AGREEMENT AND PLAN OF MERGER
by and among
TRACOR, INC.,
a Delaware corporation
TRACOR ACQUISITION CORP.,
a Delaware corporation
CORDANT HOLDINGS CORPORATION,
a Delaware corporation
XXXXX X. XXXXX,
as the initial Holder Representative
and
Each of the Principal Shareholders Party Hereto
Dated as of August 30, 1996
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of August 30,
1996, is by and among TRACOR, INC., a Delaware corporation
("Tracor"), TRACOR ACQUISITION CORP., a Delaware corporation and a
wholly-owned subsidiary of Tracor ("Merger Sub"), CORDANT HOLDINGS
CORPORATION, a Delaware corporation (the "Company"), XXXXX X.
XXXXX, an individual resident of the State of Virginia, solely in
his capacity as the initial Holder Representative hereunder, and
each of the Principal Shareholders party hereto.
R E C I T A L S:
WHEREAS, Tracor has proposed to acquire the Company, through a
merger of Merger Sub with and into the Company, upon the terms and
subject to the conditions set forth herein and in the General
Corporation Law of the State of Delaware ("GCL");
WHEREAS, the respective Boards of Directors of the Company,
Tracor and Merger Sub have reviewed the terms of this Agreement and
have approved this Agreement and the transactions contemplated
hereby (including the aforesaid merger), subject to the terms and
conditions set forth herein; and
WHEREAS, for certain limited purposes, and subject to the
terms set forth herein, the Holder Representative shall serve as a
representative for the holders of all outstanding shares of Company
Common Stock and Company Stock Options; and
WHEREAS, concurrently with the execution of this Agreement,
and as a condition and inducement to Tracor's and the Company's
willingness to enter into this Agreement, the Principal
Shareholders have executed the Principal Shareholders' Agreement.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and other agreements herein contained, and
for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
For all purposes of this Agreement, the capitalized terms
specified in Exhibit A attached hereto shall have the meanings set
forth therein, except as otherwise expressly provided.
2. THE MERGER AND RELATED MATTERS
1. The Merger
Upon the terms and subject to the conditions hereof, and in
accordance with the GCL, Merger Sub shall be merged with and into
the Company. The Merger shall become effective at the date and
time of the filing of a Certificate of Merger in the form attached
hereto as Exhibit B by the Company with the Secretary of State of
the State of Delaware in accordance with the relevant provisions of
the GCL (the "Effective Time"), which Certificate of Merger shall
be filed as promptly as practicable following the satisfaction or
waiver of the conditions set forth in Articles 6 and 7 hereof. The
Company shall be the Surviving Corporation in the Merger.
Following the Merger, the Surviving Corporation shall continue
under the same name as the Company and the separate corporate
existence of Merger Sub shall cease. Immediately prior to the
filing of the Certificate of Merger, a closing of the Merger
contemplated herein other than the matters that result from the
Merger as a matter of law under Sections 2.14, 2.15 and 2.17 and
the actions of or with respect to the Exchange Agent under Sections
2.14 and 2.17 (the "Closing") shall take place at the offices of
Xxxxx & Xxxxxxx L.L.P., 0000 Xxxxxxxxxx Xxxxx, XxXxxx, Xxxxxxxx
00000, or at such other place as the parties may agree.
2. Effects of the Merger
At and after the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, powers and franchises as
well of a public as of a private nature, and shall be subject to
all the restrictions, disabilities and duties of each of Merger Sub
and the Company, and all and singular, the rights, privileges,
powers and franchises of each of Merger Sub and the Company, and
all property, real, personal and mixed, and all debts due to either
Merger Sub or the Company on whatever account, including stock
subscriptions and all other things in action or belonging to each
of Merger Sub and the Company, shall be vested in the Surviving
Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as
effectually the property of the Surviving Corporation as they were
of Merger Sub and of the Company, and the title to any real estate
vested by deed or otherwise in Merger Sub or the Company shall not
revert or be in any way impaired by reason of the Merger; but all
rights of creditors and all liens upon any property of Merger Sub
or the Company shall be preserved unimpaired, and all debts,
liabilities and duties of Merger Sub and the Company shall
thenceforth attach to the Surviving Corporation, and may be
enforced against the Surviving Corporation to the same extent as if
said debts, liabilities and duties had been incurred or contracted
by it; and any action or proceeding pending by or against either
Merger Sub or the Company may be prosecuted as if the Merger had
not taken place, or the Surviving Corporation may be substituted in
such action or proceeding.
3. Certificate of Incorporation and By-Laws of the
Surviving Corporation
At and after the Effective Time, the certificate of
incorporation and bylaws of the Surviving Corporation shall be
amended to read in their entirety the same as the certificate of
incorporation and bylaws of the Merger Sub, each as in effect
immediately prior to the Effective Time, except that the name of
the Surviving Corporation shall be Cordant Holdings Corporation,
and the certificate of incorporation and bylaws, as so amended,
shall be the certificate of incorporation and bylaws, respectively,
of the Surviving Corporation, until amended as provided therein or
by law.
4. Directors of the Surviving Corporation
At and after the Effective Time, the directors of Merger Sub
immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation (as such are listed on
Exhibit C hereto), each to hold office until the next annual
meeting of stockholders of the Surviving Corporation or until his
earlier death, resignation or removal.
5. Officers of the Surviving Corporation
At and after the Effective Time, the officers of the Company
immediately prior to the Effective Time (and the other Persons
listed on Exhibit C hereto) shall be the initial officers of the
Surviving Corporation, each to hold office until his successor is
appointed and qualified or until his earlier death, resignation or
removal.
6. Merger Consideration and Adjustments Thereto
Subject to the terms of Section 2.12, the Merger Consideration
shall consist of an aggregate amount of Sixty-Five Million and
No/100 Dollars ($65,000,000), less (i) the Holder Allocable
Expenses as provided in Section 2.11, plus (ii) the Contract Award
Amount, to the extent, if any, as provided in Section 2.7, plus
(iii) any Working Capital Increase, as provided in Section 2.8,
less (iv) any Working Capital Decrease as provided in Section 2.8,
plus (v) the Earn-Out Amount, if any, as provided in Section 2.9,
and less (vi) any and all decreases after the Closing Date in the
amount payable under the Tracor Indemnification Note pursuant to
the terms thereof and hereof, as provided in Section 2.13.
7. Contract Award Amount
If the Company receives a Final Award from the United States
Postal Service on or before March 31, 1997 ("Award Target Date")
substantially in accordance with the analysis of estimated earnings
contained in the financial projections update of July 1, 1996
previously provided to Tracor (which indicated a gross margin (as
calculated by the Company consistent with prior practices) of
approximately forty million dollars ($40,000,000) to be generated
in the approximate three-year period following Final Award) and the
twenty pages of materials forwarded to Tracor on August 29, 1996
via facsimile transmission entitled "Change of Address (COA)
Outsourcing Opportunity" and which contain an overview of the
opportunity described in an unsolicited contract proposal (the
"Change of Address Proposal") from the Company to the United States
Postal Service concerning change of address products or services
then Tracor shall pay Ten Million Dollars ($10,000,000) additional
Merger Consideration (the "Contract Award Amount"). For the
purposes of this section, the term "Company" shall include its
Subsidiaries. If the Company receives an award pursuant to the
Change of Address Proposal, and if a bid protest is pending at the
Award Target Date, the Award Target Date shall be extended until
the date of Final Award, but not later than December 31, 1997,
provided that the Company is diligently contesting the protest
through available and appropriate proceedings diligently pursued.
8. Working Capital Changes
The Merger Consideration shall be adjusted for Working Capital
Changes, as follows:
(a) Working Capital Report. As soon as practicable (and, in
any event, within 30 days) after the Effective Time, the Surviving
Corporation shall prepare and deliver to the Holder Representative
(i) an unaudited consolidated balance sheet of the Company and its
Subsidiaries as of the close of business on the Closing Date (the
"Closing Balance Sheet"), and (ii) a report (the "Working Capital
Report") setting forth calculations of Working Capital of the
Company as of the Effective Time (the "Effective Time Net Working
Capital") and the amount of the resulting increase or decrease in
Working Capital (the "Working Capital Change") from $8,701,000, the
amount of the Working Capital of the Company set forth in the
June 30, 1996 financial statements of the Company referred to in
Section 4.6 (the "Base Working Capital"). Such Working Capital
Report shall be prepared in accordance with Section 2.8(d).
(b) Calculation of Working Capital Change. The Working
Capital Report so delivered to the Holder Representative and the
determination of the amount of Effective Time Net Working Capital
shall be conclusively deemed to have been accepted by the Holder
Representative unless within 20 days following such delivery the
Holder Representative shall deliver a report to the Surviving
Corporation (a "Response Report"), specifying in reasonable detail
the particular items affecting the calculations in the Working
Capital Report that the Holder Representative contends are
incorrect or are not in accordance with Section 2.8(d) (the
"Disputed Items") and specifying the particular changes that the
Holder Representative contends are required in order to correct or
bring such items into compliance with Section 2.8(d). If the
Response Report is timely delivered to the Surviving Corporation as
aforesaid, the Surviving Corporation and the Holder Representative
shall thereafter use their Best Efforts to resolve their
differences on the Disputed Items within 30 days following the date
the Response Report is delivered to the Surviving Corporation. The
Holder Representative and the Surviving Corporation shall revise
the calculations of the Effective Time Net Working Capital and the
Working Capital Change, if necessary, to reflect their mutual
agreement on any of the Disputed Items, and any Disputed Items that
have not been resolved to the mutual satisfaction of the Surviving
Corporation and the Holder Representative by the end of such 30-day
period (the "Remaining Disputed Items") shall be referred jointly
by the Holder Representative and the Surviving Corporation to an
independent public accounting firm mutually acceptable to the
Surviving Corporation and the Holder Representative (the
"Independent Accounting Firm") for resolution. The Independent
Accounting Firm shall be instructed (i) that the scope of its
review shall be limited solely to the Remaining Disputed Items,
(ii) that it is to render its opinion as to whether the principles
used by the Surviving Corporation to determine the Remaining
Disputed Items are in accordance with Section 2.8(d), (iii) that
if, in the written opinion of the Independent Accounting Firm, the
principles used to determine any Remaining Disputed Item are not in
accordance with Section 2.8(d), it is to revise the Working Capital
Report to the extent required in its opinion to cause any such
Remaining Disputed Item to be determined in accordance with Section
2.8(d), and (iv) that it is to use every reasonable effort to
complete such assignment and deliver copies of such opinion and, if
required, a revised Working Capital Report, to the Surviving
Corporation and the Holder Representative within 15 days following
the date such Remaining Disputed Items are referred to it. Fifty
percent (50%) of the fees of the Independent Accounting Firm shall
be paid by the Surviving Corporation. The remaining fifty percent
(50%) of the fees of the Independent Accounting Firm shall be paid
by the Holder Representative as part of the Holder Allocable
Expenses. The calculation of the Working Capital Change, as
originally delivered in the Working Capital Report or as finally
modified by agreement of the Holder Representative and the
Surviving Corporation or as issued by the Independent Accounting
Firm, as the case may be, shall be final and binding on the
parties, and shall be the basis for the payment provided for in
Section 2.8(c) below. The date on which the Working Capital Change
is finally determined in accordance with this Section 2.8 is herein
referred to as the "Working Capital Determination Date."
(c) Post Closing Adjustment. The Merger Consideration shall
be adjusted for any Working Capital Change only if such Working
Capital Change exceeds $250,000. If the Effective Time Net Working
Capital exceeds the Base Working Capital by more than $250,000,
Tracor shall pay as additional Merger Consideration the amount of
such excess over $250,000 (the "Working Capital Increase") as part
of the Merger Consideration pursuant to Section 2.10(b) below. If
the Effective Time Net Working Capital is $250,000 or more less
than the Base Working Capital, the amount of such deficiency over
$250,000 (the "Working Capital Decrease") shall be offset, on a
dollar-for-dollar basis, against (or deemed a reduction of the
amount of) the Holdback amount. In the event the Working Capital
Decrease exceeds the Holdback amount, such excess shall be payable
as follows: first, out of any Earn-Out Amount; second, out of any
Contract Award Amount; third, out of any payment due to the
Exchange Agent under the Tracor Indemnification Note; and finally,
after the maturity of the Tracor Indemnification Note, by the
Principal Shareholders, pro-rata in accordance with their
respective Applicable Percentages. The payment of the Holdback
amount, plus any Working Capital Increase less any Working Capital
Decrease (the "Post Closing Adjustment") shall be paid or made
within 10 Business Days following the Working Capital Determination
Date, in accordance with Section 2.10(b) hereof.
(d) Definition of Working Capital. For purposes of this
Section 2.8, the terms "Current Assets" shall mean the current
assets (including cash and cash equivalents) of the Company
determined in accordance with GAAP; "Current Liabilities" shall
mean the current liabilities of the Company determined in
accordance with GAAP, plus the Company's liability under any
indebtedness for borrowed money; and "Working Capital" shall mean
Current Assets less Current Liabilities (other than current
deferred tax assets which are reclassified from long-term deferred
taxes, other current tax benefits arising from the consummation of
the transactions contemplated hereby, including, without
limitation, tax benefits from the acquisition of previously
unexercised Options, nonvested stock Bonus Shares and other Company
shares or stock rights acquired through compensatory arrangements,
all transaction costs and benefits directly attributable to the
Merger, and all adjustments described on Exhibit H.
9. Earn-Out Amount
The Merger Consideration shall be adjusted for the Earn-Out
Amount as follows:
(a) Delivery of Audited Financial Statements. On or
before April 1, 1997, the Surviving Corporation shall prepare
and deliver to the Holder Representative the combined report
of revenue of the Surviving Corporation and the Company for
the twelve-month period ended December 31, 1996 (the "1996
Revenue Report"). The Holder Representative shall be deemed
to have agreed with the Surviving Corporation that the amount
of "total revenues" shown on the 1996 Revenue Report (the
"1996 Revenues") is correct and calculated in accordance with
GAAP unless within 20 days following delivery of the 1996
Revenue Report by the Surviving Corporation to the Holder
Representative, the Holder Representative shall deliver to the
Surviving Corporation a written objection to the calculation
of 0000 Xxxxxxxx shown on the 1996 Revenue Report, specifying
in reasonable detail the particular items affecting the
calculation of 1996 Revenues that the Holder Representative
contends are incorrect or not in accordance with GAAP and
specifying the particular changes that the Holder
Representative contends are required in order to correct or
bring such items into compliance with GAAP. If the Holder
Representative's written objection is delivered to the
Surviving Corporation as aforesaid, the Surviving Corporation
and the Holder Representative shall use their Best Efforts to
reach an agreement concerning the calculation of 1996 Revenues
within 30 days following the date the Holder Representative's
objection is delivered to the Surviving Corporation. If the
Surviving Corporation and the Holder Representative are unable
to agree upon the calculation of 1996 Revenues by the end of
such 30-day period, the Surviving Corporation and the Holder
Representative shall refer the matter to the Independent
Accounting Firm. The Independent Accounting Firm shall be
instructed (i) that it is to render its opinion as to whether
the 1996 Revenues as shown in the 1996 Revenue Report are
correct and whether the principles used by the Surviving
Corporation to calculate 1996 Revenues are in accordance with
GAAP, (ii) that if, in the written opinion of the Independent
Accounting Firm, the 1996 Revenues as shown in the 1996
Revenue Report are not correct and/or the principles used to
calculate 1996 Revenues are not in accordance with GAAP, it is
to revise the 1996 Revenue Report to the extent required in
its opinion to cause 1996 Revenues to be correct and
calculated in accordance with GAAP, and (iii) that it is to
use every reasonable effort to complete such assignment and
deliver copies of such opinion and, if required, a revised
1996 Revenue Report, to the Surviving Corporation and the
Holder Representative within 15 days following the date the
dispute was referred to it. Fifty percent (50%) of the fees
of the Independent Accounting Firm shall be paid by the
Surviving Corporation. The remaining fifty percent (50%) of
the fees of the Independent Accounting Firm shall be paid by
the Holder Representative as part of the Holder Allocable
Expenses. The calculation of 1996 Revenues, as shown on the
1996 Revenue Report prepared by the Surviving Corporation or
as revised by the Independent Accounting Firm, as the case may
be, shall be final and binding on the parties, and shall be
the basis for the payment provided for in Section 2.9(b)
below. The date on which 1996 Revenues are finally determined
in accordance with this Section 2.9 is herein referred to as
the "Earn-Out Determination Date."
(b) Calculation of Earn-Out Amount. Immediately
following the Earn-Out Determination Date, the Merger
Consideration shall be increased by the Earn-Out Amount set
forth below, based on 1996 Revenues as follows:
1996 Revenues Earn-Out
(In Millions) Amount
(In Millions)
Greater than or equal to $153.8 $5.0
Greater than or equal to $148.8 $3.0
and less than $153.8
Greater than or equal to $143.8 $1.0
and less than $148.8
Less than $143.8 $0.0
10. Payment of Merger Consideration
(a) Initial Cash Payment. On the Closing Date, subject to
the provisions of Section 2.12 hereof, Tracor shall deliver to the
Exchange Agent, in trust for the benefit of the Holders, the
Initial Cash Payment, in cash in an amount equal to Thirty-Three
Million Five Hundred Thousand Dollars ($33,500,000), less (i) the
Estimated Holder Allocable Expenses, less (ii) the Holdback amount,
plus (iii) if the Company has received a Final Award with respect
to the Change of Address Proposal prior to the Closing Date, the
Contract Award Amount payable under Section 2.7 hereof. Also on
the Closing Date, Tracor shall execute and deliver or cause to be
delivered to the Exchange Agent the Tracor Indemnification Note,
the Tracor Indemnification Note LOC, the Tracor Litigation Note and
the Tracor Litigation Note LOC.
(b) Payment of Working Capital Increase and Holdback. Within
ten (10) Business Days following the Working Capital Determination
Date, Tracor will pay the Holders amounts with respect to the
Holdback and any Working Capital Increase as follows: Tracor will
pay to the Exchange Agent, and direct the Exchange Agent to
distribute to the Holders entitled to receive the Merger
Consideration (pro rata, in accordance with their respective
Applicable Percentages) cash in an amount equal to the sum of the
following: (i) the Holdback amount (after giving effect to the
adjustments set forth in Section 2.8), plus (ii) the Working
Capital Increase, plus (iii) interest on such amounts at a rate of
6% per annum from the Closing Date to the date of payment.
(c) Payment of Contract Award Amount. Promptly following a
Final Award (if any) granted after the Closing Date, pursuant to
and as required by Section 2.7, Tracor will pay to the Exchange
Agent, and direct the Exchange Agent to distribute to the Holders
entitled to receive the Merger Consideration (pro rata, in
accordance with their respective Applicable Percentages) the
Contract Award Amount.
(d) Payment of Earn-Out Amount. Within ten (10) Business
Days following the Earn-Out Determination Date, Tracor will pay to
the Exchange Agent, and direct the Exchange Agent to distribute to
the Holders entitled to receive the Merger Consideration (pro rata,
in accordance with their Applicable Percentages) the Earn-Out
Amount.
(e) Allocation of Merger Consideration. The Merger
Consideration shall be allocated among the Holders as of the
Effective Time as follows:
(i) Each Company Shareholder shall be entitled to receive in
cash, out of the Initial Cash Payment and any additional cash
payments of Merger Consideration as provided for in this Agreement,
an amount equal to the Cash Per Fully Diluted Share multiplied by
the number of shares of Company Common Stock held by such Holder as
of the Effective Time of the Merger (but not including any shares
of Company Common Stock issuable upon exercise of any Company Stock
Option held by such Holder).
(ii) Each Holder of any Company Stock Option shall be entitled
to receive in cash, out of the Initial Cash Payment and any
additional cash payments of Merger Consideration as provided for in
this Agreement, an amount equal to the Cash Per Fully Diluted
Share, multiplied by the number of shares of Company Common Stock
issuable upon exercise in full of all Company Stock Options held by
such Holder as of the Effective Time of the Merger, minus the
aggregate cash exercise price payable upon exercise of all Company
Stock Options held by such Holder.
11. Holder Allocable Expenses
On or prior to the Closing Date, the Holder Representative
will provide to Tracor an estimate (which estimate may include such
reserves as the Holder Representative determines to be appropriate
for any Holder Allocable Expenses that are not then known or
determinable) of the following fees and expenses that may be
incurred by the Company or the Holders in connection with the
preparation, negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby: (i) the fees
and disbursements of special outside counsel to the Company
incurred in connection with the transactions contemplated hereby,
(ii) the fees and expenses of any other agents, consultants and
experts (not including auditors) employed by the Company and/or the
Holders in connection with the Merger (including without limitation
Xxxxxx, Xxxxx Xxxxx, Inc.), (iii) if necessary, one-half of the
fees and expenses of the Independent Accounting Firm engaged
pursuant to Section 2.8(b) or Section 2.9(a), (iv) $150,000 to be
held in reserve by the Holder Representative for the Person acting
as the Exchange Agent under the Exchange Agent Agreement, to
satisfy the obligations of the Holders to indemnify such Exchange
Agent and to otherwise fund expenses that may be incurred in
connection with the Exchange Agent Agreement, (v) one-half of all
filing fees incurred in connection with compliance with the
requirements of the HSR Act, and (vi) the expenses of the Holder
Representative incurred in such capacity (collectively, the "Holder
Allocable Expenses"). On the Closing Date, Tracor shall pay to the
Holder Representative cash in the amount of such estimated Holder
Allocable Expenses and the Holder Representative shall use such
cash to pay the Holder Allocable Expenses. From time to time (and
no less frequently than quarterly commencing three months following
the Closing Date), the Holder Representative shall pay over to the
Exchange Agent any portion of such cash which has not been so
expended and which the Holder Representative has determined is in
excess of the actual amounts required to pay (or be held in reserve
to pay) such Holder Allocable Expenses and reimbursements (the
"Excess Cash") for distribution to the Holders (pro rata, in
accordance with their respective Applicable Percentages). In the
event that the Holder Allocable Expenses exceed the estimated
amount of Holder Allocable Expenses ("Estimated Holder Allocable
Expenses"), (i) Tracor shall pay such excess Holder Allocable
Expenses up to an aggregate amount of $425,000 and a like amount of
principal, shall be deducted as an offset, on a dollar-for-dollar
basis from the then outstanding principal balance of the Tracor
Litigation Note, and additionally an amount equal to all accrued
interest on the principal amount so offset shall be offset against
accrued interest on the Tracor Litigation Note, and (ii) the
Principal Shareholders shall be responsible and shall pay, on a pro
rata basis in accordance with their respective Applicable
Percentages, any excess Holder Allocable Expenses to the extent
such Holder Allocable Expenses exceed the Estimated Holder
Allocable Expenses by more than $425,000. In no event will Tracor
or the Holder Representative be responsible for payment of Holder
Allocable Expenses except as specifically provided in this
Section 2.11. Holder Allocable Expenses shall not be included as
liabilities of the Company or any of its Subsidiaries for purposes
of determining Effective Time Net Working Capital.
