --------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Philip G. Baker............ 9-26-96 40,000 $21.00 $ 20.75 $12.00 76 of 84 months
Vice President, Product
Development
Michael H. Chaffin, Jr..... 9-26-96 60,000 12.00 18.63 12.00 71 of 84 months
Executive Vice President,
Business Development
Charles Chestnutt.......... 9-26-96 10,000 12.00 25.875 12.00 66 of 84 months
Former Vice President and
Controller
Frank Drdek................ 9-26-96 10,000 12.00 25.875 12.00 66 of 84 months
Vice President, Human
Resources
Donald Houston............. 9-26-96 30,000 12.00 25.875 12.00 66 of 84 months
Former Vice President, 10,000 12.00 19.75 12.00 71 of 84 months
Sales
John Rehfeld............... 9-26-96 200,000 12.00 20.75 12.00 76 of 84 months
Former President and CEO
Michael Tamkin............. 9-26-96 10,000 12.00 35.875 12.00 62 of 84 months
Vice President, 10,000 12.00 25.875 12.00 66 of 84 months
Manufacturing
Dennis Whittler............ 9-26-96 10,000 12.00 25.875 12.00 66 of 84 months
Vice President, Finance,
CFO
</TABLE>
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Bylaws provide that the Company is required to indemnify its
officers and directors to the maximum extent and in the manner permitted by
Delaware law. Further, the Company has entered into indemnification agreements
with its officers and directors. The Company believes that its charter and bylaw
provisions and indemnification agreements are necessary to attract and retain
qualified persons as directors and officers.
A-11
<PAGE> 33
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership on Form 3 and changes in ownership on
Form 4 or Form 5 with the Securities and Exchange Commission (the "SEC"). Such
officers, directors and ten percent stockholders are also required by SEC rules
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, during the fiscal year ended March 31, 1997, all Section
16(a) filing requirements applicable to its officers, directors and ten percent
stockholders were complied with except for one former officer, Donald Houston,
who filed a late Form 4 regarding one open market purchase in May 1996.
COMPARATIVE STOCK PERFORMANCE GRAPH
The following is a graph comparing the cumulative total return to
stockholders of the Company's Common Stock to two indices: (i) the Nasdaq Stock
Market (U.S. Companies) Index and (ii) the Nasdaq Computer Manufacturers Stock
Index. Information contained in the Performance Graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission, nor shall such information be incorporated by reference into any
future filing under the Securities Act or the Exchange Act, except to the extent
that the Company specifically incorporates it by reference into such filing.
COMPARISON OF 50-MONTH CUMULATIVE TOTAL RETURN
LOGO
The Performance Graph shows the cumulative total return on investment
assuming an investment of $100 on February 4, 1993, in the Company, the Nasdaq
Stock Market (U.S. Companies) Index and the Nasdaq Computer Manufacturers Stock
Index. The return on investment includes the reinvestment of dividends, although
dividends have never been paid on Company stock.
A-12
<PAGE> 34
ANNEX B
LOGO LOGO
LOGO
March 8, 1998
CONFIDENTIAL
Board of Directors
Proxima Corporation
9440 Carroll Park Drive
San Diego, CA 92121-9639
Dear Members of the Board:
We understand that Proxima Corporation ("Proxima" or the "Company"), ASK a.s.
("ASK") and BD Acquisition Corp., a wholly owned subsidiary of ASK (the "Sub"),
propose to enter into an Agreement and Plan of Merger (the "Agreement") pursuant
to which the Sub will offer to purchase (the "Offer") all of the outstanding
shares of Proxima common stock, $0.001 par value per share ("Proxima Common
Stock"), for $11.00 cash per share (the "Consideration") and subsequently merge
with and into Proxima (the "Merger"). Pursuant to the Merger, each issued and
outstanding share of Proxima not acquired in the Offer will be converted into
the right to receive an amount of cash equal to the Consideration. The terms and
conditions of the above described Offer and Merger (together the "Transaction")
are more fully detailed in the Agreement.
You have requested our opinion as to whether the Consideration to be received by
Proxima shareholders in the Transaction is fair, from a financial point of view,
to Proxima shareholders.
Broadview Associates focuses on providing merger and acquisition advisory
services to information technology ("IT") companies. In this capacity, we are
continually engaged in valuing such businesses, and we maintain an extensive
database of IT mergers and acquisitions for comparative purposes. We are
currently acting as financial advisor to Proxima's Board of Directors and will
receive a fee from Proxima upon the successful conclusion of the Transaction.
In rendering our opinion, we have, among other things:
1.) reviewed the terms of the Agreement and the associated exhibits thereto in
the form of the draft dated March 7, 1998 furnished to us by Rogers & Wells
LLP on March 7, 1998 (which, for the purposes of this opinion, we have
assumed, with your permission, to be identical in all material respects to
the agreement to be executed);
2.) reviewed Proxima's annual report and Form 10-K for the fiscal year ended
March 31, 1997, including the audited financial statements included
therein, and Proxima's Form 10-Q for the nine months ended December 31,
1997, including the unaudited financial statements included therein;
3.) reviewed certain internal financial and operating information relating to
Proxima, including certain projections through December 31, 1998, prepared
and provided to us by Proxima management;
4.) participated in discussions with Proxima management concerning the
operations, business strategy, financial performance and prospects for
Proxima;
5.) reviewed the recent reported closing prices and trading activity for
Proxima Common Stock;
LOGO
B-1
<PAGE> 35
6.) compared certain aspects of the financial performance of Proxima with
public companies we deemed comparable;
7.) analyzed available information, both public and private, concerning other
mergers and acquisitions we believe to be comparable in whole or in part to
the Transaction;
8.) reviewed recent equity research analyst reports covering Proxima;
9.) assisted in negotiations and discussions related to the Transaction among
Proxima, ASK and their financial and legal advisors; and
10.) conducted other financial studies, analyses and investigations as we deemed
appropriate for purposes of this opinion.
In rendering our opinion, we have relied, without independent verification, on
the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by Proxima. With
respect to the financial projections examined by us, we have assumed that they
were reasonably prepared and reflected the best available estimates and good
faith judgments of the management of Proxima as to the future performance of
Proxima. We have neither made nor obtained an independent appraisal or valuation
of any of Proxima's assets.
Based upon and subject to the foregoing, we are of the opinion that the
Consideration to be received by Proxima shareholders in the Transaction is fair,
from a financial point of view, to Proxima shareholders.
For purposes of this opinion, we have assumed that Proxima is not currently
involved in any material transaction other than the Transaction and those
activities undertaken in the ordinary course of conducting its business. Our
opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of this opinion,
and any change in such conditions may impact this opinion.
This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Proxima in
connection with its consideration of the Transaction and does not constitute a
recommendation to any Proxima shareholder as to whether such shareholder should
tender its shares in the Offer or as to how such shareholder should vote on the
Merger. Broadview Associates does not believe that any other person other than
the Board of Directors of Proxima has the legal right under state law to rely on
this opinion, and, in the absence of any governing precedents, we would resist
any assertion otherwise by any such person. This opinion may not be published or
referred to, in whole or part, without our prior written permission, which shall
not be unreasonably withheld. Broadview Associates hereby consents to references
to and the inclusion of this opinion in its entirety in the Schedule 14D-9 to be
distributed to Proxima shareholders in connection with the Transaction.
Sincerely,
/s/ BROADVIEW ASSOCIATES LLC
Broadview Associates LLC
B-2
<PAGE> 1
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 8, 1998
AMONG
ASK ASA,
BD ACQUISITION CORP.
AND
PROXIMA CORPORATION
<PAGE> 2
TABLE OF CONTENTS
This Table of Contents is not part of the
Agreement to which it is attached but is inserted
for convenience only.
ARTICLE I.
THE OFFER
1.01 The Offer................................................................ 2
1.02 Company Action........................................................... 3
1.03 Company Board Representation; Section 14(f).............................. 4
ARTICLE II.
THE MERGER
2.01 The Merger............................................................... 5
2.02 Effective Time........................................................... 5
2.03 Closing.................................................................. 6
2.04 Certificate of Incorporation and Bylaws of the Surviving Corporation..... 6
2.05 Directors and Officers of the Surviving Corporation...................... 6
2.06 Effects of the Merger.................................................... 6
2.07 Further Assurances....................................................... 6
ARTICLE III.
CONVERSION OF SHARES
3.01 Conversion of Capital Stock.............................................. 7
3.02 Exchange of Certificates................................................. 8
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.01 Organization and Qualification.......................................... 10
4.02 Capital Stock........................................................... 10
4.03 Authority Relative to this Agreement and the Stock Option Agreement..... 12
4.04 Non-Contravention; Approvals and Consents............................... 12
4.05 SEC Reports and Financial Statements.................................... 13
4.06 Absence of Certain Changes or Events.................................... 14
4.07 Absence of Undisclosed Liabilities; Cash and Short-term Investments..... 14
4.08 Legal Proceedings....................................................... 14
4.09 Information Supplied.................................................... 15
4.10 Compliance with Laws and Orders......................................... 15
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4.11 Compliance with Agreements; Certain Agreements; Major Customers......... 16
4.12 Taxes................................................................... 17
4.13 Employee Benefit Plans; ERISA........................................... 20
4.14 Insurance............................................................... 24
4.15 Labor Matters........................................................... 24
4.16 Environmental Matters................................................... 24
4.17 Tangible Property and Assets; Real Property............................. 25
4.18 Intellectual Property Rights............................................ 25
4.19 Vote Required........................................................... 26
4.20 Section 203 of the DGCL Not Applicable.................................. 26
4.21 Financial Advisor Advice................................................ 26
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
5.01 Organization and Qualification.......................................... 27
5.02 Authority Relative to this Agreement.................................... 27
5.03 Non-Contravention; Approvals and Consents............................... 27
5.04 Legal Proceedings....................................................... 28
5.05 Information Supplied.................................................... 28
5.06 Parent Not an Interested Stockholder or an Acquiring Person............. 29
5.07 Financing............................................................... 29
ARTICLE VI.
COVENANTS OF THE COMPANY
6.01 Conduct of Business..................................................... 29
6.02 No Solicitations........................................................ 32
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.01 Access to Information; Confidentiality.................................. 33
7.02 Approval of Stockholders................................................ 34
7.03 Preparation of Proxy Statement.......................................... 34
7.04 Regulatory and Other Approvals.......................................... 35
7.05 Employee Benefit Plans.................................................. 35
7.06 Directors' and Officers' Indemnification and Insurance.................. 36
7.07 Expenses................................................................ 38
7.08 Brokers or Finders...................................................... 38
7.09 Notice and Cure......................................................... 38
7.10 Fulfillment of Conditions............................................... 38
7.11 Conveyance Taxes........................................................ 39
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7.12 Stock Option Agreement.................................................. 39
ARTICLE VIII.
CONDITIONS
8.01 Conditions to Each Party's Obligation to Effect the Merger.............. 39
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination............................................................. 39
9.02 Effect of Termination................................................... 41
9.03 Amendment............................................................... 42
9.04 Waiver.................................................................. 43
ARTICLE X.
GENERAL PROVISIONS
10.01 Non-Survival of Representations, Warranties, Covenants and Agreements.. 43
10.02 Notices................................................................ 43
10.03 Entire Agreement....................................................... 44
10.04 Public Announcements................................................... 45
10.05 No Third Party Beneficiary............................................. 45
10.06 No Assignment; Binding Effect.......................................... 45
10.07 Headings............................................................... 45
10.08 Invalid Provisions..................................................... 45
10.09 Governing Law.......................................................... 45
10.10 Schedules.............................................................. 46
10.11 Counterparts........................................................... 46
GLOSSARY OF DEFINED TERMS.................................................... 48
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AGREEMENT AND PLAN OF MERGER, dated as of March 8, 1998 (the
"Agreement"), made and entered into by and among ASK asa, a corporation
organized under the laws of the Kingdom of Norway ("Parent"), BD Acquisition
Corp., a Delaware corporation and an indirect wholly owned subsidiary of Parent
("Sub"), and Proxima Corporation, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, Sub and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders to consummate, and have approved, the business
combination transaction provided for herein in which (i) Parent will cause Sub
to make a cash tender offer to acquire all of the issued and outstanding shares
of common stock, par value $ .001 per share ("Company Common Stock"), of the
Company upon the terms and subject to the conditions of this Agreement and (ii)
subsequently, Sub will merge with and into the Company and the Company will
become an indirect wholly owned subsidiary of Parent;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's and Sub's willingness to enter
into this Agreement, the Company, Parent and Sub are entering into a stock
option agreement, substantially in the form attached as Exhibit A hereto (the
"Stock Option Agreement"), pursuant to which the Company has granted to Sub an
option, exercisable upon the occurrence of certain events, to acquire a number
of shares of Company Common Stock representing in the aggregate 19.9% of the
aggregate shares of Company Common Stock outstanding at the date of this
Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition to Parent's and Sub's willingness to enter into this
Agreement, Parent, Sub and certain stockholders of the Company are entering into
a stockholders agreement substantially in the form of Exhibit B hereto (the
"Stockholders Agreement"), pursuant to which each of such stockholders has
agreed, among other things, to tender all shares of Company Common Stock
beneficially owned by him to Sub pursuant to the tender offer referred to above;
WHEREAS, the Board of Directors of the Company has approved and adopted
this Agreement and the transactions contemplated hereby and resolved and agreed
to recommend that holders of shares of Company Common Stock tender their shares
pursuant to such tender offer; and
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties and agreements in connection with the transactions
contemplated by this Agreement and also to prescribe various conditions to the
consummation of such transactions;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
<PAGE> 6
ARTICLE I.
THE OFFER
1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 9.01 and nothing shall have occurred that would result
in a failure to satisfy any of the conditions set forth in Annex A hereto, not
later than five business days after the public announcement of the execution of
this Agreement, Parent shall cause Sub to, and Sub shall, commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended
(such Act and the rules and regulations promulgated thereunder being referred to
herein as the "Exchange Act")) a cash tender offer (the "Offer") to acquire all
of the issued and outstanding shares of Company Common Stock for $11.00 per
share (such amount, or any greater amount per share paid pursuant to the Offer,
the "Per Share Amount"), net to the seller in cash, subject to any amounts
required to be withheld under applicable federal, state, local or foreign tax
laws and regulations. The obligation of Sub to consummate the Offer and to
accept for payment and to pay for shares of Company Common Stock tendered
pursuant to the Offer shall be subject only to (i) the condition that there
shall have been validly tendered and not withdrawn, in accordance with the terms
of the Offer and prior to the expiration date of the Offer, a number of shares
of Company Common Stock that represents (together with any shares of Common
Stock purchased by Sub under the Stock Option Agreement) at least a majority of
the shares of Company Common Stock outstanding on a fully diluted basis (the
"Minimum Condition"), and (ii) the other conditions set forth in Annex A hereto
(together with the Minimum Condition, the "Offer Conditions"). Sub expressly
reserves the right to waive the Minimum Condition or any of the other Offer
Conditions and to make any other changes in the terms and conditions of the
Offer (other than extending the Offer except as expressly provided below in this
Section 1.01(a)); provided, however, that, without the prior written consent of
the Company, no change may be made which (i) decreases the Per Share Amount or
the number of shares of Company Common Stock sought in the Offer, (ii) changes
the form of consideration to be paid in the Offer, (iii) imposes conditions to
the Offer in addition to those set forth in Annex A hereto, (iv) amends any
Offer Condition, (v) except as provided below, extends the Offer or (vi) is
materially adverse to the holders of shares of Company Common Stock.
Notwithstanding anything to the contrary in this Agreement, (i) Sub may, in its
sole discretion and without the consent of the Company, (A) extend the Offer, at
any time up to the Outside Termination Date, for one or more periods of not more
than ten business days each, if, at the then scheduled expiration date of the
Offer, any Offer Condition has not been satisfied; (B) extend the Offer at any
time (but on not more than one occasion) for a period of not more than 10
business days, if at that time the number of shares of Company Common Stock duly
tendered pursuant to the Offer and not subsequently withdrawn represents less
than 90% of the shares of Company Common Stock then outstanding; or (C) extend
the Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission ("SEC") or the staff thereof
applicable to the Offer and (ii) if at any scheduled expiration date of the
Offer any Offer Condition has not been satisfied or waived by Sub, at the
written request of the Company delivered no later than the scheduled expiration
date of the Offer, Sub shall, and shall continue to, extend the Offer from time
to time for one or more
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periods of not more than five business days each until a date not later than the
Outside Termination Date. Subject to the terms and conditions of the Offer, Sub
shall pay, as soon as reasonably practicable after it is permitted to do so
under applicable law, for all Shares validly tendered and not withdrawn.
(b) As soon as practicable on the date of commencement of the Offer,
Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1
promulgated under the Exchange Act (together with all amendments and supplements
thereto, the "Schedule 14D-1") with respect to the Offer, and take such steps as
are necessary to cause the Offer to Purchase (as defined below) to be
disseminated to the holders of shares of Company Common Stock as and to the
extent required by applicable federal securities laws. The Schedule 14D-1 shall
contain an offer to purchase (the "Offer to Purchase") and forms of the related
letter of transmittal and any related summary advertisement and other documents
required to be filed pursuant to the Exchange Act (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all amendments and
supplements thereto, are sometimes collectively referred to in this Agreement as
the "Offer Documents"). Parent, Sub and the Company shall correct promptly any
information provided by any of them for use in the Offer Documents which shall
have become false or misleading, and Parent and Sub shall take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
shares of Company Common Stock, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
an opportunity to review and comment on the Offer Documents prior to their being
filed with the SEC, and Parent and Sub shall be promptly advised of any comments
that Parent or Sub receives from the SEC or its staff with respect to the Offer
Documents promptly after receipt of any such comments.
1.02 Company Action.
(a) The Company hereby approves and consents to the Offer and
represents that the Board of Directors of the Company, at a meeting duly called
and held at which a quorum was present throughout, has unanimously (A)
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, taken together, are fair to and in the best
interests of the holders of shares of Company Common Stock, (B) approved and
adopted this Agreement and the transactions contemplated hereby, (C) recommended
that the stockholders of the Company accept the Offer, tender their shares of
Company Common Stock thereunder to Sub and, if required by applicable law in
order to consummate the Merger, approve and adopt this Agreement and the
transactions contemplated hereby and (D) taken all necessary steps to render
Section 203 of the Delaware General Corporation Law (the "DGCL") inapplicable to
the Merger; provided, however, that subject to and in accordance with the
provisions of Section 6.02, such recommendation may be withdrawn, modified or
amended in connection with a Superior Proposal (as defined in Section 6.02). The
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board of Directors of the Company described in the
immediately preceding sentence.
(b) As soon as practicable on the date of commencement of the Offer,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9
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<PAGE> 8
promulgated under the Exchange Act (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing the recommendation of the Board of
Directors of the Company described in Section 1.02(a), and shall take such steps
as are necessary to cause the Schedule 14D-9 to be disseminated to the holders
of shares of Company Common Stock as and to the extent required by applicable
federal securities laws. The Company, Parent and Sub shall correct promptly any
information provided by any of them for use in the Schedule 14D-9 which shall
have become false or misleading, and the Company shall take all steps necessary
to cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to holders of shares of Company Common Stock, in each case as and
to the extent required by applicable federal securities laws. Parent and its
counsel shall be given an opportunity to review and comment on the Schedule
14D-9 (including all amendments and supplements thereto) prior to its being
filed with the SEC, and the Company will provide Parent and its counsel in
writing with any comments that the Company receives from the SEC or its staff
with respect to the Schedule 14D-9 promptly after receipt of any such comments.
(c) The Company shall promptly cause its transfer agent to furnish Sub
with mailing labels containing the names and addresses of all record holders of
shares of Company Common Stock and with security position listings of shares of
Company Common Stock held in stock depositories, each as of a recent date,
together with all other available listings and computer files containing names,
addresses and security position listings of record holders and beneficial owners
of shares of Company Common Stock. The Company shall furnish Sub with such
additional information, including, without limitation, updated listings and
files of stockholders, mailing labels and security position listings and such
other assistance as Parent, Sub or their agents may reasonably request in
communicating the Offer to record and beneficial holders of shares of Company
Common Stock.
1.03 Company Board Representation; Section 14(f).
(a) Commencing upon the purchase by Sub of shares of Company Common
Stock pursuant to the Offer or the Stock Option Agreement and from time to time
thereafter, Sub shall be entitled to designate the number of directors, rounded
up to the next whole number, on the Board of Directors of the Company that
equals the product of (i) the total number of directors on the Board of
Directors of the Company (giving effect to any directors elected pursuant to
this sentence) and (ii) the percentage that (A) the aggregate number of shares
of Company Common Stock beneficially owned by Sub or any affiliate of Sub
(including shares accepted for payment in the Offer, provided funds therefor
have been deposited with the depositary appointed by Sub in connection with the
Offer, and shares of Company Common Stock issued to Sub under the Stock Option
Agreement) represents of (B) the total number of shares of Company Common Stock
then outstanding, and the Company shall take all actions necessary to cause
Sub's designees to be elected or appointed as directors of the Company,
including, without limitation, by increasing the size of the Board of Directors
of the Company or securing the resignations of incumbent directors or both. At
such times, the Company shall use its best efforts to cause persons designated
by Sub to constitute the same percentage of each committee of the Board of
Directors of the Company, each board of directors of each Subsidiary and each
committee of each such board as such persons represent on the Board of Directors
of the Company.
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<PAGE> 9
(b) The Company's obligations to appoint Buyer's designees to the Board
of Directors of the Company shall be subject to Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all
actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill
its obligations under this Section 1.03, and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors as
is required under Section 14(f) and Rule 14f-1 to fulfill such obligations under
this Section 1.03. Parent or Sub shall supply to the Company in writing and be
solely responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) From and after the time that any of Sub's designees are appointed
to the Company's Board of Directors pursuant to this Section 1.03 and prior to
the Effective Time, any amendment of this Agreement, any termination of this
Agreement by the Company, any extension of the time for the performance of any
of the obligations of Parent or Sub hereunder, any waiver of any condition to
the obligations of the Company or of any of Company's rights hereunder or other
action by the Company hereunder may be effected only by the action of a majority
of the Company Designees (as hereinafter defined), which action shall be deemed
to constitute the action of the full Board of Directors. Until the Effective
Time, the Company shall retain as members of its Board of Directors at least two
directors who are directors of the Company on the date of this Agreement (the
"Company Designees"); in the event of the death, resignation or removal of any
of the Company Designees, any remaining Company Designee (or, if no other
Company Designee shall remain on the Board, the last remaining Company Designee
and, if no Company Designee shall remain on the Board, a majority of the other
members of the Board) shall have the right to appoint a successor or successors
to fill the vacancies so created, which successor shall not be an affiliate or
associate (as those terms are defined in Section 203 of the DGCL) of Parent or
Sub, each of whom shall be deemed for purposes of this Agreement to be a Company
Designee.
ARTICLE II.
THE MERGER
2.01 The Merger. At the Effective Time (as defined in Section 2.02),
upon the terms and subject to the conditions of this Agreement, Sub shall be
merged with and into the Company (the "Merger") in accordance with the DGCL. The
Company shall be the surviving corporation in the Merger (the "Surviving
Corporation"). Sub and the Company are sometimes referred to herein as the
"Constituent Corporations". As a result of the Merger, the outstanding shares of
capital stock of the Constituent Corporations shall be converted or cancelled in
the manner provided in Article III.
2.02 Effective Time. At the Closing (as defined in Section 2.03), a
certificate of merger (the "Certificate of Merger") shall be duly prepared and
executed by the Surviving Corporation and thereafter delivered to the Secretary
of State of the State of Delaware (the "Secretary of State") for filing, as
provided in Section 251 or Section 253, as applicable, of the DGCL, on, or as
soon as practicable after, the Closing Date (as defined in Section 2.03). The
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<PAGE> 10
Merger shall become effective at the time of the filing of the Certificate of
Merger with the Secretary of State or such other time as Sub and the Company
shall agree to be set forth in the Certificate of Merger (such time being
referred to herein as the "Effective Time").
2.03 Closing. The closing of the Merger (the "Closing") will take place
at the offices of Rogers & Wells LLP, 200 Park Avenue, New York, New York 10166,
or at such other place as the parties hereto mutually agree, as soon as
practicable (but in no event later than 10:00 a.m., New York City time, on the
second business day) after consummation of the Offer and, if required by
applicable law in order to consummate the Merger, after the adoption of this
Agreement by the requisite vote of the stockholders of the Company, provided
that the other closing conditions set forth in Article VIII have been satisfied
or, if permissible, waived in accordance with this Agreement (the "Closing
Date").
