EXHIBIT 99.1
April 13, 1999
CONFIDENTIAL
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Xx. Xxxxx X. Xxxxxxx
President
STM Wireless, Inc.
One Mauchly
Irvine, California 92718
Letter of Intent re Proposed Merger
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Dear Xxxxx:
This letter sets forth our mutual understanding with respect to the proposed
acquisition by REMEC, Inc. ("REMEC") of STM Wireless, Inc. ("STM"). If STM is
prepared to go forward on the terms outlined in this letter, please countersign
the letter below, after which we will proceed to finalizing our due diligence
and the definitive documentation.
1. The Merger Transaction. On the conditions set forth below, REMEC or a
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subsidiary of REMEC would merge with STM (the "Merger"). In the Merger, the
current shareholders of STM would receive Common Stock of REMEC in exchange for
their shares of Common Stock of STM based on the exchange ratio described below.
2. Exchange Ratio. Upon consummation of the Merger, each 3.8 shares of STM
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Common Stock owned by a STM shareholder will be converted into the right to
receive one (1) share of Common Stock of REMEC (the "Exchange Ratio"). All
outstanding securities of STM that are convertible into STM Common Stock will be
convertible into REMEC Common Stock after adjustment in number of shares
issuable and exercise price to account for the Exchange Ratio and will be
otherwise convertible post-Merger in accordance with the existing terms of such
convertible securities of STM.
3. Terms and Conditions. Based on our preliminary review of STM, in
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addition to customary terms and conditions, it is anticipated that the
definitive Merger
agreement will contain the following terms and conditions:
(a) REMEC and STM will have received all required regulatory approvals
and material third party consents, in each case without the imposition of any
condition reasonably unacceptable to either party.
(b) The respective Boards of Directors of REMEC and STM will have
approved a definitive agreement as soon as is reasonably practicable.
(c) The shareholders of STM will have approved the Merger on the terms
set forth in the definitive Merger agreement as soon as reasonably practicable.
(d) REMEC will have received a favorable tax opinion or other comfort
to its reasonable satisfaction to the effect that (i) the Merger will constitute
a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code, and (ii) the Merger will accounted for as a pooling of interests.
(e) STM will have received an opinion of its financial adviser to the
effect that the Merger is fair from a financial point of view to its
shareholders.
4. Shareholders' Agreements. Concurrently with the execution of this letter
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or as soon as is reasonably practicable thereafter, REMEC will have received
written voting agreements from the significant shareholders of STM listed below
that such shareholders will (i) vote all of their shares of STM capital stock in
favor of the Merger, (ii) agree not to sell or agree to sell such shares of
capital stock to any other person prior to the anticipated date of the Merger
other than in connection with a transaction that is subject to the exception set
forth in paragraph 5 below and (iii) agree to comply with all applicable
securities laws (or laws or regulations governing the anticipated tax and
accounting treatment of the Merger) in connection with any post-Merger
disposition of securities of REMEC to be received in the Merger, including any
requirements reasonably necessary to ensure that the Merger is accounted for as
a pooling of interests. The significant shareholders who will sign voting
agreements are: (a) Xxxx Xxxxxxxxxxxx; and (b) Pequot Capital Management, Inc.
5. Exclusive Negotiations. After acceptance of this letter and until the
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termination of this letter as provided in paragraph 11, STM shall not solicit
any offer or
engage in any negotiations other than with REMEC for the merger or sale of the
business or assets of STM or any material part thereof or for any tender or
exchange offer for STM's capital stock, except to the extent that independent
legal counsel to STM has advised the Board of Directors of STM that the failure
to pursue an unsolicited offer received by STM is reasonably likely to result in
a breach of the directors' fiduciary duties.
6. Conduct of Business. Until the termination of this letter as provided in
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paragraph 11, STM will conduct its business only in the ordinary course and
consistent with past practices and will maintain its books and records in
accordance with past practices.
7. Access. Until termination of this letter as specified in paragraph 11,
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REMEC and its representatives will have access at reasonable times to the
properties, books and records and management of, and consultants to, STM for
purposes of conducting such due diligence, investigations or audits as REMEC
deems necessary or advisable in the circumstances. Until termination of this
letter as specified in paragraph 11, STM and its representatives will have
access at reasonable times to the properties, books and records and management
of, and consultants to, REMEC for purposes of conducting such due diligence,
investigations or audits as STM deems necessary or advisable in the
circumstances.
8. Publicity. Neither party shall issue any press release, publicity
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statement or other public notice relating to the proposed Merger or this letter
without the prior consent of the other party unless required under applicable
securities laws. Notwithstanding the foregoing, concurrently herewith, the
parties have agreed to a mutual press release regarding this letter.
9. No Finder's Fees. After the date of this letter and though termination of
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this letter as specified in paragraph 11, each party will not engage or
authorize nor pay any broker, financial advisor, investment banking firm, finder
or similar agent who would be entitled to a commission or other fee in respect
of the proposed Merger or any other similar transaction involving either party,
except for any fee payable upon issuance of a fairness opinion or any fee
payable by STM to CIBC Xxxxxxxxxxx. At completion of the Merger, neither party
shall be obligated to pay any broker, financial advisor, investment banking
firm, finder or similar agent a commission or other fee in respect of the
proposed Merger or any other similar transaction involving either party, except
for any fee payable upon issuance of a fairness opinion or any fee payable by
STM to CIBC Xxxxxxxxxxx.
10. Not an Offer of Securities to Shareholders. This letter is not intended
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as an offer to shareholders of STM. Any offer and sale of any securities of
REMEC in connection with the Merger will be made only after satisfaction of
applicable state and federal securities laws.
11. Effect of Letter; Enforceability; Term. Except as provided in this
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paragraph 11, this letter is not intended to be, and does not constitute, a
binding or enforceable agreement, but is merely an outline of intention to enter
into, and consummate, the Merger, and to facilitate the negotiation and
preparation of a definitive agreement and related documents. Notwithstanding
the preceding sentence, if and when this letter is countersigned by STM, the
provisions set forth in paragraphs 5 through 9 shall constitute a binding and
enforceable agreement between REMEC and STM relating to the matters addressed in
those paragraphs, enforceable against each party in accordance with the terms
contained in those paragraphs. This letter, unless extended by mutual agreement,
shall terminate at midnight on May 5, 1999 or earlier upon the execution of a
definitive Merger agreement.
If this letter is satisfactory to you as a basis for proceeding toward a
definitive agreement, please so signify by countersigning this letter below and
send an executed copy to the undersigned by facsimile (fax no. 000 000-0000).
If you have any additional questions, please telephone the undersigned at (619)
505-3114.
REMEC, INC.
By ____________________________________
Xxxxxx X. Xxxxxxx
Chairman and Chief Executive Officer
AGREED AND ACCEPTED:
STM WIRELESS, INC.
By _________________________ Date: April 13, 1999
Xxxxx X. Xxxxxxx
President