12. Agreements Concerning the Litigation
(a) Resolution Prior to Closing. If the Litigation is
settled or judicially determined, subject to no further appeals
(referred to herein as "resolved" or "resolution"), before the
Closing Date, and if the Merger occurs, the Litigation Payment
shall be payable as follows: (i) prior to the Closing Date the
Company shall pay the first Four Million Four Hundred Eighty
Thousand Dollars ($4,480,000) (the amount reserved on the Company's
balance sheet as of December 31, 1995 as an accrued liability to
Xxxxx) of such amount, and (ii) the portion, if any, of the
Litigation Payment in excess of $4,480,000 shall be paid by the
Company. In such event, (i) Tracor shall not execute the Tracor
Litigation Note, and (ii) the Initial Cash Payment shall be
increased by an amount equal to $26,500,000 minus the amount of the
Litigation Payment which is in excess of $4,480,000.
(b) Resolution After Closing. If the Litigation is not
settled or resolved before the Closing Date, and if the Merger
occurs, the Surviving Corporation shall pay the Litigation Payment,
(i) in an amount equal to the sum of $4,480,000, the payment of
which shall be the obligation of the Surviving Corporation (the
"First Tranche Litigation Payment") without any right of offset
against the Tracor Litigation Note, and (ii) in an amount equal to
the amount by which the Litigation Payment exceeds the sum of
$4,480,000 (the "Second Tranche Litigation Payment"). The dollar
amount of the Second Tranche Litigation Payment shall be deducted
on a dollar-for-dollar basis as an offset from the then outstanding
principal balance of the Tracor Litigation Note, and, if necessary,
any accrued interest thereon. In the event that the Second Tranche
Litigation Payment is greater than the outstanding principal
balance of the Tracor Litigation Note, plus any accrued interest
thereon, the Holders shall not have any liability for any such
deficiency.
(c) Tracor Litigation Note. If the Litigation is not settled
or resolved prior to the Closing Date, Tracor shall execute and
deliver the Tracor Litigation Note to the Exchange Agent, for the
benefit of the Holders, on the Closing Date. The Tracor Litigation
Note shall bear interest as specified therein and shall be due and
payable in accordance with the terms set forth therein and herein.
(d) Tracor Litigation Note LOC. On the Closing Date, Tracor
will cause the Tracor Litigation Note LOC to be issued and
delivered to the Exchange Agent to support the Tracor Litigation
Note. In the event that Bankers Trust Company notifies the
Exchange Agent that Bankers Trust Company (or the issuing bank of
any Replacement LOC, hereinafter defined) will not renew the Tracor
Litigation Note LOC (or the Replacement LOC) upon its expiration,
Tracor shall have the right to replace the Tracor Litigation Note
LOC (or the Replacement LOC) with a letter of credit issued by
another lender with a net worth and credit quality substantially
the same or better than Bankers Trust Company (the "Replacement
LOC"), provided the Replacement LOC is in the amount of the then
outstanding principal balance of the Tracor Litigation Note, is
fully secured and is actually delivered to the Exchange Agent at
least fifteen (15) days prior to the expiration of the Tracor
Litigation Note LOC (or the Replacement LOC). All letter of credit
fees payable by Tracor to the issuer (but not including any
reimbursement obligations following a draw under the Tracor
Litigation Note LOC (or the Replacement LOC)) and all other
expenses incurred by Tracor in connection with the establishment,
maintenance, renewal, amendment, substitution or replacement of the
Tracor Note LOC shall be paid by Tracor and a like amount shall be
deducted on a dollar-for-dollar basis from the interest otherwise
payable to the Exchange Agent for the pro rata benefit of the
Holders under the Tracor Litigation Note; provided, however, that
no deduction shall be made for any letter of credit fees and
expenses to the extent that they (i) exceed 1% per annum of the
face amount of the Tracor Litigation Note LOC (or the Replacement
LOC), or (ii) are paid to the issuer for any quarter beyond the
quarter in which the Tracor Litigation Note LOC (or the Replacement
LOC) is drawn or surrendered and returned to the issuer. If the
Tracor Litigation Note LOC (or the Replacement LOC) is drawn prior
to the resolution of the Litigation, whether by reason of
non-renewal thereof or otherwise, then the Exchange Agent shall
hold the proceeds thereof in escrow as security for the payment of
the Tracor Litigation Note.
(e) Payment of the Tracor Litigation Note Upon Resolution of
the Litigation. Upon resolution of the Litigation, the Holder
Representative will provide Tracor at least two (2) Business Days'
notice in writing of the amount of the Litigation Payment and the
date on which the Litigation Payment is to be made (the "Litigation
Payment Date"). Such notice will also contain a reconciliation of
the final outstanding principal balance of the Tracor Litigation
Note. Upon the Litigation Payment Date specified in such notice,
such principal balance of the Tracor Litigation Note together with
any accrued interest thereon, will become due and payable by
Tracor. On the Litigation Payment Date, Tracor shall pay or cause
to be paid the Litigation Payment, and shall pay or cause to be
paid the unpaid principal amount of the Tracor Litigation Note,
less the Second Tranche Litigation Payment, plus accrued and unpaid
interest, in cash to the Exchange Agent for the benefit of the
Holders. Upon such payment, the Exchange Agent shall surrender the
Tracor Litigation Note and the Tracor Litigation Note LOC to Tracor
for cancellation.
(f) Conduct of Litigation. After the Closing Date, the
Holder Representative shall not settle the Litigation for an amount
in excess of the sum of Four Million Four Hundred Eighty Thousand
Dollars ($4,480,000) plus the current balance of the Tracor
Litigation Note, without the approval of Tracor, which approval
shall not be unreasonably withheld, taking into account the amount
of the proposed settlement, the rulings and/or decisions by the
court(s) handling the Litigation and other relevant matters. The
Holder Representative shall not in any event settle the Litigation
after the Closing Date, unless such settlement (and judgment based
thereon) includes as an unconditional term thereof a release by
Xxxxx of all claims against the Company Shareholders, any present
or former directors of the Company who are or were defendants in
the Litigation, the Surviving Corporation and Tracor. Both prior
to and after the Closing, the Company, the Surviving Corporation,
Tracor and the Holder Representative shall consult and cooperate
with respect to the Litigation, subject to the foregoing. Prior to
the Closing Date, the Company shall continue to control the defense
and/or settlement of the Litigation, with counsel of its choice,
but the Company shall keep Tracor informed of the status and
progress of the Litigation. After the Closing Date, the Holder
Representative shall control the defense and/or settlement of the
Litigation, but with the same counsel used by the Company prior to
the Closing (unless Tracor or the Surviving Corporation requests a
change of counsel and the Holder Representative approves of such
change, which approval shall not be unreasonably withheld).
(g) Expenses of Litigation. The Company shall bear all legal
fees and expenses and other out-of-pocket expenses incurred by it
prior to the Effective Time in connection with the Litigation.
After the Effective Time, all legal fees and expenses and other
out-of-pocket expenses incurred in connection with the Litigation,
up to an aggregate amount of $750,000, shall be paid by the
Surviving Corporation and a like amount deducted on a
dollar-for-dollar basis from the then outstanding principal balance
of the Tracor Litigation Note. An amount equal to the amount of
any legal fees or expenses or other out-of-pocket expenses incurred
by Tracor or the Surviving Corporation in excess of $750,000 in
connection with the Litigation shall be payable first from any
proceeds of the Tracor Indemnification Note payable to the Holders
and finally from the Principal Shareholders in accordance with
their respective Applicable Percentages.
13. Tracor Indemnification Note and Tracor Indemnification
Note LOC
(a) Tracor Indemnification Note. On the Closing Date, Tracor
shall execute and deliver the Tracor Indemnification Note to the
Exchange Agent for the benefit of the Holders. The Tracor
Indemnification Note shall bear interest as specified therein and
shall be due and payable in accordance with the terms set forth
therein and in this Section 2.13.
(b) Tracor Indemnification Note LOC. On the Closing Date,
Tracor will cause the Tracor Indemnification Note LOC to be issued
and delivered to the Exchange Agent to support the Tracor
Indemnification Note.
(c) Payment of Tracor Indemnification Note LOC. Subject to
Section 2.13(d) and Section 10.1 hereof, the Tracor Indemnification
Note shall be due and payable 18 months after the Effective Time.
Upon payment of the then outstanding principal balance of the
Tracor Indemnification Note, plus accrued and unpaid interest, in
cash to the Exchange Agent for the benefit of the Holders, the
Exchange Agent shall return the Tracor Indemnification Note and the
Tracor Indemnification Note LOC to Tracor for cancellation. The
Exchange Agent shall distribute the proceeds of the Tracor
Indemnification Note to the Holders pro rata in accordance with the
terms of Section 2.10(e) of this Agreement.
(d) Indemnification Offsets. Tracor shall be entitled to
make offsets against the principal balance of the Tracor
Indemnification Note in accordance with the terms of Section 10.1
hereof.
14. Conversion of Common Stock and Options
At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof:
(a) Common Stock and Options. Each share of Company Common
Stock issued and outstanding and of record as of the Effective Time
other than Dissenting Shares and each unexercised Company Stock
Option shall be converted into and shall thereafter represent the
right to receive from Tracor the pro rata share of the Merger
Consideration represented by each such share and each unexercised
Company Stock Option, which shall be the Per Share Amount as
determined under Section 2.10(e). After the Effective Time, each
Holder shall be entitled to receive for each Fully Diluted Company
Share held by such Holder, upon surrender for cancellation of the
Certificates which formerly represented such shares of Company
Common Stock, and the Option Documents representing the Company
Stock Options held by such Holder, the applicable portion of the
Merger Consideration, consisting of all of the Per Share Amount
payable as of the Closing Date in cash forthwith, and the Per Share
Amounts payable subsequent to the Closing Date as provided under
Sections 2.7, 2.8, 2.9, 2.10, 2.11, 2.12 and 2.13.
(b) Preferred Stock. Any preferred stock issued by the
Company that is outstanding and convertible into Company Common
Stock shall automatically be converted as of the close of business
on the date immediately prior to the date on which the Effective
Time occurs in accordance with its terms and conditions. Each
share of Company Common Stock which is held in treasury of the
Company (including those shares reserved for issuance upon exercise
of Options or warrants) immediately prior to the Effective Time
shall be canceled and retired and cease to exist and no
consideration shall be issued in exchange therefor.
15. Conversion of Merger Sub Shares
At the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, each share of the Merger
Sub Shares issued and outstanding as of the Effective Time shall be
converted into and shall thereafter represent the right to receive
one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation. After the Effective Time,
Tracor, as holder of the Merger Sub Shares, shall be entitled to
receive a stock certificate or certificates representing 1,000
shares of common stock of the Surviving Corporation upon surrender
for cancellation of the certificates which formerly represented
such Merger Sub Shares.
16. Dissenting Shares
Any Dissenting Shares shall not be converted into the right to
receive the Per Share Amount of the Merger Consideration, and the
holders thereof shall have only such rights with respect to such
shares of Company Common Stock as are provided in Section 262 of
the GCL unless and until the Holder of any such shares of Company
Common Stock withdraws his demand for such appraisal in accordance
with Section 262(k) of the GCL or otherwise loses his right to such
appraisal. If a Holder of Dissenting Shares shall properly
withdraw his demand for appraisal or shall otherwise lose his right
to such appraisal, then, as of the Effective Time or the occurrence
of such event, whichever last occurs, such Holder's Dissenting
Shares shall cease to be Dissenting Shares and shall be converted
into and represent the right to receive the Per Share Amount of the
Merger Consideration, without any interest thereon (except as
otherwise provided in this Agreement). Within 30 days after the
Effective Time, the Company shall give Tracor prompt notice of any
written demands for appraisal or withdrawals of demands for
appraisals received by the Company and any other Documents obtained
by the Company pursuant to Section 262 of the GCL and, except with
the prior written consent of Tracor, which shall not be
unreasonably withheld, shall not settle or offer to settle any such
demands. Each Holder of Dissenting Shares who becomes entitled
pursuant to Section 262 of the GCL to payment for his shares of
Company Common Stock shall receive payment therefor after the
Effective Time from the Surviving Corporation (but only after the
amount thereof shall have been agreed upon or finally determined
pursuant to such provisions) and such shares of Company Common
Stock shall be canceled as of the Effective Time in accordance with
Section 262 of the GCL.
17. Surrender of Certificates and Option Documents
(a) Surrender and Payment. At the Closing, the Company,
Tracor and the Holder Representative shall enter into an Exchange
Agent Agreement with the Exchange Agent for the purpose of
effecting the payments to Holders contemplated hereby. Such
agreement shall provide, among other things, that promptly after
the Effective Time, the Exchange Agent shall mail to each Holder a
notice that the Merger has become effective and a letter of
transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates and Option Documents
shall pass, only upon proper delivery of the Certificates and
Option Documents to the Exchange Agent in accordance with the terms
of delivery specified in such transmittal letter and shall be in
such form and have such other provisions as Tracor and the Company
may reasonably specify) and instructions for use in effecting the
surrender of the Certificates and Option Documents for payment of
the Per Share Amount of the Merger Consideration. Upon surrender
of a Certificate or Option Document to the Exchange Agent, together
with such letter of transmittal, duly executed, the holder of such
Certificate or Option Document shall be entitled to receive
therefor one or more cash payments included in the Merger
Consideration, calculated in accordance with Section 2.10(e), and
the Certificate so surrendered shall forthwith be canceled;
provided, however, that those Holders of Company Common Stock
listed in the Disclosure Schedule who have executed promissory
note(s) in favor of the Company in connection with the acquisition
of their shares of Company Common Stock or are otherwise indebted
to the Company for withholding taxes or otherwise shall receive
from the Exchange Agent the Per Share Amount for each of the shares
of Company Common Stock owned by such Holder less the amount of
principal and interest outstanding under such promissory note(s) or
other indebtedness as set forth in the Disclosure Schedule (which
shall be deducted from the first payment of the Per Share Amount)
and the Exchange Agent shall in turn remit the amount of such
principal and interest to the Surviving Corporation, which shall
cancel such promissory note(s) or other such indebtedness. At and
after the Effective Time, each Certificate and each Option Document
shall be deemed for all corporate purposes to evidence only the
right to receive the Per Share Amount of the Merger Consideration
for each share of Company Common Stock formerly represented by such
Certificate or Option Document, and shall not evidence any interest
in, or any right to exercise the rights of a Holder of, stock in
the Surviving Corporation. No interest will be paid or accrued on
the cash payable upon the surrender of Certificates or Option
Documents except as otherwise provided in this Agreement. If
payment for any share of Company Common Stock or Company Stock
Option is to be made to a Person other than the one in whose name
the Certificate or Option Document surrendered for payment is
registered or issued, it shall be a condition to such payment that
such Certificate or Option Document be properly endorsed (or
accompanied by an appropriate instrument of transfer) and
accompanied by evidence that any applicable stock transfer taxes
have been paid or provided for.
(b) Late Surrender. Any cash deposited with the Exchange
Agent and not paid to the Holders pursuant to this Section 2.17
within three years after the Effective Time shall be repaid by the
Exchange Agent to the Surviving Corporation after which time any
holder of Certificates or Option Documents who has not theretofore
delivered or surrendered such Certificates or Option Documents to
the Exchange Agent, subject to applicable Law, shall look as a
general creditor only to the Surviving Corporation for payment of
the Merger Consideration. Notwithstanding the foregoing, neither
the Exchange Agent, the Surviving Corporation nor any party hereto
shall be liable to any Holder for any Merger Consideration
delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws.
(c) Cessation of Rights. At and after the Effective Time,
each Holder shall cease to have any rights as a stockholder of the
Company, except for the right to surrender his Certificates or
Option Documents in exchange for the Merger Consideration as
provided in Section 2.14 and this Section 2.17 and for the rights
of Dissenting Shares as provided in Section 2.16, as applicable,
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 as of the Effective
Time. If, after the Effective Time, Certificates or Option
Documents are presented to the Surviving Corporation or Tracor for
any reason, they shall be canceled and exchanged for the Per Share
Amount of the Merger Consideration as provided in Section 2.14 and
this Section 2.17 (other than those representing Dissenting Shares,
which shall be treated as provided in Section 2.16).
18. Shareholders' Approval
The Company shall, in accordance with applicable Law, duly
call, give notice of, convene and hold a meeting of the Holders of
shares of Company Common Stock, or obtain a written consent in lieu
thereof, as soon as practicable after the date hereof for the
purpose of voting upon (or passing upon in writing) this Agreement
and the Merger, and shall use its Best Efforts to secure the
approval by a majority of the Holders of shares of Company Common
Stock of this Agreement and the Merger, subject to the provisions
hereof; and use its Best Efforts to obtain and furnish the
information required to be provided to such Holders by the GCL.
19. Procedure for Reduction of Letters of Credit
(a) The Tracor Indemnification Note LOC may be permanently
reduced from time to time after compliance with the procedures set
forth in Section 10.1(c) hereof, upon submission of a certificate
in the form attached as Annex A to the Tracor Indemnification Note
LOC, provided that either the Holder Representative has given his
prior written consent to such reduction, or the panel of
arbitrators appointed pursuant to Section 10.1(c) hereof has issued
an order of arbitrators approving such reduction.
(b) The Tracor Litigation Note LOC may be permanently reduced
from time to time in the amounts of payments of principal of or any
offsets made against the Tracor Litigation Note, as provided
therein, upon submission of a certificate in the form attached as
Annex D to the Tracor Litigation Note LOC, provided that prior to
any offset or payment of principal on the Tracor Litigation Note,
Tracor shall give to the Holder Representative a written notice of
the amount of any such proposed payment or offset, specifying the
amount, nature, and specific basis for such payment or offset (a
"Reduction Notice"). The Holder Representative shall have a period
of thirty (30) days after receipt of the Reduction Notice to
dispute the proposed payment or offset by a notice in writing given
to Tracor. If the parties cannot mutually agree to the settlement
of any such dispute, before Tracor may exercise its right of offset
or make the proposed payment of principal, such dispute shall be
settled exclusively by arbitration in New York, New York, by a
panel of three arbitrators selected in accordance with the rules of
the American Arbitration Association then in force (the "American
Arbitration Association Rules"). Either the Holder Representative
or Tracor may serve upon the other a written demand for arbitration
in accordance with the American Arbitration Association Rules. The
provisions of Section 10.1(c)(iv) and (v) shall apply to any such
dispute.
3. ADDITIONAL UNDERTAKINGS AND COVENANTS PRIOR TO CLOSING
1. Best Efforts
Subject to the terms and conditions of this Agreement, prior
to the Closing each of the Company, Tracor and Merger Sub agrees to
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 and all agreements
to consummate and make effective the transactions contemplated by
this Agreement on or before September 30, 1996, including, without
limitation, (i) compliance with the provisions of the GCL relating
to the Merger, (ii) the prompt preparation and filing by the
appropriate party or parties of all applicable forms under the HSR
Act, and (iii) the preparation and filing by the appropriate party
or parties of all other forms, registrations and notices required
to be filed to consummate the transactions contemplated hereby and
the taking of such actions as are necessary to obtain any requisite
approvals, consents, orders, exemptions or waivers by any
Governmental Entity. Each of the Company and Tracor shall promptly
consult with the other with respect to, provide any necessary
information with respect to, and provide the other (or its counsel)
copies of, all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions
contemplated hereby.
2. Access; Investigations by Tracor
The Company shall, prior to the Closing, provide to
representatives of Tracor full access (as is reasonably necessary)
to the books, agreements, records (including, without limitation,
tax returns and correspondence with accountants), officers,
directors, employees, consultants and contractors of the Company
and the Subsidiaries and will furnish representatives of Tracor
such financial and operating data and other information with
respect to the businesses and Assets of the Company and the
Subsidiaries as Tracor may request, including, without limitation,
agreements with clients, customers, vendors, lessors, licensors and
suppliers of the Company and the Subsidiaries; provided, however,
that neither the Company nor the Subsidiaries shall be required to
provide to Tracor any information with respect to bid materials,
proposals or other information relative to contract awards or
purchase orders for which Tracor also has submitted or intends to
submit a competing bid or offer, or any information the disclosure
of which is forbidden by the Industrial Security Classification
Regulations. Tracor (for itself and its subsidiaries), the Company
(for itself and its subsidiaries) and the Merger Sub each agrees at
all times prior to the Closing to comply with the terms of that
certain Confidentiality Agreement dated as of April 19, 1996 by and
between Tracor and Xxxxxx, Xxxxx Xxxxx, Inc.