2.04 Certificate of Incorporation and Bylaws of the Surviving
Corporation. At the Effective Time, (i) the Certificate of Incorporation of Sub
as in effect immediately prior to the Effective Time shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation; provided that the Article First of
the Certificate of Incorporation of the Surviving Corporation shall be amended
to read in its entirety as follows: "FIRST: The name of the Corporation is
Proxima Corporation."; and (ii) the Bylaws of Sub as in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such Bylaws.
2.05 Directors and Officers of the Surviving Corporation. The directors
of Sub and the officers of Sub immediately prior to the Effective Time shall,
from and after the Effective Time, be the directors and officers, respectively,
of the Surviving Corporation until their respective successors shall have been
duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
2.06 Effects of the Merger. Subject to the foregoing, the effects of
the Merger shall be as provided in the applicable provisions of the DGCL.
2.07 Further Assurances. Each party hereto will execute such further
documents and instruments and take such further actions as may reasonably be
requested by one or more of the others to consummate the Merger, to vest the
Surviving Corporation with full title to all assets, properties, rights,
approvals, immunities and franchises of either of the Constituent Corporations
or to effect the other purposes of this Agreement.
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<PAGE> 11
ARTICLE III.
CONVERSION OF SHARES
3.01 Conversion of Capital Stock. At the Effective Time, by virtue of
the Merger and without any further action on the part of any holder of capital
stock of the Company:
(a) Capital Stock of Sub. Each issued and outstanding share of the
common stock, par value $.001 per share, of Sub ("Sub Common Stock") shall be
converted into and become one fully paid and nonassessable share of common
stock, par value $.001 per share, of the Surviving Corporation ("Surviving
Corporation Common Stock"). Each certificate representing outstanding shares of
Sub Common Stock shall at the Effective Time represent an equal number of shares
of Surviving Corporation Common Stock.
(b) Cancellation of Treasury Stock and Company Common Stock Owned by
Parent and its Subsidiaries. All shares of Company Common Stock that are owned
by the Company as treasury stock and any shares of Company Common Stock owned by
Parent, Sub or any other wholly owned Subsidiary of Parent automatically shall
be cancelled and retired and shall cease to exist, and no stock of Parent or
other consideration shall be delivered in exchange therefor. As used in this
Agreement, "Subsidiary" means, with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, of which more than
50% of either the equity interests in, or the voting control of, such
corporation or other organization is, directly or indirectly, through
Subsidiaries or otherwise, beneficially owned by such party.
(c) Conversion of Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than shares to be cancelled in accordance
with Section 3.01(b) and other than Dissenting Shares (as defined in Section
3.01(d)) shall be converted into the right to receive the Per Share Amount (the
"Merger Price"). All such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of a certificate representing any such shares shall cease
to have any rights with respect thereto, except the right to receive the Merger
Price per share, upon the surrender of such certificate in accordance with
Section 3.02, without interest.
(d) Dissenting Shares. (i) Notwithstanding any provision of this
Agreement to the contrary, each outstanding share of Company Common Stock the
holder of which has not voted in favor of the Merger, has perfected such
holder's right to an appraisal of such holder's shares in accordance with the
applicable provisions of the DGCL and has not effectively withdrawn or lost such
right to appraisal (a "Dissenting Share"), shall not be converted into or
represent a right to receive the Merger Price pursuant to Section 3.01(c), but
the holder thereof shall be entitled only to such rights as are granted by the
applicable provisions of the DGCL; provided, however, that any Dissenting Share
held by a person at the Effective Time who shall, after the Effective Time,
withdraw the demand for appraisal or lose the right of appraisal, in either case
pursuant to the DGCL, shall be deemed to be converted into, as of the Effective
Time, the right to receive the Merger Price pursuant to Section 3.01(c).
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<PAGE> 12
(ii) The Company shall give Parent (x) prompt notice of any written
demands for appraisal, withdrawals of demands for appraisal and any other
instruments served pursuant to the applicable provisions of the DGCL relating to
the appraisal process received by the Company and (y) the opportunity to direct
all negotiations and proceedings with respect to demands for appraisal under the
DGCL. The Company will not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisal or settle
or offer to settle any such demands.
(e) Stock Options. Immediately prior to the Effective Time, each of the
then outstanding employee stock options to purchase Common Stock (the "Company
Stock Options") granted under any employee stock option or compensation plan or
arrangement of the Company (the "Company Stock Plans"), whether or not then
vested or exercisable, automatically shall be cancelled, and each holder of any
such Company Stock Option shall be paid by the Company at the Effective Time for
each such Company Stock Option an amount in cash (subject to any applicable
withholding taxes) determined by multiplying (i) the excess, if any, of the
Merger Price over the applicable exercise price of such Company Stock Option by
(ii) the number of shares of Company Common Stock such holder could have
purchased (assuming full vesting of all Company Stock Options) had such holder
exercised such Company Stock Option in full immediately prior to the Effective
Time. Prior to the Effective Time, the Company will use its best efforts to
obtain any necessary consents and make any amendments to the terms of the
Company Stock Plans to the extent such consents or amendments are necessary to
give effect to the foregoing. Payment by the Company may be withheld in respect
of any Company Stock Option until necessary consents are obtained.
(f) Employee Stock Purchase Plan. Immediately prior to the Effective
Time, the Company's Employee Stock Purchase Plan shall be terminated, and
holders of shares of Company Common Stock purchased under such plan shall be
subject to the terms of this Article III.
3.02 Exchange of Certificates.
(a) Exchange Agent. As soon as reasonably practicable after the
Effective Time, Parent shall make available to the Surviving Corporation for
deposit with a bank or trust company designated by Parent (the "Exchange
Agent"), a cash amount equal to the aggregate Merger Price to which holders of
shares of Company Common Stock shall be entitled upon consummation of the
Merger, to be held for the benefit of and distributed to such holders in
accordance with this Section. The Exchange Agent shall agree to hold such funds
(such funds, together with earnings thereon, being referred to herein as the
"Exchange Fund") for delivery as contemplated by this Section and upon such
additional terms as may be agreed upon by the Exchange Agent, the Company and
Parent. The Exchange Agent shall have a combined capital and surplus of at least
$100,000,000.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
holder of record of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock (the
"Certificates") whose shares are converted pursuant to
8
<PAGE> 13
Section 3.01(c) into the right to receive the Merger Price (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as the Surviving Corporation may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Price. Upon surrender of a Certificate to the Exchange Agent,
together with such letter of transmittal, duly executed and completed in
accordance with its terms, the holder of such Certificate shall be entitled to
receive in exchange therefor a check representing the Merger Price per share of
Company Common Stock represented thereby which such holder has the right to
receive pursuant to the provisions of this Article III, and the Certificate so
surrendered shall forthwith be cancelled. In no event shall the holder of any
Certificate be entitled to receive interest on any funds to be received in the
Merger. In the event of a transfer of ownership of Company Common Stock which is
not registered in the transfer records of the Company, the Merger Price may be
issued to a transferee if the Certificate representing such Company Common Stock
is presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this Section
3.02(b), each Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the Merger Price per
share of Company Common Stock represented thereby as contemplated by this
Article III.
(c) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of shares of Company Common Stock in accordance with the
terms hereof shall be deemed to have been paid in full satisfaction of all
rights pertaining to such shares of Company Common Stock. From and after the
Effective Time, the stock transfer books of the Company shall be closed and
there shall be no further registration of transfers on the stock transfer books
of the Surviving Corporation of the shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Section.
(d) Escheat. Neither Parent nor the Surviving Corporation shall be
liable to any holder of shares of Company Common Stock for cash representing the
Merger Price delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law. Any amounts representing the Merger Price and
remaining unclaimed by any holder of shares of Company Common Stock on the day
immediately prior to the time such amounts would otherwise escheat to or become
the property of any governmental entity shall, to the extent permitted by law,
become the property of Parent, free and clear of any claims or interest of any
natural or legal person previously entitled thereto.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the relevant Section (determined in accordance
with Section 10.10 of this Agreement) of the disclosure schedule (the
"Disclosure Schedule") delivered by the Company to Parent and Sub concurrently
with the execution of this Agreement, the Company represents and warrants to
Parent and Sub as follows:
4.01 Organization and Qualification.
(a) Each of the Company and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and authority to
conduct its business as and to the extent now conducted and to own, use and
lease its assets and properties, except (in the case of any Subsidiary) for such
failures to be so organized, existing and in good standing or to have such power
and authority which, individually or in the aggregate, are not having and could
not be reasonably expected to have a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole. Each of the Company and its Subsidiaries is
duly qualified, licensed or admitted to do business and is in good standing in
each jurisdiction in which the ownership, use or leasing of its assets and
properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for such failures to be so qualified,
licensed or admitted and in good standing which, individually or in the
aggregate, (i) are not having and could not be reasonably expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole and
(ii) could not be reasonably expected to have a Material Adverse Effect on the
validity or enforceability of this Agreement or the Stock Option Agreement or on
the ability of the Company to perform its obligations hereunder or thereunder.
As used in this Agreement, any reference to any event, change or effect having a
"Material Adverse Effect" on or with respect to, or "Materially Adversely
Affecting," an entity (or group of entities taken as a whole) means such event,
change or effect materially adversely affects the business, condition (financial
or otherwise) or results of operations of such entity (or, if with respect
thereto, of such group of entities taken as a whole). Section 4.01 of the
Disclosure Schedule sets forth the name and jurisdiction of incorporation of
each Subsidiary of the Company.
(b) Neither the Company nor any Subsidiary of the Company, directly or
indirectly, owns any shares or has any ownership interest in any other Person or
is a partner with any other Person, and neither the Company nor any Subsidiary
of the Company has an obligation to purchase any shares of stock, other
securities or any other form of investment in any other Person.
4.02 Capital Stock.
(a) The authorized capital stock of the Company consists solely of
40,000,000 shares of Company Common Stock and 5,000,000 shares of preferred
stock, par value $.001 per share ("Preferred Stock"). As of the date of this
Agreement, (i) 7,175,445 shares of Company Common Stock were issued and
outstanding, (ii) 281,221 shares of Company Common
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Stock were held in the treasury of the Company, (iii) 1,500,000 shares of
Company Common Stock have been reserved for issuance under the Company's Amended
and Restated 1996 Stock Plan (the "1996 Plan"), (iv) up to an additional 500,000
shares of Company Common Stock have been reserved for issuance under the 1996
Plan to the extent that outstanding options to purchase Company Common Stock
previously granted under the Company's Amended and Restated 1986 Stock Option
Plan expire unexercised and (v) 1,427,914 shares of Company Common Stock have
been reserved for issuance under the Stock Option Agreement. As of the date
hereof, no shares of Preferred Stock are issued and outstanding. All of the
issued and outstanding shares of Company Common Stock are, and all shares
reserved for issuance will be, upon issuance in accordance with the terms
specified in the instruments or agreements pursuant to which they are issuable,
duly authorized, validly issued, fully paid and nonassessable. Except pursuant
to this Agreement and the Stock Option Agreement, there are no (i) outstanding
subscriptions, options, warrants, rights (including "phantom" stock rights),
preemptive rights or other contracts, commitments, understandings or
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of the Company or any Subsidiary of the Company or to grant, extend or
enter into any Option with respect thereto or (ii) voting trusts, proxies or
other commitments, understandings, restrictions or arrangements in favor of any
person other than the Company or a Subsidiary wholly owned, directly or
indirectly, by the Company with respect to the voting of or the right to
participate in dividends or other earnings on any capital stock of any
Subsidiary of the Company.
(b) All of the outstanding shares of capital stock of each Subsidiary
of the Company are duly authorized, validly issued, fully paid and nonassessable
and are owned, beneficially and of record, by the Company or a Subsidiary wholly
owned, directly or indirectly, by the Company, free and clear of any liens,
claims, mortgages, encumbrances, pledges, security interests, equities and
charges of any kind (each a "Lien").
(c) There are no outstanding contractual obligations of the Company or
any Subsidiary of the Company to repurchase, redeem or otherwise acquire any
shares of Company Common Stock or any capital stock of any Subsidiary of the
Company or to provide funds to, or make any investment (in the form of a loan,
capital contribution or otherwise) in, any Subsidiary of the Company or any
other person.
(d) As of the date of this Agreement and as of the record date of the
Company's most recent annual meeting of stockholders, the Company has and had,
respectively, at least 800 holders of Company Common Stock. The Company
previously has furnished to Parent written documentation with respect to such
number of holders of Company Common Stock, including certifications obtained by
the Company in accordance with Section 2115(a) of the California General
Corporation Law from each Nominee Holder (as defined in such Section 2115(a))
with respect to all beneficial owners for whom shares of Company Common Stock
are held and the number of such shares held for those beneficial owners having
addresses (as shown on the records of the Nominee Holders) in the State of
California and outside of the State of California.
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4.03 Authority Relative to this Agreement and the Stock Option
Agreement. The Company has full corporate power and authority to enter into this
Agreement and the Stock Option Agreement and, subject (in the case of this
Agreement) to obtaining the Company Stockholders' Approval (as defined in
Section 7.02(a)), if and to the extent required by applicable law, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement and the Stock Option Agreement by the Company and the consummation by
the Company of the transactions contemplated hereby and thereby have been duly
and validly approved by the Board of Directors of the Company; the Board of
Directors of the Company has unanimously recommended adoption of this Agreement
by the stockholders of the Company and directed that this Agreement be submitted
to the stockholders of the Company for their consideration; and no other
corporate proceedings on the part of the Company or its stockholders are
necessary to authorize the execution, delivery and performance of this Agreement
and the Stock Option Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby, other than, with
respect to the Merger, obtaining the Company Stockholders' Approval if and to
the extent required by applicable law. This Agreement and the Stock Option
Agreement have been duly and validly executed and delivered by the Company and,
subject (in the case of this Agreement) to the obtaining of the Company
Stockholders' Approval, if and to the extent required by applicable law,
constitute legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement and the Stock Option
Agreement by the Company do not, and the performance by the Company of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of the Company or any of its Subsidiaries under, any of the terms,
conditions or provisions of (i) the certificates or articles of incorporation or
bylaws (or other comparable charter documents) of the Company or any of its
Subsidiaries, or (ii) subject to the obtaining of the Company Stockholders'
Approval and the taking of the actions described in paragraph (b) of this
Section, (x) any statute, law, rule, regulation or ordinance (together, "Laws"),
or any judgment, decree, order, writ, permit or license (together, "Orders"), of
any court, tribunal, arbitrator, authority, agency, commission, official or
other instrumentality of the United States any foreign country or any domestic
or foreign state, county, city or other political subdivision (a "Governmental
or Regulatory Authority"), applicable to the Company or any of its Subsidiaries
or any of their respective assets or properties, or (y) any note, bond,
mortgage, security agreement, indenture, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
(together, "Contracts") to which the Company or any of its Subsidiaries is a
party or by
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which the Company or any of its Subsidiaries or any of their respective assets
or properties is bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations, modifications,
accelerations and creations and impositions of Liens which, individually or in
the aggregate, could not be reasonably expected to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole or on the ability of
the Company to consummate the transactions contemplated by this Agreement and
the Stock Option Agreement.
(b) Except (i) for the filing of a premerger notification report by the
Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), (ii) for the
filing of the Schedule 14D-9 and the Proxy Statement (as defined in Section
4.09) with the SEC pursuant to the Exchange Act, (iii) for the actions pursuant
to Section 14(f) of and Rule 14f-1 under the Exchange Act contemplated by
Section 1.03(b), (iv) for the filing of the Certificate of Merger and other
appropriate merger documents required by the DGCL with the Secretary of State
and appropriate documents with the relevant authorities of other states in which
the Constituent Corporations are qualified to do business, and (v) as disclosed
in Schedule 4.04 hereto, no consent, approval or action of, filing with or
notice to any Governmental or Regulatory Authority or other public or private
third party is necessary or required under any of the terms, conditions or
provisions of any Law or Order of any Governmental or Regulatory Authority or
any Contract to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries or any of their respective assets
or properties is bound for the execution and delivery of this Agreement and the
Stock Option Agreement by the Company, the performance by the Company of its
obligations hereunder and thereunder or the consummation of the transactions
contemplated hereby or thereby, other than such consents, approvals, actions,
filings and notices which the failure to make or obtain, as the case may be,
individually or in the aggregate, could not be reasonably expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole or
on the ability of the Company to consummate the transactions contemplated by
this Agreement and the Stock Option Agreement.
4.05 SEC Reports and Financial Statements. The Company delivered to
Parent prior to the execution of this Agreement a true and complete copy of each
form, report, schedule, registration statement, definitive proxy statement and
other document (together with all amendments thereof and supplements thereto)
filed by the Company or any of its Subsidiaries with the SEC since March 31,
1995 (as such documents have since the time of their filing been amended or
supplemented, the "Company SEC Reports"), which are all the documents (other
than preliminary material) that the Company and its Subsidiaries were required
to file with the SEC since such date. As of their respective dates, the Company
SEC Reports (i) complied as to form in all material respects with the
requirements of the Securities Act of 1933, as amended, and the rules and
regulations thereunder (the "Securities Act"), or the Exchange Act, as the case
may be, and (ii) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited interim consolidated financial statements (including, in each case,
the notes, if any, thereto) included in the Company SEC Reports (the "Company
Financial Statements") complied as to form in all material respects with the
published
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rules and regulations of the SEC as of the date thereof with respect thereto,
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto and except with respect to unaudited
statements as permitted by Form 10-Q of the SEC) and fairly present (subject, in
the case of the unaudited interim financial statements, to normal, recurring
year-end audit adjustments which are not expected to be, individually or in the
aggregate, materially adverse to the Company and its Subsidiaries taken as a
whole) the consolidated financial position of the Company and its consolidated
subsidiaries as at the respective dates thereof and the consolidated results of
their operations and cash flows for the respective periods then ended. Each
Subsidiary of the Company is treated as a consolidated subsidiary of the Company
in the Company Financial Statements for all periods covered thereby.
4.06 Absence of Certain Changes or Events. Except as contemplated by
this Agreement and except as disclosed in the Company SEC Reports filed prior to
the date of this Agreement, (a) since December 31, 1997 there has not been any
change, event or development having, individually or in the aggregate, a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole and
(b) between such date and the date hereof (i) the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course
consistent with past practice and (ii) neither the Company nor any of its
Subsidiaries has taken any action which, if taken after the date hereof, would
constitute a breach of any provision of clause (ii) of Section 6.01(b).
4.07 Absence of Undisclosed Liabilities; Cash and Short-term
Investments.
(a) Except for matters reflected or reserved against in the balance
sheet at December 31, 1997 included in the Company Financial Statements, neither
the Company nor any of its Subsidiaries had at such date, or has incurred since
that date, any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due) of any nature
that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of the Company and its consolidated
subsidiaries (including the notes thereto), except liabilities or obligations
(i) which were incurred in the ordinary course of business consistent with past
practice and (ii) which have not been, and could not be reasonably expected to
be, individually or in the aggregate, materially adverse to the Company and its
Subsidiaries taken as a whole.
(b) As of the date of this Agreement, the Company has cash and cash
equivalents and short-term investments (in each case calculated in accordance
with generally accepted accounting principles consistently applied in accordance
with past practice) that in the aggregate equal at least $20 million.
4.08 Legal Proceedings. Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, (i) there are no actions, suits,
arbitrations or proceedings pending or, to the knowledge of the Company and its
Subsidiaries, threatened against, relating to or affecting, nor to the knowledge
of the Company and its Subsidiaries are there any Governmental or Regulatory
Authority investigations or audits pending or threatened against, relating to or
affecting, the Company or any of its Subsidiaries or any of their respective
assets
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and properties which, individually or in the aggregate, could be reasonably
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole or on the ability of the Company to consummate the transactions
contemplated by this Agreement or the Stock Option Agreement, and there are no
facts or circumstances known to the Company or any of its Subsidiaries that
could be reasonably expected to give rise to any such action, suit, arbitration,
proceeding, investigation or audit, and (ii) neither the Company nor any of its
Subsidiaries is subject to any Order of any Governmental or Regulatory Authority
which, individually or in the aggregate, is having or could be reasonably
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole or on the ability of the Company to consummate the transactions
contemplated by this Agreement or the Stock Option Agreement.
4.09 Information Supplied.
(a) The Schedule 14D-9, any proxy statement or information statement,
as the case may be, relating to the Company Stockholders' Meeting (as defined in
Section 7.02) to be sent to stockholders of the Company, as amended or
supplemented from time to time (as so amended and supplemented, the "Proxy
Statement"), and any other documents to be filed by the Company with the SEC or
any other Governmental or Regulatory Authority in connection with the Offer or
the Merger and the other transactions contemplated hereby or by the Stock Option
Agreement will not, on the date of its filing or, with respect to the Schedule
14D-9, at the date it is filed with the SEC and first published, sent or given
to stockholders, or, in the case of the Proxy Statement, at the date it is
mailed to stockholders, and at the time of the Company Stockholders' Meeting and
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading, except that no representation is made by the Company
with respect to information supplied in writing by or on behalf of Parent or Sub
expressly for inclusion therein and information incorporated by reference
therein from documents, if any, filed by Parent or any of its Subsidiaries with
the SEC. The Schedule 14D-9, the Proxy Statement and any other such documents
filed by the Company with the SEC under the Exchange Act will comply as to form
in all material respects with the requirements of the Exchange Act.
(b) Neither the information supplied or to be supplied in writing by or
on behalf of the Company for inclusion, nor the information incorporated by
reference from documents filed by the Company or any of its Subsidiaries with
the SEC, in the Offer Documents or any other documents to be filed by Parent or
Sub with the SEC or any other Governmental or Regulatory Authority in connection
with the Offer or the Merger and the other transactions contemplated hereby or
by the Stock Option Agreement will on the date of its filing or, with respect to
the Offer Documents, at the date they are filed with the SEC and first
published, sent or given to stockholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
4.10 Compliance with Laws and Orders. The Company and its Subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of
their respective businesses (the
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"Company Permits"), except for failures to hold such permits, licenses,
variances, exemptions, orders and approvals which, individually or in the
aggregate, are not having and could not be reasonably expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
The Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except failures so to comply which, individually or in the aggregate,
are not having and could not be reasonably expected to have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole. Except as disclosed
in the Company SEC Reports filed prior to the date of this Agreement, the
Company and its Subsidiaries are not in violation of or default under any Law or
Order of any Governmental or Regulatory Authority, except for violations which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
4.11 Compliance with Agreements; Certain Agreements; Major Customers.
(a) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, neither the Company nor any of its Subsidiaries nor to
the knowledge of the Company and its Subsidiaries any other party thereto is in
breach or violation of, or in default in the performance or observance of any
term or provision of, and no event has occurred which, with notice or lapse of
time or both, could be reasonably expected to result in a default under, (i) the
certificates of incorporation or bylaws (or other comparable charter documents)
of the Company or any of its Subsidiaries or (ii) any Contract to which the
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or any of their respective assets or properties is bound,
except in the case of clause (ii) for breaches, violations and defaults which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole.
(b) Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement or as provided for in this Agreement, as of the date
hereof, neither the Company nor any of its Subsidiaries is a party to any oral
or written (i) consulting agreement not terminable on 30 days' or less notice
involving the payment of more than $75,000 per annum or $250,000 per annum in
the aggregate for all such agreements, (ii) union or collective bargaining
agreement, (iii) agreement with any executive officer or other key employee of
the Company or any of its Subsidiaries the benefits of which are contingent or
vest, or the terms of which are materially altered, upon the occurrence of a
transaction involving the Company or any of its Subsidiaries of the nature
contemplated by this Agreement, (iv) agreement with respect to any executive
officer or other key employee of the Company or any of its Subsidiaries
providing any term of employment or compensation guarantee or (v) agreement or
plan, including any stock option, stock appreciation right, restricted stock or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
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(c) Section 4.11 of the Disclosure Schedule includes a complete and
correct list of the 15 largest customers of the Company and its Subsidiaries, on
a consolidated basis, in terms of revenue recognized in respect of such
customers for the three-month period ending December 31, 1997, showing the
amount of revenue recognized for each such customer during such period. No
officer of the Company or any Subsidiary of the Company has been notified in
writing that any of the customers listed in Section 4.11 of the Disclosure
Schedule will terminate or reduce in any material respect, or otherwise
materially and adversely change, the business or relationship between such
customer and the Company or any Subsidiary of the Company.
4.12 Taxes.
(a) (i) Filing of Timely Tax Returns. The Company has timely filed all
Tax Returns required to be filed by applicable law, maintained all documents
and records relating to Taxes as are required to be made or provided by it
and has complied in all respects with all legislation relating to Taxes
applicable to it. All Tax Returns were in all respects (and, as to Tax
Returns not filed as of the date hereof, will be) true, complete and
correct. No claim has ever been made by any authority of a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to taxation by that jurisdiction.
