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EXHIBIT 7.3
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made as of the 28th day of July,
1989 between CODE ACQUISITION CORP., a Michigan corporation ("Code
Acquisition") and TESSCO ELECTRONIC SYSTEMS SUPPORT COMPANY, INC., a Texas
corporation ("Tessco").
WITNESSETH:
WHEREAS, Code-Alarm, Inc., a Michigan corporation ("Code-Alarm") has
formed Code Acquisition, a wholly-owned subsidiary of Code-Alarm for the
purposes of merging Tessco with and into Code Acquisition (the "Merger");
WHEREAS, Code Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan and, as
of the date hereof, the authorized capital stock of Code Acquisition consists
of 50,000 shares of common stock, par value $1.00 per share, of which 1,000
shares are issued and outstanding and owned by Code-Alarm;
WHEREAS, Tessco is a corporation duly organized and validly existing
under the laws of the State of Texas and, as of the date hereof, the authorized
capital stock of Tessco consists of 100,000 shares of Common Stock, no par
value per share (the "Tessco Common Stock"), of which 10,000 shares are issued
and outstanding, other than treasury shares, which shall be cancelled;
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WHEREAS, the parties hereto have entered into an Agreement and Plan
of Reorganization ("Plan of Reorganization") dated as of July 2, 1989, setting
forth certain representations, warranties and agreements in connection with the
transactions therein and herein contemplated; and
WHEREAS, the respective Boards of Directors of Tessco, Code-Alarm and
Code Acquisition deem the merger advisable and in the best interests of each of
such respective corporations and their respective shareholders and, by
resolutions duly adopted, have adopted and approved this Agreement and Plan of
Merger and the Plan of Reorganization, and all of the shareholders of Tessco
have adopted and approved this Agreement and Plan of Merger and the Plan of
Reorganization.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
1.1 Merger of Tessco into Code Acquisition. Tessco shall be merged
into Code Acquisition upon the filing of a Certificate of Merger with the
Corporation and Securities Bureau of the Michigan Department of Commerce and
the Articles of Merger with the Secretary of State, Corporate Division, of the
State of Texas (the time at which the latter of such filings shall be deemed
effective is referred to as the "Effective Time") which filings shall be made
as soon after the execution
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of this Agreement and Plan of Merger as practicable. At the Effective Time,
the separate corporate existence of Tessco shall thereupon cease and Code
Acquisition shall be the surviving corporation.
1.2 Effect of the Merger. From and after the Effective Time:
1.2.1 The separate existence of Tessco and Code Acquisition
shall cease and be merged into Code Acquisition, which shall possess
(i) all of the rights, privileges, immunities and franchises public
and private, and shall be subject to all of the restrictions,
disabilities and duties, of Tessco and Code Acquisition; and (ii) all
property, real, personal and mixed, and all debts due to either
Tessco and Code Acquisition on whatever account, including
subscriptions to shares, and all other things in action or belonging
to Tessco and Code Acquisition shall be vested in Code Acquisition.
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1.2.2 All rights of creditors and all liens upon any
property of either Tessco or Code Acquisition shall be preserved
unimpaired and all debts, liabilities and duties of Tessco and Code
Acquisition shall thenceforth attach to Code Acquisition and may be
enforced against Code Acquisition to the same extent as if said
debts, liabilities and duties had been incurred or contracted by it.
1.2.3 Any action or proceeding, whether civil, criminal or
administrative, pending by or against Tessco or Code Acquisition
shall be prosecuted as if the Merger had not taken place, and Code
Acquisition may be substituted as a party in such action or
proceeding in place of Tessco.
1.3 Additional Actions. If, at any time after the Effective Time,
Code Acquisition shall consider or be advised that any further assignments or
assurances in law or any other acts are necessary or desirable to (i) vest,
perfect or confirm, of record or otherwise, in Code Acquisition its rights,
title or interest in, to or under any of the rights, properties or assets of
Tessco acquired or to be acquired by Code Acquisition as a result of, or in
connection with, the Merger, or (ii) otherwise carry out the purposes of this
Agreement and Plan of Merger, Tessco and its proper officers and directors
shall be deemed
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hereby to have granted to Code Acquisition an irrevocable power of attorney
to execute and deliver all such proper deeds, assignments and assurances in law
and to do all acts necessary or proper to vest, perfect or confirm title to and
possession of such rights, properties or assets in Code Acquisition and
otherwise to carry out the purposes of this Agreement and Plan of Merger; and
the proper officers and directors of Code Acquisition are fully authorized in
the name of Tessco or otherwise to take any and all such action.
ARTICLE II
2.1 Name of Surviving Corporation. The name of the Surviving
Corporation shall be Tessco Group, Inc.
2.2 Articles of Incorporation. From and after the Effective Time,
the Articles of Incorporation of Code Acquisition, except as amended as provided
in Section 2.1 shall be the Articles of Incorporation of the surviving
corporation until duly amended in accordance with law.