3. Operation of Business of the Company and the Subsidiaries
(a) Maintenance of Business. The Company shall use its Best
Efforts, and shall cause each of its Subsidiaries to use its Best
Efforts, prior to the Closing, to (i) preserve their business
organizations and their present relationships with customers,
suppliers, consultants, employees and any other Persons having
business relations with them; and (ii) maintain all of their
respective Assets in customary repair and condition.
(b) Prohibited Activities. Except as contemplated by this
Agreement including the Disclosure Schedule, or as reasonably
required to carry out their obligations hereunder, the Company
shall, and shall cause each of the Subsidiaries, prior to the
Closing, to conduct their respective businesses only in the
Ordinary Course of Business and, in addition, not: (i) issue any
capital stock (except for issuances of Company Common Stock (A) to
Holders of Company Stock Options or (B) pursuant to the Company's
stock bonus plan, including acceleration of grants under such
Plan); (ii) declare, set aside or pay any dividend or distribution
with respect to their capital stock to the holders of Company
capital stock; (iii) directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock (except as required by
the Company's March 1990 subscription agreements, the Company's May
1990 stock option plan, or the Company's stock bonus plan, each as
amended); (iv) effect a split, reclassification or other change in
or of any of their capital stock; (v) amend their certificates or
articles of incorporation or bylaws; (vi) grant any increase in the
compensation payable or to become payable by the Company or any
Subsidiary to officers or, other than in the Ordinary Course of
Business, employees of the Company or any Subsidiary or enter into
any bonus, insurance, pension or other benefit plan, payment or
arrangement for or with any of such officers or employees, other
than for or with employees in the Ordinary Course of Business;
(vii) borrow or agree to borrow any funds, or directly or
indirectly guarantee or agree to guarantee the obligations of
others other than in the Ordinary Course of Business or in
connection with settling or resolving the Litigation; (viii) enter
into any agreement which may have a Material Adverse Effect;
(ix) place, or allow to be placed, an Encumbrance on any of their
Assets other than in the Ordinary Course of Business; (x) cancel
any indebtedness owing to the Company or any Subsidiary or any
claims which the Company or any Subsidiary may possess, or waive
any rights of substantial value; (xi) sell, assign or transfer any
Intellectual Property, other than pursuant to that certain Sale of
Assets Agreement dated March 26, 1996 by and between Cordant, Inc.
and DSK Systems, Inc. in connection with the sale of the Company's
computer security business known as the Assure family of products;
(xii) sell or otherwise dispose of any interest in any Asset (other
than in the Ordinary Course of Business); (xiii) violate any Laws
which may have a Material Adverse Effect; (xiv) commit any act or
omit to do any act, or engage in any activity or transaction or
incur any obligation (by conduct or otherwise), which (individually
or in the aggregate) reasonably could be expected to have a
Material Adverse Effect; or (xv) make any loan or advance to any
stockholder, officer or director of the Company or any Subsidiary
or to any other person, firm or corporation.
(c) Material Adverse Changes. The Company shall notify
Tracor promptly of any material adverse change in the business,
operations, prospects, condition (financial or otherwise), Assets
or liabilities of the Company or any Subsidiary prior to the
Closing, including, without limitation, information (including,
without limitation, copies of all Documents relating thereto)
concerning all claims instituted, threatened or asserted against or
affecting the Company or any Subsidiary or their respective
businesses or Assets at Law or in equity before or by any court or
Governmental Entity.
(d) Accounting. Prior to the Closing, the Company shall, and
shall cause each Subsidiary to, keep proper books of record and
account in which true and complete entries will be made of all
transactions in accordance with GAAP, and shall supply to Tracor
monthly unaudited consolidated balance sheets and statements of
income of the Company, prepared in compliance with Section 4.6, as
soon as practicable after the end of each month, and such other
Documents (financial or otherwise) as Tracor shall reasonably
request. Tracor may contract with Deloitte & Touche to have the
monthly balance sheets and statements of income reviewed by
Deloitte & Touche, with all of Deloitte & Touche's fees and
expenses to be borne by Tracor.
(e) Significant Developments. Prior to the Closing, the
Company shall inform and discuss with Tracor on a regular and
ongoing basis the management of the businesses and Assets of the
Company and the Subsidiaries, including, without limitation, any
significant new agreements or transactions proposed to be entered
into or persons employed or terminated by the Company or by any
Subsidiary, and any other significant developments relating to the
businesses or Assets of the Company or of any Subsidiary (other
than in the Ordinary Course of Business); provided, however, that
Tracor shall have no express or implied power, authority or
responsibility with respect to the Company, any Subsidiary or their
businesses, Assets or agreements. Without limiting the foregoing,
the Company shall not enter into any agreement, understanding,
commitment or other arrangement (whether written or oral) with any
Subsidiary or any officer, director, employee or agent thereof
after the date hereof, without the prior written consent of Tracor,
other than in the Ordinary Course of Business and except as set
forth on the Disclosure Schedule.
4. No Inconsistent Negotiations
The Company shall immediately cease any existing discussions
or negotiations with any parties conducted prior to the date of
this Agreement in respect of the acquisition of all or
substantially all of the business of the Company or any Subsidiary,
whether by sale of Assets or shares of capital stock, or by merger,
consolidation, or similar transaction (collectively, an
"Acquisition Transaction"). The Company shall not, and shall not
permit its officers, employees, representatives or agents to,
directly or indirectly, (i) solicit or initiate discussions or
negotiations with, or provide any nonpublic information to, any
person other than Tracor or its Affiliates concerning an
Acquisition Transaction, or (ii) otherwise solicit or initiate
inquiries or the submission of any Proposal contemplating an
Acquisition Transaction. The Company shall promptly communicate to
Tracor the terms, including the identity of the Person making such
Proposal, of any inquiry or Proposal which it may receive in
respect of an Acquisition Transaction. Nothing contained in this
Agreement shall be construed to prohibit the Board of Directors of
the Company from any or all of the following, if the Board of
Directors of the Company is advised by its legal counsel that the
failure to so act could involve a breach of fiduciary duty on the
part of the Board of Directors: (a) engaging in discussions or
negotiations with, and providing nonpublic information to, any
person other than Tracor or its Affiliates which has initiated
discussions or negotiations, or made an unsolicited inquiry or
Proposal, concerning an Acquisition Transaction (including other
parties solicited by the Company prior to the date of this
Agreement), (b) withdrawing, modifying or refraining from making
its recommendation to the shareholders of the Company of the
Merger, and (c) accepting an offer for an Acquisition Transaction
which the Board of Directors of the Company believes is more
favorable to the Company or to its shareholders than the Merger
("Superior Transaction") and recommending the Superior Transaction
to the shareholders of the Company.
5. News Releases
Neither Tracor nor the Company or its Subsidiaries shall issue
or approve any news release or other public announcement concerning
the transactions contemplated by this Agreement without the prior
approval of Tracor and the Company (which approval shall not be
unreasonably withheld and shall be consistent with applicable legal
requirements).
6. Exercise of Options; Termination of Stock Option Plans
and Agreements
The Company shall, prior to Closing, if requested by Tracor,
take such actions as may be necessary to (a) permit each holder of
a Company Stock Option to exercise all such Company Stock Options
held by such holder on or prior to the Closing, and (b) terminate
all of the Company's stock option plans, stock option agreements,
and stock repurchase agreements, to be effective no later than the
Closing Date. The Company shall, as of the Effective Time, take
such actions as may be necessary to cause unvested grants to become
vested and then immediately thereafter terminate the Company's
Stock Bonus Plan. Each share of Company Common Stock issued by the
Company pursuant to the Company's stock option plans and agreements
or Stock Bonus Plan prior to or on the Closing Date shall be valued
by the Company, for federal and state income tax purposes, at an
amount at least equal to the Initial Cash Payment per Fully Diluted
Share.
7. Subsequent Events
The Company shall notify Buyer and Tracor shall notify the
Company promptly in writing of the occurrence of any event, or the
failure of any event to occur, prior to the Closing that results in
an omission from, or breach of, any of the covenants, agreements,
representations or warranties made in this Agreement, the
Disclosure Schedule or any other Document furnished in connection
with or pursuant to this Agreement, but such notification shall not
excuse breaches of covenants or agreements disclosed in such
notification or affect the conditions precedent set forth in
Articles 6 or 7 hereof.
8. Indemnification and Insurance
(a) Indemnification. Tracor, on behalf of the Surviving
Corporation, agrees that all rights to indemnification from the
Company existing on the date hereof in favor of the present or
former officers or directors of the Company with respect to actions
taken in their capacity as such officers and directors prior to the
Effective Time as provided in the Company's Certificate of
Incorporation or By-Laws or similar documents of any of the
Subsidiaries shall survive the Merger as obligations of the
Surviving Corporation following the Effective Time and remain in
full force and effect, and shall not be modified in any way which
reduces such indemnification except with the consent of such
persons, and all such rights in any agreement in effect as of the
Effective Time between the Company or any Subsidiary and any such
officer or director shall survive the Merger and shall continue in
full force and effect, in accordance with its terms, in either case
to the extent not prohibited by law.
(b) Insurance. Tracor will use its Best Efforts to maintain
and continue in effect, for a period of at least three (3) years
following the Effective Time, the officers' and directors'
insurance policies covering the Company's officers and directors
then maintained by the Company or comparable (in scope and amount
of coverage) officers' and directors' insurance policies.
9. Certain Benefits
Each of the Company, Tracor and Merger Sub acknowledges that
consummation of the transactions contemplated by this Agreement
will constitute a change in control of the Company (to the extent
such concept is applicable) for the purposes of the agreements,
contracts, plans, programs, policies and arrangements of the
Company described in the Disclosure Schedule. From and after the
Effective Time, the Surviving Corporation shall (a) honor the
Company's management incentive plan and the Company's discretionary
bonus practice for the year ending December 31, 1996, not to exceed
previously budgeted amounts without approval of the Surviving
Corporation's Board of Directors, (b) honor the Company's director
and management deferred compensation plan, provided that the
Surviving Corporation may amend such Plan effective January 1,
1997, if Tracor deems it necessary to cause it to comply with
applicable Internal Revenue Service and Securities and Exchange
Commission regulations, and (c) honor the Company's severance
practices until December 31, 1997, at which time the employees of
the Surviving Corporation shall become participants in the Vitro
Corporation severance plan or, at the option of Tracor, in another
severance Plan maintained by Tracor or any of its Subsidiaries.
All participants in the Company's 401(k) Plan shall be vested in
their account balances thereunder as of the Effective Time and
effective as soon as practicable thereafter and in any event, prior
to January 1, 1997, become participants in the Tracor, Inc. 401(k)
savings plan, provided that the employer's matching contribution
shall be consistent with that in the Cordant, Inc. 401 (k) savings
plan. For the purposes of participating in any severance, 401(k),
vacation or defined benefit plan, each participant's years of
service with the Company shall be deemed the same number of years
of service with Tracor or one of its subsidiaries; provided,
however that with respect to defined benefit plans, such years of
service shall be deemed to be the same for vesting purposes only.
Regular employees of the Surviving Corporation will be eligible for
continued health and welfare benefit plans after the Effective Time
(i.e. comprehensive medical and dental insurance, long term and
short term disability insurance, employee assistance program,
health care and dependent care flexible spending accounts, life and
accident insurance, vacation and holidays). For the purposes of
participating in any medical and dental plan maintained by Tracor
or any of its subsidiaries (i) any pre-existing conditions
qualifications of such Plan shall be waived, and (ii) employees of
the Surviving Corporation who have made payments in respect of any
deductible amounts under a medical or dental Plan maintained by the
Company, shall be given credit therefor under any such plan
maintained by Tracor or one of its subsidiaries.
10. Employment Agreements
Cordant, Inc. shall enter into the Executive Employment
Agreements, in the form attached hereto as Exhibit F, effective as
of the Effective Time, with the Executives and for the positions,
base salaries and total targeted compensation set forth in a letter
agreement signed by such Executives and Cordant, Inc. concurrently
with the execution of this Agreement.
11. Compliance with Conditions Precedent
The Company, Tracor and Merger Sub will each use its Best
Efforts to cause the conditions precedent to the Merger set forth
in Articles 6 and 7 hereof to be fulfilled subject to the terms
hereof.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PRINCIPAL SHAREHOLDERS
Except as contemplated by this Agreement or as specified in
the Disclosure Schedule, the Company represents and warrants and
the Principal Shareholders represent and warrant (which
representations and warranties shall be deemed to be qualified by
the disclosures with respect thereto set forth in the Disclosure
Schedule) to Tracor and Merger Sub as follows:
1. Organization and Standing
The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and
has all requisite corporate power and authority to own, operate and
lease its Assets, to carry on its business as currently conducted,
to execute and deliver this Agreement and to carry out the
transactions contemplated hereby. The Company is duly qualified to
conduct business as a foreign corporation and is in good standing
in the states, countries and territories listed on the Disclosure
Schedule. The Company is not qualified to conduct business in any
other jurisdiction, and neither the nature of the business
conducted by the Company nor the character of the Assets owned,
leased or otherwise held by it makes any such qualification
necessary. There is no state, country or territory wherein the
absence of licensing or qualification as a foreign corporation
would have a Material Adverse Effect on the Company.
2. Subsidiaries
The Company has no subsidiaries and no equity investment or
other interest in, nor has the Company made advances (other than
prepayments made in the Ordinary Course of Business) or loans to,
any Person. Each Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its state
or jurisdiction of incorporation, and has the full and unrestricted
corporate power and authority to own, operate and lease its Assets
and to carry on its business as currently conducted. Each
Subsidiary is qualified to conduct business and is in good standing
in the states, countries and territories listed in the Disclosure
Schedule. The Subsidiaries are not qualified to conduct business
in any other jurisdictions, and neither the nature of their
businesses nor the character of the Assets owned, leased or
otherwise held by them makes any such qualification necessary.
There is no state, country or territory wherein the absence of
licensing or qualification as a foreign corporation would have a
Material Adverse Effect on any Subsidiary.
3. Certificate of Incorporation and Bylaws
The Company has furnished to Tracor a true and complete copy
of the certificate of incorporation of the Company and of each
Subsidiary, as currently in effect, certified as of a recent date
by the Secretary of State (or comparable governmental authority) of
the respective jurisdictions of incorporation, and a true and
complete copy of the bylaws of the Company and of each Subsidiary,
as currently in effect, certified by their respective corporate
secretaries. Such certified copies are attached as exhibits to,
and part of, the Disclosure Schedule.
4. Capitalization
(a) Authorized Capital of the Company. The authorized
capital of the Company as of the date hereof consists of:
(i) Company Common Stock: twenty million (20,000,000)
shares of Company Common Stock, of which four million five
hundred nineteen thousand four hundred twenty (4,519,420)
shares are duly authorized, validly issued and outstanding,
fully paid and non-assessable, and have been issued in
compliance with all applicable federal and state securities
laws; provided, however, that certain shares of Company Common
Stock were paid for, in part,
by those holders of shares of Common Stock identified in the
Disclosure Schedule by the execution of promissory notes
payable to the Company;
(ii) Reserved Company Common Stock: The Company has reserved
(A) four hundred twenty-two thousand four hundred ninety (422,490)
shares of Company Common Stock for issuance pursuant to the
Company's Stock Option Plan and (B) five hundred thirty thousand
three hundred eighty (530,380) shares of Company Common Stock for
issuance pursuant to the Company's Stock Bonus Plan. Except as
described in this Section 4.4(a)(ii), the Company has not reserved
any capital stock for any purpose and there are no options,
warrants, conversion privileges, preemptive rights or other rights
currently outstanding to purchase or receive any of the capital
stock of the Company;
(iii) Series A Preferred Stock: seventeen thousand eight
hundred eighty-eight (17,888) shares of Series A Preferred Stock,
of which no shares are validly issued and outstanding;
(iv) Series B Preferred Stock: eleven thousand (11,000) shares
of Series B Preferred Stock, of which no shares are validly issued
and outstanding; and
(v) Unclassified Preferred Stock: seventy-one thousand one
hundred twelve (71,112) shares of unclassified preferred stock, of
which no shares are validly issued and outstanding.
(b) Authorized Capital of Subsidiaries. The Disclosure
Schedule sets forth the authorized capital stock of each subsidiary
of the Company and the ownership of the outstanding capital stock
of each subsidiary. All of such shares of capital stock of
subsidiaries have been duly authorized and validly issued and are
outstanding, fully paid and nonassessable. The Company or its
subsidiaries, as applicable, directly owns such shares of capital
stock of the subsidiaries free and clear of all Encumbrances.
There are no options, warrants, conversion privileges, preemptive
rights or other rights currently outstanding to purchase or receive
any of the capital stock of any subsidiary.
(c) Option and Bonus Shares. All shares of Company Common
Stock to be issued upon the exercise of Company Stock Options, and
all Bonus Shares of Company Common Stock to be issued under the
Stock Bonus Plan subsequent to the date hereof, will be, when
issued, duly authorized, validly issued, fully paid and
nonassessable, free of any Encumbrance, and issued in compliance
with all applicable federal and state securities Laws.
(d) Outstanding Agreements. There are no outstanding
agreements affecting or relating to the voting, issuance, purchase,
registration for sale, redemption, repurchase or transfer of
Company Common Stock, any other securities of the Company, or any
securities of any Subsidiary.
5. Directors, Officers and Employees
The Disclosure Schedule lists all current directors, officers
and employees of the Company and the Subsidiaries, showing each
such person's name, positions, and annual remuneration and bonuses
either as targeted for 1996 or paid for 1995 (except bonuses which
have not been determined for the current fiscal year) in the
current fiscal year.
6. Financial Statements
The Company has prepared and furnished to Tracor, and there
are included as exhibits that are part of the Disclosure Schedule,
the audited consolidated balance sheets of the Company as of the
end of the fiscal year ending in each of 1992, 1993, 1994 and 1995,
and the audited consolidated statements of operations,
stockholders' equity and cash flows for each of such fiscal years,
and the unaudited consolidated balance sheet of the Company as of
June 30, 1996, and the unaudited consolidated statements of
operations and changes in cash flows for the period then ended.
All of the financial statements, including, without limitation, the
notes thereto, referred to in this Section 4.6 or furnished to
Tracor after the date hereof pursuant to this Agreement: (a) are in
accordance with the books and records of the Company, (b) present
fairly the consolidated financial position of the Company as of the
dates and the results of operations and cash flows for the periods
indicated, and (c) have been prepared in accordance with GAAP.
7. No Liabilities
Except as reflected in the financial statements furnished
pursuant to this Agreement, there are no material liabilities
(whether contingent or absolute, matured or unmatured) of the
Company or any Subsidiary. Since the Current Balance Sheet Date,
the Company has not incurred any liabilities (whether contingent or
absolute, matured or unmatured) other than in the Ordinary Course
of Business.
8. Accounts Receivable
The accounts receivable of the Company and the Subsidiaries
shown on the balance sheets furnished pursuant to Section 3.3(d) or
4.6, or thereafter acquired by any of them, have been collected or
are collectible in amounts not less than the amounts thereof
carried on the books of the Company and the Subsidiaries, except to
the extent of the allowance for doubtful accounts shown on such
balance sheets.
9. Taxes
(a) Filing of Tax Returns; Payment of Taxes. The Company and
the Subsidiaries have (or, in the case of returns becoming due
after the date hereof and on or before the Closing Date, will have
prior to the Closing Date) duly filed all the Company Tax Returns
required to be filed by the Company and the Subsidiaries on or
before the Closing Date with respect to all applicable Taxes, and
no penalties or other charges are or will become due with respect
to any of the Company Tax Returns as the result of the late filing
thereof. All of the Company Tax Returns are (or, in the case of
returns becoming due after the date hereof and on or before the
Closing Date, will be) true and complete in all material respects.
The Company and the Subsidiaries: (i) have timely paid all Taxes
due or claimed to be due by any Taxing authority in connection with
any of the Company Tax Returns; or (ii) have established (or, in
the case of amounts becoming due after the date hereof, prior to
the Closing Date will have paid or established) in financial
statements provided to Tracor pursuant to Section 3.3(d) or 4.6
adequate reserves (in conformity with GAAP) for the payment of such
Taxes. The amounts set up as reserves for Taxes on the
consolidated financial statements of the Company furnished pursuant
to Section 3.3(d) or 4.6 are sufficient for the payment of all
unpaid Taxes, whether or not such Taxes are disputed or are yet due
and payable, for or with respect to the applicable period, and for
which the Company or any Subsidiary may be liable in its own right
(including, without limitation, by reason of being a member of an
affiliated group, pursuant to Treasury Regulation Section 1.1502-6
or otherwise) or as a transferee of the Assets of, or successor to,
any corporation, person, association, partnership, joint venture or
other entity.
(b) Unpaid Taxes. Except for those matters set forth in
Exhibit H attached hereto, neither the Company nor any Subsidiary,
either in its own right (including, without limitation, by reason
of being a member of an affiliated group, pursuant to Treasury
Regulation Section 1.1502-6 or otherwise) or as a transferee, has
or on the Closing Date will have any liability for Taxes payable
for or with respect to any periods prior to and including the
Closing Date in excess of the amounts actually paid prior to the
Closing Date or reserved for in financial statements furnished to
Tracor pursuant to Section 3.3(d) or 4.6.