(ii) Payment of Taxes. The Company has, within the time and in the
manner prescribed by law, paid (and until the Closing Date will pay within
the time and in the manner prescribed by law) all Taxes that are due and
payable.
(iii) Tax Reserves. The Company has established (and until the Closing
Date will maintain) on its books and records reserves adequate to pay all
Taxes not yet due and payable in accordance with generally accepted
accounting principles. No differences exist between the amounts of the book
basis and the tax basis of assets (net of liabilities) on the books and
records of the Company that are not accounted for by an accrual on the books
for federal income tax purposes.
(iv) Tax Liens. There are no Liens for Taxes with respect to the assets
or the income or operations of the Company except Liens for Taxes not yet
due.
(v) Extensions of Time for Filing Tax Returns. The Company has not
requested any extension of time within which to file any Tax Return, which
Tax Return has not since been filed.
(vi) Waivers of Statute of Limitations. The Company has not executed
any outstanding waivers or comparable consents regarding the application of
the statute of limitations with respect to any Taxes or Tax Returns.
(vii) Expiration of Statute of Limitations. The statute of limitations
for the assessment of all Taxes has expired for all applicable federal and
California state Tax Returns of the Company or those federal and California
state Tax Returns have been
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examined by the appropriate taxing authorities for all periods through
March 31, 1994, in the case of federal Tax Returns, and through March 31,
1993, in the case of California state Tax Returns. No deficiency for any
Taxes has been proposed, asserted or assessed against the Company that has
not been resolved and paid in full.
(viii) Audit, Administrative and Court Proceedings. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns of the Company, and no Governmental or
Regulatory Authority has notified the Company that it intends to investigate
its Tax affairs.
(ix) Powers of Attorney. No power of attorney currently in force has
been granted by the Company concerning any Tax matter.
(x) Tax Rulings. The Company has not received a Tax Ruling or entered
into a Closing Agreement with any Governmental or Regulatory Authority that
would reasonably be expected to have a Material Adverse Effect upon the
Company after the Closing Date.
(xi) Availability of Tax Returns. The Company has made available to
Parent complete and accurate copies of (i) all Tax Returns, and any
amendments thereto, filed by the Company, (ii) all audit reports received
from any Governmental or Regulatory Authority relating to any Tax Return
filed by the Company and (iii) the Closing Agreements entered into by the
Company with any Governmental or Regulatory Authority.
(xii) Secondary Liability. No event, transaction, act or omission has
occurred which could result in the Company becoming liable to pay or to bear
any Tax as a transferee, successor or otherwise which is primarily or
directly chargeable or attributable to any other person, firm or company.
The Company has no actual or contingent liability (whether by reason of any
indemnity, warranty or otherwise) to any other person in respect of any
actual, contingent or deferred liability of such person for Taxes.
(xiii) Withholding Taxes. The Company has complied (and until the
Closing Date will comply) in all respects with the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), relating to the
payment and withholding of Taxes, including, without limitation, the
withholding and reporting requirements under Code Sections 1441
through 1464, 3401 through 3606, and 6041 and 6049, as well as similar
provisions under any other Laws, and has, within the time and in the manner
prescribed by Law, withheld and paid over to the proper Governmental or
Regulatory Authorities all amounts required in connection with amounts paid
or owing to any employee, independent contractor, creditor, stockholder, or
other third party.
(xiv) Code Section 341(f). The Company has not filed (and will not file
prior to the Closing) a consent pursuant to Code Section 341(f) or agreed to
have Code Section 341(f)(2)
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apply to any disposition of a subsection (f) asset (as that term is
defined in Code Section 341(f)(4)) owned by the Company.
(xv) Code Section 168. No property of the Company is property that it
or any party to this transaction is or will be required to treat as being
owned by another person pursuant to the provisions of Code Section 168(f)(8)
(as in effect prior to its amendment by the Tax Reform Act of 1986) or is
"tax-exempt use property" within the meaning of Code Section 168.
(xvi) Code Section 481 Adjustments. The Company is not required to
include in income any adjustment pursuant to Code Section 481(a) by reason
of a voluntary change in accounting method initiated by the Company, and to
the best of the knowledge of the Company, the Internal Revenue Service (the
"IRS") has not proposed any such adjustment or change in accounting method.
(xvii) Code Section 338 Elections. No election under Code Section 338
(or any predecessor provisions) has been made with respect to any assets of
the Company.
(xviii) Deductibility of Payments or Obligations. The Company is not
subject to any contract, obligation or commitment under which it will or may
any time hereafter be or become liable to make any payment (or provide any
other amount in money or money's worth) which (in either such case) is not
deductible, depreciable or amortizable in full in computing the income of
the Company for the purpose of any Taxes on income or profits to which the
Company may be subject, other than any payment relating to the acquisition
of assets which is treated as having an indefinite useful life for purposes
of the relevant Tax.
(xix) Payments for Assets or Services. The Company has not disposed of
any asset or supplied any service or business facility of any kind
(including a loan of money or the letting, hiring or licensing of any
property whether tangible or intangible) in circumstances where the
consideration to be received for such disposal or supply will be less than
the consideration deemed received for Tax purposes.
(xx) Parachute Payments. The Company is not a party to any agreement,
contract, or arrangement that would result, separately or in the aggregate,
in the payment of any "excess parachute payments" within the meaning of Code
Section 280G.
(b) Defined Terms. The following capitalized terms shall have the
following meanings:
(i) "Closing Agreement" means a written and legally binding agreement
with a Governmental or Regulatory Authority relating to Taxes.
(ii) "Tax" or "Taxes" means all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign taxing
authority, whether disputed or not, including, without limitation, income,
capital, estimated, excise,
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property, sales, transfer, withholding, employment, payroll, and
franchise taxes and such terms shall include any interest, penalties or
additions attributable to or imposed on or with respect to such assessments.
(iii) "Tax Returns" means any return, report, information return, or
other document (including any related or supporting information) filed or
required to be filed with any federal, state, local, or foreign Governmental
or Regulatory Authority in connection with the determination, assessment or
collection of any Tax (whether or not such Tax is imposed on the Company) or
the administration of any laws, regulations or administrative requirements
relating to any Tax.
(iv) "Tax Ruling" means a written ruling by a Governmental or
Regulatory Authority relating to Taxes.
4.13 Employee Benefit Plans; ERISA.
(a) There are no Company Benefit Plans (as defined below) except as set
forth in Section 4.13 of the Disclosure Schedule. With respect to each Company
Benefit Plan, to the extent applicable:
(i) each of the Company Benefit Plans is, and its administration is and
has been in compliance with, and none of the Company nor any of its
Subsidiaries has received any claim or notice that any such Company Benefit
Plan is not in compliance with, its terms and all applicable laws,
regulations, rulings and other authority issued thereunder and all other
applicable governmental laws, regulations and orders, and prohibited
transaction exemptions, including, without limitation, the requirements of
ERISA and all Tax rules for which favorable Tax treatment is intended,
bonding requirements and requirements for the filing of applicable reports,
documents, and notices with the Secretary of Labor or the Secretary of the
Treasury and the furnishing of documents to the participants and
beneficiaries (and other individuals entitled to such documents) of each
such Plan (as defined below);
(ii) neither the PBGC (as defined below), the Company nor any of its
Subsidiaries has instituted proceedings to terminate any Company Benefit
Plan;
(iii) all contributions, premiums and other payments required by law or
any Plan or applicable collective bargaining agreement to have been made
under any such Plan to any fund, trust or account established thereunder or
in connection therewith have been made by the due date thereof; and any and
all contributions, premiums and other payments with respect to compensation
or service before and through the Closing, or otherwise with respect to
periods before and through the Closing, due from any of the Company or its
affiliates to, under or on account of each Company Benefit Plan shall have
been paid prior to Closing or shall have been fully reserved and provided
for on the Company Financial Statements;
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(iv) no Company Benefit Plan is now or has ever been subject to Part
III of Subtitle B of Title I of ERISA or Section 412 of the Code;
(v) the actuarial present value on a termination basis of accrued
benefits under each of the Company Benefit Plans sponsored by the Company,
any Subsidiary of the Company or any ERISA Affiliate which is subject to
Title IV of ERISA, based upon the interest rate assumptions that would be
utilized by the PBGC to value annuities for a pension plan termination and
the other actuarial assumptions and methods currently used for such Company
Benefit Plan, did not, as of its latest valuation date, exceed the then
current value of the assets of such Company Benefit Plan;
(vi) each of the Company Benefit Plans which is intended to be
Tax-qualified under Section 401(a) of the Code has been determined by the
IRS to be so qualified and such determination has not been modified, revoked
or limited, and no circumstances have occurred that would adversely affect
the tax-qualified status of any such Plan;
(vii) there is no suit, action, dispute, claim, arbitration or legal,
administrative or other proceeding or governmental investigation pending, or
threatened, alleging any breach of the terms of any such Plan or of any
fiduciary duties thereunder or violation of any applicable law with respect
to any such Plan;
(viii) none of the Company or any of its Subsidiaries is in default in
performing any of its contractual obligations under any of the Company
Benefit Plans or any related trust agreement or insurance contract;
(ix) none of the Company or any Subsidiary of the Company, or, to the
Company's best knowledge, any "party in interest" (as defined in Section
3(14) of ERISA) or any "disqualified person" (as defined in Section 4975 of
the Code) with respect to any such Plan, has engaged in a non-exempt
"prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA;
(x) (a) no Company Benefit Plan that is a "welfare benefit plan" (as
defined in Section 3(1) of ERISA) provides for continuing benefits or
coverage for any participant or beneficiary or covered dependent of a
participant after such participant's termination of employment, except to
the extent required by Law; (b) there has been no violation of Section 4980B
of the Code or Sections 601 through 608 of ERISA with respect to any such
Plan that could result in any material liability; (c) no such Plans are
"multiple employer welfare arrangements" within the meaning of Section 3(40)
of ERISA; (d) with respect to any such Plans that are self-insured, all
claims made pursuant to any such Plan that have not yet been paid are set
forth in Section 4.13 of the Disclosure Schedule, together with an estimate
thereof; no such claim could, in the aggregate, result in an uninsured
liability in excess of $10,000 per participant or covered dependent, and all
such claims could not result in an uninsured liability of more than $100,000
in the aggregate for all participants and covered dependents combined, and
are estimated as set forth on Section 4.13 of the Disclosure Schedule; (e)
none of the
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Company or any Subsidiary of the Company maintains or has any
obligation to contribute to any "voluntary employees' beneficiary
association" within the meaning of Section 501(c)(9) of the Code or other
funding arrangement for the provision of welfare benefits (such disclosure
to include the amount of any such funding); and (f) all Company Benefit
Plans which provide medical, dental health or long-term disability benefits
are fully insured and claims with respect to any participant or covered
dependent under such Company Benefit Plan could not result in any uninsured
liability to the Company, any Subsidiary of the Company or Parent;
(xi) None of the Company, any Subsidiary of the Company or any ERISA
Affiliate has at any time: (a) had any obligation to contribute to any
"multiemployer plan" as defined in Section 3(37) of ERISA, and (b) withdrawn
in any complete or partial withdrawal from any "multiemployer plan" as
defined in Section 3(37) of ERISA. If the Company, the Subsidiaries of the
Company and each ERISA Affiliate were to, as of the date hereof, completely
withdraw from all multiemployer plans in which any of them participate, or
to which any of them otherwise have any obligation to contribute, neither
the Company, any Subsidiary of the Company nor any ERISA Affiliate would
incur any withdrawal liability;
(xii) with respect to each such Plan, true, correct, and complete
copies of the applicable following documents have been delivered to Parent:
(a) all current Plan documents and related trust documents, and any
amendment thereto; (b) Forms 5500, financial statements and actuarial
reports for the last three Plan years; (c) the most recently issued IRS
determination letter; (d) summary plan descriptions and all summaries of
material modifications; and (e) all written communications to employees
relating to such Plans.
(b) Without limiting any other provision of this Section 4.13, no event
has occurred and no condition exists, with respect to any Plan, that has
subjected or could subject the Company or any Subsidiary of the Company, or any
Company Benefit Plan or any successor thereto, to any tax, fine, penalty or
other liability (other than, in the case of the Company, a Subsidiary of the
Company and the Company Benefit Plans, a liability arising in the normal course
to make contributions or payments, as applicable, when ordinarily due under a
Company Benefit Plan with respect to employees of the Company and the
Subsidiaries of the Company). No Plan other than a Company Benefit Plan is or
will be directly or indirectly binding on Parent by virtue of the transactions
contemplated hereby. Parent, and its affiliates, including on and after the
Closing, the Company and any Subsidiary of the Company, shall have no liability
for, under, with respect to or otherwise in connection with any Plan, which
liability arises under ERISA or the Code, by virtue of the Company or any
Subsidiary of the Company being aggregated in a controlled group or affiliated
service group with any ERISA Affiliate for purposes of ERISA or the Code at any
relevant time prior to the Closing. No Plan exists which could result in the
payment by the Company of money or any other property or rights, or accelerate
or provide any other rights or benefits, to any current or former employee of
the Company or any Subsidiary of the Company (or other current or former service
provider thereto) that would not have been required but for the transactions
provided for herein, and none of the Company or any Subsidiary of the Company,
nor any of their respective affiliates, is a
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party to any Plan, program, arrangement or understanding that would result,
separately or in the aggregate, in the payment (whether in connection with any
termination of employment or otherwise) of any "excess parachute payment" within
the meaning of Section 280G of the Code with respect to a current or former
employee of, or current or former independent contractor to, any of the Company
or any Subsidiary of the Company. None of the Company or any Subsidiary of the
Company maintains any Plan which provides severance benefits to current or
former employees or other service providers. Each Company Benefit Plan may be
amended and terminated in accordance with its terms, and, each such Plan
provides for the unrestricted right of the Company or any Subsidiary of the
Company (as applicable) to amend or terminate such Plan. Neither the Company,
any Subsidiary of the Company nor Parent will have any liability under the
Workers Adjustment and Retraining Notification Act, as amended, with respect to
any events occurring or conditions existing on or prior to Closing.
(c) As used herein:
(i) "Company Benefit Plan" means a Plan which the Company or any
Subsidiary of the Company, or any ERISA Affiliate sponsors, maintains, has
any obligation to contribute to, has liability under or is otherwise a party
to, or which otherwise provides benefits for employees, former employees,
independent contractors or former independent contractors (or their
dependents and beneficiaries) of the Company or any Subsidiary of the
Company existing on the date of this Agreement or at any time subsequent
thereto and on or prior to the Closing Date and, in the case of a Plan which
is subject to Part 3 of Title I of ERISA, Section 412 of the Code or Title
IV of ERISA, at any time during the five-year period preceding the date of
this Agreement.
(ii) "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and any successor or statute thereto, and the rules and
regulations promulgated thereunder.
(iii) "ERISA Affiliate" means an entity required to be aggregated with
any of the Company or any Subsidiary of the Company under Sections 414(b),
(c), (m) or (o) of the Code or Section 4001 of ERISA.
(iv) "PBGC" means the Pension Benefit Guaranty Corporation.
(v) "Plan" means any employment, bonus, incentive compensation,
deferred compensation, pension, profit sharing, retirement, stock purchase,
stock option, stock ownership, stock appreciation rights, phantom stock,
equity (or equity-based) leave of absence, layoff, vacation, day or
dependent care, legal services, cafeteria, life, health, medical, accident,
disability, workmen's compensation or other insurance, severance,
separation, termination, change of control or other benefit plan, agreement
(including any collective bargaining agreement), practice, policy or
arrangement of any kind, whether written or oral, and whether or not subject
to ERISA, including, but not limited to any "employee benefit plan" within
the meaning of Section 3(3) of ERISA.
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(d) Except as set forth in Section 4.13 of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby constitutes a change in control or has or will
accelerate benefits under any Company Benefit Plan.
4.14 Insurance. The Company delivered to Parent prior to the execution
of this Agreement a true and complete list of all liability, property, workers'
compensation, directors' and officers' liability and other insurance policies
currently in effect that insure the business, operations, properties, assets or
employees of the Company or any of its Subsidiaries.
4.15 Labor Matters. There are no material controversies pending or, to
the knowledge of the Company and its Subsidiaries, threatened between the
Company or any of its Subsidiaries and any representatives of its employees,
and, to the knowledge of the Company and its Subsidiaries, there are no material
organizational efforts presently being made involving any of the now unorganized
employees of the Company or any of its Subsidiaries. Since March 31, 1993, there
has been no work stoppage, strike or other concerted action by employees of the
Company or any of its Subsidiaries.
4.16 Environmental Matters.
(a) (i) The Company and its Subsidiaries are in compliance with all
applicable Environmental Laws (as defined below); (ii) the Company and its
Subsidiaries have obtained all permits, licenses and other material
authorizations from all Governmental or Regulatory Authorities required under
applicable Environmental Laws, and are in compliance with the terms and
conditions thereof; (iii) neither the Company nor any of its Subsidiaries has
received written notice of, or is the subject of, any action cause of action,
claim, investigation, demand or notice by any person or entity alleging
liability under or noncompliance with any Environmental Law; and (iv) there is
no environmental condition which was caused by the Company or its Subsidiaries
on any of the properties currently or formerly owned or leased by the Company or
any of its Subsidiaries.
(b) As used herein:
(i) "Environmental Law" means any Law of any Governmental or Regulatory
Authority relating to human health, safety or protection of the environment
or to emissions, discharges, releases or threatened releases of pollutants,
contaminants or Hazardous Materials in the environment (including, without
limitation, ambient air, surface water, ground water, land surface or
subsurface strata), or otherwise relating to the treatment, storage,
disposal, transport or handling of any Hazardous Material; and
(ii) "Hazardous Material" means (A) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could
become friable, urea formaldehyde foam insulation and transformers or other
equipment that contain dielectric fluid containing levels of polychlorinated
biphenyls (PCBs); (B) any chemicals, materials, substances or wastes which
are now or hereafter become defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials,"
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"extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants" or words of similar import, under any
Environmental Law; and (C) any other chemical, material, substance or waste,
exposure to which is now prohibited, limited or regulated by any
Governmental or Regulatory Authority.
4.17 Tangible Property and Assets; Real Property. The Company and its
Subsidiaries have good and marketable title to, or have valid leasehold
interests in or valid rights under contract to use, all tangible property and
assets used in and, individually or in the aggregate, material to the conduct of
the businesses of the Company and its Subsidiaries taken as a whole (including
all tangible property and assets reflected on the latest unaudited balance sheet
included in such Company SEC Reports or acquired since such date, other than
property or assets disposed of since such date or held subject to a lease or
other contract permitted to expire in accordance with its terms since such date,
in either case in the ordinary course of business), free and clear of all Liens
other than (i) any statutory Lien arising in the ordinary course of business by
operation of Law with respect to a liability that is not yet due or delinquent
and (ii) any minor imperfection of title or similar Lien which individually or
in the aggregate with other such Liens does not materially impair the value of
the property or asset subject to such Lien or the use of such property or asset
in the conduct of the business of the Company or any such Subsidiary. All such
property and assets are, in all material respects, in good working order and
condition, ordinary wear and tear excepted, and adequate and suitable for the
purposes for which they are presently being used. The Company and its
Subsidiaries do not own any real property.
4.18 Intellectual Property Rights.
(a) (i) The Company or a Subsidiary of the Company owns the entire
right, title and interest in and to, or is licensed or otherwise has the right
to use, all Intellectual Property (as defined below), including the right to sue
and recover for damages and the other remedies with respect to any past
infringement or other violations of the Intellectual Property, used in or
necessary for the conduct of the business as currently conducted by the Company
and its Subsidiaries taken as a whole; (ii) there is no suit, claim, action,
investigation or proceeding pending or, to the best knowledge of the Company,
threatened that the Company or any Subsidiary of the Company is infringing,
misappropriating or otherwise violating the rights of any person or entity with
regard to any Intellectual Property owned by, licensed to and/or otherwise used
by the Company or any Subsidiary of the Company; (iii) to the best knowledge of
the Company, no person is infringing on or otherwise violating any right of the
Company or any Subsidiary of the Company with respect to any Intellectual
Property owned by, licensed to and/or otherwise used by the Company or its
Subsidiaries; (iv) the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby does not and will not
conflict with or result in any violation, breach or default under any agreement,
license, sublicense or other right relating to the Intellectual Property owned
by, licensed to and/or otherwise used by the Company or its Subsidiaries; (v)
the Company or a Subsidiary of the Company will continue to own, be licensed or
have rights to use the Intellectual Property after the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby;
(vi) the Company and each Subsidiary of the Company has taken reasonable steps
to protect its Intellectual Property and its rights thereunder, and to the best
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knowledge of the Company, no such rights to Intellectual Property have been lost
or are in jeopardy of being lost through failure to act by the Company or any
Subsidiary of the Company; (vii) there are no restrictions on the direct or
indirect transfer of any interest in the Intellectual Property, including any
license agreement, held by the Company or any Subsidiary of the Company in
respect of the Intellectual Property; (viii) neither the Company nor any of its
Subsidiaries is, or has received notice that it is, in default (or with the
giving of notice or lapse of time or both, would be in default) under any
agreement to use the Intellectual Property; and (ix) all documentation related
to the Intellectual Property is accurate in all material respects and reasonably
sufficient in detail and content to identify and explain the Intellectual
Property to facilitate its full and proper use without reliance on the special
knowledge or memory of any Person.
(b) "Intellectual Property" means: (i) any and all trademarks and
trademark rights, trade names and trade name rights, service marks and service
mark rights, trade dress, copyrights and copyright rights, patents and patent
rights, mask works, trade secrets, know-how, proprietary information, processes,
formulae, computer programs (including source code, object code and data),
industrial models, designs, methodologies, business names, product names, brand
names, logos and slogans; (ii) any and all pending applications for trademarks,
service marks, copyrights, patents and mask works and any and all other kinds of
intellectual property; and (iii) all documentation related to such intellectual
property, including, without limitation, technical specifications,
manufacturing, engineering and technical drawings, and comprising physical
documents and/or electronic files.
4.19 Vote Required. Assuming the accuracy of the representation and
warranty contained in Section 5.06, unless the Merger may be consummated in
accordance with Section 253 of the DGCL as contemplated by Section 7.02(b), the
affirmative vote of the holders of record of at least a majority of the
outstanding shares of Company Common Stock with respect to the adoption of this
Agreement is the only vote of the holders of any class or series of the capital
stock of the Company required to adopt this Agreement and approve the Merger and
the other transactions contemplated hereby. No action on the part of the
Company's stockholders is required with respect to the Stock Option Agreement.
4.20 Section 203 of the DGCL Not Applicable. The provisions of Section
203 of the DGCL will not, before the termination of this Agreement, assuming the
accuracy of the representation and warranty contained in Section 5.06, apply to
this Agreement, the Stock Option Agreement, the Offer, the Merger or the other
transactions contemplated hereby or by the Stock Option Agreement.
4.21 Financial Advisor Advice. The Company has received the opinion of
Broadview Associates LLC to the effect that, as of the date of this Agreement,
the cash consideration to be received by the stockholders of Company pursuant to
the Offer and the Merger is fair, from a financial point of view, to such
stockholders.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
5.01 Organization and Qualification. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby. Each of Parent and Sub is duly qualified, licensed or admitted to do
business and is in good standing in each jurisdiction in which the ownership,
use or leasing of its assets and properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified, licensed or admitted and in good standing
which, individually or in the aggregate, could not be reasonably expected to
have a Material Adverse Effect on the validity or enforceability of this
Agreement or on the ability of Parent or Sub to perform its obligations
hereunder.
5.02 Authority Relative to this Agreement. Each of Parent and Sub has
full corporate power and authority to enter into this Agreement and to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance of this
Agreement by each of Parent and Sub and the consummation by each of Parent and
Sub of the transactions contemplated hereby have been duly and validly approved
by its Board of Directors and by Parent in its capacity as the sole stockholder
of Sub and no other corporate proceedings on the part of Parent or Sub or their
stockholders are necessary to authorize the execution, delivery and performance
of this Agreement by Parent or Sub and the consummation by Parent or Sub of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Sub and constitutes the legal, valid and
binding obligation of Parent and Sub enforceable against Parent and Sub in
accordance with its terms except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.03 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance by Parent and Sub of their obligations hereunder and
the consummation of the transactions contemplated hereby will not, conflict
with, result in a violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any person any
right of termination, cancellation, modification or acceleration of, or result
in the creation or imposition of any Lien upon any of the assets or properties
of Parent or any of its Subsidiaries under, any of the terms, conditions or
provisions of (i) the certificates or articles of incorporation or bylaws (or
other comparable charter documents) of Parent or any of its Subsidiaries, or
(ii) subject to the taking of the actions described in paragraph (b) of this
Section, (x) any Law or Order of any Governmental or Regulatory Authority
applicable to Parent or any
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of its Subsidiaries or any of their respective assets or properties, or (y) any
Contract to which Parent or any of its Subsidiaries is a party or by which
Parent or any of its Subsidiaries or any of their respective assets or
properties is bound, excluding from the foregoing clauses (x) and (y) conflicts,
violations, breaches, defaults, terminations, modifications, accelerations and
creations and impositions of Liens which, individually or in the aggregate,
could not be reasonably expected to have a Material Adverse Effect on the
ability of Parent and Sub to consummate the transactions contemplated by this
Agreement.