2.3 State of Incorporation of the Surviving Corporation. Code
Acquisition shall continue to be a Michigan corporation subject to its laws. Its
registered office shall continue to be 000 X. Xxxxxxxx, Xxxxxxx Xxxxxxx,
Xxxxxxxx 00000.
2.4 Rights of Dissenting Shareholders. Code Acquisition hereby
agrees that it may be served with process in
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the State of Texas with respect to any proceeding for the enforcement of any
obligation of Tessco and in any proceeding for the enforcement of the rights of
a dissenting shareholder of Tessco against Code Acquisition. Code Acquisition
hereby irrevocably appoints the Secretary of the State of Texas as its agent to
accept service of process in any such proceeding. Code Acquisition further
agrees that it will promptly pay to any dissenting shareholder of Tessco the
amount, if any, to which such shareholder shall be entitled under the provisions
of the Texas Business Corporation Act with respect to the rights of such
dissenting shareholder.
2.5 Cessation of Shareholder Status. The shareholders of Tessco
(the "Shareholders") holding certificates which represent shares of the capital
stock of Tessco outstanding immediately prior to the Effective Time shall cease
to be, and shall have no rights as, shareholders of Tessco or Code Acquisition.
ARTICLE III
TERMS OF THE TRANSACTION
3.1 Merger Consideration. At the Effective Time, each share of
Tessco Common Stock which is issued and outstanding shall be converted into
cash and Code-Alarm common stock, no par value (the "Code-Alarm Common Stock")
as provided in Section 3.2 subject to the adjustment provided in Section 3.3
and the
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contingent distributions described in Sections 3.4, 3.5 and 3.6 hereof. All
shares of Tessco Common Stock which are held by Tessco as treasury shares shall
be cancelled.
3.2 Closing Distribution. At the Effective Time, the Shareholders
shall receive a distribution of $1,330,004.00 by cashier's or certified check
and 149,180 shares of Code-Alarm Common Stock.
3.3 1989 Adjustment. Xxxxxx X. Xxxxx, certified public accountant,
shall prepare, in cooperation with Laventhol & Xxxxxxx, independent certified
public accountants, audited consolidated financial statements for Tessco and
Paramax, Inc. a Texas corporation ("Paramax") as of and for the year ended July
1, 1989 (the "1989 Financial Statements"). If the sum of the after-tax net
income of Tessco and Paramax as shown on the 1989 Financial Statements exceeds
$689,000, then as soon as practicable after receipt of the 1989 Financial
Statements, Code Acquisition shall distribute to the Shareholders cash and
Code-Alarm Common Stock with a value equal to the difference, if any, of the
after-tax net income of Tessco and Paramax minus $689,000, multiplied by 5. If
the sum of the after-tax net income of Tessco and Paramax as shown on the 1989
Financial Statements is less than $689,000, then as soon as practical after
receipt of the 1989 Financial Statements, the Shareholders shall return to Code
Acquisition cash and Code-Alarm Common
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Stock with a value equal to the difference, if greater than zero, of $689,000
minus the after-tax net income, multiplied by 5. The distribution or return
shall be made 48 percent in cash and 52 percent in Code-Alarm Common Stock;
provided, however, that if the Shareholders would be entitled to receive or
keep a fraction of a share of Code-Alarm Common Stock, the Shareholders shall
not receive or keep such fractional share and shall instead receive such amount
in cash or deduct such amount from any cash to be returned, as applicable. In
determining the number of shares to be distributed or returned pursuant to this
Section 3.3, each share of Code-Alarm Common Stock shall be valued at $12.20
per share.
3.4 1990 Distribution. On or before March 31, 1990, Code
Acquisition shall distribute to the Shareholders cash and Code-Alarm Common
Stock, in accordance with Section 3.7, with a value equal to 25 percent of the
increase, if any, of the Theoretical Value for the 6 months ended December 31,
1989 over the Theoretical Value for the year ended July 1, 1989. The
Theoretical Value shall be determined by multiplying the Actual Earnings of
Tessco, or Code Acquisition as applicable, by the Applicable Valuation Factor.