(c) Deficient Taxes. There is no action, suit, proceedings,
audit, investigation or claim pending or, to the knowledge of the
Company, threatened in respect of any Taxes for which the Company
or any Subsidiary is or may become liable, nor has any deficiency
or claim for any such Taxes been proposed, asserted or, to the
knowledge of the Company, threatened. Neither the Company nor any
Subsidiary has consented to any waivers or extensions of any
statute of limitations with respect to any taxable year of the
Company or any Subsidiary. There is no agreement, waiver or
consent providing for an extension of time with respect to the
assessment or collection of any Taxes against the Company or any
Subsidiary, and no power of attorney granted by the Company or any
Subsidiary with respect to any tax matters is currently in force.
(d) Tax Returns. The Company has furnished to Tracor true
and complete copies of all the Company Tax Returns for the past 5
years and all written communications with the Internal Revenue
Service relating to any such Company Tax Returns or to any
deficiency or claim proposed and/or asserted, irrespective of the
outcome of such matter, but only to the extent such items relate to
tax years (i) which are subject to an audit, investigation,
examination or other proceeding, or (ii) with respect to which the
statute of limitations has not expired.
(e) Partnerships, Affiliated Groups, Etc. Neither the
Company nor any of the Subsidiaries (i) is or has ever been a
partner in a partnership or an owner of an interest in an entity
treated as a partnership for federal income tax purposes; (ii) has
executed or filed with the Internal Revenue Service any consent to
have the provisions of Section 341(f) of the Code apply to it;
(iii) is subject to Section 999 of the Code; (iv) is a passive
foreign investment company as defined in Section 1296(a) of the
Code; (v) is a party to an agreement relating to the sharing,
allocation or payment of, or indemnity for, Taxes (except for the
"indemnification agreement" dated October 16, 1992 with Centel for
1991 tax NOL carrybacks to the Centel Affiliated Group returns for
prior to March 27, 1990); or (vi) other than being a member of the
Centel "affiliated group" prior to March 27, 1990, and of the
M/A-COM, Inc. "affiliated group" prior to October, 1986, has ever
been a member of an "affiliated group" (as defined in Section
1504(a) of the Code) which did not have the Company as the common
parent corporation.
(f) Property Owned by Others; Tax-Exempt Property. None of
the Assets and properties of the Company or the Subsidiaries is an
Asset or property that Tracor is or will be required to treat as
being (i) owned by any other person pursuant to the provisions of
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately before the enactment of the Tax Reform
Act of 1986, or (ii) tax-exempt use property within the meaning of
Section 168(h)(1) of the Code.
(g) Closing Agreements. No closing agreement pursuant to
Section 7121 of the Code (or any predecessor provision) or any
similar provision of any state, local, or foreign Law has been
entered into by or with respect to the Company or any of the
Subsidiaries or any Assets thereof.
(h) Disclosure of Positions. All positions taken on federal
Tax Returns that could give rise to a penalty for substantial
understatement pursuant to Section 6662 of the Code have been
disclosed on such Tax Returns or there is or was substantial
authority for such treatment.
(i) Non-deductible Payments. Neither the Company nor any of
the Subsidiaries has made any payments, is obligated to make any
payments, or is a party to any agreement that under certain
circumstances could obligate it to make any payments that will not
be deductible under Section 280G of the Code or under Section
162(m) of the Code.
(j) Excess Loss Accounts; Deferred Intercompany Gains. No
"excess loss account"or "deferred intercompany gain" (as such terms
are described in Treasury Regulation Section 1.1502) exists for,
between or with respect to the Company or any of the Subsidiaries.
(k) Tax Elections. Neither the Company nor any of the
Subsidiaries has made any tax elections under any Section of the
Code, including, without limitation under any of Sections 108, 168,
338, 441 (except for a change of tax year election made in 1986 to
a calendar year tax period), 472, 1017, 1033 or 4977, or Treasury
Regulation 1.1502.
(l) Change in Accounting Method. Neither the Company nor any
of the Subsidiaries has agreed to or is required to make any
adjustment pursuant to Section 481(a) of the Code by reason of any
change in any accounting method. Neither the Company nor any of
the Subsidiaries has an application pending with any taxing
authority requesting permission for a change in any accounting
method.
(m) Foreign Persons. Neither the Company nor any of the
Subsidiaries is a foreign person within the meaning of
Section 1445(b) of the Code.
10. Conduct of Business; Absence of Material Adverse Effect
Since the Current Balance Sheet Date, there has been no change
which could reasonably be expected to cause a Material Adverse
Effect, and no change except in the Ordinary Course of Business, in
the business, operations, prospects, condition (financial or
otherwise), Assets or liabilities of the Company or any Subsidiary
or any event, condition or contingency that is, in the reasonable
judgment of management of the Company, likely to result in such a
Material Adverse Effect in the business, operations, prospects,
condition (financial or otherwise), Assets or liabilities of the
Company or any Subsidiary, other than changes resulting from
developments affecting the federal government contracting industry
generally. Since the Current Balance Sheet Date, the Company and
the Subsidiaries have conducted their respective businesses
diligently and substantially in the manner heretofore conducted and
only in the Ordinary Course of Business, and neither the Company
nor any Subsidiary has (a) incurred a material loss of, or
significant injury to, any Assets of the Company or of any such
Subsidiary as the result of any fire, explosion, flood, windstorm,
earthquake, labor trouble, riot, accident, act of God or public
enemy or armed forces, or other casualty; (b) issued any capital
stock (except as permitted by this Agreement), bonds or other
corporate securities or debt instruments, granted any options,
warrants or other rights calling for the issuance thereof, or
borrowed any funds; (c) incurred, or become subject to, any
material obligation or material liability (absolute or contingent,
matured or unmatured), except current liabilities incurred in the
Ordinary Course of Business; (d) discharged or satisfied any
Encumbrance or paid any material obligation or material liability
(absolute or contingent, matured or unmatured) other than current
liabilities or credit lines shown in the balance sheets furnished
pursuant to Section 3.3(d) or 4.6, and current liabilities incurred
since the Current Balance Sheet Date in the Ordinary Course of
Business; (e) declared or made payment of, or set aside for
payment, any dividends or distributions of any Assets, or
purchased, redeemed or otherwise acquired any of its capital stock,
any securities convertible into capital stock, or any other
securities; (f) mortgaged, pledged or subjected to any Encumbrance
any of its Assets; (g) sold, exchanged, leased, transferred or
otherwise disposed of any of its Assets, or canceled any debts or
claims, except in each case in the Ordinary Course of Business;
(h) written down the value of any Assets or written off as
uncollectible any notes or accounts receivable, except write-downs
and write-offs in the Ordinary Course of Business, none of which,
individually or in the aggregate, would have a Material Adverse
Effect; (i) entered into any transactions other than in the
Ordinary Course of Business; (j) increased the rate of compensation
payable, or to become payable, by it to any of its officers,
employees or consultants; (k) made or permitted any amendment or
termination of any material agreement to which it is a party which
would have a Material Adverse Effect; (1) made any accrual or
arrangement for or payment of bonuses or special compensation of
any kind to any director, officer or employee other than in the
Ordinary Course of Business; (m) directly or indirectly paid any
severance or termination pay to any officer or employee other than
in the Ordinary Course of Business; (n) made capital expenditures,
or entered into commitments therefor, aggregating more than Two
Hundred Fifty Thousand Dollars ($250,000); (o) made any change in
any method of accounting or accounting practice; (p) entered into
any transaction of the type described in Section 4.23; or (q) made
an agreement to do any of the foregoing.
11. Assets
The Company and the Subsidiaries have good, valid and
marketable title to all Assets respectively owned by them,
including, without limitation, all Assets reflected in the balance
sheets furnished pursuant to Section 3.3(d) and 4.6 and all Assets
purchased by the Company or by any Subsidiary since the Current
Balance Sheet Date (except for Assets reflected in such balance
sheets or acquired since the Current Balance Sheet Date which have
been sold or otherwise disposed of in the Ordinary Course of
Business), free and clear of all Encumbrances. The Assets, taken
as a whole, are in good operating condition and repair (subject to
normal wear and tear) and are suitable for the purposes for which
each is presently or has historically been used.
12. Insurance
The Disclosure Schedule lists all policies of title, fire,
hazard, casualty, liability, life, worker's compensation and other
forms of insurance of any kind owned or held by the Company and the
Subsidiaries. All such policies: (a) are with insurance companies
reasonably believed by the Company to be financially sound and
reputable; (b) are in full force and effect; (c) are sufficient for
compliance by the Company and by each Subsidiary with all
requirements of Law and of all agreements to which the Company or
any Subsidiary is a party; (d) are valid and outstanding policies
enforceable against the insurer; (e) insure against risks of the
kind customarily insured against and in amounts customarily carried
by companies similarly situated and by companies engaged in similar
businesses and owning similar properties, and provide adequate
insurance coverage for the businesses and Assets of the Company and
the Subsidiaries; (f) provide that they will remain in full force
and effect through the respective dates set forth in the Disclosure
Schedule; and (g) will not terminate or lapse by reason of the
transactions contemplated by this Agreement. Neither the Company
nor any Subsidiary has received (i) any notice of cancellation of
any such policy or refusal of coverage thereunder, (ii) any notice
that any issuer of any such policy has filed for protection under
applicable bankruptcy laws or is otherwise in the process of
liquidating or has been liquidated, or (iii) any other notice that
any such policy is no longer in full force or effect or that the
issuer of any such policy is no longer willing or able to perform
its obligations thereunder.
13. Intellectual Property
The Disclosure Schedule lists all material franchises,
trademarks, service marks, trade names, copyrights, patents and
applications therefor owned or licensed by or registered in the
name of the Company or any Subsidiary. The Company and the
Subsidiaries own all of the Intellectual Property listed in the
Disclosure Schedule purported to be owned by each of them free and
clear of all Encumbrances, pay no royalty to anyone with respect to
any Intellectual Property and have the right to bring action for
the infringement of such Intellectual Property. The Company and
the Subsidiaries own or possess adequate rights to use all
Intellectual Property necessary to the conduct of the present
business of the Company and the Subsidiaries. Neither the Company
nor any Subsidiary has any knowledge, or has received any notice to
the effect, nor have any claims been asserted, that any product the
Company or any Subsidiary manufactures or sells or that any service
the Company or any Subsidiary renders, or that the marketing or use
by the Company, any Subsidiary or another of any such product or
service, may or is claimed to infringe any Intellectual Property or
legally protectable right of another. Neither the Company nor any
Subsidiary or, to the best knowledge of the Company, the other
party or parties thereto, is in breach of any license or sublicense
with respect to any item of Intellectual Property, except where any
such breach would not have a Material Adverse Effect.
14. Debt Instruments
The Disclosure Schedule lists all material mortgages,
indentures, notes, guarantees and other agreements for or relating
to borrowed money or credit facilities (including, without
limitation, conditional sales agreements and capital leases) to
which the Company or any Subsidiary is a party or which have been
assumed by the Company or any Subsidiary or to which any Assets of
the Company or any Subsidiary are subject. The Company and the
Subsidiaries have performed all material obligations required to be
performed by any of them to date and are not in default in any
material respect under any of the foregoing, and there has not
occurred any event which (whether with or without notice, lapse of
time or the happening or occurrence of any other event) would
constitute such a default.
15. Real Property
The Disclosure Schedule lists the addresses of all real
property now used or occupied by the Company and its Subsidiaries
and the name of the record owner thereof. The Company has
delivered or made available to Tracor correct and complete copies
of the leases and subleases for the real property listed on the
Disclosure Schedule which is leased by the Company or any
Subsidiary. Each such lease and sublease is in full force and
effect and gives the lessee or sublessee thereunder the right to
use and occupy the demised premises thereunder for the uses set
forth therein. Neither the Company nor any Subsidiary, nor, to the
knowledge of the Company, the other party or parties thereto, is in
breach of any term of any such lease or sublease, except where any
such breach would not have a Material Adverse Effect. Neither the
Company nor any Subsidiary owns or has owned any real property.
16. Leases
The Disclosure Schedule lists all material leases and other
material agreements under which the Company or any Subsidiary is
lessee or lessor of any Asset (other than real property), or holds,
manages or operates any Asset (other than real property) owned by
any third party, or under which any Asset (other than real
property) owned by the Company or by any Subsidiary is held,
operated or managed by a third party. Each such lease and other
Agreement (i) is in full force and effect, (ii) constitutes a
legal, valid and binding obligation of, and is legally enforceable
against, the Company or such Subsidiary in accordance with its
terms, (iii) to the Company's knowledge, constitutes a legal, valid
and binding obligation of, and is legally enforceable against, the
other parties thereto in accordance with its terms and (iv) grants
the leasehold estate it purports to grant free and clear of all
Encumbrances. All necessary governmental approvals with respect
thereto, if any, have been obtained, all necessary filings or
registrations therefor, if any, have been made, and there have been
no threatened cancellations thereof and are no outstanding disputes
thereunder. The Company and the Subsidiaries have in all material
respects performed all obligations thereunder required to be
performed by any of them to date. No party is in default in any
material respect under any of the foregoing, and there has not
occurred any event which (whether with or without notice, lapse of
time or the happening or occurrence of any other event) would
constitute such a default.
17. Licenses, Permits and Authorizations
The Disclosure Schedule contains a list of all licenses,
approvals, consents, franchises and other permits of or with any
governmental regulatory or administrative authority, whether
foreign, federal, state or local, which are held by the Company or
any Subsidiary. All such licenses, franchises and other permits
are in full force and effect and there are no proceedings pending
or, to the best knowledge of the Company, threatened that seek the
revocation, cancellation, suspension or adverse modification
thereof. Such licenses, approvals, consents, franchises and
permits constitute all of the material licenses, approvals,
consents, franchises and permits necessary to permit the Company
and its Subsidiaries to own, operate, use and maintain their Assets
in the manner in which they are now operated and to conduct the
business of the Company and its Subsidiaries as currently
conducted. All required filings with respect to such licenses,
approvals, consents, franchises and permits have been timely made
and all required applications for renewal thereof have been timely
filed.
18. Other Agreements
(a) Enforceability, Etc. of Other Agreements. The Disclosure
Schedule lists all agreements of a nature described in (b) below to
which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary is bound at the date hereof. Each such
agreement (i) is in full force and effect, (ii) constitutes a
legal, valid and binding obligation of, and is legally enforceable
against, the Company or such Subsidiary in accordance with its
terms, (iii) to the Company's knowledge, constitutes a legal, valid
and binding obligation of, and is legally enforceable against the
other parties thereto. All necessary governmental approvals with
respect thereto, if any, have been obtained, all necessary filings
or registrations therefor, if any, have been made, and there have
been no threatened cancellations thereof and there are no
outstanding material disputes thereunder. The Company and the
Subsidiaries have in all material respects performed all the
obligations thereunder required to be performed by any of them to
date. No party is in default in any material respect under any of
the foregoing, and there has not occurred any event which (whether
with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute such a default.
Except as specified on the Disclosure Schedule, there are no
renegotiations of, or, to the best knowledge of the Company,
attempts to renegotiate, or outstanding rights to renegotiate, any
material amounts paid or payable to the Company or any Subsidiary
under current or completed contracts, with any Person or entity
having the contractual or statutory right to demand or require such
renegotiation. Neither the Company nor any Subsidiary has received
any written demand for such renegotiation in respect of any such
contract. Except as set forth in the Disclosure Schedule, no
customer or government contract officer has asserted that any
material adjustments are required to the terms of any contracts.
(b) No Other Agreements. Neither the Company nor any
Subsidiary is a party to any written (i) agreement for the
employment of any officer or employee; (ii) material contract to
which any employee, consultant, or contractor of the Company or any
Subsidiary is bound which in any manner purports to (A) restrict
such employee's consultant's, or contractor's freedom to engage in
any line of business or to compete with any other Person, or
(B) assign to any other Person (other than the Company or any
Subsidiary) such employee's, consultant's, or contractor's rights
to any material invention, improvement, or discovery;
(iii) material license agreement or material distributor, dealer,
manufacturer's representative, sales agency, advertising, property
management or brokerage agreement; (iv) lease, rental or occupancy
agreement, license, installment or conditional sale agreement, or
other contract affecting the ownership of, leasing of, title to,
use of, or any leasehold or other interest in, any real or personal
property (except personal property leases and installment and
conditional sales agreements having a value per item or aggregate
payments of less than $500,000 over the remaining term;
(v) material licensing agreement or other contract with respect to
patents, trademarks, copyrights or other intellectual property,
including agreements with current or former employees, consultants,
or contractors regarding the appropriation or the nondisclosure of
Intellectual Property; (vi) agreement with any labor organization
or other collective bargaining unit; (vii) agreement for the future
purchase (other than for resale) of materials, supplies, services,
merchandise or equipment involving payments of more than Five
Hundred Thousand Dollars ($500,000) over its remaining term
(including, without limitation, periods covered by any option to
renew by either party); (viii) agreement for the purchase, sale or
lease of any real estate or other Assets, (ix) profit-sharing,
bonus, incentive compensation, deferred compensation, stock option,
severance pay, stock purchase, employee benefit, insurance,
hospitalization, pension, retirement or other similar plan or
agreement; (x) agreement for the sale of any of its Assets or the
grant of any preferential rights to purchase any of its Assets or
rights, other than in the Ordinary Course of Business; (xi) joint
venture agreement or other agreement involving the sharing of
profits, losses, costs or liabilities by the Company or any
Subsidiary with any other person; (xii) note, debenture, other
evidence of indebtedness, guarantee, loan, credit or financing
agreement or instrument or other contract for money borrowed,
including any agreement or commitment for future loans, credit or
financing, other than in the Ordinary Course of Business;
(xiii) outstanding loan to any person or entity or receivable due
from any stockholder of the Company or persons or entities
controlling, controlled by or under common control with the Company
other than as evidenced by the promissory notes executed by holders
of Company Common Stock identified in the Disclosure Schedule which
promissory notes were executed in connection with the acquisition
of such shares of Company Common Stock; (xiv) contract providing
for payments to or by any person or entity based on sales,
purchases or profits, other than direct payment for goods;
(xv) power of attorney which is currently effective and
outstanding, other than in the Ordinary Course of Business;
(xvi) contract requiring capital expenditures after the date hereof
in an amount in excess of $100,000; (xvii) warranty, guaranty or
other similar undertaking with respect to contractual performance
extended by the Company or any Subsidiary other than in the
Ordinary Course of Business; (xviii) amendment, supplement, or
modification in respect of any of the foregoing; (xix) any other
agreement material to the business or operations of the Company and
its Subsidiaries, taken as a whole; and (xx) any agreement
(including, without limitation, agreements not to compete and
exclusivity agreements) that reasonably could be interpreted to
impose any restriction on any business operations of the Company or
any Subsidiary which, either individually or in the aggregate,
could have a Material Adverse Effect.
19. Books and Records
Except with respect to the items (and only to the extent of
such items) set forth on Exhibit H, the books of account, stock
records, minute books and other records of the Company and the
Subsidiaries are true and complete and have been maintained in
accordance with good business practices, including, but not limited
to, the maintenance of a good system of internal controls, and the
matters contained therein are appropriately and accurately
reflected in the financial statements of the Company furnished
pursuant to Section 3.3(d) or 4.6. At the Closing, all of these
books and records will be in the possession of the Company and its
Subsidiaries.
20. Litigation; Disputes
(a) Litigation, Etc. There are no actions, suits, claims,
arbitrations, proceedings or investigations pending, or, to the
knowledge of the Company, threatened or reasonably anticipated
against, affecting or involving the Company or any Subsidiary or
their respective businesses or Assets, or the transactions
contemplated by this Agreement, at law or in equity or admiralty,
or before or by any court, arbitrator or governmental authority,
domestic or foreign. Neither the Company nor any Subsidiary is
operating under, subject to or in default with respect to any
order, award, writ, injunction, decree or judgment of any court,
arbitrator or governmental authority. Except as set forth in the
Disclosure Schedule, there is no unsatisfied judgment, order or
decree requiring the payment of $10,000 or more individually or in
the aggregate.
(b) Other Disputes. Neither the Company nor any Subsidiary
is currently involved in or reasonably anticipates any dispute with
any of its current or former employees, agents, brokers,
distributors, vendors, customers, business consultants,
franchisees, franchisors, representatives or independent
contractors (or any current or former employees of any of the
foregoing Persons or entities) which, individually or in the
aggregate, may have a Material Adverse Effect.
21. Labor Relations
Neither the Company nor any Subsidiary has engaged in any
unfair labor practice and there are no strikes, work slowdowns or
stoppages, grievance proceedings, union organization efforts or
other controversies pending, or, to the Company's knowledge,
threatened or reasonably anticipated between the Company or any
Subsidiary and (i) any current or former employees of the Company
or of any Subsidiary or (ii) any union or other collective
bargaining unit representing such employees. The Company and the
Subsidiaries have complied and are in compliance in all material
respects with all Laws relating to employment or the workplace,
including, without limitation, provisions relating to wages, hours,
benefits, collective bargaining, safety and health, plant closings,
work authorization, equal employment opportunity, immigration,
withholding, unemployment compensation, worker's compensation, the
payment of social security and similar Taxes, employee privacy and
right to know. Neither the Company nor any Subsidiary is liable
for the payment of Taxes, fines, penalties or other amounts,
however designated, for failure to comply with any of such Laws.
Except as specified on the Disclosure Schedule, there are no
collective bargaining agreements, employment agreements between the
Company or any Subsidiary and any of their respective employees not
terminable at will relating to the businesses and Assets of the
Company or of any Subsidiary.