(b) Except (i) for the filing of a premerger notification report by
Parent under the HSR Act, (ii) for the filing of the Certificate of Merger and
other appropriate merger documents required by the DGCL with the Secretary of
State and appropriate documents with the relevant authorities of other states in
which the Constituent Corporations are qualified to do business, (iii) for the
filing of the Schedule 14D-1 with the SEC pursuant to the Exchange Act, and the
transactions contemplated hereby and (iv) as disclosed in Schedule 5.03 hereto,
no consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority or other public or private third party is necessary or
required under any of the terms, conditions or provisions of any Law or Order of
any Governmental or Regulatory Authority or any Contract to which Parent or any
of its Subsidiaries is a party or by which Parent or any of its Subsidiaries or
any of their respective assets or properties is bound for the execution and
delivery of this Agreement by Parent and Sub, the performance by Parent and Sub
of their respective obligations hereunder or the consummation of the
transactions contemplated hereby, other than such consents, approvals, actions,
filings and notices which the failure to make or obtain, as the case may be,
individually or in the aggregate, could not be reasonably expected to have a
Material Adverse Effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.
5.04 Legal Proceedings. There are no actions, suits, arbitrations or
proceedings pending or, to the knowledge of Parent and its Subsidiaries,
threatened against, relating to or affecting, nor to the knowledge of Parent and
its Subsidiaries are there any Governmental or Regulatory Authority
investigations or audits pending or threatened against, relating to or
affecting, Parent or any of its Subsidiaries or any of their respective assets
and properties which, if determined adversely to Parent or any of its
Subsidiaries, individually or in the aggregate, could be reasonably expected to
have a Material Adverse Effect on the ability of Parent and Sub to consummate
the transactions contemplated by this Agreement. Neither Parent nor any of its
Subsidiaries is subject to any Order of any Governmental or Regulatory Authority
which, individually or in the aggregate, could be reasonably expected to have a
Material Adverse Effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.
5.05 Information Supplied.
(a) The Offer Documents and any other documents to be filed by Parent
or Sub with the SEC or any other Governmental or Regulatory Authority in
connection with the Offer or the Merger and the other transactions contemplated
hereby or by the Stock Option Agreement will not, on the date of its filing or,
with respect to the Offer Documents, on the date they are filed with the SEC and
first published, sent or given to stockholders of the Company, as the case may
be, contain any untrue statement of a material fact or omit to state any
material
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fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by Parent or Sub with respect
to information supplied in writing by or on behalf of the Company expressly for
inclusion therein and information incorporated by reference therein from
documents filed by the Company or any of its Subsidiaries with the SEC. The
Offer Documents and any other such documents filed by Parent or Sub with the SEC
under the Exchange Act will comply as to form in all material respects with the
requirements of the Exchange Act.
(b) Neither the information supplied or to be supplied in writing by or
on behalf of Parent or Sub for inclusion, nor the information incorporated by
reference from documents filed by Parent or any of its Subsidiaries with the
SEC, in the Schedule 14D-9, the Proxy Statement or any other documents to be
filed by the Company with the SEC or any other Governmental or Regulatory
Authority in connection with the Offer or the Merger and the other transactions
contemplated hereby or by the Stock Option Agreement will on the date of its
filing or, with respect to the Schedule 14D-9, on the date it is filed with the
SEC and first published, sent or given to stockholders of the Company, or, in
the case of the Proxy Statement, at the date it is mailed to stockholders, at
the time of the Company Stockholders' Meeting and at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
5.06 Parent Not an Interested Stockholder or an Acquiring Person.
Neither Parent nor any of its affiliates or associates (as such terms are
defined in Section 203 of the DGCL) is an "interested stockholder" (as such term
is defined in Section 203 of the DGCL).
5.07 Financing. Parent has sufficient cash and/or available credit
facilities (and has provided the Company with evidence thereof) to acquire all
the outstanding shares of Company Common Stock in the Offer and the Merger in
accordance with this Agreement and to make all other necessary payments of fees
and expenses in connection with the transactions contemplated by this Agreement.
ARTICLE VI.
COVENANTS OF THE COMPANY
6.01 Conduct of Business. At all times from and after the date hereof
until the Effective Time, the Company covenants and agrees as to itself and its
Subsidiaries that (except as expressly contemplated or permitted by this
Agreement or the Stock Option Agreement, or to the extent that Parent shall
otherwise consent in writing):
(a) Ordinary Course. The Company and its Subsidiaries shall conduct
their respective businesses only in, and the Company and such Subsidiaries shall
not take any action except in, the ordinary course in substantially the same
manner as previously conducted and in substantial compliance with all applicable
Laws.
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(b) Without limiting the generality of paragraph (a) of this Section,
(i) the Company and its Subsidiaries shall use reasonable efforts to preserve
intact in their present business organizations and reputation, to keep available
the services of their present officers and employees, to maintain their assets
and properties in good working order and condition, ordinary wear and tear
excepted, to maintain insurance on their tangible assets and businesses in such
amounts and against such risks and losses as are currently in effect, to
preserve their relationships with customers, suppliers, licensors, licensees,
distributors and others having business relationships with them and to comply in
all material respects with all Laws and Orders of all Governmental or Regulatory
Authorities applicable to them, and (ii) neither the Company nor any of its
Subsidiaries shall, except (A) as expressly contemplated by this Agreement or
(B) as set forth in Section 6.01 of the Disclosure Schedule:
(1) adopt or amend in any material respect any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation
right, pension, retirement, employment or other employee benefit agreement,
trust plan or other arrangement for the benefit or welfare of any director,
officer or employee of the Company or any of its Subsidiaries or increase in
any manner the compensation or fringe benefits of any director, officer or
employee of the Company or any of its Subsidiaries or pay any benefit not
required by any existing agreement or place any assets in any trust for the
benefit of any director, officer or employee of the Company or any of its
Subsidiaries;
(2) incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another person or enter into any arrangement having
the economic effect of any of the foregoing, or make any loans, advances or
capital contributions to, or investments in, any other person, other than to
the Company or any direct or indirect wholly owned Subsidiary of the
Company;
(3) expend funds for capital expenditures or research and development,
which in the aggregate exceed $1,100,000;
(4) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets except for
disposition of inventory or immaterial assets, in either case, in the
ordinary course of business consistent with past practice;
(5) (x) declare, set aside or pay any dividends on, or declare or make
any other distribution in respect of, any of its capital stock (except for
dividends paid by Subsidiaries to the Company with respect to capital
stock), (y) split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock or (z) purchase, redeem
or otherwise acquire any shares of capital stock of the Company or any of
its
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Subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities;
(6) authorize for issuance, issue, deliver, sell or agree to commit to
issue, sell or deliver (whether through the issuance or granting of Options
or otherwise), pledge or otherwise encumber any shares of its capital stock
or the capital stock of any of its Subsidiaries, any other voting securities
or any securities convertible into, or any Options to acquire, any such
shares, voting securities or convertible securities or any other securities
or equity equivalents (including without limitation stock appreciation
rights) (other than issuances upon exercise of Company Stock Options
outstanding on the date hereof);
(7) amend its Certificate of Incorporation, By-Laws or equivalent
organizational documents or alter through merger, liquidation,
reorganization, restructuring or in any other fashion the corporate
structure or ownership of any Subsidiary of the Company;
(8) acquire or agree to acquire, including, without limitation, by
merging or consolidating with, or by purchasing a substantial equity
interest in or substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof;
(9) settle or compromise any stockholder derivative or other suits
arising out of the transactions contemplated by this Agreement or any other
litigation (whether or not commenced prior to the date of this Agreement) or
settle, pay or compromise any claims not required to be paid, other than in
consultation and cooperation with Parent, and, with respect to any such
settlement, without the prior written consent of Parent (except such consent
shall not be required for payments to be made under any such agreements
existing on the date of this Agreement and described in Section 6.01 of the
Disclosure Schedule), which consent shall not be unreasonably withheld;
(10) make any material Tax election or settle or compromise any
material Tax liability (whether with respect to amount or timing);
(11) except in the ordinary course of business, materially modify,
amend or terminate any material Contract or waive or release or assign any
material rights or claims;
(12) (i) fail to pay in the ordinary course of business consistent with
past practice any amount ("Payable") due, owing or payable to any trade
creditor or supplier or (ii) other than in the ordinary course of business
consistent with past practice, alter the terms or scheduled payment dates of
any Payable; or
(13) take or agree to take any action that would make any
representation and warranty of the Company contained in this Agreement
inaccurate at, or as of any
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time prior to, the Effective Time, or omit or agree to omit to take any
action necessary and prudent to prevent any such representation or warranty
from being inaccurate at any such time.
(c) Advice of Changes. The Company shall confer on a regular and
frequent basis with Parent with respect to its business and operations and other
matters relevant to the Offer or the Merger, and shall promptly advise Parent,
orally and in writing, of any change or event, including, without limitation,
any complaint, investigation or hearing by any Governmental or Regulatory
Authority (or communication indicating the same may be contemplated) or the
institution or threat of litigation, having, or which, insofar as can be
reasonably foreseen, could have, a Material Adverse Effect on the Company and
its Subsidiaries taken as a whole or on the ability of the Company to consummate
the transactions contemplated hereby.
6.02 No Solicitations. Except as provided below, from the date of this
Agreement until the earlier of the termination of this Agreement or the
Effective Time, neither the Company nor any of its Subsidiaries shall, nor shall
they authorize or permit any officer, director, employee, investment banker,
financial advisor, attorney, accountant or other advisor or representative
(each, a "Representative") retained by or acting for or on behalf of the Company
or any of its Subsidiaries to, directly or indirectly, (i) take any action to
knowingly solicit, initiate, continue, facilitate or encourage (including by way
of furnishing or disclosing non-public information) any offer or proposal for a
merger, consolidation or other business combination involving the Company or any
of its Subsidiaries or any proposal or offer to acquire in any manner, directly
or indirectly, 15% or more of the shares of any class of voting securities of
the Company or any of its Subsidiaries or a substantial portion of the assets of
the Company or any of its Subsidiaries, other than the transactions contemplated
by this Agreement or by the Stock Option Agreement (any of the foregoing being
referred to as an "Acquisition Proposal"), or (ii) knowingly engage in
negotiations, discussions or communications regarding or disclose any
information relating to the Company or any of its Subsidiaries or afford access
to the properties, books or records of the Company or any of its Subsidiaries to
any person, corporation, partnership or other entity or group (a "Potential
Acquiror") that may be considering making, or has made, an Acquisition Proposal.
The Board of Directors of the Company (including any committee thereof) shall
not withdraw or modify in a manner adverse to Parent the approval and
recommendation of the Offer, this Agreement, the Stock Option Agreement or the
Merger or approve or recommend any Acquisition Proposal. Notwithstanding the
foregoing, (i) the Company may participate in discussions or negotiations with
or furnish information to any third party which makes a written Acquisition
Proposal which either (x) is not subject to a financing contingency and involves
the purchase for cash of 100% of the Company Common Stock at a price per share
greater than the purchase price of the Offer or (y) provides for the acquisition
of 100% of the Company Common Stock for consideration, not consisting entirely
of cash, which the Company's Board of Directors determines, based on the advice
of its financial advisor, is financially superior to the purchase price of the
Offer (in the case of either (x) or (y), a "Superior Proposal"), and (ii) the
Board of Directors or any committee thereof may withdraw or modify in a manner
adverse to Parent the approval or recommendation of this Agreement, the Offer or
the Merger and may approve or recommend any such Superior Proposal, if, in the
case of either (i) or (ii), the Board of Directors of the
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Company determines (and is advised by its outside legal counsel) that the
failure to take such action would constitute a breach of its fiduciary duties
and the Company enters into a confidentiality agreement with the Potential
Acquiror with respect to any non-public information relating to the Company or
its Subsidiaries upon terms substantially the same as (and in no event more
beneficial to the Potential Acquiror than) those contained in the
Confidentiality Agreement dated July 21, 1997, between Parent and the Company.
The Company shall (i) notify Parent promptly (and in any event within one
business day) after receipt of any Acquisition Proposal (or any indication that
any person is considering making an Acquisition Proposal) or any request for
non-public information relating to the Company or any of its Subsidiaries or for
access to the properties, books or records of the Company or any of its
Subsidiaries by any person that may be considering making, or has made, an
Acquisition Proposal, (ii) notify Parent promptly of any material change to any
such Acquisition Proposal, indication or request and (iii) upon reasonable
request by Parent, provide Parent with all material information about any such
Acquisition Proposal, indication or request. The Company will not, and will
cause its affiliates not to, enter into an agreement with respect to a Superior
Proposal unless Parent has been advised in writing of the identity of the
parties making the Superior Proposal and the material terms thereof at least two
business days prior to the entering into of such agreement.
ARTICLE VII.
ADDITIONAL AGREEMENTS
7.01 Access to Information; Confidentiality.
(a) The Company shall, and shall cause its Subsidiaries to, throughout
the period from the date hereof to the Effective Time, (i) provide Parent and
its Representatives with reasonable access, upon reasonable prior notice and
during normal business hours, to all officers, employees, agents and accountants
of the Company and its Subsidiaries and their respective properties, books,
contracts, commitments and records, and (ii) furnish promptly to such persons
(x) a copy of each report, statement, schedule and other document filed or
received by the Company or any of its Subsidiaries during such period pursuant
to the requirements of federal or state securities laws or filed with any other
Governmental or Regulatory Authority, and (y) all other information and data
(including, without limitation, copies of Contracts, Company Benefit Plans and
other books and records) concerning the business and operations of the Company
and its Subsidiaries as Parent or its Representatives reasonably may request. No
investigation pursuant to this paragraph or otherwise shall affect any
representation or warranty contained in this Agreement or any condition to the
obligations of the parties hereto.
(b) Parent will hold, and will use its best efforts to cause its
Representatives to hold, in strict confidence, unless (i) compelled to disclose
by judicial or administrative process or by other requirements of applicable
Laws of Governmental or Regulatory Authorities (including, without limitation,
in connection with obtaining the necessary approvals of this Agreement or the
transactions contemplated hereby of Governmental or Regulatory Authorities), or
(ii) disclosed in an action or proceeding brought by a party hereto in pursuit
of its rights or in the exercise of its remedies hereunder, all documents and
information concerning the
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Company and its Subsidiaries furnished to it by the Company or its
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information can
be shown to have been (x) previously known by Parent or its Representatives, (y)
in the public domain (either prior to or after the furnishing of such documents
or information hereunder) through no fault of Parent and its Representatives or
(z) later acquired by Parent or its Representatives from another source if
Parent or such Representative is not aware that such source is under an
obligation to the Company to keep such documents and information confidential.
In the event that this Agreement is terminated without the transactions
contemplated hereby having been consummated, upon the request of the Company,
Parent will, and will cause its Representatives to, promptly redeliver or cause
to be redelivered all copies of documents and information furnished by the
Company or its Representatives to Parent and its Representatives in connection
with this Agreement or the transactions contemplated hereby and destroy or cause
to be destroyed all notes, memoranda, summaries, analyses, compilations and
other writings related thereto or based thereon prepared by Parent or its
Representatives.
(c) Parent will not for a period of two years from the date of
termination of this Agreement directly or indirectly solicit for employment or
employ any person who is at the date of this Agreement employed by the Company
or any of its Subsidiaries; provided, however, that the foregoing restriction
shall not apply (i) following the Effective Time, (ii) to solicitations made by
way of advertisement or other general (as opposed to specific) solicitations or
(iii) to solicitations addressed to persons who at the date of the solicitation
have not been employed by the Company or its Subsidiaries for a period of at
least six months.
7.02 Approval of Stockholders.
(a) If required by applicable law in order to consummate the Merger,
the Company shall, through its Board of Directors, duly call, give notice of,
convene and hold a meeting of its stockholders (the "Company Stockholders'
Meeting") as soon as practicable following the acceptance and payment and
purchase of shares of Company Common Stock by Sub pursuant to the Offer, for the
purpose of voting on the Merger and the adoption of this Agreement (the "Company
Stockholders' Approval"). Subject to Section 6.02, the Company shall, through
its Board of Directors, include in the Proxy Statement the recommendation of the
Board of Directors of the Company that the stockholders of the Company adopt
this Agreement, and shall use its best efforts to obtain such adoption. At such
meeting, Parent shall, and shall cause its Subsidiaries to, cause all shares of
Company Common Stock then owned by Parent or any such Subsidiary to be voted in
favor of the adoption of this Agreement.
(b) Notwithstanding the foregoing, in the event that Sub shall acquire
at least 90% of the then outstanding shares of Company Common Stock, the parties
hereto shall, subject to Article VIII, at the request of Sub take all necessary
and appropriate action to cause the Merger to become effective in accordance
with Section 253 of the DGCL, as soon as reasonably practicable after such
acquisition, without a meeting of the stockholders of the Company.
7.03 Preparation of Proxy Statement. Except to the extent not required
by applicable law, the Company shall prepare and file the Proxy Statement and
all other required
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materials with the SEC as soon as reasonably practicable after consummation of
the Offer, and shall use its best efforts to have the Proxy Statement cleared by
the SEC. If at any time prior to the Effective Time any event shall occur that
should be set forth in an amendment of or a supplement to the Proxy Statement,
the Company shall prepare and file with the SEC such amendment or supplement as
soon thereafter as is reasonably practicable. Parent, Sub and the Company shall
cooperate with each other in the preparation of the Proxy Statement, and the
Company shall notify Parent of the receipt of any comments of the SEC with
respect to the Proxy Statement and of any requests by the SEC for any amendment
or supplement thereto or for additional information, and shall provide to Parent
promptly copies of all correspondence between the Company or any representative
of the Company and the SEC with respect to the Proxy Statement. The Company
shall give Parent and its counsel the opportunity to review the Proxy Statement
and all responses to requests for additional information by and replies to
comments of the SEC before their being filed with, or sent to, the SEC. Each of
the Company, Parent and Sub shall use its best efforts, after consultation with
the other parties hereto, to respond promptly to all such comments of and
requests by the SEC and to cause the Proxy Statement to be mailed to the holders
of Company Common Stock entitled to vote at the Company Stockholders' Meeting at
the earliest reasonably practicable time.
7.04 Regulatory and Other Approvals. Subject to the terms and
conditions of this Agreement and without limiting the provisions of Sections
7.02 and 7.03, each of the Company and Parent will proceed diligently and in
good faith and will use all commercially reasonable efforts to do, or cause to
be done, all things necessary, proper or advisable to, as promptly as
practicable, (a) obtain all consents, approvals or actions of, make all filings
with and give all notices to Governmental or Regulatory Authorities or any other
public or private third parties required of Parent, the Company or any of their
Subsidiaries to consummate the Offer, the Merger and the other matters
contemplated hereby and by the Stock Option Agreement, and (b) provide such
other information and communications to such Governmental or Regulatory
Authorities or other public or private third parties as the other party hereto
or such Governmental or Regulatory Authorities or other public or private third
parties may reasonably request. In addition to and not in limitation of the
foregoing, each of the parties will (x) take promptly all actions necessary to
make the filings required of Parent and the Company or their affiliates under
the HSR Act and under comparable merger notification or competition laws of
non-U.S. jurisdictions, (y) comply at the earliest practicable date with any
request for additional information received by such party or its affiliates from
the Federal Trade Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division") pursuant to the HSR Act or the
authorities of such other jurisdictions, and (z) cooperate with the other party
in connection with such party's filings under the HSR Act and in connection with
resolving any investigation or other inquiry concerning the Offer or the Merger
or the other matters contemplated by this Agreement commenced by the FTC, the
Antitrust Division, state attorneys general or any other Governmental or
Regulatory Authority.
7.05 Employee Benefit Plans.
(a) Parent shall cause the Company Benefit Plans (other than those that
are based on Company Common Stock) in effect at the date of this Agreement to
remain in effect until the second anniversary of the Effective Time or, to the
extent such Company Benefit Plans
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(other than those that are based on Company Common Stock) are not continued,
Parent will maintain or cause the Company to maintain until such date benefit
plans (as defined in Section 3(3) of ERISA) for the benefit of the employees of
the Company which are no less favorable, in the aggregate, than the Company
Benefit Plans (other than those that are based on Company Common Stock) existing
on the date hereof. All Company Benefit Plans under which the employees'
interests are based on Company Common Stock shall be terminated immediately
prior to the Effective Time. The Company's employees shall be given credit, for
purposes of any service requirements for participation in the Parent plans for
which they become eligible, if any, for their period of service with the Company
prior to the Effective Time, and the Company employees shall also, with respect
to participation in any Parent plans or programs for which they may become
eligible, if any, which have co-payment, deductible or other co-insurance
features, receive credit for any amounts such employees have paid to date in
1998 in co-payments, deductibles or co-insurance under comparable programs
maintained by the Company prior to the Effective Time. In addition, no employee
of the Company who participates in any medical/health plan of the Company at the
Effective Time shall be denied coverage under any Parent medical/health plan for
which they become eligible, if any, by reason of any pre-existing condition
exclusions, to the extent applicable subsequent to the Effective Time.
(b) Parent will, and will cause the Surviving Corporation to, honor
without modification all employee severance plans (or policies) and employment
and severance agreements of the Company or any of its Subsidiaries in existence
on the date hereof as such agreements shall be in effect in accordance with the
terms of this Agreement at the Effective Time, including, without limitation,
the plans and agreements specified in Schedule 7.05 hereto.
7.06 Directors' and Officers' Indemnification and Insurance.
(a) Until the sixth anniversary of the Effective Time, the Company and
Parent, and from and after the Effective Time the Surviving Corporation (each,
an "Indemnifying Party"), shall indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date hereof, a director or
officer of the Company or any of its Subsidiaries (the "Indemnified Parties")
against all losses, claims, damages, costs and expenses (including attorneys'
fees and expenses), liabilities or judgments or amounts that are paid in
connection with any threatened or actual claim, action, suit, proceeding or
investigation (whether civil, criminal, administrative or investigative and
whether asserted or claimed prior to, at or after the Effective Time) that is
based in whole or in part on, or arises in whole or in part out of, the fact
that such Indemnified Party is or was a director or officer of the Company or
any of its Subsidiaries (including service as a fiduciary of any employee
benefit plan), whether pertaining to any matter existing or occurring at or
prior to the Effective Time to the fullest extent permitted by Delaware law or
based in whole or in part on this Agreement or the transactions contemplated
hereby ("Indemnified Liabilities"); provided that no Indemnifying Party shall be
liable for any settlement of any claim effected without its written consent,
which consent shall not be unreasonably withheld; provided further that in the
event any claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claims shall continue until disposition
of any and all such claims. Without limiting the foregoing, in the event that
any such claim, action, suit, proceeding or investigation is brought against any
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Indemnified Party (whether arising prior to or after the Effective Time), (w)
the Indemnifying Parties will pay expenses in advance of the final disposition
of any such claim, action suit, proceeding or investigation to each Indemnified
Party to the full extent permitted by applicable law provided that the person to
whom expenses are advanced provides an undertaking to repay such advance if it
is ultimately determined that such person is not entitled to indemnification;
(x) the Indemnified Parties shall retain counsel reasonably satisfactory to the
Indemnifying Parties; (y) the Indemnifying Parties shall pay all reasonable fees
and expenses of such counsel for the Indemnified Parties (subject to the final
sentence of this paragraph) promptly as statements therefor are received; and
(z) the Indemnifying Parties shall use all commercially reasonable efforts to
assist in the vigorous defense of any such matter. Any Indemnified Party wishing
to claim indemnification under this Section, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify the Indemnifying
Parties, but the failure so to notify an Indemnifying Party shall not relieve it
from any liability which it may have under this paragraph except to the extent
such failure materially and irreparably prejudices such party.