The Actual Earnings for the year ended July 1, 1989 shall be the sum of the
after-tax net income of Tessco and Paramax as shown on the 1989 Financial
Statements. The Actual Earnings of Code Acquisition for the periods beginning
after July 1, 1989 shall be the after-tax net
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income, if any, of Code Acquisition as determined by Code-Alarm's certified
public accountants on the consolidating income statements to be used in
preparing the audited, consolidated income statement of Code-Alarm and its
subsidiaries, adjusted as follows: (i) there shall be no allocation of
corporate overhead to Code Acquisition; (ii) the tax allocated to the net
income of Code Acquisition shall be determined by multiplying the net income of
Code Acquisition by the effective consolidated tax rate of Code-Alarm and its
subsidiaries; and (iii) any other adjustments shall be determined in accordance
with any written agreements between the Shareholders and Code-Alarm with
respect to the determination of the Actual Earnings of Code Acquisition. The
Applicable Valuation Factor shall be determined in accordance with the
following table:
Product of Net Sales (in thousands) Applicable
times Actual Earnings (in thousands) Valuation Factor
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less than $10,335,999 5.0
$10,336,000 to 13,715,999 5.2
13,716,000 to 17,521,999 5.4
17,522,000 to 21,754,999 5.6
21,755,000 to 26,414,999 5.8
26,415,000 to 31,500,999 6.0
31,501,000 to 38,394,999 6.2
38,395,000 to 45,936,999 6.4
45,937,000 to 54,126,999 6.6
54,127,000 to 62,964,999 6.8
over 62,965,000 7.0
The Net Sales of Tessco and its subsidiary for the year ended July 1, 1989
shall be the net sales of Tessco and its subsidiary
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as shown on the 1989 Financial Statements. The Net Sales of Code Acquisition
for the periods beginning after June 30, 1989 shall be the net sales of Code
Acquisition as determined by Code-Alarm's certified public accountants on the
consolidating income statements used in preparing the audited, consolidated
income statement of Code-Alarm and its subsidiaries. For the purposes of
determining the Theoretical Value for the six months ended December 31, 1989
only, Net Sales and Actual Earnings shall be multiplied by 2.
3.5 1991 Distribution. On or before March 31, 1991, Code
Acquisition shall distribute to the Shareholders cash and Code-Alarm Common
Stock, in accordance with Section 3.7, with a value equal to 37.5 percent of
the increase, if any, of the Theoretical Value for the year ended December 31,
1990 over the greater of: (i) the Theoretical Value for the six months ended
December 31, 1989 or (ii) the Theoretical Value for the year ended July 1,
1989.
3.6 1992 Distribution. On or before March 31, 1992, Code
Acquisition shall distribute to the Shareholders cash and Code-Alarm Common
Stock, in accordance with Section 3.7, with a value equal to 12.5 percent of
the increase, if any, of the Theoretical Value for the year ended December 31,
1991 over the greater of (i) the Theoretical Value for the year ended December
31, 1990; (ii) the Theoretical Value for the six months ended
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December 31, 1989; or (iii) the Theoretical Value for the year ended July 1,
1989.
3.7 Proportion of Distribution; Determination of Value. The
Shareholders may determine the proportion of cash and Code-Alarm Common Stock
to be distributed to them in any year by written notice to Code-Alarm not later
than February 1 of such year; provided, however, that in no event shall the
cash portion be less than 33 percent nor more than 48 percent of the
distribution. The value of the Code-Alarm Common Stock to be distributed in
March of each year shall be determined by adding the high and low sales price
of Code-Alarm Common Stock for the first 5 consecutive trading days in February
of such year as reported in the Wall Street Journal and dividing the sum by 10.
Absent such written notice, Code-Alarm shall determine, in its sole discretion,
the proportion of cash and Code-Alarm Common Stock to be distributed, which
cash shall not be less than 33 percent nor more than 48 percent of such
distribution.
3.8 Antidilution Adjustment. If, in the interval between the
commencement of any valuation period with respect to any distribution to be
made to the Shareholders as provided in this Article III and such distribution,
the outstanding shares of Code-Alarm Common Stock shall be changed into a
different number of shares or a different class by reason of any
reclassification, recapitalization, split-up, combination,
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exchange of shares, readjustment, or a stock dividend thereon shall be declared
with a record date within said interval, the value of the Code-Alarm Common
Stock and the number of shares of Code-Alarm Common Stock to be distributed to
the Shareholders shall be correspondingly adjusted.
ARTICLE IV
4.1 Counterparts. This Agreement and Plan of Merger may be executed
in one or more counterparts, each of which shall be deemed to be an original
but all of which together shall constitute one agreement.
4.2 Governing Law. This Agreement and Plan of Merger shall be
governed in all respects, including, but not limited to, validity,
interpretation, effect and performance, by the laws of the State of Michigan.
4.3 Amendment. Subject to applicable law, this Agreement and Plan
of Merger may be amended, modified or supplemented only by written agreement of
Tessco, Code Acquisition, Xxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx at any time
prior to the Effective Time.
4.4 Waiver. Any of the terms or conditions of this Agreement and
Plan of Merger may be waived at any time by whichever of Tessco and Code
Acquisition is, or the Shareholders which are, entitled to the benefit thereof
by action taken by the Board of Directors of Tessco or Code Acquisition.
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4.5 Headings. The headings herein are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement, nor are they deemed to be a part of this Agreement.
4.6 Termination. This Agreement and Plan of Merger shall terminate
upon the termination of the Plan of Reorganization and there shall be no
liability on the part of any of the parties hereto or of any of their
respective directors or officers.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement and Plan of Merger as of the date hereof.
CODE ACQUISITION CORP.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Chairman of the Board
TESSCO ELECTRONIC SYSTEMS SUPPORT
COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Chairman of the Board
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