22. Pension and Benefit Plans
(a) Plans and Other Arrangements. Neither the Company nor
any Subsidiary (i) maintains or ever has maintained any Plan or
Other Arrangement, (ii) is or ever has been a party to any Plan or
Other Arrangement or (iii) has obligations under any Plan or Other
Arrangement.
(b) Delivery of Documents. The Company has furnished to
Tracor true and complete copies of each of the following Documents:
(i) the Documents setting forth the terms of each Plan; (ii) all
related trust agreements or annuity agreements (and any other
funding Document) for each Plan; (iii) for the four (4) most recent
plan years, all annual reports (Form 5500 series) on each Plan that
have been filed with any governmental agency; (iv) the current
summary plan description and subsequent summaries of material
modifications for each Plan; (v) all DOL opinions on any Plan and
all material correspondence relating to the request for and receipt
of each opinion; (vi) all material correspondence with the PBGC on
any Plan; (vii) all Internal Revenue Service rulings, opinions or
technical advice relating to any Plan and all correspondence
relating to the request for and receipt of each ruling, opinion or
technical advice; and (viii) all agreements with service providers
or fiduciaries for providing services on behalf of any Plan. For
each Other Arrangement, the Company has furnished to Tracor true
and complete copies of each policy, agreement or other Document
setting forth or explaining the terms of the Other Arrangement, all
related trust agreements or other funding Documents (including,
without limitation, insurance contracts, certificates of deposit,
money market accounts, etc.), all material correspondence or other
submissions with any governmental agency, and all current
agreements with service providers or fiduciaries for providing
services on behalf of any Other Arrangement.
(c) Multiemployer Plans, Etc. No Plan is a Multiemployer
Plan, a Minimum-Funding Plan or a Defined Benefit Plan.
(d) Contributions; Administration. The Company and the
Subsidiaries have made all contributions and other payments
required by and due under the terms of each Plan and Other
Arrangement and have taken no action (including, without
limitation, actions required by Law) relating to any Plan or Other
Arrangement that will increase Tracor's, the Company's or any
Subsidiary's obligation under any Plan or Other Arrangement. All
Plans and Other Arrangements have been administered and maintained
in accordance with their terms and provisions.
(e) Qualified Plans. The Disclosure Schedule sets forth a
list of all Qualified Plans. All Qualified Plans and any related
trust agreements or annuity agreements (or any other funding
Document) comply and have complied with ERISA, the Code (including,
without limitation, the requirements for tax qualification
described in Section 401 thereof), and all other Laws. The trusts
established under such Plans are exempt from federal income taxes
under Section 501(a) of the Code. The Company and the Subsidiaries
have received determination letters issued by the Internal Revenue
Service with respect to each Qualified Plan, and the Company has
furnished to Tracor true and complete copies of all such
determination letters and all material correspondence relating to
the applications therefor. All statements made by or on behalf of
the Company or any Subsidiary to the Internal Revenue Service in
connection with applications for determinations with respect to
each Qualified Plan were true and complete when made and continue
to be true and complete. Nothing has occurred since the date of
the most recent applicable determination letter that would
adversely affect the tax-qualified status of any Qualified Plan.
(f) Compliance With Laws. The Company and the Subsidiaries
have complied with all applicable provisions of the Code, ERISA,
the National Labor Relations Act, Title VII of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act, the Fair Labor
Standards Act, the Securities Act, the Securities Exchange Act of
1934, and all other Laws pertaining to the Plans, Other
Arrangements and other employee or employment related benefits, and
all premiums and assessments relating to all Plans or Other
Arrangements. The Company and the Subsidiaries have no liability
for any delinquent contributions within the meaning of Section 515
of ERISA (including, without limitation, related attorneys' fees,
costs, liquidated damages and interest) or for any arrearages of
wages. The Company and the Subsidiaries have no pending unfair
labor practice charges, contract grievances under any collective
bargaining agreement, other administrative charges, claims,
grievances or lawsuits before any court, governmental agency,
regulatory body, or arbiter arising under any Law governing any
Plan, and, to the Company's knowledge, there exist no facts that
could give rise to such a claim.
(g) Prohibited Transactions. Neither the Company, any
Subsidiary nor any of the Plans has engaged in any transaction in
violation of Section 406(a) or 406(b) of ERISA for which no
exemption exists under Section 408 of ERISA or a "prohibited
transaction" (as such term is defined in Section 4975(c)(1) of the
Code), for which no exemption exists under Section 4975(c)(2) or
4975(d) of the Code.
(h) Terminated Plans. No Plan that covered any current or
former employees of the Company or a Subsidiary, nor any other
Plan, has been terminated since 1980. The Company has furnished to
Tracor true and complete copies of all government filings, employee
communications, board minutes and all other Documents relating to
each Plan termination.
(i) Non-Deductible Payments. No Plan or Other Arrangement,
individually or collectively, provides for any payment by the
Company or any Subsidiary to any employee or independent contractor
that is not deductible under Section 162(a)(1), 162(m) or 404 of
the Code or that is an "excess parachute payment" pursuant to
Section 280G of the Code.
(j) Welfare Plans. No Plan is a funded Welfare Plan that
provides benefits to current or former Company or Subsidiary
employees or their beneficiaries.
(k) Post-Retirement Benefits. No Plan promises or provides
post-retirement medical, life insurance or other benefits now or in
the future to current, former or retired employees of the Company
or any Subsidiary.
(l) Health Care Continuation-Coverage Requirements. All
Welfare Plans and the related trusts that are subject to Section
4980B(f) of the Code and Sections 601 through 607 of ERISA comply
with and have been administered in compliance with the health care
continuation-coverage requirements for tax-favored status under
Section 4980B(f) of the Code (formerly Section 162(k) of the Code),
Sections 601 through 607 of ERISA, and all proposed or final
Treasury regulations under Section 162 of the Code explaining those
requirements.
(m) Reports, Fees, Etc. The Company and the Subsidiaries
have (i) filed or caused to be filed all returns and reports on the
Plans and Other Arrangements that they are required to file and
(ii) paid or made adequate provision for all fees, interest,
penalties, assessments or deficiencies that have become due
pursuant to those returns or reports or pursuant to any assessment
or adjustment that has been made relating to those returns or
reports. All other fees, interest, penalties and assessments that
are payable by or for the Company or any Subsidiary have been
timely reported, fully paid and discharged, and there are no unpaid
fees, penalties, interest or assessments due from the Company or
any Subsidiary or from any other person that are or could become a
lien on any Asset of the Company or any Subsidiary or could
otherwise adversely affect the businesses or Assets of the Company
or any Subsidiary. The Company and the Subsidiaries have collected
or withheld all amounts that are required to be collected or
withheld by them to discharge their obligations, and all of those
amounts have been paid to the appropriate governmental agencies or
set aside in appropriate accounts for future payment when due.
23. Transactions with Related Parties
Neither any present or former officer, director or stockholder
of the Company or any Subsidiary, nor any Affiliate of such
officer, director or stockbroker, is currently a party to any
transaction with the Company or any Subsidiary, including, without
limitation, any agreement providing for the employment of,
furnishing of services by, rental of Assets from or to, or
otherwise requiring payments to, any such officer, director,
stockholder or Affiliate.
24. Restrictions and Consents
To the Company's knowledge, there are no agreements, Laws or
other restrictions of any kind to which the Company or any
Subsidiary (or any asset thereof) is party or subject that would
prevent or restrict the execution, delivery or performance of this
Agreement or result in any penalty, forfeiture, agreement
termination, or restriction on business operations of Tracor, the
Company or any Subsidiary as a result of the execution, delivery or
performance of this Agreement, the result of which, either
individually or in the aggregate, could have a Material Adverse
Effect. No consent of any party to any contract to which the
Company or any Subsidiary is a party is required in connection with
the Merger, except where the failure to obtain such consent would
not have a Material Adverse Effect. No filing with, and no
permit, authorization, consent or approval of, any Governmental
Entity is necessary for the consummation by the Company of the
Merger contemplated by this Agreement, other than filings and
approvals required by the HSR Act.
25. Authorization
The Company has all requisite corporate power and authority
(subject to the approvals discussed below) to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance by the Company of
this Agreement and all other Documents contemplated hereby, the
fulfillment of and compliance with the respective terms and
provisions hereof and thereof, and the consummation by the Company
of the transactions contemplated hereby and thereby, have been duly
and validly authorized and approved by its Board of Directors
(which authorization and approval has not been modified or
rescinded and is in full force and effect) and do not and will not:
(a) require any other corporate action, including any consent or
approval of the holders of Company Common Stock other than that
which will have been obtained prior to the Closing and evidence of
which will have been provided to Tracor; (b) conflict with, or
violate any provision of, any Law having applicability to the
Company or any Subsidiary or any of their respective Assets, or any
provision of the articles of incorporation or bylaws of the Company
or any Subsidiary; (c) conflict with, or result in any breach of,
or constitute a default under, or terminate any agreement to which
the Company or any Subsidiary is a party or by which it or any of
its Assets may be bound, the result of which, either individually
or in the aggregate, could have a Material Adverse Effect;
(d) violate any provision of any order, judgment or decree
applicable to the Company or any Subsidiary; (e) result in a
violation or revocation of any required license, permit or approval
from any governmental or third party; or (f) result in or require
the creation or imposition of or result in the acceleration of any
indebtedness, or of any Encumbrance of any material nature upon, or
with respect to, the Company or any Subsidiary or any of the Assets
now owned or hereafter acquired by the Company or any Subsidiary.
26. Absence of Violation
Neither the Company nor any Subsidiary is in violation of or
default under, nor has it breached, any term or provision of its
certificate or articles of incorporation or bylaws or any agreement
or restriction to which the Company or any Subsidiary is a party or
by which the Company or any Subsidiary or any Asset thereof is
bound or affected, the result of which, either individually or in
the aggregate, could have a Material Adverse Effect. The Company
and the Subsidiaries have complied and are in full compliance with
all Laws (including Environmental Laws), the failure to comply with
which could have a Material Adverse Effect. Neither the Company,
the Subsidiaries nor any of their officers or directors, or, to the
Company's knowledge, employees or agents (or stockholders,
distributors, representatives or other persons acting on the
express, implied or apparent authority of the Company or of any
Subsidiary) have paid, given or received or have offered or
promised to pay, give or receive, any bribe or other unlawful,
questionable or unusual payment of money or other thing of value,
any extraordinary discount, or any other unlawful or unusual
inducement, to or from any person, business association or
governmental official or entity in the United States or elsewhere
in connection with or in furtherance of the business of the Company
or any Subsidiary (including, without limitation, any offer,
payment or promise to pay money or other thing of value (i) to any
foreign official or political party (or official thereof) for the
purposes of influencing any act, decision or omission in order to
assist the Company or any Subsidiary in obtaining business for or
with, or directing business to, any person, or (ii) to any person,
while knowing that all or a portion of such money or other thing of
value will be offered, given or promised to any such official or
party for such purposes). The business of the Company and the
Subsidiaries is not in any manner dependent upon the making or
receipt of such payments, discounts or other inducements.
27. Environmental Matters
The Company and its Subsidiaries are and at all times have
been in compliance with all Environmental Laws, except where such
instances of noncompliance would not be expected by the Company to
have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has any material liability under any Environmental
Law. All real property previously leased by the Company or any of
its Subsidiaries was, at all times during which such premises were
occupied by the Company or any of its Subsidiaries, free from
contamination from Hazardous Materials as a result of the conduct
of the Company or any Subsidiary or, to the best of the Company's
knowledge, any other party. No notices of any violation or alleged
violation of, or any liability under, any Environmental Law
relating to the operations or properties of the Company or any
Subsidiary have been received by the Company or any Subsidiary.
There are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits, claims, proceedings,
administrative actions or investigations pending or, to the
knowledge of the Company, threatened, alleging that the Company or
any Subsidiary is in violation of any Environmental Law, or that
the Company or any Subsidiary is a party responsible for remedial
action pursuant to any Environmental Law. The Company and each
Subsidiary has all permits, licenses and authorizations required
under the Environmental Laws for the operation of their business as
it is currently operated and, to the Company's knowledge, based on
the manner in which the business of the Company and its
Subsidiaries currently is conducted, no modification or change to
the operations of such business will be required upon renewal of
any such permits, licenses and authorizations.
28. Government Contracts
Neither the Company nor any Subsidiary has received notice of
any claim, suit or investigation asserting or alleging the
commission of criminal acts or bribery by either the Company or any
Subsidiary with respect to any contract between the Company or any
Subsidiary and the United States government or a department or
agency thereof (a "Government Contract"). Neither the Company nor
any Subsidiary has been debarred or suspended from participation in
the award of contracts with the United States government or any
agency or department thereof (it being understood that debarment
and suspension does not include ineligibility to bid for certain
contracts due to generally applicable bidding requirements).
Neither the Company or any Subsidiary has received written notice
of any kind from the United States government or any agency or
department thereof alleging any violation, or notifying the Company
or any Subsidiary of any investigation of a possible violation, of
any applicable law, rule, or regulation of the Company or any
Subsidiary or any act for which the Company or any Subsidiary could
be debarred or suspended from contracting with any agency of any
government, or prohibiting or seeking to prohibit the Company or
any Subsidiary from conducting, or restricting or seeking to
restrict the Company's or any Subsidiary's ability to conduct, all
or any part of its business or operations or from contracting with
any government. No payment has been made by the Company or any
Subsidiary, or, to the best knowledge of the Company or any
Subsidiary, by any person acting on its or their behalf, to any
person in connection with any Government Contract in violation of
applicable procurement laws or regulations or in violation of (or
requiring disclosure pursuant to) the Foreign Corrupt Practices
Act. The cost accounting and purchasing systems maintained by the
Company and its Subsidiaries with respect to Government Contracts
are in compliance with all applicable United States government Laws
and regulations in all material respects. The Disclosure Schedule
identifies the current reasonable best estimate of the Company of
the "cost to complete" of each material firm fixed price contract
(other than contracts on an indefinite delivery/indefinite quantity
basis) pursuant to which the Company or any Subsidiary is required
to perform services and/or deliver products and the Company's
current reasonable best estimate of the aggregate amount of
payments to be received under each such contract. None of such
contracts has accrued or is expected by the Company to result in
any losses.
29. Copies of Documents
True and complete copies of all Documents listed in the
Disclosure Schedule have been furnished to Tracor, on request,
prior to the execution of this Agreement, or shall be furnished to
Tracor, on request, promptly after such request.
30. Binding Obligation
This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and binding
obligation thereof, enforceable in accordance with its terms; and
each Document to be executed by the Company or any Principal
Shareholder pursuant hereto, when executed and delivered in
accordance with the provisions hereof, shall be a valid and binding
obligation thereof, enforceable in accordance with its terms,
except (i) as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights (including, without limitation, the effect of statutory and
other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers) and (ii) as may be limited by the
exercise of judicial discretion and the application of principles
of equity including, without limitation, requirements of good
faith, fair dealing, conscionability and materiality (regardless of
whether this Agreement or any such Document is considered in a
proceeding in equity or at Law).
5. REPRESENTATIONS AND WARRANTIES OF TRACOR AND MERGER SUB
Tracor and Merger Sub jointly and severally represent and
warrant to the Company as follows:
1. Organization and Standing
Each of Tracor and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware. Each of Tracor and Merger Sub has all requisite
corporate power and authority to carry on its business as currently
conducted, to enter into this Agreement and to carry out the
transactions contemplated hereby.
2. Capitalization
As of the date hereof, at the Effective Time and at all times
prior to the Effective Time, Tracor owns and shall own all of the
outstanding capital stock of Merger Sub.
3. Authorization
The execution, delivery and performance by Tracor and Merger
Sub of this Agreement and all other Documents contemplated hereby,
the fulfillment of and the compliance with the respective terms and
provisions hereof and thereof, and the consummation by Tracor and
Merger Sub of the transactions contemplated hereby and thereby have
been duly authorized by their respective Boards of Directors (which
authorization has not been modified or rescinded and is in full
force and effect), and will not: (a) conflict with, or violate any
provision of, any term or provision of their respective certificate
of incorporation or bylaws, or (b) conflict with, or result in any
breach of, or constitute a default under, any agreement to which
Tracor or Merger Sub is a party or by which Tracor or Merger Sub is
bound. No other corporate action (including shareholder approval)
is necessary for Tracor or Merger Sub to enter into this Agreement
and all other Documents contemplated hereby and to consummate the
transactions contemplated hereby and thereby.
4. Binding Obligation
This Agreement constitutes a valid and binding obligation of
each of Tracor and Merger Sub, enforceable in accordance with its
terms, except (i) as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights (including, without limitation, the effect of statutory and
other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers), and (ii) as may be limited by the
exercise of judicial discretion and the application of principles
of equity including, without limitation, requirements of good
faith, fair dealing, conscionability and materiality (regardless of
whether this Agreement is considered in a proceeding in equity or
at law). Each Document to be executed by Tracor or Merger Sub
pursuant hereto, when executed and delivered in accordance with the
provisions hereof, shall be a valid and binding obligation of
Tracor or Merger Sub, as applicable, enforceable in accordance with
its terms, except (i) as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors'
rights (including, without limitation, the effect of statutory and
other law regarding fraudulent conveyances, fraudulent transfers
and preferential transfers) and (ii) as may be limited by the
exercise of judicial discretion and the application of principles
of equity including, without limitation, requirements of good
faith, fair dealing, conscionability and materiality (regardless of
whether such Document is considered in a proceeding in equity or at
law).
5. Consents and Approvals
Except for applicable requirements of the HSR Act and the
filing and recording of the Certificate of Merger, as required by
the GCL, no filing with, and no permit, authorization, consent or
approval of, any Governmental Entity is necessary for the
consummation by Tracor and Merger Sub of the Merger contemplated by
this Agreement.
6. Funds Available
Tracor has the financial ability to perform its obligations
contemplated by this Agreement, including without limitation
providing the requisite amount of funds required as Merger
Consideration hereunder. The Merger will not be effected when
Tracor is insolvent or would be rendered insolvent thereby. The
Merger will be effected with funds which Tracor has on hand,
without the need for borrowing solely for the purpose of
effectuating the Merger or using the assets of the Company as
collateral therefor; provided however, that the parties recognize
that Tracor will continue to borrow funds from time to time for its
general corporate purposes, and that consistent with Tracor's
normal financing practices, the Surviving Company will guarantee a
portion of such borrowings not in excess of its net worth. The
Surviving Corporation's stock will also be pledged by Tracor to
secure such borrowings and the Surviving Corporation's assets will
be pledged and/or mortgaged to secure such guarantee.
7. Litigation
There are no actions, suits, proceedings, reviews or
investigations, pending or, to the best knowledge of Tracor and
Merger Sub, threatened involving Tracor or the Merger Sub, at law
or in equity, or before any Governmental Entity which might
materially and adversely affect their ability to perform their
obligations under this Agreement.
8. Investment Company Act
Neither Tracor nor Merger Sub is an "investment company" or a
company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are
subject to the fulfillment, at or prior to the Closing, of each of
the following conditions, and failure to satisfy any such condition
shall excuse and discharge all obligations of the Company to carry
out the provisions of this Agreement, unless such failure is agreed
to in writing by the Company:
1. Representations and Warranties
The representations and warranties made by Tracor and Merger
Sub in this Agreement or in any Document furnished by Tracor and
Merger Sub pursuant to this Agreement shall be true and complete in
all material respects when made and on and as of the Closing Date
as though such representations and warranties were made on and as
of such date, except for any changes which are contemplated or
expressly permitted by this Agreement.
2. Performance
Tracor and Merger Sub shall have performed and complied in all
material respects with all agreements and conditions required by
this Agreement to be performed or complied with by them prior to
the Closing Date.
3. Legal Proceedings
No action or proceeding by or before any Governmental Entity
shall have been instituted or threatened (and not dismissed,
settled or otherwise terminated) which is reasonably expected to
restrain, prohibit or invalidate the transactions contemplated by
this Agreement, other than an action or proceeding instituted or
threatened by the Company.
4. Tracor's Certificate
Tracor shall have delivered to the Company a certificate,
dated as of the Closing Date and executed by a senior officer of
Tracor, certifying to the fulfillment of the conditions set forth
in Sections 6.1 through 6.3.
5. Documents at Closing
All documents required under this Agreement to be furnished by
Tracor to the Company prior to or at the Closing shall have been so
furnished.
6. Consents
All consents, authorizations and approvals of governmental,
quasi-governmental and regulatory authorities and private parties
which are required to be obtained in order to consummate the
transactions contemplated hereby shall have been duly obtained and
shall be in full force and effect on the Closing Date.
7. Shareholder Approval
This Agreement and the Merger shall have been duly approved by
the affirmative vote or written consent of the holders of a
majority of the outstanding shares of the Company entitled to vote
thereon.
8. HSR Act
Any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF TRACOR AND MERGER SUB
The obligations of Tracor and Merger Sub under this Agreement
are subject to the fulfillment, at or prior to the Closing, of each
of the following conditions, and failure to satisfy any such
condition shall excuse and discharge all obligations of Tracer and
Merger Sub to carry out the provisions of this Agreement, unless
such failure is agreed to in writing by Tracor:
1. Representations and Warranties
The representations and warranties made by the Company in this
Agreement and the statements contained in the Disclosure Schedule
and Exhibits attached hereto or in any Document furnished by the
Company pursuant to this Agreement shall be true and complete in
all material respects when made, and on and as of the Closing Date
as though such representations and warranties were made on and as
of such date, except for any changes which are contemplated or
expressly permitted by this Agreement or resulting from the
Ordinary Course of Business.
2. Performance
The Company shall have performed and complied in all material
respects with all agreements and conditions required by this
Agreement to be performed or complied with prior to the Closing
Date.