(b) The Surviving Corporation shall (i) until the sixth anniversary of
the Effective Time, cause to be maintained in effect, to the extent available,
the policies of directors' and officers' liability insurance maintained by the
Company and its Subsidiaries as of the date hereof (or policies of at least the
same coverage and amounts containing terms that are no less advantageous in any
material respect to the insured parties) or (ii) purchase a policy of directors'
and officers' liability insurance of at least the same coverage and amounts and
containing terms that are no less advantageous in any material respect to the
insured parties and for a term of six years after the Effective Time, in each
case with respect to claims arising from facts or events that occurred prior to
the Effective Time; provided, however, that in no event shall the Surviving
Corporation be obligated to expend in order to maintain or procure insurance
coverage pursuant to clause (i) of this paragraph any amount per annum in excess
of 125% of the last premium paid by the Company prior to the date of this
Agreement, and if the annual premium of such insurance coverage exceeds that
amount, the Surviving Corporation shall purchase as much coverage as possible
for such amount.
(c) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party and each party entitled
to insurance coverage under paragraph (b) above, respectively, and his or her
heirs and legal representatives, and shall be in addition to any other rights an
Indemnified Party may have under the certificate or articles of incorporation or
bylaws of the Surviving Corporation or any of its Subsidiaries, under the DGCL
or otherwise.
(d) In the event Parent, the Company or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, (ii) transfers all or substantially
all of its properties and assets to any person or (iii) consummates a
transaction resulting in the transfer of more than a majority of its capital
stock (whether by means of reverse triangular merger, share exchange or
otherwise), then, and in each such case, proper provision shall be made so that
the successors and assigns of Parent, the Company or the Surviving Corporation,
as the case may be, shall assume the obligations set forth in paragraphs (a) and
(b) of this Section.
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7.07 Expenses. Except as set forth in Section 9.02, whether or not the
Offer or the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such cost or expense, except that expenses incurred
in connection with printing and mailing the Offer Documents, the Schedule 14D-9
and the Proxy Statement, as well as any filing fees relating thereto, shall be
shared equally by Parent and the Company.
7.08 Brokers or Finders. Each of Parent and the Company represents, as
to itself and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement except Broadview Associates LLC,
whose fees and expenses will be paid by the Company in accordance with the
Company's agreement with such firm (a true and complete copy of which has been
delivered by the Company to Parent prior to the execution of this Agreement),
and BT Alex. Brown Incorporated, whose fees and expenses will be paid by Parent
in accordance with Parent's agreement with such firm (a true and complete copy
of which has been delivered by Parent to the Company prior to the execution of
this Agreement), and each of Parent and the Company shall indemnify and hold the
other harmless from and against any and all claims, liabilities or obligations
with respect to any other such fee or commission or expenses related thereto
asserted by any person on the basis of any act or statement alleged to have been
made by such party or its affiliate.
7.09 Notice and Cure. Each of Parent and the Company will notify the
other promptly in writing of, and contemporaneously will provide the other with
true and complete copies of any and all information or documents relating to,
and will use reasonable efforts to cure before the Closing, any event,
transaction or circumstance occurring after the date of this Agreement that
causes or will cause any covenant or agreement of Parent or the Company, as the
case may be, under this Agreement to be breached or that renders or will render
untrue any representation or warranty of Parent or the Company, as the case may
be, contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Each of Parent and the Company also
will notify the other promptly in writing of, and will use best efforts to cure,
before the Closing, any violation or breach of any representation, warranty,
covenant or agreement made by Parent or the Company, as the case may be, in this
Agreement, whether occurring or arising prior to, on or after the date of this
Agreement. No notice given pursuant to this Section shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining satisfaction of any condition contained herein.
7.10 Fulfillment of Conditions. Subject to the terms and conditions of
this Agreement, each of Parent and the Company will take or cause to be taken
all steps reasonably necessary or desirable and proceed diligently and in good
faith to satisfy each condition to the other's obligations contained in this
Agreement and to consummate and make effective the transactions contemplated by
this Agreement, and neither Parent nor the Company will, nor will it permit any
of its Subsidiaries to, take or fail to take any action that could be reasonably
expected to result in the nonfulfillment of any such condition.
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7.11 Conveyance Taxes. Sub and the Company shall cooperate in the
preparation, execution and filing of all returns, questionnaires, applications,
or other documents regarding any real property transfer or gains, sales, use,
transfer, value added, stock transfer and stamp taxes, any transfer, recording,
registration and other fees, and any similar taxes which become payable in
connection with the transactions contemplated hereunder that are required or
permitted to be filed on or before the Effective Time.
7.12 Stock Option Agreement. The Company, Parent and Sub shall perform
fully their respective obligations under the Stock Option Agreement.
ARTICLE VIII.
CONDITIONS
8.01 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to consummate the Merger is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:
(a) Stockholder Approval. Unless the Merger may be consummated pursuant
to Section 253 of the DGCL as contemplated by Section 7.02(b), this Agreement
shall have been adopted by the requisite vote of the stockholders of the Company
under the DGCL.
(b) HSR Act. Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) No Injunctions or Restraints. No court of competent jurisdiction or
other competent Governmental or Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any Law or Order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
illegal or otherwise restricting, preventing or prohibiting consummation of the
Offer or the Merger or the other transactions contemplated by this Agreement,
the Stock Option Agreement or the Stockholders Agreement.
(d) Consummation of Offer. Sub or its permitted assignee shall have
purchased all shares of Company Common Stock validly tendered and not withdrawn
pursuant to the Offer.
ARTICLE IX.
TERMINATION, AMENDMENT AND WAIVER
9.01 Termination. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Effective Time, whether prior to or after the Company Stockholders' Approval:
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(a) by mutual written consent of the Company and Parent;
(b) by the Company (A) if there has been a material breach of any
representation, warranty, covenant or agreement on the part of Parent set forth
in this Agreement which breach has not been cured, in the case of a
representation or warranty, prior to the Effective Time or, in the case of a
covenant or agreement, within 30 days following receipt by Parent of notice of
such breach (provided that such right to terminate shall expire on the date on
which Parent or the Sub beneficially owns a majority of the outstanding shares
of Company Common Stock, or (B) if there shall be any Law that makes
consummation of the Merger illegal or if any injunction or Order of a
Governmental or Regulatory Authority having jurisdiction preventing the
consummation of the Merger shall have become final and non-appealable;
(c) by Parent (A) (i) if any representation or warranty of the Company
shall not be true and correct (x) in all material respects as of the date of
this Agreement or (y) as of the time of termination of this Agreement, and, in a
case described in this subclause (y), the failure of such representation or
warranty to be true and correct (1) has a Material Adverse Effect on the
Company, (2) if capable of being made true and correct within 30 days following
receipt by the Company of notice of such representation or warranty not being
true and correct is not in fact made true and correct within such 30-day period
and (3) did not result from the announcement of this Agreement or the
transactions contemplated hereby, or (ii) if there has been a material breach of
any covenant or agreement on the part of the Company set forth in this Agreement
or the Stock Option Agreement which breach of a covenant or agreement has not
been cured within 30 days following receipt by the Company of notice of such
breach (provided that such right to terminate shall expire on the date on which
Parent or Sub beneficially owns a majority of the outstanding shares of Company
Common Stock and Parent's designees constitute, or shall have been afforded the
opportunity, without the imposition by the Company of adverse conditions, to
constitute, the requisite percentage (but not less than a majority) of the
members of the Board of Directors of the Company specified in this Agreement),
(B) if there shall be any Law that makes consummation of the Merger illegal or
if any injunction or Order of a Governmental or Regulatory Authority having
jurisdiction preventing the consummation of the Merger shall have become final
and non-appealable or (C) if the Offer shall have expired or been terminated
without any shares of Company Common Stock being purchased thereunder by Sub as
a result of the occurrence of any of the events described on Annex A hereto;
(d) by either the Company or Parent if the Offer has not been
consummated by May 5, 1998 (the "Outside Termination Date"), provided that the
terminating party is not then in material breach of any provision of this
Agreement;
(e) by Parent upon the occurrence of a "Trigger Event" (as defined
below), provided that such right to terminate shall expire on the date on which
Parent or Sub beneficially owns a majority of the outstanding shares of Company
Common Stock and Parent's designees constitute the requisite percentage (but not
less than a majority) of the members of the Board of Directors of the Company
specified in this Agreement; and
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(f) by Parent, if the FTC or the Antitrust Division has initiated
litigation or an administrative proceeding challenging the transactions
contemplated by this Agreement under U.S. antitrust laws, which litigation or
administrative proceeding will include a motion seeking an Order or injunction
prohibiting the consummation of any of the transactions contemplated by this
Agreement.
9.02 Effect of Termination.
(a) If this Agreement is validly terminated by either the Company or
Parent pursuant to Section 9.01, this Agreement shall forthwith become null and
void and there shall be no liability or obligation on the part of either the
Company or Parent (or any of their respective Representatives or affiliates),
except (i) that the provisions of Sections 7.01(b), 7.01(c), 7.07, 7.08 and 9.02
will continue to apply following any such termination, (ii) that nothing
contained herein shall relieve any party hereto from liability for breach of its
representations, warranties, covenants or agreements contained in this Agreement
and (iii) as provided in paragraph (b) below.
(b) In the event that Parent terminates this Agreement pursuant to
Section 9.01(c)(A)(i), 9.01(c)(A)(ii) or 9.01(e), then the Company shall pay to
Parent (x) a termination fee in the amounts and at the times specified in
Section 9.02(c) and (y) an amount (not to exceed $500,000 in the aggregate)
equal to all out-of-pocket expenses and fees certified by Parent to have been
incurred by Parent and its Subsidiaries in connection with this Agreement and
the transactions contemplated hereby (including, without limitation, fees and
expenses payable to all banks, investment banking firms and other financial
institutions and persons and their respective agents and counsel for acting as
Parent's financial advisor with respect to, or arranging or committing to
provide or providing any financing for, the acquisition of all the outstanding
shares of Company Common Stock in the Offer and the Merger). In the event that
Parent terminates this Agreement pursuant to Section 9.01(c)(C), then the
Company shall pay to Parent a termination fee in the amount and at the time
specified in Section 9.02(c). A "Trigger Event" means any of the following
events: (i) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or agreement in principle
with respect to, or, at any time within 12 months after the termination of this
Agreement, consummated any Acquisition Proposal or similar business combination
or transaction other than the transactions contemplated by the Merger Agreement;
(ii) the Board of Directors of the Company or any committee thereof shall have
withdrawn its approval or recommendation of the Offer, this Agreement or the
Merger, or modified its approval or recommendation in a manner adverse to Parent
or Sub; (iii) the Board of Directors of the Company or any committee thereof
shall have made any recommendation with respect to an Acquisition Proposal by
any person (other than Parent or Sub) other than a recommendation rejecting or
against such Acquisition Proposal; (iv) the Company receives any Acquisition
Proposal by any person (other than Parent or Sub), and the Company's Board of
Directors takes a neutral position or makes no recommendation with respect to
such Acquisition Proposal after a reasonable amount of time (and in no event
more than five business days) has elapsed for the Company's Board of Directors
to review and make a recommendation with respect to such Acquisition Proposal
consistent with the Board's fiduciary duties; or (v) (x) any corporation,
partnership or other entity or "person" (as defined in Section 13(d)(3) of the
Exchange Act) other than Parent, the
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Company or any of their respective affiliates shall have, at any time prior to
the termination of this Agreement, commenced, or announced an intention to
commence, (A) a "solicitation" of "proxies" or become a "participant" in such a
solicitation (as such terms are defined in Regulation 14A under the Exchange
Act) or (B) a tender offer, exchange offer or other extraordinary transaction
(in each case with respect to Company Common Stock) and as a result thereof, if
this Agreement were not terminated promptly thereafter, Parent or Sub would be
required to incur substantial expenditures in addition to those otherwise
required for the transactions contemplated by this Agreement, and (y) such
corporation, partnership or other entity or "person" or its affiliates and
associates (as defined in the Exchange Act) collectively shall be or become the
beneficial owners (determined pursuant to Rule 13d-3 under the Exchange Act) of
at least 15% of any class of shares of capital stock of the Company (including
the shares of Company Common Stock) or shall have acquired, directly or
indirectly, at least 15% of the assets or earning power of the Company.
(c) The termination fee payable pursuant to Section 9.02(b) shall be as
follows: (i) if the termination of this Agreement occurred pursuant to Section
9.01(e) based on a Trigger Event described in clause (i) or (v) of Section
9.02(b), a termination fee of $3,000,000 shall be payable immediately upon such
termination; (ii) if the termination of this Agreement occurred pursuant to
Section 9.01(c)(A) or pursuant to Section 9.01(e) based on a Trigger Event
described in clause (ii), (iii) or (iv) of Section 9.02(b), a termination fee of
$1,500,000 (the "Initial Termination Fee") shall be payable immediately upon
such termination, and an additional termination fee of $1,500,000 shall be
payable immediately upon the occurrence during the 12 months following the
receipt of the Initial Termination Fee of a Trigger Event described in clause
(i) or (v) of Section 9.02(b); and (iii) if (A) the termination of this
Agreement occurred pursuant to Section 9.01(c)(C), (B) at any time prior to
termination of this Agreement pursuant to Section 9.01(c)(C), the Company shall
have received an Acquisition Proposal and (C) within 12 months of termination of
this Agreement pursuant to Section 9.01(c)(C), the Company shall have entered
into, or shall have publicly announced its intention to enter into, an agreement
or agreement in principle with respect to, or consummated any business
combination or transaction with any person or entity that made the Acquisition
Proposal referred to in the immediately preceding subclause (B) or with any
affiliate of such person or entity, a termination fee of $3,000,000 shall be
payable immediately upon such termination. All termination fees and other
amounts payable under Section 9.02(b) and this Section 9.02(c) shall be payable
by wire transfer of immediately available funds to an account designated in
writing by Parent. Except as otherwise provided in this Section 9.02, all such
amounts shall be due immediately upon termination of this Agreement and without
prior notice or demand.
(d) Notwithstanding anything to the contrary in this Agreement, any
termination fees otherwise payable under Section 9.02(b) shall be reduced to the
extent such payment otherwise would cause the Total Profit (as defined in the
Stock Option Agreement) to exceed $4,500,000.
9.03 Amendment. Subject to Section 1.03(c), this Agreement may be
amended, supplemented or modified by action taken by or on behalf of the
respective Boards of Directors of the parties hereto at any time prior to the
Effective Time, whether prior to or after adoption of this Agreement by the
stockholders of the Company but after such adoption only to the extent
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<PAGE> 47
permitted by applicable law. No such amendment, supplement or modification shall
be effective unless set forth in a written instrument duly executed by or on
behalf of each party hereto.
9.04 Waiver. Subject to Section 1.03(c), at any time prior to the
Effective Time any party hereto, by action taken by or on behalf of its Board of
Directors, may to the extent permitted by applicable law (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties of the
other parties hereto contained herein or in any document delivered pursuant
hereto or (iii) waive compliance with any of the covenants, agreements or
conditions of the other parties hereto contained herein. No such extension or
waiver shall be effective unless set forth in a written instrument duly executed
by or on behalf of the party extending the time of performance or waiving any
such inaccuracy or non-compliance. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be deemed to be
or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion.
ARTICLE X.
GENERAL PROVISIONS
10.01 Non-Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or in any instrument delivered pursuant to this Agreement
shall not survive the Merger but shall terminate at the Effective Time, except
for the agreements contained in Article III and in Sections 7.01(b), 7.01(c),
7.05, 7.06, 7.07 and 7.08, which shall survive the Effective Time.
10.02 Notices. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Parent or Sub, to:
ASK asa
K.G. Meldahlsvei 9
N-1602 Fredrikstad
NORWAY
Facsimile No.: 47 69 34 0632
Attn: Ole J. Fredriksen
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, NY 10166
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<PAGE> 48
Facsimile No.: 212-878-8375
Attn: John A. Healy, Esq.
If to the Company, to:
Proxima Corporation
9440 Carroll Park Drive
San Diego, CA 92121-2298
Facsimile No.: (619) 677-5755
Attn: General Counsel
with copies to:
Brobeck, Phleger & Harrison LLP
4875 MacArthur Court, Suite 1000
Newport Beach, CA 92660
Facsimile No.: 714-752-7522
Attn: Patrick Arrington, Esq.
and
Brobeck, Phleger & Harrison LLP
One Market Square
Spear Street Tower
San Francisco, CA 94105
Facsimile No.: 415-442-1010
Attn: Steve L. Camahort, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice is to be delivered pursuant to this Section). Any party from
time to time may change its address, facsimile number or other information for
the purpose of notices to that party by giving notice in writing specifying such
change to the other parties hereto.
10.03 Entire Agreement. This Agreement, including all Exhibits and
Schedules referred to herein or delivered pursuant hereto, and the Stock Option
Agreement supersede all prior discussions and agreements among the parties
hereto with respect to the subject matter hereof and thereof, including, without
limitation, that certain confidentiality agreement between the Company and
Parent dated July 21, 1997, and contain the sole and entire agreement among the
parties hereto with respect to the subject matter hereof and thereof.
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10.04 Public Announcements. Except as otherwise required by law or the
rules of any applicable securities exchange or national market system, so long
as this Agreement is in effect, Parent and the Company will not, and will not
permit any of their respective Representatives to, issue or cause the
publication of any press release or make any other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld. Parent and
the Company will cooperate with each other in the development and distribution
of all press releases and other public announcements with respect to this
Agreement and the transactions contemplated hereby, and will furnish the other
with drafts of any such releases and announcements as far in advance as
practicable.
10.05 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as provided in Sections
7.05 and 7.06 (which are intended to be for the benefit of the persons entitled
to therein, and may be enforced by any of such persons), it is not the intention
of the parties to confer third-party beneficiary rights upon any other person.
10.06 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other parties hereto and any attempt to
do so will be void, except that Sub may assign any or all of its rights,
interests and obligations hereunder, including the right to purchase all or any
portion of the shares of Company Common Stock tendered pursuant to the Offer, to
another direct or indirect wholly owned Subsidiary of Parent, provided that any
such Subsidiary agrees in writing to be bound by all of the terms, conditions
and provisions contained herein. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the
parties hereto and their respective successors and assigns.
10.07 Headings. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
10.08 Invalid Provisions. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(iii) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the legal, invalid or unenforceable provision
or by its severance herefrom and (iv) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
10.09 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to a contract
executed and performed in such State without giving effect to the conflicts of
laws principles thereof.
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10.10 Schedules. Each exception set forth in the Disclosure Schedule is
identified by reference to, or has been grouped under a heading referring to, a
specific individual Section of this Agreement and, except as otherwise
specifically stated with respect to such exception, relates only to such
Section.
10.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
signed by its officer thereunto duly authorized as of the date first above
written.
ASK ASA
By: /s/ Einar J. Greve
-------------------------------
Name: Einar J. Greve
Title: Director
BD ACQUISITION CORP.
By: /s/ Einar J. Greve
-------------------------------
Name: Einar J. Greve
Title: Director
PROXIMA CORPORATION
By: /s/ K.E. Olson
-------------------------------
Name: K.E. Olson
Title: CEO
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have the meanings
ascribed to them in the corresponding Sections of this Agreement listed below:
"Acquisition Transaction" -- Section 6.02
"Acquisition Proposal" -- Section 6.02
"Antitrust Division" -- Section 7.04
"CERCLA" -- Section 4.16(c)
"Certificate of Merger" -- Section 2.02
"Certificates" -- Section 3.02(b)
"Closing" -- Section 2.03
"Closing Date" -- Section 2.03
"Code" -- Section 4.12(a)
"Company" -- Preamble
"Company Benefit Plan" -- Section 4.13(c)(i)
"Company Common Stock" -- Preamble
"Company Designees" -- Section 1.03(c)
"Company Financial Statements" -- Section 4.05
"Company Permits" -- Section 4.10
"Company SEC Reports" -- Section 4.05
"Company Stock Option" -- Section 3.01(e)
"Company Stock Plan" -- Section 3.01(e)
"Company Stockholders' Approval" -- Section 7.02(a)
"Company Stockholders' Meeting" -- Section 7.02(a)
"Constituent Corporations" -- Section 2.01
"Contracts" -- Section 4.04(a)
"DGCL" -- Section 1.02(a)
"Dissenting Share" -- Section 3.01(d)
"Effective Time" -- Section 2.02
"Environmental Law" -- Section 4.16(g)(i)
"ERISA" -- Section 4.13(c)
"ERISA Affiliate" -- Section 4.13(b)
"Exchange Act" -- Section 1.01
"Exchange Agent" -- Section 3.02(a)
"Exchange Fund" -- Section 3.02(a)
"Exon-Florio Amendment" -- Section 7.04
"FTC" -- Section 7.04
"Governmental or Regulatory Authority" -- Section 4.04(a)
"Hazardous Material" -- Section 4.16(g)(ii)
"HSR Act" -- Section 4.04(b)
"Indemnified Liabilities" -- Section 7.06(a)
"Indemnified Parties" -- Section 7.06(a)
"Indemnifying Party" -- Section 7.06(a)
"Intellectual Property" -- Section 4.18
"IRS" -- Section 4.12(a)
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"Laws" -- Section 4.04(a)
"Lien" -- Section 4.02(b)
"Materially Adversely Affecting" -- Section 4.01
"Material Adverse Effect" -- Section 4.01
"Merger" -- Section 2.01
"Merger Price" -- Section 3.01(c)
"Minimum Condition" -- Section 1.01(a)
"Offer" -- Section 1.01(a)
"Offer Documents" -- Section 1.01(b)
"Offer to Purchase" -- Section 1.01(b)
"Options" -- Section 4.02(a)
"Orders" -- Section 4.04(a)
"Outside Termination Date" -- Section 9.01(d)
"Parent" -- Preamble
"PBGC" -- Section 4.13(a)(iii)
"Per Share Amount" -- Section 1.01(a)
"Plan" -- Section 4.13(c)(ii)
"Potential Acquiror" -- Section 6.02
"Preferred Stock" -- Section 4.02(a)
"Proxy Statement" -- Section 4.09
"Release" -- Section 4.16(a)
"Representative" -- Section 6.02
"SEC" -- Section 1.01(a)
"Schedule 14D-1" -- Section 1.01(b)
"Schedule 14D-9" -- Section 1.02(b)
"Secretary of State" -- Section 2.02
"Securities Act" -- Section 4.05
"Stockholders Agreement" -- Preamble
"Stock Option Agreement" -- Preamble
"Sub" -- Preamble
"Sub Common Stock" -- Section 3.01(a)
"Subsidiary" -- Section 3.01(b)
"Superior Proposal" -- Section 6.02
"Surviving Corporation" -- Section 2.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Trigger Event" -- Section 9.02(b)
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ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A shall have the meanings
ascribed to them in the Agreement and Plan of Merger to which this Annex A is
attached, except that the term "Merger Agreement" shall be deemed to refer to
such Agreement and Plan of Merger.