3. Legal Proceedings
No action or proceeding by or before any Governmental Entity
shall have been instituted or threatened (and not subsequently
settled, dismissed or otherwise terminated) which is reasonably
expected to restrain, prohibit or invalidate the transactions
contemplated by this Agreement other than an action or proceeding
instituted or threatened by Tracor.
4. Officer's Certificate
The Company shall have delivered to Tracor a certificate,
dated as of the Closing Date and executed by the Company's
President, in his capacity as such, certifying to the fulfillment
of the conditions specified in Sections 7.1 through 7.3.
5. Documents at Closing
All documents required under this Agreement to be furnished by
the Company to Tracor prior to or at the Closing shall have been so
furnished.
6. Consents
All consents, authorizations and approvals of governmental,
quasi-governmental and regulatory authorities and private parties
which are required to be obtained in order to consummate the
transactions contemplated hereby shall have been duly obtained and
shall be in full force and effect on the Closing Date.
7. Release of Liens
Provided that concurrently with the Closing Tracor shall pay
the Company's bank line of credit in full, the Company shall obtain
concurrently therewith from Signet Bank, as agent for the bank
group, a release of all Encumbrances covering any Assets or
property of the Company or its Subsidiaries and securing the
Company's bank line of credit. All other material Encumbrances on
any Assets or property of the Company or any of its Subsidiaries
shall have been released prior to the Closing Date, other than the
landlord's liens imposed by law with respect to the leasehold
interests of the Company and its subsidiaries.
8. Shareholder Approval
This Agreement and the Merger shall have been duly approved by
the affirmative vote or written consent of the holders of a
majority of the outstanding shares of the Company entitled to vote
thereon.
9. HSR Act
Any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
8. TERMINATION
1. Termination
This Agreement may be terminated and the Merger may be
abandoned at any time before the Effective Time, whether before or
after the approval of the matters contemplated hereunder by the
shareholders of the Company or Merger Sub under any one or more of
the following circumstances:
(a) by the mutual consent of the Company, Tracor and Merger
Sub;
(b) by the Company by action of its Board of Directors, and
upon written notice of termination to Tracor, (i) if Tracor or the
Merger Sub has failed to comply in any material respect with any
material covenant or agreement herein to be complied with or
performed by it or them prior to or at the Effective Time and such
failure has not been cured within ten (10) days after receipt of
notice thereof, (ii) it becomes reasonably certain that the Merger
will not be consummated on or prior to December 31, 1996 or any
earlier time if any condition to such party's obligations to effect
the Merger is not capable of being satisfied by December 31, 1996;
provided, however, that the right to terminate this Agreement under
this Section 8.1(b) shall not be available to the Company if its
breach of representations, warranties, covenants or agreements
contained in this Agreement has been the cause of, or resulted in,
the failure of the Merger to be consummated by such date or the
inability of such condition to be satisfied, (iii) if the Board of
Directors of the Company shall have withdrawn, modified in a manner
adverse to Tracor or Merger Sub, or refrained from making, its
recommendation to the Company Shareholders of the Merger, in
connection with a recommendation of the Board to the Company
Shareholders of a Superior Transaction, if, upon written advice of
the Company's counsel, the Company's Board of Directors determines
that it has a fiduciary duty to do so, or (iv) the representations
and warranties of Tracor and the Merger Sub shall have been
breached in a material manner or become inaccurate in a material
respect as of the Closing;
(c) by Tracor or the Merger Sub, by written notice of
termination delivered to the Company (i) if the Company shall have
failed to comply in any material respect with any of the material
covenants or agreements herein to be complied with or performed by
it prior to or at the Effective Time and such failure has not been
cured within ten (10) days after receipt of notice thereof, or
(ii) it becomes reasonably certain that the Merger will not be
consummated on or prior to December 31, 1996, or any earlier time
if any condition to such party's obligations to effect the Merger
is not capable of being satisfied by December 31, 1996; provided,
however, that the right to terminate this Agreement under this
Section 8.1(c) shall not be available to Tracor or Merger Sub if
their breach of representations, warranties, covenants or
agreements contained in this Agreement has been the cause of, or
resulted in, the failure of the Merger to be consummated by such
date or the inability of such condition to be satisfied; or
(iii) if the Board of Directors of the Company shall have
withdrawn, modified in any manner adverse to Tracor or Merger Sub,
or refrained from making, its recommendation to the Company
Shareholders of the Merger, in connection with a recommendation of
the Board to the Company Shareholders of a Superior Transaction, or
(iv) there shall have occurred an event which shall have caused or
is reasonably likely to cause a Material Adverse Effect (except as
anticipated by this Agreement), or (v) the representations and
warranties of the Company shall have been breached in a material
manner or become inaccurate in a material respect as of the
Closing.
(d) by Tracor or the Company if the conditions to such
party's obligations set forth in Articles 6 or 7, as applicable,
have become impossible to satisfy, or (ii) any permanent injunction
or other order of a court or other Governmental Entity preventing
the consummation of the Merger shall have become final and
non-appealable.
2. Effect of Termination
In the event this Agreement is terminated as provided in this
Article 8, this Agreement shall forthwith become wholly void and of
no effect, and the parties shall be released from all future
obligations hereunder other than the obligations pursuant to
Section 10.3 and the last sentence of Section 3.2; provided,
however, that nothing herein shall relieve any party from liability
for any breach of any of its covenants or agreements in this
Agreement. The parties hereto shall have any and all remedies to
enforce such continuing obligations or to redress such breach
provided at Law or in equity (including, without limitation,
specific performance).
3. Amendment
This Agreement may be amended by the Company, Tracor and
Merger Sub, by action taken or authorized by their respective
Boards of Directors, at any time before or after approval of this
Agreement and the transactions contemplated hereby by the
shareholders of the Company, but, after such approval, no amendment
shall be made which by Law requires further approval by such
shareholders without such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of
each of the parties hereto.
4. Extension; Waiver
At any time prior to the Effective Time, the parties hereto
may, to the extent legally allowed, (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 contained herein or in any
document delivered by the other parties pursuant hereto and
(iii) waive compliance by the other parties with any of the
agreements or conditions contained herein; provided, that the
foregoing shall not apply as between Tracor and Merger Sub.
5. Fees Upon Termination; Expenses
Notwithstanding anything contained in Section 8.2 or elsewhere
in this Agreement, in the event that the Company terminates this
Agreement pursuant to clause (iii) of Section 8.1(b) hereof, or
Tracor or the Merger Sub terminates this Agreement pursuant to
clause (iii) of Section 8.1(c) hereof, then the Company shall,
within ten Business Days following the termination of this
Agreement, pay Tracor a termination fee in cash of One Million Five
Hundred Thousand Dollars ($1,500,000). Except as provided in the
immediately preceding sentence or as otherwise provided in Section
10.4 hereof, and whether or not 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 costs and expenses.
9. HOLDER REPRESENTATIVE
1. Designation and Replacement of Holder Representative
The parties have agreed that it is desirable to designate a
representative to act on behalf of the Holders for certain limited
purposes, as specified herein (the "Holder Representative"). The
parties have designated Xxxxx X. Xxxxx as the initial Holder
Representative, and approval of this Agreement by the holders of
Company Common Stock in accordance with the GCL shall constitute
ratification and approval of such designation and the provisions of
this Article 9. The Holder Representative may resign at any time,
and the Holder Representative may be removed by the vote of Persons
which collectively owned more than 50% of the Fully-Diluted Company
Shares at the Effective Time of the Merger ("Majority Holders").
In the event that a Holder Representative has resigned or been
removed, a new Holder Representative shall be appointed by a vote
of the Majority Holders, such appointment to become effective upon
the written acceptance thereof by the new Holder Representative.
2. Authority and Rights of Holder Representative;
Limitations on Liability
The Holder Representative shall have such powers and authority
as are necessary to carry out the functions assigned to it under
this Agreement and the Exchange Agent Agreement; provided, however,
that the Holder Representative will have no obligation to act on
behalf of the Holders, except as expressly provided herein.
Without limiting the generality of the foregoing, the Holder
Representative shall have full power, authority and discretion to
estimate and determine the amounts of Holder Allocable Expenses, to
pay such Holder Allocable Expenses in accordance with Section 2.11
hereof and to act on behalf of all Company Indemnified Parties
pursuant to Section 10.1 hereof. The Holder Representative will
have no liability to Tracor, the Company, or the Holders with
respect to actions taken or omitted to be taken in its capacity as
Holder Representative, except with respect to the Holder
Representative's gross negligence or willful misconduct. The
Holder Representative will at all times be entitled to rely on any
directions received from the Majority Holders; provided, however,
that the Holder Representative shall not be required to follow any
such direction, and shall be under no obligation to take any action
in its capacity as Holder Representative, unless the Holder
Representative is holding funds delivered to it under Article 2 of
this Agreement and/or has been provided with other funds, security
or indemnities which, in the sole determination of the Holder
Representative, are sufficient to protect the Holder Representative
against the costs, expenses and liabilities which may be incurred
by the Holder Representative in responding to such direction or
taking such action. The Holder Representative shall be entitled to
engage such counsel, experts and other agents and consultants as it
shall deem necessary in connection with exercising its powers and
performing its function hereunder and (in the absence of bad faith
on the part of the Holder Representative) shall be entitled to
conclusively rely on the opinions and advice of such Persons. The
Holder Representative shall be entitled to reimbursement, from
funds paid to him under Article 2 of this Agreement and/or
otherwise received by it in its capacity as Holder Representative
pursuant to or in connection with this Agreement, for all
reasonable expenses, disbursements and advances (including fees and
disbursements of its counsel, experts and other agents and
consultants) incurred by the Holder Representative in such
capacity, and for indemnification against and reimbursement of any
loss, liability or expenses arising out of actions taken or omitted
to be taken in its capacity as Holder Representative (except for
those arising out of the Holder Representative's gross negligence
or willful misconduct), including the costs and expenses of
investigation and defense of claims.
10. MISCELLANEOUS
1. Survival of Representations and Warranties;
Indemnification
(a) Survival. All of the representations and warranties of
the Company and the Principal Shareholders contained in Article 4
(other than in Section 4.9) of this Agreement and all of the
representations and warranties of Tracor contained in Article 5 of
this Agreement shall survive the Merger and shall continue in full
force and effect for a period of eighteen (18) months after the
Effective Time. The representations and warranties of the Company
and the Principal Shareholders contained in Section 4.9 shall
survive the Merger and shall remain in full force and effect for a
period after the Effective Time equal to the applicable statute of
limitations (the "Applicable Limitations Period"), subject to
Section 10.1(b).
(b) Indemnification. Subject to the provisions of this
Section 10.1, Tracor and Merger Sub and their respective officers,
directors, shareholders, agents, employees, subsidiaries, parents,
assigns, successors and predecessors (collectively, the "Tracor
Indemnified Parties") shall be entitled to indemnification, solely
by means of offset against the Tracor Indemnification Note, for any
and all damages, claims, deficiencies, losses, including Taxes, and
all expenses, including fees and expenses of counsel (reduced by
benefits or offsets to which any party shall be entitled directly
or indirectly by reason thereof) (collectively "Damages") resulting
from any misrepresentation, breach of warranty or nonfulfillment or
failure to perform any covenant or agreement on the part of the
Company and the Principal Shareholders under this Agreement;
provided, however, that after the maturity of the Tracor
Indemnification Note the Tracor Indemnified Parties shall be
entitled to indemnification for Damages arising as a result of any
breach of Section 4.9 ("Tax Breach Damages"), but such
indemnification shall be limited to the amount, if any, of
principal and interest paid to the Exchange Agent for the benefit
of the Holders, under the Tracor Indemnification Note. Subject to
the provisions of this Section 10.1, Tracor shall indemnify in
respect of, and hold (i) the Holder Representative, (ii) the
Holders entitled to receive the Merger Consideration in connection
with the Merger and (iii) their respective officers, directors,
shareholders, employees, agents, subsidiaries, parents, successors,
and assigns (the "Company Indemnified Parties") harmless against,
any and all Damages resulting from any misrepresentation, breach of
warranty, or nonfulfillment or failure to perform any covenant or
agreement on the part of Tracor under this Agreement; provided,
however, that Tracor's aggregate liability pursuant to this Section
10.1 shall not exceed $5,000,000. Damages for which a claim may be
asserted hereunder are hereinafter referred to as a "Loss."
(c) Claims Procedure. All claims for indemnification by any
Indemnified Party under this Section 10.1 shall be asserted and
resolved as follows:
(i) In the event that any claim or demand in respect of which
any Indemnified Party would be entitled to indemnification
hereunder is asserted against such Indemnified Party by a third
party, said Indemnified Party shall with reasonable promptness
notify the indemnifying party (the "Indemnifying Party") of such
claim or demand, specifying the nature of and specific basis for
such claim or demand and the amount or the estimated amount thereof
to the extent then feasible (which estimate shall not be conclusive
of the final amount of such claim and demand) (the "Claim Notice").
The Indemnified Party shall not be entitled to indemnification with
respect to any such claim or demand if the Indemnified Party fails
to notify the Indemnifying Party thereof in accordance with the
provisions of this Agreement in reasonably sufficient time so that
the Indemnifying Party's ability to defend against the claim or
demand is not materially prejudiced. The Indemnifying Party shall
have thirty (30) days from the personal delivery or mailing of the
Claim Notice (the "Notice Period") to notify the Indemnified Party
(i) whether or not it disputes entitlement of the Indemnified Party
to indemnification hereunder with respect to such claim or demand,
and (ii) whether or not it desires at no cost or expense to the
Indemnified Party, to defend the Indemnified Party against such
claim or demand; provided, however, that any Indemnified Party is
hereby authorized prior to and during the Notice Period to file any
motion, answer or other pleading which it shall deem necessary or
appropriate to protect its interests or those of the Indemnifying
Party and not materially prejudicial to the Indemnifying Party. In
the event that the Indemnifying Party notifies the Indemnified
Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand and except as
hereinafter provided, the Indemnifying Party shall have the right
to defend by all appropriate proceedings, which proceedings shall
be promptly settled or prosecuted by it to a final conclusion. If
the Indemnified Party desires to participate in, but not control,
any such defense or settlement it may do so at its sole cost and
expense. If requested by the Indemnifying Party, the Indemnified
Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand which the Indemnifying
Party elects to contest, or, if appropriate and related to the
claim in question, in making any counterclaim. No claim may be
settled without the consent of the Indemnifying Party, or except
where there is no admission of liability of the Indemnified Party,
consent of the Indemnified Party.
(ii) In the event any Indemnified Party should have an
indemnification claim hereunder which does not involve a claim or
demand being asserted against or sought to be collected from it by
a third party, the Indemnified Party shall send a Claim Notice with
respect to such claim to the Indemnifying Party. If the
Indemnifying Party does not notify the Indemnified Party within the
Notice Period that the Indemnifying Party disputes such claim, the
Indemnified Party shall be conclusively deemed to be entitled to
indemnification in the amount of such claim, subject to the
limitation set forth in this Section 10.1.
(iii) In the event that any Tracor Indemnified Party sends
a Claim Notice to an Indemnifying Party and such Indemnifying Party
notifies the Tracor Indemnified Party within the Notice Period that
the Indemnifying Party disputes the Tracor Indemnified Party's
entitlement to indemnification hereunder with respect to the claim
or demand described in the Claim Notice, before such Tracor
Indemnified Party may exercise its right of offset against the
Tracor Indemnification Note as described in Section 10.1(b), such
dispute shall be settled exclusively by arbitration, in New York,
New York by a panel of three arbitrators selected in accordance
with and conducting the arbitration proceedings in accordance with
the American Arbitration Association Rules. The Tracor Indemnified
Party shall serve upon the Indemnifying Party a written demand for
arbitration in accordance with the American Arbitration Association
Rules.
(iv) The parties hereto agree to abide by all awards and
decisions rendered in an arbitration proceeding in accordance with
this Agreement, and all such awards and decisions may be filed by
the prevailing party with any court having jurisdiction over the
person or property of the other party as a basis for judgment and
the issuance of execution thereon. The fees of the arbitrator(s)
and related expenses of arbitration shall be apportioned among the
parties as determined by the arbitrator(s).
(v) The parties consent to the jurisdiction of the courts of
the State of New York for all purposes in connection with any
arbitration under this Agreement. The parties consent that any
process or notice of motion or other application to said courts,
and any paper in connection with arbitration, may be served by
certified mail, return receipt requested, or by personal service,
or in such other manner as may be permissible under the rules of
the applicable court or arbitration tribunal, provided a reasonable
time for appearance is allowed.
(d) Limitations. No Company Indemnified Party shall be
entitled to indemnification for any Losses or Damages for which it
would otherwise be entitled to indemnification pursuant to this
Section 10.1 unless and until the aggregate amount of all Losses
and Damages for which all Company Indemnified Parties are entitled
to indemnification exceeds $250,000, at which time, such Company
Indemnified Party shall (subject to the other limitations set forth
in this Section 10.1) be entitled to indemnification for the full
amount of all such Losses and Damages, up to a maximum amount of
$5,000,000. The Tracor Indemnified Parties shall not be entitled
to indemnification for any Losses or Damages for which they would
otherwise be entitled to indemnification pursuant to this Section
10.1 unless and until the aggregate amount of all Losses and
Damages for which all Tracor Indemnified Parties are entitled to
indemnification exceeds $250,000, at which time, the Tracor
Indemnified Parties shall (subject to the other limitations set
forth in this Section 10.1) be entitled to indemnification for the
full amount of all such Losses and Damages up to a maximum of the
$5,000,000 principal amount of the Tracor Indemnification Note,
and, in the event the Tracor Indemnification Note has been paid, as
set forth in Section 10.1(b) hereof. Notwithstanding any provision
hereof to the contrary, (i) the Company Indemnified Parties shall
not be entitled to indemnification by Tracor for Losses or Damages
in excess of $5,000,000. To the extent that any Tracor Indemnified
Party is entitled to indemnification pursuant to this Section 10.1,
such Tracor Indemnified Party shall be entitled to reimbursement
for the Losses or Damages for which it is entitled to
indemnification only by means of offset against the Tracor
Indemnification Note, and, in the event the Tracor Indemnification
Note has been paid, as set forth in Section 10.1(b) hereof, and no
Tracor Indemnified Party shall have any recourse against the Holder
Representative or the Holders for indemnification pursuant to this
Section 10.1. Notwithstanding anything to the contrary otherwise
contained in this Agreement, Tracor's obligation to indemnify the
Company Indemnified Parties pursuant to this Section 10.1 shall
expire 18 months after the Closing Date; provided, however, that
such indemnification rights, with respect to any claim for
indemnification asserted in writing by any Company Indemnified
Party prior to the expiration of such 18-month period, shall
survive the expiration of such 18-month period until such claim for
indemnification is either resolved or satisfied. Notwithstanding
anything to the contrary otherwise contained in this Agreement,
Tracor's right to indemnification under this Section 10.1 shall
expire 18 months after the Closing Date (or, with respect to any
breach of Section 4.9, after the Applicable Limitations Period has
expired); provided, however, that such indemnification obligations,
with respect to any claim for indemnification asserted in writing
by any Tracor Indemnified Party prior to the expiration of such 18
months (or Applicable Limitations Period, as applicable), shall
survive the expiration of such 18 months (or Applicable Limitations
Period, as applicable), until such claim for indemnification is
either resolved or satisfied.
(e) Sole Remedy. Following the Effective Time of the Merger,
the rights of the Indemnified Parties to indemnification pursuant
to this Section 10.1 shall be the sole and exclusive remedy of such
Indemnified Parties for any breach of any representation, warranty
or covenant set forth in this Agreement.
2. Additional Actions and Documents
Each of the parties hereto hereby agrees to take or cause to
be taken such further actions, to execute, deliver and file or
cause to be executed, delivered and filed such further Documents,
and will obtain such consents, as may be necessary or as may be
reasonably requested in order to fully effectuate the purposes,
terms and conditions of this Agreement. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances or
any other acts or things are necessary or desirable to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation, its right, title or interest in, to or under any of
the rights, properties or assets of the Company acquired or to be
acquired by reason of, or as a result of, the Merger, or otherwise
to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors shall be
authorized to execute and deliver, in the name and on behalf of the
Merger Sub or the Company, all such deeds, bills of sale,
assignments and assurances and to do, in the name and on behalf of
the Merger Sub or Company, all such other acts and things necessary
or desirable to vest, perfect or confirm any and all right, title
or interest in, to or under such rights, properties or assets in
the Surviving Corporation or otherwise to carry out the purposes of
this Agreement.
3. No Brokers
Except as set forth in the Disclosure Schedule, each of the
parties hereto represents and warrants to the other parties (and to
each of them) that such party has not engaged any broker, finder or
agent in connection with the transactions contemplated by this
Agreement and has not incurred (and will not incur) any unpaid
liability to any broker, finder or agent for any brokerage fees,
finders' fees or commissions, with respect to the transactions
contemplated by this Agreement. Each party agrees to indemnify,
defend and hold harmless each of the other parties from and against
any and all claims asserted against such parties for any such fees
or commissions by any persons purporting to act or to have acted
for or on behalf of the indemnifying party.
4. Assignment
This Agreement may not be assigned by any party hereto by
operation of Law or otherwise.
5. Entire Agreement
This Agreement, including the Disclosure Schedule and the
Exhibits, the Notes, the Principal Shareholders' Agreement and the
other Documents referred to herein or furnished pursuant hereto,
constitutes the entire agreement among the parties hereto with
respect to the transactions contemplated herein, and supersede all
prior oral or written agreements, commitments, understandings,
statements or representations with respect to the matters provided
for herein and therein.