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) Sub's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered shares of Company
Common Stock promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered shares of Company Common Stock,
and may (subject to Sections 1.01(a) and 7.04 of the Merger Agreement) terminate
the Offer if (i) any applicable waiting period under the HSR Act shall not have
expired or terminated, (ii) the Minimum Condition has not been satisfied or
(iii) at any time on or after March 8, 1998, and at or before the time of
payment for any such shares of Company Common Stock (whether or not any shares
of Company Common Stock have theretofore been accepted for payment or paid for
pursuant to the Offer) pursuant to the Offer, any of the following events shall
have occurred and remain in effect:
(a) (i) there shall be instituted or pending any action or proceeding
by any Governmental or Regulatory Authority (A) challenging or seeking to make
illegal, impede, materially delay or otherwise directly or indirectly restrain,
prohibit or make materially more costly the Offer or the Merger or seeking to
obtain material damages relating to the transactions contemplated under the
Offer, the Merger Agreement and the Stock Option Agreement, (B) seeking to
prohibit or materially limit the ownership or operation by Sub or Parent of all
or any material portion of the business or assets of the Company or any of its
subsidiaries taken as a whole or to compel Sub or Parent to dispose of or hold
separately all or any material portion of the business or assets of Sub or
Parent or the Company or any of its Subsidiaries taken as a whole, or seeking to
impose any material limitation on the ability of Sub or Parent to conduct its
business or own such assets, (C) seeking to impose material limitations on the
ability of Sub or Parent effectively to exercise full rights of ownership of the
shares of Company Common Stock, including, without limitation, the right to vote
any shares of Company Common Stock acquired pursuant to the Offer or the Stock
Option Agreement or owned by Parent or Sub on all matters properly presented to
the Company's stockholders, (D) seeking to require divestiture by Sub or Parent
of any shares or (E) otherwise materially adversely affecting the condition of
the Company and its Subsidiaries taken as a whole; or (ii) any court shall have
entered an Order which is in effect and which (A) makes illegal, impedes,
materially delays or otherwise directly or indirectly restrains, prohibits or
makes materially more costly the Offer or the Merger, (B) prohibits or
materially limits the ownership or operation by Sub or Parent of all or any
material portion of the business or assets of the Company or any of its
Subsidiaries taken as a whole or compels Sub or Parent to dispose of or hold
separately all or any material portion of the business
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or assets of Sub or Parent or the Company or any of its Subsidiaries taken as a
whole, or imposes any material limitation on the ability of Sub or Parent to
conduct its business or own such assets, (C) imposes material limitations on the
ability of Sub or Parent effectively to exercise full rights of ownership of the
shares of Company Common Stock, including, without limitation, the right to vote
any shares of Company Common Stock acquired pursuant to the Offer or the Stock
Option Agreement or owned by Parent or Sub on all matters properly presented to
the Company's stockholders, (D) requires divestiture by Sub or Parent of any
shares of Company Common Stock or (E) otherwise Materially Adversely Affects the
condition of the Company and its Subsidiaries taken as a whole;
(b) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, Order or injunction enacted, enforced,
promulgated, amended, issued or deemed applicable to (i) Sub, Parent, the
Company or any Subsidiary of the Company or (ii) the Offer or the Merger, by any
Governmental or Regulatory Authority other than the routine application of the
waiting period provisions of the HSR Act to the Offer or to the Merger, which
could reasonably be expected to, directly or indirectly, result in any of the
consequences referred to in clauses (A) through (E) of paragraph (a)(i) above;
(c) any change shall have occurred since the date of the Merger
Agreement (or any condition, event or development shall have occurred, involving
a prospective change) that would have a Material Adverse Effect on the Company,
other than any change that results from the announcement of the Merger Agreement
or the transactions contemplated thereby;
(d) there shall have occurred any of the following which would
reasonably be expected to have a Material Adverse Effect on the Company or
Parent: (i) any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the over-the-counter
market, (ii) any decline in any of the Dow Jones Industrial Average, the Nasdaq
Composite Index or the New York Stock Exchange Composite Index in excess of 20%
measured from the close of business on the trading day next preceding the date
of the Merger Agreement, (iii) any material change in United States or any other
currency exchange rates or a suspension of, or limitation on, the markets
therefor, (iv) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or Norway, or (v) a
commencement or escalation of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States or
Norway;
(e) (i) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements contained in
the Merger Agreement or the Stock Option Agreement, (ii) any representation or
warranty of the Company set forth in the Merger Agreement or the Stock Option
Agreement shall not be true and correct (A) in all material respects as of the
date of the Merger Agreement or (B) as of such time, and, in a case described in
this subclause (B), the failure of such representation or warranty to be true
and correct has a Material Adverse Effect on the Company and did not result from
the announcement of the Merger Agreement or the transactions contemplated
thereby or (iii) any of the stockholders who are party to the Stockholders
Agreement shall have breached or failed to perform in any material respect any
of such stockholder's obligations, covenants or agreements under the
Stockholders Agreement or any representation or warranty of any of such
stockholder contained
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in the Stockholders Agreement shall not be true and correct in any respect,
except in the case of this clause (iii) for such breaches or failures that would
not have a Material Adverse Effect on the Company or materially hinder or delay
consummation of any of the transactions contemplated by the Merger Agreement;
(f) all consents, registrations, approvals, permits, authorizations,
notices, reports or other filings required to be obtained or made by the
Company, Sub or Parent with or from any Governmental or Regulatory Authority in
conjunction with the execution, delivery and performance of the Merger
Agreement, the Stock Option Agreement, the Stockholders Agreement, the Offer and
the consummation of the transactions contemplated by the Merger Agreement, the
Stock Option Agreement or the Stockholders Agreement shall not have been made or
obtained and such failure would reasonably be expected to have a Material
Adverse Effect on the Company and its Subsidiaries, taken as a whole, or would
prevent or materially hinder or delay consummation of the transactions
contemplated by the Merger Agreement, the Stock Option Agreement or the
Stockholders Agreement;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) (x) any corporation, partnership or other entity or "person" or
"group" (within the meaning of Section 13(d)(3) of the Exchange Act), other than
Parent, the Company or any of their respective affiliates, shall have commenced,
or announced an intention to commence, (A) a "solicitation" of "proxies" or
become a "participant" in any "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act) or (B) a tender offer, exchange offer or
other extraordinary transaction (in each case with respect to Company Common
Stock) and as a result thereof, if the Offer were not terminated, Parent or Sub
would be required to incur substantial expenditures in addition to those
otherwise required for the transactions contemplated by the Merger Agreement,
and (y) such corporation, partnership, other entity or "person" or its
affiliates and associates (as defined in the Exchange Act) collectively shall be
or become the beneficial owners (determined pursuant to Rule 13d-3 under the
Exchange Act) of at least 15% of any shares of capital stock of the Company
(including the shares of Company Common Stock) or shall have acquired, directly
or indirectly, at least 15% of the assets or earning power of the Company; or
(i) (i) the Company's Board of Directors or any committee thereof shall
have withdrawn, or modified or changed in a manner adverse to Sub or Parent
(including by amendment of the Schedule 14D-9) its recommendation of the Offer,
the Merger Agreement or the Merger; (ii) the Company's Board of Directors or any
committee thereof shall have made any recommendation with respect to any
Acquisition Proposal by any Person (other than Sub or Parent) other than a
recommendation rejecting or against such Acquisition Proposal; or (iii) the
Company shall have received any Acquisition Proposal by any person or entity
(other than Sub or Parent) and the Company's Board of Directors is neutral or
makes no recommendation with respect to such Acquisition Proposal after a
reasonable amount of time (and in no event more than five business days) has
elapsed for the Company's Board of Directors to review and make a recommendation
with respect to such Acquisition Proposal consistent with its fiduciary duties;
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which in the reasonable judgment of Sub or Parent, in any such case and
regardless of the circumstances giving rise to such condition, makes it
inadvisable to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Sub and
may be waived by Parent in whole or in part at any time and from time to time in
the sole discretion of Sub. The failure by Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time. Any determination by Sub concerning the events
described above will be final and binding on all parties.
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EXHIBIT 2
OPTION AGREEMENT
OPTION AGREEMENT, dated as of March 8, 1998 (this "Agreement"), among
ASK asa, a corporation organized under the laws of the Kingdom of Norway
("Parent"), BD Acquisition Corp., a Delaware corporation ("Sub") and an indirect
wholly owned subsidiary of Parent, and Proxima Corporation, a Delaware
corporation (the "Company").
WHEREAS, Parent, Sub and the Company, concurrently with the execution
and delivery of this Agreement, have entered into an Agreement and Plan of
Merger dated as of the date hereof (the "Merger Agreement"), providing for,
among other things, the merger of Sub with and into the Company (the "Merger");
and
WHEREAS, as a condition to the willingness of Parent and Sub to enter
into the Merger Agreement, Parent and Sub have required that the Company agree,
and in order to induce Parent and Sub to enter into the Merger Agreement the
Company has agreed, to grant Sub the Option (as hereinafter defined) upon the
terms and subject to the conditions of this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms that are not defined in this Agreement shall have the
respective meanings set forth in the Merger Agreement.
ARTICLE II
THE OPTION
SECTION 2.1 GRANT OF OPTION. The Company hereby grants to Sub an
irrevocable option (the "Option") to purchase 1,427,914 newly-issued shares
(representing 19.9% of the aggregate outstanding shares) (the "Shares") of
common stock, par value $.001 per share ("Company Common Stock"), of the Company
at a purchase price per share of $11.00 (the "Exercise Price"), in the manner
set forth in Sections 2.2 and 2.3 of this Agreement. The number of Shares that
may be received upon the exercise of the Option and the Exercise Price are
subject to adjustment as herein set forth. This Agreement shall terminate, and
the Option hereby granted expire, on the earliest of (i) the Effective Time,
(ii) the termination of the
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Merger Agreement pursuant to Section 9.01(a), 9.01(b), 9.01(c)(B) or 9.01(c)(C)
(other than a termination pursuant to Section 9.01(c)(C) made after an
Acquisition Proposal is made or an intent to make an Acquisition Proposal is
publicly announced), 9.01(d) or 9.01(f) thereof and (iii) to the extent that no
Option Notice (as defined below) has theretofore been given by Sub, three months
after any other termination of the Merger Agreement.
SECTION 2.2 EXERCISE OF OPTION. (a) At any time or from time to time
prior to the expiration of the Option granted hereunder in accordance with the
terms of this Agreement, Sub (or its designee) may exercise the Option, in whole
or in part, if on or after the date hereof:
(i) any corporation, partnership, individual, trust, unincorporated
association, or other entity or "person" (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) other than Parent, the Company or any of their
respective "affiliates" (as defined in the Exchange Act) shall have
solicited "proxies" in a "solicitation" subject to the proxy rules
under the Exchange Act, executed any written consent or become a
"participant" in any "solicitation" (as such terms are defined in
Regulation 14A under the Exchange Act), in each case with respect to
the Company Common Stock;
(ii) the Company shall have received an Acquisition Proposal; or
(iii) any of the events described in Section 9.01(c) or (e) of the
Merger Agreement shall have occurred, unless a termination fee would
not be paid or payable if the Merger Agreement were terminated as a
result of such event (but without the necessity of Parent having
terminated the Merger Agreement).
(b) In the event that Sub wishes to exercise all or any part of the
Option, Sub shall give written notice (the "Option Notice," with the date of the
Option Notice being hereinafter called the "Notice Date") to the Company
specifying the number of Shares it will purchase and a place and date (not later
than 30 business days from the Notice Date) for closing such purchase (a
"Closing"). Sub's obligation to purchase Shares upon any exercise of the Option
is subject (at its election) to the conditions that (i) no preliminary or
permanent injunction or other order against the purchase, issuance or delivery
of the Shares shall have been issued by any federal, state or foreign court of
competent jurisdiction (and no action or proceeding shall have been commenced or
threatened for purposes of obtaining such an injunction or order); (ii) any
applicable waiting period under the HSR Act shall have expired or been
terminated; and (iii) there shall have been no material breach of the
representations, warranties, covenants or agreements of the Company contained in
this Agreement or the Merger Agreement; provided, however, that any failure by
Sub to purchase Shares upon exercise of the Option at any Closing as a result of
the nonsatisfaction of any of such conditions shall not affect or prejudice
Parent's right to purchase such Shares upon the subsequent satisfaction of such
conditions. Upon request by Sub, the Company will promptly take all action
required to effect all necessary filings by the Company under the HSR Act.
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(c) Notwithstanding anything to the contrary in this Agreement, if
prior to the expiration of the Option granted hereby any of the events described
in Section 2.2(a) of this Agreement shall have occurred, then Sub (or its
designee) shall have the right, in lieu of exercising the Option, at any time
thereafter (for so long as the Option is exercisable under this Agreement) to
request in writing that the Company pay, and promptly (but in any event not more
than five business days) after the giving by Sub (or its designee) of such
request, the Company shall pay to Sub (or its designee), in cancellation of the
Option, an amount in cash equal to (i) the excess over the Exercise Price of the
greater of (A) the last sale price of a share of Company Common Stock as
reported on the Nasdaq National Market (or any national or other exchange on
which the Company Common Stock may be traded) on the last trading day prior to
the Notice Date, or (B) (1) the highest price per share of Company Common Stock
offered to be paid or paid pursuant to or in connection with an Acquisition
Proposal that involves the Company Common Stock and that has not been terminated
or withdrawn prior to the Notice Date or (2) the aggregate consideration offered
to be paid or paid in an Acquisition Proposal that involves the assets of the
Company and that has not been terminated or withdrawn prior to the Notice Date,
divided by the number of shares of Company Common Stock then outstanding,
multiplied by (ii) the number of Shares then covered by the Option. If all or a
portion of the price per share of Company Common Stock offered, paid or payable
or the aggregate consideration offered, paid or payable for the assets of the
Company, each as contemplated by the preceding sentence, consists of non-cash
consideration, such price or aggregate consideration shall be the cash
consideration, if any, plus the fair market value of the non-cash consideration
as determined by the investment bankers of Sub (or its designee) and the
investment bankers of the Company.
SECTION 2.3 PURCHASE OF SHARES. At any Closing, which shall be held at
the offices of Rogers & Wells LLP, New York, New York, (i) the Company will
deliver to Sub the certificate or certificates representing the number of Shares
being purchased in proper form for transfer upon exercise of the Option in the
denominations designated by Sub in the Option Notice, and, if the Option has
been exercised in part, a new Option evidencing the rights of Sub to purchase
the balance of the Shares subject thereto, and (ii) Sub shall pay the aggregate
purchase price for the Shares to be purchased by wire transfer of immediately
available funds to an account designated by the Company two business days prior
to the Closing in the amount of the Exercise Price times the number of Shares to
be purchased.
SECTION 2.4 ADJUSTMENTS UPON SHARE ISSUANCES, CHANGES IN
CAPITALIZATION, ETC. (a) Without in any way affecting the Company's obligations
under the Merger Agreement, in the event of any change in Company Common Stock
or in the number of outstanding shares of Company Common Stock by reason of a
stock dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction or any other change in the corporate or capital structure of
the Company (including, without limitation, the declaration or payment of an
extraordinary dividend of cash, securities or other property), the type and
number of the Shares to be issued by the Company upon exercise of the Option
shall be adjusted appropriately, and proper provision shall be made in the
agreements governing such transaction, so that Sub shall receive upon exercise
of the Option the number and class of shares or other securities or property
that Sub would have received in respect to the Shares if the Option had been
exercised immediately prior to such event, or the record date therefor, as
applicable, and
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Sub had elected to the fullest extent it would have been permitted to elect, to
receive such securities, cash or other property in respect of such Shares.
(b) Without in any way affecting the Company's obligations under the
Merger Agreement, in the event that the Company shall enter into an agreement
(i) to consolidate with or merge into any person, other than Parent or one of
its subsidiaries, and shall not be the continuing or surviving corporation of
such consolidation or merger, (ii) to permit any person, other than Parent or
one of its subsidiaries, to merge into the Company and the Company shall be the
continuing or surviving corporation, but, in connection with such merger, the
then outstanding shares of Company Common Stock shall be changed into or
exchanged for stock or other securities of the Company or any other person or
cash or any other property, or then outstanding shares of Company Common Stock
shall after such merger represent less than 50% of the outstanding shares and
share equivalents of the surviving corporation or (iii) to sell or otherwise
transfer all or substantially all of its assets to any person, other than Parent
or one of its subsidiaries, then, and in each such case, proper provision shall
be made in the agreements governing such transaction so that Sub shall receive
upon exercise of the Option the number and class of shares or other securities
or property that Sub would have received in respect of the Shares if the Option
had been exercised immediately prior to such transaction, or the record date
therefor, as applicable, and Sub had elected to the fullest extent it would have
been permitted to elect, to receive such securities, cash or other property in
respect of such Shares.
(c) Notwithstanding anything to the contrary in this Agreement and
without in any way affecting the Company's obligations under the Merger
Agreement, in the event that any additional shares of Company Common Stock are
issued after the date of this Agreement (other than pursuant to clause (a) of
this Section 2.4), the number of Shares issuable upon exercise of the Option
shall be automatically adjusted so that, after such issuance, such number equals
19.9% of the aggregate number of shares of Company Common Stock then issued and
outstanding (without considering any shares of Company Common Stock subject to
or issued pursuant to the Option).
(d) The rights of Sub under this Section 2.4 shall be in addition to,
and shall in no way limit, Parent's or Sub's rights against the Company for any
breach of the Merger Agreement.
(e) The provisions of this Agreement shall apply with appropriate
adjustments to any securities for which the Option becomes exercisable pursuant
to this Section 2.4.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent as follows:
SECTION 3.1 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has full corporate power and authority to
execute and
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deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution, delivery and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly and validly authorized by the Board of Directors of the Company,
and no other corporate proceedings on the part of the Company are necessary to
authorize the execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated by
this Agreement. This Agreement has been duly and validly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 3.2 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, (i) conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time or both) a
default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of the Company under, any of the terms, conditions or provisions of
(A) the certificate or articles of incorporation of bylaws (or other comparable
charter documents) of the Company, (B) subject to the taking of the actions
described in clause (ii) of this Section, (x) any Law or Order of any
Governmental or Regulatory Authority, applicable to the Company or any of its
assets or properties, or (y) any note, bond, mortgage, security agreement,
indenture, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company is a party
or by which the Company or any of its assets or properties is bound, and (ii)
except for applicable requirements of the HSR Act, the Exchange Act and the
Securities Act of 1933, as amended (the "Securities Act"), require any filing by
the Company with, or any permit, authorization, consent or approval of, any
Governmental or Regulatory Authority or any third party.
SECTION 3.3 OPTION SHARES. The Company has taken all necessary
corporate action to authorize and reserve for issuance upon exercise of the
Option a total of 1,427,914 shares of Company Common Stock (together with any
additional shares of Company Common Stock that would be issuable as a result of
any adjustments required under Section 2.4 of this Agreement), and such shares
of Company Common Stock, when issued and delivered by the Company to Parent upon
exercise of the Option, will be duly authorized, validly issued, fully paid and
nonassessable, and will be free and clear of any security interests, liens,
claims, pledges, charges or encumbrances of any kind whatsoever and not subject
to any preemptive rights.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to the Company as follows:
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SECTION 4.1 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and
Sub is a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Each of Parent and Sub has full
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by each of Parent and
Sub and the consummation by each of Parent and Sub of the transactions
contemplated hereby have been duly and validly authorized by its Board of
Directors, and no other corporate proceeding on the part of Parent or Sub is
necessary to authorize the execution, delivery and performance of this Agreement
by Parent or Sub or for Parent or Sub to consummate such transactions. This
Agreement has been duly and validly executed and delivered by each of Parent and
Sub and constitutes a legal, valid and binding obligation of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and by
general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 4.2 NO CONFLICT, REQUIRED FILING AND CONSENTS. The execution
and delivery of this Agreement by Parent and Sub do not, and the performance of
this Agreement by Parent and Sub will not, (i) conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of Parent or Sub under, any of the terms, conditions or provisions of
(A) the certificate or articles of incorporation of bylaws (or other comparable
charter documents) of Parent or Sub, (B) subject to the taking of the actions
described in clause (ii) of this Section, (x) any Law or Order of any
Governmental or Regulatory Authority applicable to Parent or Sub or any of their
respective assets or properties, or (y) any Contract to which Parent or Sub is a
party or by which Parent or Sub or any of their respective assets or properties
is bound, or (ii) except for applicable requirements of the HSR Act, the
Exchange Act, and the Securities Act, require any filing by Parent with, or any
permit, authorization, consent or approval of, any Governmental or Regulatory
Authority or any third party.
SECTION 4.3 INVESTMENT INTENT. The purchase of the Shares pursuant to
this Agreement is for the account of Sub for the purpose of investment and not
with a view to or for sale in connection with any distribution thereof within
the meaning of the Securities Act and the rules and regulations promulgated
thereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.1 REGISTRATION RIGHTS; LISTING OF SHARES. (a) The Company
agrees to use its reasonable best efforts to (i) effect as promptly as possible
upon the request of Sub and (ii) cause to become and remain effective for a
period of not less than six months (or such shorter period as may be necessary
to effect the distribution of such Shares), the registration under the
Securities Act and any applicable state securities laws, of all or any part
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of the Shares as may be specified in such request; provided, however, that Sub
(i) shall have the right to select the managing underwriter for any such
offering after consultation with the Company, which managing underwriter shall
be reasonably acceptable to the Company and (ii) shall not be entitled to more
than two effective registration statements hereunder. Sub agrees to use all
reasonable efforts to cause, and to cause any underwriters of any sale or other
disposition to cause, any sale or other disposition pursuant to such
registration statement to be effected on a widely distributed basis so that upon
consummation thereof no purchaser or transferee will own beneficially more than
5% of the then outstanding voting power of the Company. Sub agrees not to sell,
or cause to be sold, any Shares registered pursuant to this Section 5.1 for one
period not exceeding ninety days in the aggregate if the Board of Directors of
the Company shall have determined in good faith (and shall have notified Sub in
writing of such determination) that such sale would result in the disclosure of
nonpublic information that would materially and adversely affect the Company.
(b) In addition to such demand registrations, if the Company proposes
to effect a registration of Company Common Stock for its own account or for the
account of any other stockholder of the Company, the Company will give prompt
written notice to all holders of Options or Shares of its intention to do so and
shall use its reasonable best efforts to include therein all Shares requested by
Sub to be so included; provided, however, that if the managing underwriter of
such offering advises the Company in writing that in its opinion the number of
shares of Company Common Stock requested to be included in such registration
exceeds the number which can be sold in such offering, the Company will, after
fully including therein all shares of Company Common Stock to be sold by the
Company, include the shares of Company Common Stock requested to be included
therein by Sub pro rata (based on the number of shares of Company Common Stock
intended to be included therein) with the shares of Company Common Stock
intended to be included therein by persons other than the Company. No
registration effected under this Section 5.1(b) shall relieve the Company of its
obligations to effect demand registrations under Section 5.1(a) hereof.
(c) Registrations effected under this Section 5 shall be at the
Company's expense, but excluding underwriting discounts and commissions to
brokers or dealers and the fees and expenses of counsel to the holder of Options
or Shares; provided, however, that the Company will not be required to pay for
any registration expenses with respect to any registration which is withdrawn at
the request of a Holder unless the Holder agrees to forfeit its right to request
one registration. In connection with each registration under this Section 5, the
Company shall indemnify and hold each holder of Options or Shares participating
in such offering (a "Holder"), its underwriters and each of their respective
affiliates harmless against any and all losses, claims, damages, liabilities and
expenses (including, without limitation, investigation expenses and fees and
disbursements of counsel and accountants), joint or several, to which such
Holder, its underwriters and each of their respective affiliates may become
subject, under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in any registration statement (including any prospectus therein),
or any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, other
than such losses, claims,
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damages, liabilities or expenses (or actions in respect thereof) which arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in written information furnished by a Holder to the
Company expressly for use in such registration statement.
(d) In connection with any registration statement pursuant to this
Section 5, each Holder agrees to furnish the Company with such information
concerning itself and the proposed sale or distribution as shall reasonably be
required in order to ensure compliance with the requirements of the Securities
Act. In addition, Sub shall indemnify and hold the Company, its underwriters and
each of their respective affiliates harmless against any and all losses, claims,
damages, liabilities and expenses (including without limitation investigation
expenses and fees and disbursements of counsel and accountants), joint or
several, to which the Company, its underwriters and each of their respective
affiliates may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in written information furnished by any
Holder to the Company expressly for use in such registration statement.
(e) Upon the issuance of Shares hereunder, the Company will use its
reasonable best efforts promptly to cause the Shares to be approved for
quotation on Nasdaq or on such national or other exchange on which the shares of
Company Common Stock are at the time listed.
SECTION 5.2 LIMITATION ON PROFIT. (a) Notwithstanding any other
provision of this Agreement to the contrary, in no event shall Sub's (or its
designee's) Total Profit (as hereinafter defined) exceed $4,500,000 and, if it
otherwise would exceed such amount, Sub (or its designee), at its sole election,
shall either (a) reduce the number of shares of Company Common Stock subject to
the Option, (b) deliver to the Company for cancellation Shares previously
purchased by Sub (or its designee), (c) pay cash to the Company or (d) take any
actions described in any one or more of the preceding clauses (a), (b) and (c),
so that Sub's (or its designee's) Total Profit shall not exceed $4,500,000 after
taking into account the foregoing actions.
(b) As used herein, the term "Total Profit" shall mean (i) except in
the case of the cancellation of the Option pursuant to Section 2.2(c), the sum
of (A) (x) the aggregate net cash amounts (before taxes) received by Sub (or its
designee) pursuant to the sale of Shares (or any other securities into which
such Shares are converted or exchanged) to any unaffiliated party, less (y)
Sub's (or its designee's) purchase price of such Shares and (B) the aggregate
amount of termination fees paid under Section 9.02(b) of the Merger Agreement or
(ii) in the case of the cancellation of the Option pursuant to Section 2.2(c),
the sum of (A) the net cash amount (before taxes) received by Sub (or its
designee) pursuant to Section 2.2(c) and (B) the aggregate amount of termination
fees paid under Section 9.02(b) of the Merger Agreement.
SECTION 5.3 TRANSFER OF SHARES; RESTRICTIVE LEGEND. Sub agrees not to
transfer or otherwise dispose of the Shares issuable upon exercise of the
Option, or any interest therein, without first providing to the Company an
opinion of counsel for Sub,
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reasonably satisfactory in form and substance to counsel for the Company, to the
effect that such transfer or disposition will not violate the Securities Act or
any applicable state law governing the offer and sale of securities, and the
rules and regulations thereunder. Sub further agrees to the placement on the
certificate(s) representing the Shares issuable upon exercise of the Option of
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER (i) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
(ii) ANY APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF
SECURITIES. NO TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF ANY
INTEREST THEREIN, MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH OTHER STATE LAWS OR
PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH OTHER
STATE LAWS, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.";
provided, however, that upon provision to the Company of any opinion of counsel
for Sub, reasonably satisfactory in form and substance to counsel for the
Company, to the effect that such legend is no longer required under the
provisions of the Securities Act or applicable state securities laws, the
Company shall promptly cause new unlegended certificates representing such
Shares to be issued to Sub against surrender of such legended certificates.
SECTION 5.4 BEST EFFORTS. Subject to the terms and conditions of this
Agreement, Parent, Sub and the Company shall each use its best efforts to take,
or cause to be taken, all actions, 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.
Each party shall promptly consult with the other and provide any necessary
information and material with respect to all filings made by such party with any
Governmental or Regulatory Authority in connection with this Agreement or the
transactions contemplated hereby.
SECTION 5.5 FURTHER ASSURANCES. The Company shall perform such further
acts and execute such further documents and instruments as may reasonably be
required to vest in Sub the power to carry out the provisions of this Agreement.
If Sub shall exercise the Option, or any portion thereof, in accordance with the
terms of this Agreement, the Company shall, without additional consideration,
execute and deliver all such further documents and instruments and take all such
further action as Sub may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement.
SECTION 5.6 SURVIVAL. All of the representations, warranties and
covenants contained herein shall survive a Closing and shall be deemed to have
been made as of the date hereof and as of the date of each Closing.
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ARTICLE VI
MISCELLANEOUS
SECTION 6.1 SPECIFIC PERFORMANCE; JURISDICTION. The parties hereto
agree that if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, irreparable
damage would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific
performance of the terms hereof, without any requirement for securing or posting
any bond, in addition to any other remedy at law or equity.
SECTION 6.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof.
SECTION 6.3 AMENDMENT; ASSIGNMENT. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto and specifically
referencing this Agreement. No party to this Agreement may assign any of its
rights or obligations under this Agreement without the prior written consent of
the other party hereto, and any such purported assignment shall be null and
void. Notwithstanding the foregoing, the rights and obligations of Parent or Sub
hereunder may, without the prior written consent of the Company, be assigned by
Parent or Sub to any of its direct or indirect wholly owned Subsidiaries.
SECTION 6.4 SEVERABILITY. The provisions of this Agreement shall be
deemed severable and the invalidity or unenforceability of any provisions hereof
shall not affect the validity and enforceability of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any person or
entity or any circumstances, is invalid or unenforceable, (i) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid and
unenforceable provision and (ii) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application thereof, in any other jurisdiction.
SECTION 6.5 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law.
SECTION 6.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but each of which
together shall constitute one and the same document.
SECTION 6.7 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be given in
the manner and to the parties at the addresses specified in Section 10.02 of the
Merger Agreement.
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SECTION 6.8 BINDING EFFECT. This Agreement shall be binding upon, inure
to the benefit of, and be enforceable by the permitted successors and assigns of
the parties hereto. Nothing expressed or referred to in this Agreement is
intended or shall be construed to give any person other than the parties to this
Agreement, or their respective permitted successors or assigns, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision contained herein.
SECTION 6.9 SURVIVAL. All of the representations, warranties and
covenants contained herein shall survive a Closing and shall be deemed to have
been made as of the date hereof and as of the date of each Closing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 12
IN WITNESS WHEREOF, each of the Company and Parent have caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
PROXIMA CORPORATION
By: /s/ K.E. Olson
-------------------------------
Name: K.E. Olson
Title: CEO
ASK ASA
By: /s/ Einar J. Greve
-------------------------------
Name: Einar J. Greve
Title: Director
BD ACQUISITION CORP.
By: /s/ Einar J. Greve
-------------------------------
Name: Einar J. Greve
Title: Director
12
<PAGE> 1
EXHIBIT 3
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (this "Agreement"), dated March 8, 1998, by and
among ASK asa, a corporation organized under the laws of the Kingdom of Norway
("Parent"), BD Acquisition Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Parent, and each of the Individuals Listed
on the Signature Pages hereto (each in his individual capacity, a "Stockholder",
and collectively, the "Stockholders").
WHEREAS, each of the Stockholders is, as of the date hereof, the record
and beneficial owner of the shares of common stock, par value $.001 per share
(the "Common Stock"), of Proxima Corporation, a Delaware corporation (the
"Company"), set forth on Annex I hereto;
WHEREAS, Parent, Purchaser and the Company concurrently herewith are
entering into an Agreement and Plan of Merger, dated as of the date hereof (the
"Merger Agreement"; capitalized terms used but not defined herein have the
meanings ascribed to such terms in the Merger Agreement), which provides, among
other things, for the acquisition of the Company by Parent by means of a cash
tender offer (the "Offer") by Purchaser for all of the outstanding shares of
Common Stock and for the subsequent merger (the "Merger") of Purchaser with and
into the Company upon the terms and subject to the conditions set forth in the
Merger Agreement; and
WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, and in order to induce Parent and Purchaser to
enter into the Merger Agreement, the Stockholders have agreed to enter into this
Agreement.
NOW, THEREFORE, in consideration of the execution and delivery by
Parent and Purchaser of the Merger Agreement and the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein and
therein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. Representations and Warranties of the Stockholder. Each of
the Stockholders hereby represents and warrants to Parent and Purchaser,
severally and not jointly, as follows:
(a) Such Stockholder is the record and beneficial owner of the shares
of Common Stock (as may be adjusted from time to time pursuant to Section 7
hereof, the "Shares") set forth opposite his name on Annex I to this Agreement.
<PAGE> 2
(b) Such Stockholder has the legal capacity to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
(c) This Agreement has been validly executed and delivered by such
Stockholder and constitutes the legal, valid and binding obligation of such
Stockholder, enforceable against such Stockholder in accordance with its terms,
except as limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
(d) The execution and delivery of this Agreement by such Stockholder do
not, and the performance by such Stockholder of his obligations hereunder will
not, (i) conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, result in or give to
any person any right of termination, cancellation, modification or acceleration
of, or result in the creation or imposition of any Lien upon any of the assets
or properties of such Stockholder under, any of the terms, conditions or
provisions of (A) (x) any Law or Order of any Governmental or Regulatory
Authority applicable to such Stockholder or any of his assets or properties, or
(y) any Contract to which such Stockholder is a party or by which such
Stockholder or any of his assets or properties is bound, or (ii) require any
filing by such Stockholder with, or any permit, authorization, consent or
approval of, any Governmental or Regulatory Authority or any third party.
(e) The Shares and the certificates representing the Shares owned by
such Stockholder are now and at all times during the term hereof will be held by
such Stockholder, or by a nominee or custodian for the benefit of such
Stockholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder, and not subject to any preemptive rights.
SECTION 2. Representations and Warranties of Parent and Purchaser. Each
of Parent and Purchaser hereby represents and warrants to the Stockholders as
follows:
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the Kingdom of Norway, Purchaser is a
corporation duly organized, validity existing and in good standing under the
laws of the State of Delaware, and each of Parent and Purchaser has full
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
each of Parent and Purchaser and constitutes the legal, valid and binding
obligation of each of Parent and Purchaser, enforceable against each of them in
accordance with its terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
2
<PAGE> 3
(c) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance by Parent and Purchaser of their
obligations hereunder and the consummation of the transactions contemplated
hereby will not, (i) conflict with, result in a violation or breach of,
constitute (with or without notice or lapse of time or both) a default under,
result in or give to any person any right of termination, cancellation,
modification or acceleration of, or result in the creation or imposition of any
Lien upon any of the assets or properties of Parent or Purchaser under, any of
the terms, conditions or provisions of (A) the certificates or articles of
incorporation or bylaws (or other comparable charter documents) of Parent or
Purchaser or (B) (x) any Law or Order of any Governmental or Regulatory
Authority applicable to Parent or Purchaser or any of their respective assets or
properties, or (y) any Contract to which Parent or Purchaser is a party or by
which Parent or Purchaser or any of their respective assets or properties is
bound, excluding from the foregoing clauses (x) and (y) conflicts, violations,
breaches, defaults, terminations, modifications, accelerations and creations and
impositions of Liens which, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on the ability of Parent
and Purchaser to consummate the transactions contemplated by this Agreement, or
(ii) require any filing by Parent or Purchaser with, or any permit,
authorization, consent or approval of, any Governmental or Regulatory Authority.
SECTION 3. Grant of Option.
(a) Each Stockholder hereby irrevocably grants to Parent and Purchaser
an exclusive option ("Option") to purchase all Shares of such Stockholder at a
price of $11.00 per Share, net to such Stockholder in cash, subject to any
amounts required to be withheld under applicable federal, state, local or
foreign income tax laws and regulations, and subject to adjustment under Section
3(d), which Option shall be exercisable by Parent or Purchaser at any time after
consummation of the Offer and prior to the termination of this Agreement.
(b) To exercise the Option, either Parent or Purchaser shall send a
written notice ("Exercise Notice") to each Stockholder specifying the place and
the time (which shall be not less than two business days and not more than four
business days after the date of the Exercise Notice) for the closing of the
purchase and sale of the Shares in accordance with the exercise of the Option.
The closing of the purchase of the Shares ("Closing") pursuant to the exercise
of the Option shall take place at the places and at the times designated by
Parent or Purchaser in the Exercise Note.
(c) At Closing, each Stockholder shall sell, assign, convey and
transfer to Parent or Purchaser, and its successors or permitted assigns, each
such Stockholder's Shares, free and clear of any and all liens, claims, security
interests, encumbrances, options or adverse claims whatsoever, and each
Stockholder shall deliver or cause to be delivered to either Parent or Purchaser
a certificate or certificates representing the number of Shares to be delivered
by such Stockholder at the Closing, duly endorsed, or accompanied by stock
powers duly executed in blank, with all required transfer tax stamps affixed
thereto; and either Parent or Purchaser shall deliver to each Stockholder (or
the Stockholder's designee) by wire transfer or certified or bank cashier's
check or checks, an amount equal to (i) the product of (x) the number of such
3
<PAGE> 4
Stockholder's Shares purchased at Closing multiplied by (y) the Per Share
Amount, less (ii) any amounts required to be withheld under applicable federal,
state, local or foreign income tax laws and regulations.
(d) In the event of any change in the Company's capital stock by reason
of any stock dividend, stock split, merger, consolidation, recapitalization,
combination, conversion, exchange of shares or dividend or other change in the
corporate or capital structure of the Company, which would have the effect of
diluting or changing Parent's or Purchaser's rights hereunder, the number and
kind of shares or securities subject to the Option and the Offer Price shall be
appropriately and equitably adjusted so that (i) Parent or Purchaser shall
receive, at the Closing, the number and class of shares or other securities or
property that Parent or Purchaser would have received and (ii) the Stockholders
shall receive, at the Closing, the consideration they would have received in
respect of the Shares purchasable upon exercise of the Option if the Option had
been exercised immediately prior to such event.
SECTION 4. Purchase and Sale of the Shares. Each of the Stockholders
hereby agrees that he shall tender his Shares into the Offer promptly, and in
any event no later than the tenth business day following the commencement of the
Offer pursuant to Section 1.01 of the Merger Agreement, and that such
Stockholder shall not withdraw any Shares so tendered unless the Offer is
terminated or has expired. Purchaser hereby agrees to purchase all the Shares so
tendered at a price per Share equal to $11.00 per Share or any higher price that
may be paid in the Offer; provided, however, that Purchaser's obligation to
accept for payment and pay for the Shares in the Offer is subject to all the
terms and conditions of the Offer set forth in the Merger Agreement and Annex A
thereto.
SECTION 5. Transfer of the Shares. Prior to the termination of this
Agreement, except as otherwise provided, herein, none of the Stockholders shall:
(i) transfer (which term shall include, without limitation, for the purposes of
this Agreement, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of the Shares; (ii) enter into any contract, option or
other agreement or understanding with respect to any transfer of any or all of
the Shares or any interest therein; (iii) grant any proxy, power-of-attorney or
other authorization or consent in or with respect to the Shares; (iv) deposit
the Shares into a voting trust or enter into a voting agreement or arrangement
with respect to the Shares; or (v) take any other action that would in any way
restrict, limit or interfere with the performance of such Stockholder's
obligations hereunder or the transactions contemplated hereby.
SECTION 6. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each of the Stockholders hereby irrevocably grants to, and
appoints, Parent and any nominee thereof, its proxy and attorney-in-fact (with
full power of substitution), for and in the name, place, and stead of such
Stockholder, to vote his Shares, or grant a consent or approval in respect of
his Shares, in connection with any meeting of the Stockholders of the Company
(i) in favor of the Merger, and (ii) against any action or agreement which would
impede, interfere with or prevent the Merger, including any Acquisition Proposal
(as defined below).
4
<PAGE> 5
(b) Each of the Stockholders represents that any proxies heretofore
given in respect of the Shares are not irrevocable, and that such proxies are
hereby revoked.
(c) Each of the Stockholders hereby affirms that the proxy set forth in
this Section 6 is irrevocable and is given in connection with the execution of
the Merger Agreement, and that such irrevocable proxy is given to secure the
performances of the duties of such Stockholder under this Agreement. Each
Stockholder hereby further affirms that the irrevocable proxy granted hereby is
coupled with an interest in the Shares and, except as set forth in Section 9
hereof, is intended to be irrevocable in accordance with the provisions of
Section 212(e) of the Delaware General Corporation Law.
SECTION 7. Certain Events. In the event of any stock split, stock
dividend, merger, reorganization, recapitalization or other change in the
capital structure of the Company affecting the Common Stock or the acquisition
of additional shares of Common Stock or other securities or rights of the
Company by any Stockholder, the number of Shares shall be adjusted
appropriately, and this Agreement and the rights and obligations hereunder shall
attach to any additional shares of Common Stock or other securities or rights of
the Company issued to or acquired by any such Stockholder.
SECTION 8. Certain Other Agreements. From the date of this Agreement
until the earlier of the termination of this Agreement or the Effective Time,
none of the Stockholders shall, and none of the Stockholders shall authorize or
permit any advisor or representative retained by or acting for or on behalf of
any such Stockholder to, directly or indirectly, (i) take any action to
knowingly solicit, initiate, continue, facilitate or encourage (including by way
of furnishing or disclosing non-public information) any offer or proposal for a
merger, consolidation or other business combination involving the Company or any
of its Subsidiaries or any proposal or offer to acquire in any manner, directly
or indirectly, 15% or more of the shares of any class of voting securities of
the Company or any of its Subsidiaries or a substantial portion of the assets of
the Company or any of its Subsidiaries, other than the transactions contemplated
by the Merger Agreement or by this Agreement (any of the foregoing being
referred to as an "Acquisition Proposal"), or (ii) knowingly engage in
negotiations, discussions or communications regarding or disclose any
information relating to the Company or any of its Subsidiaries or afford access
to the properties, books or records of the Company or any of its Subsidiaries to
any person, corporation, partnership or other entity or group (a "Potential
Acquiror") that may be considering making, or has made, an Acquisition Proposal.
Each of the Stockholders shall (i) notify Parent promptly (and in any event
within one business day) after receipt of any Acquisition Proposal (or any
indication that any person is considering making an Acquisition Proposal) or any
request for non-public information relating to the Company or any of its
Subsidiaries or for access to the properties, books or records of the Company or
any of its Subsidiaries by any person that may be considering making, or has
made, an Acquisition Proposal, (ii) notify Parent promptly of any material
change to any such Acquisition Proposal, indication or request and (iii) upon
reasonable request by Parent, provide Parent with all material information about
any such Acquisition Proposal, indication or request.
5
<PAGE> 6
SECTION 9. Further Assurances. Each of the Stockholders shall, upon
request of Parent or Purchaser, execute and deliver any additional documents and
take such further actions as may reasonably be deemed by Parent or Purchaser to
be necessary or desirable to carry out the provisions hereof and to vest in
Parent the power to vote the Shares as contemplated by Section 6 hereof.
SECTION 10. Termination. Except as otherwise provided in this
Agreement, this Agreement, and all rights and obligations of the parties
hereunder, shall terminate immediately upon the earlier of (i) the acquisition
by Parent, through Purchaser or otherwise, of all the Shares, (ii) the
termination of the Merger Agreement in accordance with its terms or (iii) the
Effective Time; provided, however, that Sections 9 and 11 shall survive any
termination of this Agreement.
SECTION 11. Expenses. All fees and expenses incurred by any one party
hereto shall be borne by the party incurring such fees and expenses.
SECTION 12. Public Announcements. Each of the Stockholders, Parent and
Purchaser agrees that it will not issue any press release or otherwise make any
public statement with respect to this Agreement or the transactions contemplated
hereby without the prior consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that such disclosure can be
made without obtaining such prior consent if (i) the disclosure is required by
law, and (ii) the party making such disclosure has first used its best efforts
to consult with the other party about the form and substance of such disclosure.
Section 13. Miscellaneous.
(a) All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
or by facsimile transmission or mailed (first class postage prepaid) to the
parties at the following addresses or facsimile numbers:
(A) if to any or all the Stockholders, to:
Proxima Corporation
9440 Carroll Park Drive
San Diego, CA 92121
Telephone: (619) 457-5500
Facsimile: (619) 677-5755
Attention: General Counsel
6
<PAGE> 7
with copies to:
Brobeck, Phleger & Harrison LLP
4875 MacArthur Court, Suite 1000
Newport Beach, CA 92660
Facsimile No.: 714-752-7522
Attn: Patrick Arrington, Esq.
and
Brobeck, Phleger & Harrison LLP
One Market Square
Spear Street Tower
San Francisco, CA 94105
Facsimile No.: 415-442-1010
Attn: Steve L. Camahort, Esq.
and
(B) if to Parent or Purchaser, to:
ASK asa
K.G. Meldahlsvei 9
N-1602 Fredrikstad
NORWAY
Telephone: 47 69 34 01 55
Facsimile: 47 69 34 06 32
Attention: Ole J. Fredriksen
with a copy to:
Rogers & Wells LLP
200 Park Avenue
New York, New York 10166
Telephone: (212) 878-8000
Facsimile: (212) 878-8375
Attention: John A. Healy, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other person to whom a
copy of such notice is to be delivered pursuant to this Section). Any party from
time to time may change its address,
7
<PAGE> 8
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto.
(b) The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
(c) This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which shall be considered one and
the same agreement.
(d) This Agreement constitutes the entire agreement, and supersedes all
prior agreements and understandings, whether written and oral, among the parties
hereto with respect to the subject matter hereof.
(e) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware without giving effect to the principles
of conflicts of laws thereof.
(f) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, and any such purported assignment shall be null and void; provided,
however, Purchaser or Parent may, without the prior written consent of any
Stockholder assign its rights and obligations to any of its direct or indirect
wholly owned Subsidiaries. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by, the parties
and their respective successors and assigns, and the provisions of this
Agreement are not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
(g) If any term, provision, covenant or restriction herein is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable or against its regulatory policy, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(h) Each of the parties hereto acknowledge and agrees that in the event
of any breach of this Agreement, each non-breaching party would be irreparably
and immediately harmed and could not be made whole by monetary damages. It is
accordingly agreed that the parties hereto (i) will waive, in any action for
specific performance, the defense of adequacy of a remedy at law and (ii) shall
be entitled, in addition to any other remedy to which they may be entitled at
law or in equity, to compel specific performance of this Agreement.
(i) No amendment, modification or waiver in respect to this Agreement
shall be effective unless it shall be in writing and signed by each party
hereto.
8
<PAGE> 9
(j) No person who is or becomes (during the term hereof) a director or
officer of the Company makes any agreement or understanding herein in his or her
capacity as such director or officer, and nothing herein shall limit or affect
any action taken by any Stockholder in his or her capacity as an officer or
director of the Company in connection with the Company's rights under the Merger
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
9
<PAGE> 10
IN WITNESS WHEREOF, each of Parent, the Purchaser and the Stockholders
have caused this Agreement to be duly executed and delivered as of the date
first written above.
ASK ASA
By: /s/ Einar J. Greve
-------------------------------
Name: Einar J. Greve
Title: Director
BD ACQUISITION CORP.
By: /s/ Einar J. Greve
-------------------------------
Name: Einar J. Greve
Title: Director
/s/ Patrick Arrington
-----------------------------------
Patrick Arrington
/s/ Richard E. Belluzzo
-----------------------------------
Richard E. Belluzzo
/s/ Robert W. Johnson
-----------------------------------
Robert W. Johnson
/s/ Jeffrey M. Nash
-----------------------------------
Jeffrey M. Nash
/s/ Kenneth E. Olson
-----------------------------------
Kenneth E. Olson
/s/ John M. Seiber
-----------------------------------
John M. Seiber
10
<PAGE> 11
ANNEX I
Ownership of Company Common Stock
1. Patrick Arrington............................................. 0 Shares
2. Richard E. Belluzzo........................................... 0 Shares
3. Robert W. Johnson............................................. 9,260 Shares
4. Jeffrey M. Nash............................................... 0 Shares
5. Kenneth E. Olson.............................................. 202,430 Shares
6. John M. Seiber................................................ 8,106 Shares
11
<PAGE> 1
EXHIBIT 4
[BROADVIEW ASSOCIATES LLC LETTERHEAD]
March 8, 1998
CONFIDENTIAL
Board of Directors
Proxima Corporation
9440 Carroll Park Drive
San Diego, CA 92121-9639
Dear Members of the Board:
We understand that Proxima Corporation ("Proxima" or the "Company"), ASK a.s.
("ASK")and BD Acquisition Corp., a wholly owned subsidiary of ASK (the "Sub"),
propose to enter into an Agreement and Plan of Merger (the "Agreement")
pursuant to which the Sub will offer to purchase (the "Offer") all of the
outstanding shares of Proxima common stock, $0.001 par value per share
("Proxima Common Stock"), for $11.00 cash per share (the "Consideration") and
subsequently merge with and into Proxima (the "Merger"). Pursuant to the
Merger, each issued and outstanding share of Proxima not acquired in the Offer
will be converted into the right to receive an amount of cash equal to the
Consideration. The terms and conditions of the above described Offer and
Merger (together the "Transaction") are more fully detailed in the Agreement.
You have requested our opinion as to whether the Consideration to be received
by Proxima shareholders in the Transaction is fair, from a financial point of
view, to Proxima shareholders.
Broadview Associates focuses on providing merger and acquisition advisory
services to information technology ("IT") companies. In this capacity, we are
continually engaged in valuing such businesses, and we maintain an extensive
database of IT mergers and acquisitions for comparative purposes. We are
currently acting as financial advisor to Proxima's Board of Directors and will
receive a fee from Proxima upon the successful conclusion of the Transaction.
<PAGE> 2
Proxima Corporation Board of Directors March 8, 1998
Page 2
In rendering our opinion, we have, among other things:
1.) reviewed the terms of the Agreement and the associated exhibits
thereto in the form of the draft dated March 7, 1998 furnished to us
by Rogers & Wells LLP on March 7, 1998 (which, for the purposes of
this opinion, we have assumed, with your permission, to be identical
in all material respects to the agreement to be executed);
2.) reviewed Proxima's annual report and Form 10-K for the fiscal year
ended March 31, 1997, including the audited financial statements
included therein, and Proxima's Form 10-Q for the nine months ended
December 31, 1997, including the unaudited financial statements
included therein;
3.) reviewed certain internal financial and operating information relating
to Proxima, including certain projections through December 31, 1998,
prepared and provided to us by Proxima management;
4.) participated in discussions with Proxima management concerning the
operations, business strategy, financial performance and prospects for
Proxima;
5.) reviewed the recent reported closing prices and trading activity for
Proxima Common Stock;
6.) compared certain aspects of the financial performance of Proxima with
public companies we deemed comparable;
7.) analyzed available information, both public and private, concerning
other mergers and acquisitions we believe to be comparable in whole or
in part to the Transaction;
8.) reviewed recent equity research analyst reports covering Proxima;
9.) assisted in negotiations and discussions related to the Transaction
among Proxima, ASK and their financial and legal advisors; and
10.) conducted other financial studies, analyses and investigations as we
deemed appropriate for purposes of this opinion.
<PAGE> 3
Proxima Corporation Board of Directors March 8, 1998
Page 3
In rendering our opinion, we have relied, without independent verification, on
the accuracy and completeness of all the financial and other information
(including without limitation the representations and warranties contained in
the Agreement) that was publicly available or furnished to us by Proxima. With
respect to the financial projections examined by us, we have assumed that they
were reasonably prepared and reflected the best available estimates and good
faith judgments of the management of Proxima as to the future performance of
Proxima. We have neither made nor obtained an independent appraisal or
valuation of any of Proxima's assets.