6. Waiver
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or
under any other Documents furnished in connection with or pursuant
to this Agreement shall impair any such right, power or privilege
or be construed as a waiver of any default or any acquiescence
therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power
or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto
unless made in writing and signed by the party against whom
enforcement of such waiver is sought and then only to the extent
expressly specified therein.
7. Consent to Jurisdiction
(a) This Agreement and the duties and obligations of the
parties hereunder and under each of the Documents referred to
herein shall be enforceable or actionable against any party only in
the courts of the United States of America located in the State of
Delaware, and the courts in the State of Delaware. For such
purpose, each party hereto hereby irrevocably submits to the
exclusive jurisdiction of such courts, and agrees that all claims
in respect of this Agreement and such other Documents may be heard
and determined in any of such courts.
(b) Each party hereto hereby irrevocably agrees that a final
judgment of any of the courts specified above in any action or
proceeding relating to this Agreement or to any of the other
Documents referred to herein or therein shall be conclusive and may
be enforced in other jurisdictions by suit on the judgment or in
any other manner provided by law.
8. Severability
If any part of any provision of this Agreement or any other
agreement or Document given pursuant to or in connection with this
Agreement shall be invalid or unenforceable in any respect, such
part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining
parts of such provision or the remaining provisions of this
Agreement.
9. Governing Law
Except to the extent that the GCL applies to the transactions
contemplated by this Agreement, this Agreement, the rights and
obligations of the parties hereto, and any claims or disputes
relating thereto, shall be governed by and construed in accordance
with the laws of the State of Texas (excluding the choice of law
rules thereof).
10. Notices
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to
any other party pursuant to this Agreement shall be in writing and
shall be hand delivered, sent by overnight courier or mailed by
first-class, registered or certified mail, return receipt
requested, postage prepaid, or transmitted by telegram, telecopy or
telex, addressed as follows:
(i) If to Tracor or Merger Sub:
Tracor, Inc.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice)
to:
Xxxxxxxx Xxxxxxxx & Xxxxxx P.C.
5400 Renaissance Tower
0000 Xxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
(ii) If to the Company:
Cordant Holdings Corporation
00000 Xxxxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice)
to:
Xxxxx & Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(iii)If to the Holder Representative and/or the Principal
Shareholders:
Xxxxx X. Xxxxx
c/o Cordant, Inc.
00000 Xxxxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice)
to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
Each party may designate by notice in writing a new
address to which any notice, demand, request or communication may
thereafter be so given, served or sent. Each notice, demand,
request, or communication which shall be hand delivered, sent,
mailed, telecopied or telexed in the manner described above, or
which shall be delivered to a telegraph company, shall be deemed
sufficiently given, served, sent, received or delivered for all
purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, or (with respect to a
telecopy or telex) the answerback being deemed conclusive, but not
exclusive, evidence of such delivery) or at such time as delivery
is refused by the addressee upon presentation.
11. Headings
Article and Section headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed
to be a part of this Agreement for any purpose, and shall not in
any way define or affect the meaning, construction or scope of any
of the provisions hereof.
12. Execution in Counterparts
To facilitate execution, this Agreement may be executed
in as many counterparts as may be required. It shall not be
necessary that the signatures of, or on behalf of, each party, or
that the signatures of all persons required to bind any party,
appear on each counterpart; but it shall be sufficient that the
signature of, or on behalf of, each party, or that the signatures
of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in making proof of
this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf
of, all of the parties hereto.
13. Limitation on Benefits
The covenants, undertakings and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto and their respective
successors, heirs, executors, administrators, legal representatives
and permitted assigns.
14. Binding Effect
Subject to any provisions hereof restricting assignment,
this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors, heirs,
executors, administrators, legal representatives and assigns.
15. Liability and Survival
No party hereto shall have any liability to any other
party hereto for the inaccuracy, incompleteness, breach or other
violation (collectively, "breach") of any representation, warranty,
covenant or agreement after the Effective Time if such other party
had knowledge thereof at or prior to the Effective Time; in any
event no representation or warranty of any party shall survive the
Effective Time by more than 18 months, except as provided in
Section 10.1. The agreements and covenants that by their terms are
required to be performed, in whole or in part, after the Effective
Time shall survive the Effective Time in accordance with their
terms, including without limitation the provisions of Article 2 and
Sections 3.8, 3.9 and 3.10 hereof.
16. Specific Performance
The parties hereto agree that if any of the covenants and
agreements contained in 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, in addition to any other remedy at law or equity.
[Balance of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement, or have caused this Agreement to be duly executed
on their behalf, as of the day and year first above written.
TRACOR:
TRACOR, INC.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President
MERGER SUB:
TRACOR ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: President
COMPANY:
CORDANT HOLDINGS CORPORATION
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: President
HOLDER REPRESENTATIVE:
/s/ Xxxxx X. Xxxxx
------------------
Xxxxx X. Xxxxx, individually and
solely in his
capacity as Holder Representative
PRINCIPAL SHAREHOLDERS:
/s/ Xxxxx X. Xxxxx
-------------------
Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Trustee of the Xxxxx
X. Xxxxx Trust and the Xxxxxxxx X. Xxxxx Trust
/s/ C. Xxxxxxx Xxxxxxxxxx
-------------------------
C. Xxxxxxx Xxxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
----------------------
Xxxxxxx X. Xxxxxxx
Exhibit A to the
Agreement and Plan of Merger
DEFINITIONS
"Acquisition Transaction" has the meaning specified in Section
3.4.
"Affiliate" means: (a) with respect to a person, any member
of such person's family; (b) with respect to an entity, any
officer, director, stockholder, partner or investor of or in such
entity or of or in any Affiliate of such entity; and (c) with
respect to a person or entity, any person or entity which directly
or indirectly, through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such person or
entity.
"Aggregate Fully-Diluted Company Shares" means the sum of the
Fully-Diluted Company Shares held by all Holders as of the
Effective Time.
"Aggregate Option Exercise Price" means the sum of the cash
exercise prices payable upon exercise in full of all Company Stock
Options held by all Holders.
"Agreement" or "this Agreement" means this Agreement and Plan
of Merger dated as of August 30, 1996, including the Disclosure
Schedule and Exhibits hereto.
"Applicable Limitations Period" has the meaning specified in
Section 10.1(a).
"Applicable Percentage" means, as to any Holder, the
percentage derived by dividing the Fully-Diluted Company Shares
held by such Holder as of the Effective Time by the Aggregate
Fully-Diluted Company Shares, rounded to the nearest 1/100th of one
percent.
"Article" means an Article of this Agreement.
"Assets" means assets of every kind and everything that is or
may be available for the payment of liabilities (whether inchoate,
tangible or intangible), including, without limitation, real and
personal property.
"Award Target Date" has the meaning specified in Section 2.7.
"Base Working Capital" has the meaning specified in Section
2.8(a).
"Best Efforts" means, as to a party hereto, an undertaking by
such party to perform or satisfy an obligation or duty or otherwise
act in a manner reasonably calculated to obtain the intended result
by action or expenditure not disproportionate or unduly burdensome
in the circumstances, which means, among other things, that such
party shall not be required to (i) expend funds other than for
payment of the reasonable and customary fees and expenses of
employees, counsel, consultants, representatives or agents of such
party in connection with the performance or satisfaction of such
obligation or duty or other action, provided that the foregoing
shall not require a party to institute litigation or arbitration as
part of its best efforts, or (ii) suffer any material economic
disadvantage or detriment as a condition of achieving a
satisfactory result.
"Bonus Shares" means shares of Company Common Stock issuable
to employees of the Company pursuant to the Cordant Holdings
Corporation Stock Bonus Plan.
"Business Day" means any day except a Saturday, Sunday, and
any day which shall be in New York City or Dallas, Texas a legal
holiday or a day on which banking institutions are authorized or
required by law or other governmental action to close.
"Cash Per Fully Diluted Share" means (i) the sum of (A) the
Merger Consideration, plus (B) the Aggregate Option Exercise Price,
divided by (ii) the Aggregate Fully-Diluted Company Shares.
"Certificate of Merger" means the Certificate of Merger
attached as Exhibit B hereto.
"Certificate(s)" means a certificate or certificates which as
of the Effective Time represented shares of Company Common Stock.
"Change of Address Proposal" has the meaning specified in
Section 2.7.
"Claim Notice" has the meaning specified in Section 10.1(c).
"Closing" means the consummation of the Merger as described in
the last sentence of Section 2.1 hereof.
"Closing Balance Sheet" has the meaning specified in Section
2.8(a).
"Closing Date" means the date on which the Effective Time
occurs.
"Code" means the Internal Revenue Code of 1986, as amended,
and all Laws promulgated pursuant thereto or in connection
therewith.
"Company" means Cordant Holdings Corporation, a Delaware
corporation.
"Company Common Stock" means the common stock, one cent ($.01)
par value per share, of the Company.
"Company Indemnified Parties" has the meaning specified in
Section 10.1.
"Company Shareholders" means the holders of Company Common
Stock participating in the Merger.
"Company Stock Option" means any option to purchase shares of
Company Common Stock whether under the Company's Stock Option Plan,
or any other stock option plan, arrangement or agreement adopted by
the Company.
"Company Tax Returns" means all returns, reports, declarations
and information statements required to be filed by the Company or
any of the Subsidiaries (without regard to extensions of time
permitted by law or otherwise) with any federal, state, local or
foreign governmental authority or agency.
"Contract Award Amount" means that contingent amount payable
under Section 2.7 hereof.
"Control" means possession, directly or indirectly, of power
to direct or cause the direction of management or policies (whether
through ownership of voting securities, by agreement or otherwise).
"Current Assets" has the meaning specified in Section 2.8(d).
"Current Balance Sheet Date" means June 30, 1996.
"Current Liabilities" has the meaning specified in Section
2.8(d).
"Damages" has the meaning specified in Section 10.1(b).
"Defined Benefit Plan" means a Plan that is or was a "defined
benefit plan" as such term is defined in Section 3(35) of ERISA.
"Disclosure Schedule" means the disclosure schedule identified
as the Disclosure Schedule to the Agreement.
"Disputed Items" has the meaning specified in Section 2.8(b).
"Dissenting Shares" means any share of Company Common Stock
issued and outstanding immediately prior to the Effective Time held
by a stockholder who has not voted for adoption of this Agreement
and the Merger contemplated hereby and who has otherwise properly
exercised dissenters' rights of appraisal in accordance with
Section 262 of the GCL.
"Documents" means any paper or other material (including,
without limitation, computer storage media) on which is recorded
(by letters, numbers or other marks) information that may be
evidentially used, including, without limitation, legal opinions,
mortgages, indentures, notes, instruments, leases, agreements,
insurance policies, reports, studies, financial statements
(including, without limitation, the notes thereto), other written
financial information, schedules, certificates, charts, maps,
plans, photographs, letters, memoranda and all similar materials.
"DOL" means the Department of Labor or its successors.
"Earn-Out Amount" means the amount of additional Merger
Consideration paid to the Holders as a result of the adjustment
required by Section 2.9(b).
"Earn-Out Determination Date" has the meaning specified in
Section 2.9(a).
"Effective Time" means the date and time the Merger becomes
effective in accordance with Section 2.1.
"Effective Time Net Working Capital" has the meaning specified
in Section 2.8(a).
"Encumbrance" means any mortgage, lien, pledge, encumbrance,
security interest, deed of trust, option, encroachment,
reservation, order, decree, judgment, condition, restriction,
charge, agreement, claim or equity of any kind.
"Environmental Laws" means any Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation,
and Liability Act), including any plans, other criteria, or
guidelines promulgated pursuant to such Laws, now or hereafter in
effect relating to Hazardous Materials generation, production, use,
storage, treatment, transportation or disposal, or noise control,
or the protection of human health or the environment.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Laws promulgated pursuant thereto or in
connection therewith.
"Estimated Holder Allocable Expenses" has the meaning
specified in Section 2.11.
"Excess Cash" has the meaning specified in Section 2.11.
"Exchange Agent" means a Person designated by the Company and
reasonably satisfactory to Tracor to act as Exchange Agent
hereunder.
"Exchange Agent Agreement" means the agreement to be entered
into by and among the Exchange Agent, Tracor, the Holder
Representative, and the Company pursuant to Section 2.17 hereof.
"Executives" means, collectively, Xxx X. Xxxxxxx, A. Xxxx
Xxxxx, Xxxxxxx X. Xxxxxxx, L. Xxxxxxx Xxxxxxx, Xxxxx X. Xxxxx,
C. Xxxxxxx Xxxxxxxxxx, Xxxxx X. Xxxxx, Xxxxxxx X. Xxxxxxxxx,
Xxxxx X. Xxxxxx, and Xxxxxxx X. Xxxxx.
"Executive Employment Agreements" means the Employment
Agreements to be entered into as of the Effective Time between the
Surviving Corporation and each of the Executives substantially in
the form of Exhibit F hereto.
"Exhibit" means an exhibit attached to this Agreement.
"Final Award" means an award of a contract with respect to
which no protest has been filed within 17 days after the date of
such award; or, in the event of protest, at such time as the
protest is denied in its entirety and is no longer subject to
appeal.
"Fully Diluted Company Shares" held by any Holder shall be
equal to the sum of the shares of Company Common Stock held by such
Holder plus the shares of Company Common Stock issuable upon
exercise in full of all Company Stock Options held by such Holder.
"GAAP" means generally accepted accounting principles in the
United States consistently applied by the Company through the
Effective Time.
"GCL" has the meaning specified in the Recitals to the
Agreement.
"Government Contract" has the meaning specified in Section
4.28.
"Governmental Entity" means any court or federal, state, local
or foreign administrative, governmental or quasi-governmental body.
"Hazardous Materials" means any wastes, substances or
materials (whether solids, liquids or gases) that are deemed
hazardous, toxic, pollutants or contaminants, including, without
limitation, substances defined as "hazardous wastes," "hazardous
substances," "toxic substances," "radioactive materials," or other
similar designations in, or otherwise subject to regulation under,
any Environmental Laws. "Hazardous Materials" includes
polychlorinated biphenyls (PCBs), asbestos, lead-based paints, and
petroleum and petroleum products (including, without limitation,
crude oil or any fraction thereof).
"Holdback" means Merger Consideration in the amount of One
Million Five Hundred Thousand Dollars ($1,500,000).
"Holder" means any Person who, immediately prior to the
Effective Time, holds record ownership of shares of Company Common
Stock or Company Stock Options.
"Holder Allocable Expenses" has the meaning specified in
Section 2.11.
"Holder Representative" has the meaning specified in Section
9.1.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Indemnified Party" means a Tracor Indemnified Party or a
Company Indemnified Party, as applicable.
"Indemnifying Party" has the meaning specified in Section
10.1(c).
"Independent Accounting Firm" has the meaning specified in
Section 2.8(b).
"Initial Cash Payment" means the portion of the Merger
Consideration paid in cash by Tracor to the Exchange Agent, in
trust for the benefit of the Holders, on the Closing Date, pursuant
to and in the amount specified by Section 2.10(a).
"Intellectual Property" means all franchises, patents, patent
qualifications, trademarks, service marks, trade names, trade
styles, brands, private labels, copyrights, know-how, computer
software, industrial designs and drawings and general intangibles
of a like nature, trade secrets, licenses, and rights and filings
with respect to the foregoing, and all reissues, extensions and
renewals thereof.
"Laws" means all foreign, Federal, state and local statutes,
laws, ordinances, regulations, rules, resolutions, orders,
determinations, writs, injunctions, awards (including, without
limitation, awards of any arbitrator), judgments and decrees
applicable to the specified persons or entities and to the
businesses and Assets thereof (including, without limitation, Laws
relating to securities registration and regulation; the sale,
leasing, ownership or management of real property; employment
practices, terms and conditions, and wages and hours; building
standards, land use and zoning; safety, health and fire prevention;
and environmental protection, including Environmental Laws).
"Litigation" means the pending lawsuit brought by Xxxxx
against the Company and various other defendants in the Delaware
Court of Chancery on December 5, 1994 and any developments therein
or legal actions relating thereto, including but not limited to the
action brought by Xxxxx against the Company and various other
defendants in the same Court on October 3, 1995.
"Litigation Payment" means the amount payable by the Company,
the Surviving Corporation and/or Tracor to Xxxxx as a result of the
settlement or resolution of the Litigation.
"Litigation Payment Date" has the meaning specified in Section
2.12(e).
"Losses" means all demands, losses, claims, actions or causes
of action, assessments, damages (including, without limitation,
diminution in value), liabilities, costs and expenses, including,
without limitation, interest, penalties and attorneys' fees
(including amounts allocable to time spent by in-house counsel) and
disbursements.
"Majority Holders" has the meaning specified in Section 9.1.
"Material Adverse Effect" means a material adverse effect upon
the business, operations, Assets, profits or condition (financial
or otherwise) of the Company and its Subsidiaries, taken as a
whole.
"Merger" means the merger of Merger Sub with and into the
Company.
"Merger Consideration" means the aggregate consideration
payable by Tracor in connection with the acquisition of the Company
pursuant to the Merger.
"Merger Sub" means Tracor Acquisition Corp., a Delaware
corporation.
"Merger Sub Shares" means the issued and outstanding shares of
common stock, one cent ($.01) par value per share, of Merger Sub.
"Minimum-Funding Plan" means a Pension Plan that is subject to
Title I, Subtitle B, Part 3, of ERISA (concerning "funding").
"Xxxxx" means Xxxxx Business Forms, Inc., a corporation
organized under the laws of the State of Delaware.
"Multiemployer Plan" means a "multiemployer plan" as such term
is defined in Section 3(37) of ERISA.
"1996 Revenue Report" has the meaning set forth in
Section 2.9(a).
"1996 Revenues" has the meaning set forth in Section 2.9(a).
"Notes" means the Tracor Indemnification Note and the Tracor
Litigation Note, collectively.
"Notice Period" has the meaning specified in Section 10.1(c).
"Option Document" means a Document representing the right to
receive a Certificate upon the exercise of one or more Company
Stock Options.
"Options" means the outstanding options to purchase shares of
Company Common Stock identified on the Disclosure Schedule.
"Ordinary Course of Business" means ordinary course of
business of the Company and/or its Subsidiaries consistent with
past practices.
"Other Arrangement" means a benefit program or practice
providing for bonuses, incentive compensation, vacation pay,
severance pay, insurance, restricted stock, stock options, employee
discounts, company cars, tuition reimbursement or any other
perquisite or benefit (including, without limitation, any fringe
benefit under Section 132 of the Code) to employees, officers or
independent contractors that is not a Plan.
"PBGC" means the Pension Benefit Guaranty Corporation or its
successor.
"Pension Plan" means an "employee pension benefit plan" as
such term is defined in Section 3(2) of ERISA.
"Per Share Amount" means the amount of cash payable to each
Holder upon consummation of the Merger, calculated in accordance
with Section 2.10(e).
"Person" means any individual, partnership, limited liability
company, corporation, joint venture, trust, estate, association or
unincorporated organization, or any other form of business or
professional entity.
"Plan" means any plan, program or arrangement, whether or not
written, that is or was an "employee benefit plan" as such term is
defined in Section 3(3) of ERISA and (a) which was or is
established or maintained by the Company or any Subsidiary; (b) to
which the Company or any Subsidiary contributed or was obligated to
contribute or to fund or provide benefits; or (c) which provides or
promises benefits to any person who performs or who has performed
services for the Company or any Subsidiary and because of those
services is or has been (i) a participant therein or (ii) entitled
to benefits thereunder.
"Post Closing Adjustment" has the meaning specified in Section
2.8(c).
"Principal Shareholders" means Xxxxx X. Xxxxx, individually
and in his capacity as a trustee of the Xxxxx X. Xxxxx Trust and
the Xxxxxxxx X. Xxxxx Trust, C. Xxxxxxx Xxxxxxxxxx, and Xxxxxxx X.
Xxxxxxx.
"Principal Shareholders' Agreement" means the Principal
Shareholders Agreement in substantially the form of Exhibit G
attached hereto.
"Proposal" means any proposal, offer or indication of interest
from any Person, entity or group relating to any acquisition or
purchase of all or (other than in the Ordinary Course of Business)
any portion of the Assets of, or any substantial equity in, the
Company or any Subsidiary or any business combination with the
Company or any Subsidiary, other than the transactions contemplated
by the Agreement.
"Qualified Plan" means a Pension Plan that satisfies, or is
intended by the Company to satisfy, the requirements for tax
qualification described in Section 401 of the Code.
"Remaining Disputed Items" has the meaning specified in
Section 2.8(b).
"Replacement LOC" has the meaning specified in Section
2.12(d).
"Response Report" has the meaning specified in Section 2.8(b).
"Section" means a Section (or a subsection) of the Agreement.
"Securities Act" means the Securities Act of 1933, as amended,
and all laws promulgated pursuant thereto or in connection
therewith.
"Subsidiaries" means Cordant, Inc., a Maryland corporation,
and/or its wholly owned subsidiary, Cordant Federal Services
Corporation, a Maryland corporation.
"Superior Transaction" has the meaning specified in Section
3.4.
"Surviving Corporation" means the Company after effecting the
Merger described in Section 2.1 hereof.
"Tax Breach Damages" has the meaning specified in Section
10.1(b).
"Taxes" means all Federal, state, local and foreign taxes
(including, without limitation, income, profit, franchise, sales,
use, real property, personal property, ad valorem, excise,
employment, social security and wage withholding taxes) and
installments of estimated taxes, assessments, deficiencies, levies,
imports, duties, license fees, registration fees, withholding, or
other similar charges of every kind, character or description
imposed by any governmental or quasi-governmental authorities, and
any interest, penalties or additions to tax imposed thereon or in
connection therewith.