Based upon and subject to the foregoing, we are of the opinion that the
Consideration to be received by Proxima shareholders in the Transaction is
fair, from a financial point of view, to Proxima shareholders.
For purposes of this opinion, we have assumed that Proxima is not currently
involved in any material transaction other than the Transaction and those
activities undertaken in the ordinary course of conducting its business. Our
opinion is necessarily based upon market, economic, financial and other
conditions as they exist and can be evaluated as of the date of this opinion,
and any change in such conditions may impact this opinion.
This opinion speaks only as of the date hereof. It is understood that this
opinion is for the information of the Board of Directors of Proxima in
connection with its consideration of the Transaction and does not constitute a
recommendation to any Proxima shareholder as to whether such shareholder should
tender its shares in the Offer or as to how such shareholder should vote on the
Merger. Broadview Associates does not believe that any other person other than
the Board of Directors of Proxima has the legal right under state law to rely
on this opinion, and, in the absence of any governing precedents, we would
resist any assertion otherwise by any such person. This opinion may not be
published or referred to, in whole or part, without our prior written
permission, which shall not be unreasonably withheld. Broadview Associates
hereby consents to references to and the inclusion of this opinion in its
entirety in the Schedule 14D-9 to be distributed to Proxima shareholders in
connection with the Transaction.
Sincerely,
/s/ Broadview Associates LLC
Broadview Associates LLC
<PAGE> 1
EXHIBIT 5
[LOGO OF PROXIMA CORPORATION]
PROXIMA
Contact: Dennis Whittler
Vice President, Finance
Chief Financial Officer
(619) 638-2786
FOR IMMEDIATE RELEASE
PROXIMA CORPORATION SIGNS MERGER AGREEMENT WITH ASK asa
San Diego, California, March 8, 1998 -- Proxima Corporation
(NASDAQ:PRXM) announced today that it has entered into a definitive merger
agreement with ASK asa, pursuant to which ASK will acquire all of the shares of
Proxima for $11 per share, or approximately $84 million in cash. ASK will
commence a tender offer within five business days. Completion of the tender
offer is subject to a majority of the shares on a fully-diluted basis being
tendered and other customary conditions. The tender offer will be followed as
promptly as possible by a merger in which any untendered shares of Proxima
stock will be converted into the right to receive $11 per share in cash.
Based in Fredrikstad, Norway, ASK is a leading manufacturer of
multimedia projection equipment. ASK is publicly traded and listed on the Oslo
Stock Exchange. Under the terms of the agreement, Proxima will become a
wholly-owned subsidiary of ASK.
Commenting on the merger agreement, Kenneth E. Olson, chairman,
president and CEO of Proxima, and Ole J. Fredriksen, president of ASK, stated
that "this merger will create a strong competitor in the worldwide market for
data-capable multimedia projectors. Proxima's powerful brand name and strong
market position in the Americas are complementary to ASK's leadership position
in Europe. This merger offers strategic opportunities for both technologies and
marketing. We believe that this is a very synergistic combination of strengths
which will give us the capability to challenge for the leadership position in
our market."
Mr. Olson will become an advisory member of ASK's board of directors
and will continue as the chairman, CEO and president of Proxima. Mr. Fredriksen
will join the Proxima board.
For the twelve months ended December 31, 1997, Proxima reported
revenues of $133.3 million, while ASK reported revenues of $82.0 million.
<PAGE> 2
PROXIMA CORPORATION SIGNS MERGER AGREEMENT
Page 2 of 2
Proxima was advised by Broadview Associates LLC. ASK was advised by BT
Alex. Brown Inc., which will serve as dealer manager for the tender offer.
The statements contained in this release regarding the expected
completion of the merger, the synergistic integration of the combined
companies, and the leadership position and market strength of the combined
companies constitute "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Potential risks
and uncertainties include, but are not limited to, such factors as the possible
objection of regulatory authorities, adverse economic and business conditions
in the electronics industry, reduced demand for the products of the combined
companies, the inability of the companies to consummate the merger for whatever
reason, difficulties in managing the integration for the two companies,
supplier and/or customer disruption caused by the merger, and other risks and
uncertainties described in reports and other documents filed by Proxima from
time to time with the SEC. Any of the companies' assumptions could prove
inaccurate, and therefore, there can be no representation that the
forward-looking information will prove to be accurate.
# # #
PROXIMA CORPORATION
9440 Carroll Park Drive, San Diego, CA 92121-2298
619-457-550 FAX 619-457-9647
<PAGE> 1
Exhibit 6
PRESS RELEASE
ASK asa announces take-over bid for Proxima Corporation
Today, ASK asa announced a cash tender offer for all issued stock in the US
company, Proxima listed on NASDAQ, USA (Symbol: PRXM). During 1997, Proxima
reported revenues of USD 133.3 billion (NOK 1,000 million). The main intention
of the acquisition is to strengthen ASK's distribution and presence in the US
marketplace.
The tender offer is USD 11 per share, and the total value of the transaction is
USD $4 million or NOK 630 million. The tender offer is conditional upon
acceptance by minimum 50% of Proxima's shareholders, as well as approval by the
American authorities. The Board of Proximal unanimously recommend its
stockholders to accept the offer.
The technical framework for the tender offer is as a merger agreement between
Proxima and a wholly owned subsidiary of ADK which has been established for
this purpose. All shareholders will be tendered at the same share prices as
long as minimum 50% accept the presented tender offer. The acquisition is
financed by a combination of ASK funds and bank loans. The merger schedule
provides for Proxima as a wholly-owned subsidiary of ASK, and the intention is
to delist Proxima from NASDAQ. On Friday 6 March, Proxima's final quotation was
USD $ 5/16, making ASK's offer a bid premium of 32% above the final quotation.
This offer will be sent to Proxima's shareholders on 13 March and the offer
will expire on 10 April.
In his statement, Managing Director Ole J. Fredriksen of ASK asa says "The
acquisition of Proxima represents a unique opportunity to create a global
market leader within multimedia projector's. The combination of the
well-established Proxima trademark in the American market, in conjunction with
ASK's product portfolio, will lead to a stronger and more profitable unit. The
two companies have complimentary strengths and the merged company will become
one of the dominating players within the fast growing presentation industry. We
have great expectations to the opportunities that Proxima's distribution
channels will represent in future, so that we can be a part of the significant
growth which is taking place in the US marketplace."
Ken E. Olson, Chairman of the Board and Managing Director at Proxima, states,
"The merger of the two companies will create the second largest player in the
global market for multimedia projectors. In time, we will have the possibility
of becoming the market leader, since this merger provides strategic advantages
in both marketing and technology. Together, the two companies feature an unique
combination of strengths. ASK's special skills lie in system and hardware
design, while Proxima's lie in software and peripheral products. Proxima enjoys
a well-established brand name in USA and a strong position in the market, while
ASK has an equivalent position in Europe. These two markets are the most
important today.
<PAGE> 2
About PROXIMA
Proxima was established in 1982, and is one of the market leaders within
multimedia projectors, offering products to the professional market. Proxima
markets and distributes a product portfolio of easy-to-use lightweight portable
projectors featuring high resolution graphics. The company also markets LCD
overhead panels. The company's financial year does not follow the calendar
year, and in the calendar year of 1997 it reported revenues of USD 133.3
million (NOK 1,000 million). At the end of the 3rd financial quarter, which
closed 31 December 1997, the company reported a net loss of USD 1.4 million.
Proxima implemented a turn-round operation at turn of year 1996/1997, and show
that they are now on the right course with sales of USD 68 million and pre-tax
profits of USD 1.3 million for the last two quarters. The sales were
distributed as follows: USA/Canada 73%, Europe 14% and Asia 13%. The company is
based in San Diego, California, USA. Proxima's website can be visited at
http://www.proxima.com.
- ----------------------
About ASK
ASK was established in 1984, and was listed on the Oslo Stock Exchange in
August 1996 after its demerger from Tandberg Data asa. ASK develops, markets
and manufactures a varied product portfolio ranging from ultra portable to
portable and permanent installation projectors. The projectors are used for
data and video based presentations. ASK has focused on the ultra portable
segment, and the higher and of the market. ASK has achieved a leading position
by focusing on continual product improvement as well as by offering the market
products based round differing technological platforms. In 1997, the company
reported revenues of NOK 604 millions (USD 80.5 million), distributed as
follows: Europe 69%, USA/Canada 16% and Asia 15%. The company is based in
Fredrikstad, Norway. ASK's website can be visited at hhttp://www.ask.no.
------------------
About the market
The multimedia projector market is in a state of rapid growth, with an annual
volume growth of 35% according to Pacific Media Associates. They expect a total
market value of USD 2.5 billion by the end of 1998. In 1997, around 330,000
units were sold world wide. In comparison, during the same period 65-70 million
PC's were sold. The growth in the projector market has been fuelled by several
factors, including the increased acceptance of the productivity improvements
which are taking place in electronic presentations.
The market is also being heavily fuelled by increased sales of notebooks, PC's
and workstations, as well as continual improvements in presentation and
multimedia applications. Software houses are also continually prompting their
products (including Microsoft's PowerPoint, Lotus Freelance Graphics,
Macromedia Director, Software Publishing's Harvard Graphics). Multiplication of
the distribution channels for projectors increases availability of the products,
and at the same time the introduction of ultra portable projectors (weighing
3-5 kg.) as a sales tool fuels the process of establishing a new market
segment.
Fredrikstad, 9 March 1998
Contacts:
Ole J. Fredriksen Ken. E. Olsen
47 69 34 01 55/ 47 23 11 36 00 1 619 457 5500
ASK ass Proxima Corporation
<PAGE> 1
EXHIBIT 7
Article Ninth of the Amended and Restated Certificate of Incorporation of
Proxima Corporation states that:
To the fullest extent permitted by the Delaware General Corporation Law
as the same exists or as it may hereafter be amended, no director of the
Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director.
Neither any amendment nor repeal of this Article, nor the adoption of
any provision of this Restated Certificate of Incorporation inconsistent
with this Article, shall eliminate or reduce the effect of this Article
in respect of any matter occurring, or any cause of action, suit or
claim that, but for this Article, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
<PAGE> 1
EXHIBIT 8
Article VI of the By-Laws of Proxima Corporation states:
ARTICLE IV
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted
by the General Corporation Law of Delaware, indemnify each of its
directors and officers against expenses (including attorneys' fees),
judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding, arising by reason of the
fact that such person is or was an agent of the corporation. For
purposes of this Section 6.1, a "director" or an "officer" of the
corporation includes any person (i) who is or was a director or an
officer of the corporation, (ii) who is or was serving at the request of
the corporation as a director or officer of another corporation
partnership, joint venture, trust or other enterprise, including,
without limitation, any direct or indirect subsidiary of the
corporation, or (iii) who was a director or officer of a corporation
which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each
of its employees and agents (other than directors and officers) against
expenses (including attorneys' fees), judgments, fines, settlements, and
other amounts actually and reasonably incurred in connection with any
proceeding, arising by reason of the fact that such person is or was an
agent of the corporation. For purposes of this Section .2, an "employee"
or "agent" of the corporation (other than a director or officer)
includes any person (i) who is or was an employee or agent of the
corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation partnership,
joint venture, trust or other enterprise, including, without limitation,
any direct or indirect subsidiary of the corporation or (iii) who was an
employee or agent of a corporation which was a predecessor corporation
of the corporation or of another enterprise at the request of such
predecessor corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or
<PAGE> 2
agent of another corporation partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether
or not the corporation would have the power to indemnify him against
such liability under the provisions of the General Corporation of the
State of Delaware.
<PAGE> 1
EXHIBIT 9
[PROXIMA LOGO]
March 13, 1998
Dear Stockholder:
I am pleased to report that on March 8, 1998, Proxima Corporation (the
"Company") entered into a merger agreement with ASK asa ("ASK") and one of its
subsidiaries that provides for the acquisition of the Company by ASK at a price
of $11.00 per share in cash. Under the terms of the proposed transaction, an ASK
subsidiary has made a tender offer for all outstanding shares of the Company's
common stock at $11.00 per share in cash.
Your Board of Directors has by a unanimous vote of those present (one
member being absent) approved the merger agreement and the ASK offer, and has
determined that the terms of the offer and the merger, taken together, are fair
to and in the best interests of the Company's stockholders. Accordingly, the
Board of Directors unanimously recommends that all Company stockholders accept
the ASK offer and tender their shares to ASK.
In arriving at its recommendations, the Board of Directors gave careful
consideration to a number of factors. These factors included the opinion of
Broadview Associates LLC, financial advisor to the Company, that the cash
consideration of $11.00 per share to be received by the stockholders pursuant
to the ASK offer and the merger is fair to the Company's stockholders from a
financial point of view.
Following the successful completion of the tender offer, upon approval by
stockholder vote, if required, the ASK subsidiary and the Company will merge,
and all Company shares not purchased in the tender offer will be converted into
the right to receive $11.00 per share in cash in the merger.
Accompanying this letter is a copy of the Company's
Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is the
Offer to Purchase and related materials, including a Letter of Transmittal for
use in tendering shares. We urge you to read the enclosed materials carefully.
On behalf of the Board of Directors,
Sincerely,
/s/ Kenneth E. Olson
Kenneth E. Olson
Chairman of the Board, President
and Chief Executive Officer
<PAGE> 1
Exhibit 10
IN THE COURT OF CHANCERY IN THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
________________________________________x
.
MARC TISCH, .
.
Plaintiff, .
. C.A. No. 16234NC
KENNETH E. OLSON, PATRICK ARRINGTON, .
RICHARD E. BELLUZO, ROBERT W. JOHNSON, .
JEFFREY M. NASH, JOHN M. SIEBER, .
PROXIMA CORPORATION and ASK asa, .
.
Defendants. .
.
________________________________________x
CLASS ACTION COMPLAINT
----------------------
Plaintiff alleges upon information and belief, except for paragraph 1
hereof, which is alleged upon knowledge, as follows:
1. Plaintiff has been the owner of the common stock of Proxima Corp.
("Proxima" or the "Company") since prior to the transaction herein complained
of and continuously to date.
2. Proxima is a corporation duly organized and existing under the laws
of the State of Delaware. The Company is a leading developer, manufacturer and
marketer of multimedia projection products which bring the power of the
computer to the workgroup.
3. ASK asa ("ASK") is a Norwegian company based in Fredrikstad, Norway
and is a leading manufacturer of multimedia projection equipment.
4. Defendant Kenneth E. Olsen is Chairman of the Board, interim
President and Chief Executive Officer of the Company.
<PAGE> 2
5. Defendants Patrick Arrington, Richard E. Belluzo, Robert W.
Johnson, Jeffrey M. Nash, and John M. Slober are Directors of Proxima.
6. The Individual Defendants are in a fiduciary relationship with
Plaintiff and the other public stockholders of Proxima and owe them the highest
obligations of good faith and fair dealing.
CLASS ACTION ALLEGATIONS
7. Plaintiff brings this action on its own behalf and as a class
action, pursuant to Rule 23 of the Rules of the Court of Chancery, on behalf of
all common stockholders of the Company (except the defendants herein and any
person, firm, trust, corporation, or other entity related to or affiliated with
any of the defendants) and their successors in interest, who are or will be
threatened with injury arising from defendants' actions as more fully described
herein.
8. This action is properly maintainable as a class action because:
(a) The class is so numerous that joinder of all members is
impracticable. As of June 6, 1997, there were approximately 7,152,368 shares of
Proxima common stock outstanding owned by hundreds, if not thousands, of record
and beneficial holders;
(b) There are questions of law and fact which are common to the
class including, inter alia, the following: (i) whether defendants have
----------
breached their fiduciary and other common law duties owned by them to plaintiff
and the members
<PAGE> 3
of the class; and (ii) whether the class is entitled to injunctive relief or
damages as a result of the wrongful conduct committed by defendants.
(c) Plaintiff is committed to prosecuting this action and has retained
competent counsel experienced in litigation of this nature. The claims of the
plaintiff are typical of the claims of other members of the class and plaintiff
has the same interests as the other members of the class. Plaintiff will fairly
and adequately represent the class.
(d) Defendants have acted in a manner which affects plaintiff and all
members of the class alike, thereby making appropriate injunctive relief and/or
corresponding declaratory relief with respect to the class as a whole.
(e) The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with respect
to individual members of the Class, which would establish incompatible
standards of conduct for defendants, or adjudications with respect to
individual members of the Class which would, as a practical matter, be
dispositive of the interests of other members or substantially impair or impede
their ability to protect their interests.
SUBSTANTIVE ALLEGATIONS
9. After experiencing some operating difficulties in the past few
years, Proxima has recently begun to show significant improvements in its
financial results and future prospects. The Company has also received excellent
market response for its new products. Indeed, Proxima's new DP9200XGA projector
recently
<PAGE> 4
received the prestigious PC Magazine Editor's Choice Award and was awarded
Computer Resoller News' highest recommendation in the category. Additionally,
- ----------------------
for the third quarter ended December 31, 1997, Proxima reported net income of
$789,000, or 11 cents a share, on revenues of $35,076,000. A Company press
release noted that third quarter revenues increased by 25 percent over the
previous quarter "primarily on good market acceptance of the Company's three
new multimedia projector models," and that gross margins increased to nearly 21
percent while operating expenses declined to about 18 percent revenues.
10. Despite these strong results and promising prospects, Proxima's
stock price has languished. Given Proxima's strong portfolio of products and
financial performance, its prospects for future growth and expansion are
substantial, and the intrinsic value of Proxima is for greater than that
reflected in the market price of Proxima's stock.
11. On March 9, 1998, Proxima and ASK announced that they had entered
into a definitive merger agreement whereby ASK will acquire Proxima in a
transaction valued at $84 million. Under the terms of the transaction as
presently proposed, ASK will commence a cash tender offer for all of Proxima's
outstanding common shares at a price of $11 per share. The tender offer will be
followed by a merger in which any untendered shares of Proxima will be
converted into the right to receive $11 per share in cash.
12. By entering into the agreement with ASK, the Proxima Board has
initiated a process to sell the Company which imposes heightened fiduciary
<PAGE> 5
responsibilities and requires enhanced scrutiny by the Court. However, the
terms of the porposed transaction were not the result of an auction process or
active market check; they were arrived at without a full and thorough
investigation by the Individual Defendants; and they are intrinsically unfair
and inadequate from the standpoint of the Proxima shareholders.
13. The Individual Defendants failed to make an informed decision, as
no market check of the Company's value was obtained. In agreeing to the
merger, the Individual Defendants failed to properly inform themselves of
Proxima's highest transactional value.
14. The Individual Defendants have violated the fiduciary duties owned
to the public shareholders of Proxima. The Individual Defendants' agreement to
the terms of the transaction, its timing, and the failure to auction the
Company and invite other bidders, and defendants' failure to provide a market
check demonstrate a clear absence of the exercise of due care and of loyalty to
Proxima's public shareholders.
15. The Individual Defendants' fiduciary evaluation of Proxima's net
worth as a merger/acquisition candidate; and
(a) Undertake an appropriate evaluation of Proxima's net worth
as a merger/acquisition candidate; and
(b) Engage in a meaningful auction with third parties in an
attempt to obtain the best value for Proxima's public shareholders.
<PAGE> 6
16. The Individual Defendants have breached their fiduciary duties by
reason of the acts and transactions complained of herein, including their
decision to merge with ASK without making the requisite effort to obtain the
best offer possible.
17. Plaintiff and other members of the Class have been and will be
damaged in that they have not and will not receive their fair proportion of the
value of Proxima's assets and business, and will be prevented from obtaining
fair and adequate consideration for their shares of Proxima common stock.
18. The consideration to be paid to class members in the proposed
merger is unfair and inadequate because, among other things:
(a) The intrinsic value of Proxima's common stock is materially
in excess of the amount offered for those securities in the merger giving due
consideration to the anticipated operating results, net asset value, cash flow,
and profitability of the Company;
(b) The merger price is not the result of an appropriate
consideration of the value of Proxima because the Proxima Board approved the
proposed merger without undertaking steps to accurately ascertain Proxima's
value through open bidding or at least a "market check mechanism"; and
(c) By entering into the agreement with ASK, the Individual
Defendants have allowed the price of Proxima stock to be capped, thereby
depriving plaintiff and the Class of the opportunity to realize any increase in
the value of Proxima stock.
<PAGE> 7
19. By reason of the foregoing, each member of the Class will suffer
irreparable injury and damages absent injunctive relief by this Court.
20. ASK is named as a defendant in order to permit the Court to grant
complete relief.
21. Plaintiff and other members of the Class have no adequate remedy
at law.
WHEREFORE, plaintiff and members of the Class demand judgment against
defendants as follows:
A. Declaring that this action is properly maintainable as a class
action and certifying plaintiff as the representative of the Class;
B. Preliminarily and permanently enjoining defendants and their
counsel, agents, employees and all persons acting under, in concert with, or for
them, from proceeding with, consummating, or closing the proposed transaction;
C. In the event that the proposed transaction is consummated,
rescinding it and setting it aside, or awarding rescissory damages to the Class;
D. Awarding compensatory damages against defendants, individually and
severally, in an amount to be determined at trial, together with pre-judgment
and post-judgment interest at the maximum rate allowable by law, arising from
the proposed transaction;
E. Awarding plaintiff its costs and disbursements and reasonable
allowances for fees of plaintiff's counsel and experts and reimbursement of
expenses; and
<PAGE> 8
F. Granting plaintiff and the Class such other and further relief as
the Court may deem just and proper.
Dated: March 9, 1998
ROSENTHAL, MONHAIT, GROSS & GOODESS, P.A.
BY /s/ Norman M. Monhait
-------------------------------------
Suite 1401, Mellon Bank Center
P.O. Box 1070
Wilmington, DE 19899-1070
(302) 655-4433
Attorneys for Plaintiff
OF COUNSEL:
BERNSTEIN LIEBHARD & UFSHITZ
274 Madison Avenue
New York, NY 10016
(212) 770-1414
<PAGE> 1
EXHIBIT 11
FORM OF SEVERANCE PLAN FOR OFFICERS
As an officer of Proxima, you hold an important and responsible job in our
highly competitive and ever changing high technology marketplace.
Proxima's Board of Directors recognizes the business uncertainties in our
industry and has implemented a consistent and equitable policy regarding
severance pay for officers. The Board of Directors believes that a responsible
severance pay arrangement for the current officers is in the best interests of
the Company.
Accordingly, in the event of a reduction in force, elimination of position or
any other involuntary departure (other than for a major company infraction such
as theft, fraud, dishonesty, willful insubordination, threats or harassment of
any kind, illegal drug use, use of or being under the influence of alcohol in
the workplace, possession of a weapon, commission of a crime involving moral
turpitude, etc.), you would be provided the pay and benefits listed herein. You
hereby acknowledge that the provision of pay and benefits i) is expressly
contingent upon your signing and accepting Proxima's Employment Release
Agreement for Officers ("Release Agreement"), as may be amended by Proxima from
time to time, and ii) shall be Proxima's sole liability in the event of an
involuntary termination. The following summarizes the pay and benefits and the
Release Agreement:
<TABLE>
<CAPTION>
- --------------------------------------------- -----------------------------------------
PROXIMA'S CONDITIONS FOR
OFFICER PAY AND BENEFITS SEVERANCE PAY AND BENEFITS
- --------------------------------------------- -----------------------------------------
<S> <C>
- - __ months pay paid on a bi-weekly basis The Release Agreement signed and
(based on ____ -twelfths of the last 12 accepted by Associate containing, but
months base salary [and commissions not limited to, the following terms:
actually paid measured from the
departure date; however, bonuses of any - Releases Proxima from any liability
kind (i.e., based on earnings, SPIFs,
individual goals, etc.) will not be - Allows Proxima the right to
considered in the calculation]) mitigate the severance payments
due to income received during the
- - Continued medical, dental and severance period whether from
insurance (disability and life) wages, consulting, or other
benefits during the severance term, professional services
subject to the standard individual
co-payments - Contains detailed provisions
concerning the protection of
- - Outplacement services under an Proxima confidential information
"Executive Program," as selected and
approved by Proxima - Allows Proxima "on-call" question
and answer access to Associate
during the severance pay period
- --------------------------------------------- -------------------------------------------
</TABLE>
This summary in no way modifies the Release Agreement. Any pay or benefits
provided under this plan will be governed exclusively by the Release Agreement.
Accepted and Agreed to:
Proxima Corporation
BY________________________________ ___________________________
Thomas D. Kampfer Officer:
Date:_________________ Date:_________________