"Tracor" means Tracor, Inc., a Delaware corporation.
"Tracor Indemnification Note" means that certain promissory
note in the original principal amount of $5,000,000 executed and
delivered by Tracor to the Exchange Agent, for the benefit of all
of the Holders, substantially in the form of Exhibit D-1 hereto.
"Tracor Indemnification Note LOC" means the stand-by letter of
credit issued by Bankers Trust Company to Tracor for the benefit of
the Exchange Agent, as payee of the Tracor Indemnification Note, in
substantially the form of Exhibit E-1 hereto, as security for the
obligations of Tracor pursuant to the Tracor Indemnification Note.
"Tracor Indemnified Parties" has the meaning specified in
Section 10.1(b).
"Tracor Litigation Note" means that certain promissory note in
the original principal amount of $26,500,000 executed and delivered
by Tracor to the Exchange Agent, substantially in the form of
Exhibit D-2 hereto.
"Tracor Litigation Note LOC" means the stand-by letter of
credit issued by Bankers Trust Company to Tracor for the benefit of
the Exchange Agent, as payee of the Tracor Litigation Note, in
substantially the form of Exhibit E-2 hereto, as security for the
obligations of Tracor pursuant to the Tracor Litigation Note.
"Welfare Plan" means an "employee welfare benefit plan" as
such term is defined in Section 3(1) of ERISA.
"Working Capital" has the meaning specified in Section 2.8(d).
"Working Capital Change" means a change in the working capital
of the Company as defined in Section 2.8 hereof.
"Working Capital Decrease" has the meaning specified in
Section 2.8(c).
"Working Capital Determination Date" has the meaning specified
in Section 2.8(b) hereof.
"Working Capital Increase" has the meaning specified in
Section 2.8(c).
"Working Capital Report" has the meaning specified in Section
2.8(a).
Exhibit B to the
Agreement and Plan of Merger
Certificate of Merger
CERTIFICATE OF MERGER
OF
TRACOR ACQUISITION CORP.
INTO
CORDANT HOLDINGS CORPORATION
The undersigned corporation, organized and existing under and
by virtue of the Delaware General Corporation Law, does hereby
certify:
FIRST: That the name and state of incorporation of each of
the constituent corporations of the merger is as follows:
Name State of Incorporation
Tracor Acquisition Corp. Delaware
Cordant Holdings Corporation Delaware
SECOND: That an Agreement and Plan of Merger among Tracor
Acquisition Corp. and Cordant Holdings Corporation has been
approved, adopted, certified, executed and acknowledged by each of
Tracor Acquisition Corp. and Cordant Holdings Corporation in
accordance with the requirements of Section 251 of the Delaware
General Corporation Law.
THIRD: That the name of the surviving corporation of the
merger is Cordant Holdings Corporation.
FOURTH: That the certificate of incorporation of Cordant
Holdings Corporation (the "Surviving Corporation") shall be amended
to read in its entirety as set forth in Exhibit A.
FIFTH: That the executed Agreement and Plan of Merger is on
file at the principal place of business of the Surviving
Corporation. The address of the principal place of business of the
Surviving Corporation is 00000 Xxxxxxxx Xxxx Xxxxx, Xxxxxx,
Xxxxxxxx 00000.
SIXTH: That a copy of the Agreement and Plan of Merger will
be furnished by the Surviving Corporation, on request and without
cost, to any stockholder of Tracor Acquisition Corp. or Cordant
Holdings Corporation.
IN WITNESS WHEREOF, Cordant Holdings Corporation has caused
this Certificate of Merger to be signed in its corporate name by
____________________, its authorized officer, this ______ day of
_________, 1996.
CORDANT HOLDINGS CORPORATION
By:
Name:
Title:
Exhibit C to the
Agreement and Plan of Merger
Initial Directors and Officers of Surviving Corporation
The following persons will serve in the offices set forth
across from their names below:
Name Office
Xxxxx Xxxxxxxx Vice President
Xxxxxxx X. Xxxxxxx Vice President and
Assistant Secretary
Xxxxx Xxxxxxx Assistant Treasurer
Exhibit D-1 to the
Agreement and Plan of Merger
Tracor Indemnification Note
TRACOR INDEMNIFICATION NOTE
$5,000,000.00 September ___, 1996
RECEIVED, the undersigned, TRACOR, INC., a Delaware
corporation ("Tracor"), hereby promises to pay to SIGNET TRUST
COMPANY, for the benefit of the Holders (the "Noteholder"), at 0
Xxxxx 0xx Xxxxxx, Xxxxxxxx, Xxxxxxxx, in lawful money of the United
States of America, the principal sum of FIVE MILLION AND
NO/100 Dollars ($5,000,000.00), or such lesser principal amount
as shall be outstanding hereunder, calculated in accordance with
Section 2.13 of that certain Merger Agreement and Plan of Merger
dated August 30, 1996, by and among Tracor, Tracor Acquisition
Corp., a Delaware corporation, Cordant Holdings Corporation, a
Delaware corporation, Xxxxx X. Xxxxx, as the initial Holder
Representative (in such capacity, the "Holder Representative")
and each of the Principal Shareholders party thereto (the "Merger
Agreement"), together with interest (less the Tracor
Indemnification Note LOC Expenses [hereinafter defined]) on the
principal balance payable to the Noteholder hereunder, each as
herein specified, in a single payment on March ___, 1998.
This note is executed and delivered pursuant to the terms of
the Merger Agreement and is the Tracor Indemnification Note
described therein. Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in the Merger
Agreement. Reference is hereby made to the Merger Agreement for
provisions affecting this note including provisions regarding
adjustments to the outstanding principal balance hereof.
Notwithstanding anything set forth herein or in the Merger
Agreement to the contrary, the outstanding principal balance of
this note shall be reduced on a dollar-for-dollar basis by the
amount of any and all Losses and Damages in connection with which
any Tracor Indemnified Party is entitled to indemnification
pursuant to Section 10.1 of the Merger Agreement.
The outstanding principal balance hereof shall bear interest
prior to maturity at a varying rate per annum which shall from
day to day be equal to the Collateral Investment Rate
(hereinafter defined) in effect from day to day, each such change
in the rate of interest charged hereunder to become effective, without notice
to Tracor, on the effective date of each change in the Collateral
Investment Rate. All past due principal and interest (less the
Tracor Indemnification Note LOC Expenses) shall bear interest at
the maximum rate permitted by applicable law. Interest on the
indebtedness evidenced by this note shall be computed on the
basis of a year of 365 or 366 days, as the case may be, and the
actual number of days elapsed (including the first day but
excluding the last day).
For the purposes hereof, each of the following terms shall
have the following meanings:
"Collateral Investment Rate" means the rate from day to
day at which the cash collateral securing the Tracor
Indemnification Note LOC accrues interest.
"Tracor Indemnification Note LOC Expenses" means the
aggregate amount of all letter of credit fees payable by
Tracor to the issuer of the Tracor Indemnification Note LOC
(but not including any reimbursement obligations following a
draw under the Tracor Indemnification Note LOC) and all other
expenses incurred by Tracor after the Closing Date in
connection with the maintenance, amendment, renewal,
substitution or replacement of the Tracor Indemnification Note
LOC; provided that no deduction shall be made for any letter
of credit fees and expenses to the extent that they (i) exceed
1% per annum of the face amount of the Tracor Indemnification
Note LOC, or (ii) are paid to the issuer for any quarter
beyond the quarter in which the Tracor Indemnification Note
LOC is drawn in full or surrendered and returned to the
issuer.
Tracor shall not have the right to prepay this note or any
portion hereof prior to the maturity date hereof.
Tracor shall be in default hereunder (an "Event of Default")
in the event that it fails to pay when due any principal of or
accrued and unpaid interest on this note, and such failure
continues unremedied for a period of five (5) days after the
occurrence thereof.
Upon the occurrence of any Event of Default, the holder hereof
may, at its option, declare the unpaid principal payable to
Noteholder hereunder and accrued and unpaid interest thereon,
less the Tracor Indemnification Note LOC Expenses, immediately
due and payable without notice, demand or presentment, all of
which are hereby waived, and upon such declaration, the same
shall become and shall be immediately due and payable, and in
addition thereto, and not in substitution therefor, the holder
hereof shall have the right to draw on the Tracor Indemnification
Note LOC. Failure of the Noteholder to exercise this option
shall not constitute a waiver of the right to exercise the same
upon the occurrence of a subsequent Event of Default hereunder.
If the Noteholder expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the
holder hereunder, or in the protection or realization of any
collateral given as security for the repayment hereof, including,
without limitation, the Tracor Indemnification Note LOC, or if
this note is placed in the hands of an attorney for collection,
or if it is collected through any legal proceedings, Tracor
agrees to pay all reasonable collection costs and fees incurred
by the holder, including reasonable attorneys' fees and
disbursements.
Tracor and each surety, guarantor, endorser, and other party
ever liable for payment of any sums of money payable on this note
jointly and severally waive notice, presentment, demand for
payment, protest, notice of protest and non-payment or dishonor,
notice of acceleration, notice of intent to accelerate, notice of
intent to demand, diligence in collecting, grace, and all other
formalities of any kind, and consent to all extensions without
notice for any period or periods of time and partial payments,
before or after maturity, and any impairment of any collateral
securing this note, all without prejudice to the holder. The
Noteholder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without
notice to any other party, and to grant any such party any
extensions of time for payment of any of said indebtedness, or to
release or substitute part or all of the collateral securing this
note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
Any payment on this note coming due on a Saturday, a Sunday,
or a day which is a legal holiday in the place at which a payment
is to be made hereunder shall be made on the next succeeding day
which is a business day in such place, and any such extension of
the time of payment shall be included in the computation of
interest hereunder.
This note shall be governed by and construed in accordance
with the laws of the State of New York and the applicable laws of
the United States of America. Any action or proceeding under or
in connection with this note against Tracor or any other party
ever liable for payment of any sums of money payable on this note
shall be brought in any state or federal court in New York, New
York. This Note shall inure to the benefit of the Noteholder and
its successors and assigns.
TRACOR, INC.
By:
Title:
Exhibit D-2 to the
Agreement and Plan of Merger
Tracor Litigation Note
$26,500,000.00 September ___, 1996
FOR VALUE RECEIVED, the undersigned, TRACOR, INC., a Delaware
corporation ("Tracor"), hereby promises to pay to SIGNET TRUST
COMPANY, for the benefit of the Holders (the "Noteholder"), at 0
Xxxxx 0xx Xxxxxx, Xxxxxxxx, Xxxxxxxx, in lawful money of the United
States of America, the principal sum of TWENTY-SIX MILLION FIVE
HUNDRED THOUSAND AND NO/100 Dollars ($26,500,000.00), or such
lesser principal amount as shall be outstanding hereunder,
calculated in accordance with Section 2.12 of that certain
Agreement and Plan of Merger dated August 30, 1996, by and among
Tracor, Tracor Acquisition Corp., a Delaware corporation, Cordant
Holdings Corporation, a Delaware corporation, Xxxxx X. Xxxxx, as
the Holder Representative (in such capacity, the "Holder
Representative") and each of the Principal Shareholders party
thereto (the "Merger Agreement"), together with interest (less the
Tracor Litigation Note LOC Expenses [hereinafter defined]) on the
outstanding principal balance payable to the Noteholder hereunder
as herein specified, in three payments:
(i) on April 1, 1997, $3,500,000 if the Contract Award
Amount is not payable by Tracor under Section 2.7 of the
Merger Agreement;
(ii) on April 1, 1997 or as soon thereafter as the
Earn-Out Amount is determined under Section 2.9 of the Merger
Agreement, 35% of the amount, if any, by which the Earn-Out
Amount is less than $5,000,000;
(iii) on the Litigation Payment Date, the remaining
balance of this note, plus any interest accrued thereon,
subject to the reductions set forth below.
This note is executed and delivered pursuant to the terms of
the Merger Agreement and is the Tracor Litigation Note described
therein. Capitalized terms used and not otherwise defined herein
shall have the meanings set forth in the Merger Agreement.
Reference is hereby made to the Merger Agreement for provisions
affecting this note including provisions regarding adjustments to
the outstanding principal balance hereof. Notwithstanding anything
set forth herein or in the Merger Agreement to the contrary, the
outstanding principal balance of this note, plus any interest
accrued thereon shall be reduced on a dollar-for-dollar basis by
the amount of any (i) Second Tranche Litigation Payment,
(ii) payment of excess Holder Allocable Expenses of up to $425,000
(plus any amount remaining unused under the immediately succeeding
clause (iii), up to $300,000) in accordance with Section 2.11 of
the Merger Agreement, and (iii) payment of up to $450,000 (plus any
amount remaining unused under the immediately preceding
clause (ii), up to $300,000) of expenses in connection with the
Litigation made by the Company, the Surviving Corporation or
Tracor.
The outstanding principal balance hereof shall bear interest
prior to maturity at a varying rate per annum which shall from day
to day be equal to the Collateral Investment Rate (hereinafter
defined) in effect from day to day, each such change in the rate of
interest charged hereunder to become effective, without notice to
Tracor, on the effective date of each change in the Collateral
Investment Rate. All past due principal and interest (less the
Tracor Litigation Note LOC Expenses) shall bear interest at the
maximum rate permitted by applicable law. Interest on the
indebtedness evidenced by this note shall be computed on the basis
of a year of 365 or 366 days, as the case may be, and the actual
number of days elapsed (including the first day but excluding the
last day).
For the purposes hereof, each of the following terms shall
have the following meanings:
"Collateral Investment Rate" means the rate from day to
day at which the cash collateral securing the Tracor
Litigation Note LOC (and any Replacement LOC) accrues
interest.
"Tracor Litigation Note LOC Expenses" means the
aggregate amount of all letter of credit fees and expenses
payable by Tracor to the issuer of the Tracor Litigation Note
LOC (and any Replacement LOC) (but not including any
reimbursement obligations following a draw under the Tracor
Litigation Note LOC (and any Replacement LOC)) and all other
expenses incurred by Tracor after the Closing Date in
connection with the maintenance, amendment, renewal,
substitution or replacement of the Tracor Litigation Note LOC
(and any Replacement LOC); provided that no deduction shall be
made for any letter of credit fees or expenses to the extent
that they (i) exceed 1% per annum of the face amount of the
Tracor Litigation Note LOC (and any Replacement LOC), or (ii)
are paid to the issuer for any quarter beyond the quarter in
which the Tracor Litigation Note LOC (and any Replacement LOC)
is drawn or surrendered and returned to the issuer.
Tracor shall not have the right to prepay this note prior to
the Litigation Payment Date.
Tracor shall be in default hereunder (an "Event of Default")
in the event that it fails to pay when due any principal of or
accrued and unpaid interest on this note, and such failure
continues unremedied for a period of fifteen (15) days after the
occurrence thereof.
Upon the occurrence of any Event of Default, the holder hereof
may, at its option, draw on the Tracor Litigation Note LOC (and any
Replacement LOC) for the amount of the defaulted payment hereunder
only. Failure of the Noteholder hereof to exercise this option
shall not constitute a waiver of the right to exercise the same
upon the occurrence of a subsequent Event of Default hereunder.
If the Noteholder hereof expends any effort in any attempt to
enforce payment of all or any part or installment of any sum due
the holder hereunder, or in the protection or realization of any
collateral given as security for the repayment hereof, including,
without limitation, the Tracor Litigation Note LOC (and any
Replacement LOC), or if this note is placed in the hands of an
attorney for collection, or if it is collected through any legal
proceedings, Tracor agrees to pay all reasonable collection costs
and fees incurred by the holder, including reasonable attorneys'
fees.
Tracor and each surety, guarantor, endorser, and other party
ever liable for payment of any sums of money payable on this note
jointly and severally waive notice, presentment, demand for
payment, protest, notice of protest and non-payment or dishonor,
notice of acceleration, notice of intent to accelerate, notice of
intent to demand, diligence in collecting, grace, and all other
formalities of any kind, and consent to all extensions without
notice for any period or periods of time and partial payments,
before or after maturity, and any impairment of any collateral
securing this note, all without prejudice to the holder. The
holder shall similarly have the right to deal in any way, at any
time, with one or more of the foregoing parties without notice to
any other party, and to grant any such party any extensions of time
for payment of any of said indebtedness, or to release or
substitute part or all of the collateral securing this note, or to
grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the
personal liability of any party hereunder.
Any payment on this note coming due on a Saturday, a Sunday,
or a day which is a legal holiday in the place at which a payment
is to be made hereunder shall be made on the next succeeding day
which is a business day in such place, and any such extension of
the time of payment shall be included in the computation of
interest hereunder.
This note shall be governed by and construed in accordance
with the laws of the State of New York and the applicable laws of
the United States of America. Any action or proceeding under or in
connection with this note against Tracor or any other party ever
liable for payment of any sums of money payable on this note shall
be brought in any state or federal court in New York, New York.
TRACOR, INC.
By:
Title:
Exhibit E-1 to the
Agreement and Plan of Merger
Tracor Indemnification Note LOC
IRREVOCABLE NONTRANSFERABLE STANDBY
LETTER OF CREDIT NO. _______
____________, 1996
[Exchange Agent]
_____________________
_____________________
_____________________
Gentlemen:
At the request and for the account of TRACOR, INC., a
Delaware corporation (the "Corporation"), the undersigned (the
"Bank") establishes this irrevocable nontransferable standby letter
of credit (the "Letter of Credit") in the initial aggregate amount
of U.S. Five Million Dollars ($5,000,000) (as the same may be
reduced from time to time, the "Letter of Credit Amount"), in your
favor as Noteholder (the "Drawing Party") under the Tracor
Indemnification Note, as defined in the hereinafter defined Merger
Agreement. This Letter of Credit is issued in connection with the
Agreement and Plan of Merger, dated August 30, 1996 (as the same
may be hereafter amended, the "Merger Agreement") by and among the
Corporation, Tracor Acquisition Corp., a Delaware corporation,
Cordant Holdings Corporation, a Delaware corporation, Xxxxx X.
Xxxxx, as the initial Holder Representative (as defined in the
Merger Agreement), and each of the Principal Shareholders party
thereto. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Merger Agreement.
The Letter of Credit Amount shall be reduced from time
to time on a dollar-for-dollar basis by the amount of any and all
Losses and Damages in connection with which any Tracor Indemnified
Party is entitled to indemnification pursuant to Section 10.1 of
the Merger Agreement by presentation of a certificate by the
Corporation in the form of Annex A (appropriately completed) (a
"Reduction Certificate"). The Letter of Credit Amount shall be
reduced permanently upon receipt by the Bank of a Reduction
Certificate by the principal amount stated in such Certificate.
The Letter of Credit Amount shall be available for drawing by you
as Drawing Party (or any successor Noteholder [as defined in the
Tracor Indemnification Note] and as provided in this Letter of
Credit) as set forth below in a single payment up to the maximum
amount not to exceed the Letter of Credit Amount.
This Letter of Credit shall expire at 4:00 p.m.,
________ time, on the date (the "Expiration Date") that is the
earliest to occur of the following: (i) [19 months after
Closing], 1998, (the "Scheduled Expiration Date"); (ii) the date of
payment of a Final Payment Drawing (as defined below); or (iii) the
date on which you surrender this Letter of Credit to us for
cancellation. You agree to surrender this Letter of Credit to us,
and not to make any Drawing, after the earlier of (a) the
Expiration Date, or (b) the date there is no principal amount
outstanding under the Tracor Indemnification Note (each, a
"Surrender Event").
Subject to the provisions of this Letter of Credit, a
single demand for payment under this Letter of Credit may be made
by you (or your successors) from time to time prior to the
Expiration Date by presentation of: (i) a certificate in the form
of Annex B (appropriately completed) (a "Final Payment
Certificate"), upon the occurrence of an Event of Default, as
defined in the Tracor Indemnification Note (a "Final Payment
Drawing"); and (ii) a draft in the form of Annex C (appropriately
completed) drawn on us, presented at our office located at ,
or by telecopier (at telecopier number: (___) ________) or telex
(at telex number: (___) _______, answerback: _______) (or such
other address, telecopier or telex number in the continental United
States as we may designate in a written notice delivered to you),
prior to 11:00 a.m., ________ time, on any Business Day (such
demand and presentation, a "Drawing").
Such Final Payment Certificate and draft shall be signed
by you with all blanks completed and deletions made in accordance
with the directions to do so, if any, contained in the applicable
forms described above. Payment against conforming documents
presented under this Letter of Credit shall be made by us on or
before 1:00 p.m., ________ time, on the next (or, in the case of
presentation after 11:00 a.m., ________ time, the second next)
Business Day after presentation.
Payments made hereunder shall be made by wire transfer
to ______________________________, evidenced by delivery to it of a
Federal Reserve Bank wire transfer confirmation number, to it at
____________, ABA Number __________, Clearing Account No. _______
for further credit to ______________________________, Account No.
_______, Attention: _________________ (or to such other account
number or address in the continental United States as you may from
time to time designate in writing to us).
This Letter of Credit is not transferable in whole or in
part. Partial drawings are not permitted hereunder. This Letter
of Credit is irrevocable.
Only you or any successor Noteholder, as Drawing Party,
may make a drawing under this Letter of Credit. Upon a payment of
the amount specified in a sight draft drawn hereunder, we shall be
fully discharged on our obligation under this Letter of Credit with
respect to such sight draft and we shall not thereafter be
obligated to make any further payment under this Letter of Credit
in respect to such sight draft to you or any other person who may
have made to you or makes to you a demand for payment of principal
of, or interest on the Tracor Indemnification Note.
Communications with respect to this Letter of Credit
shall be addressed to us at ,
Attention: _______________ (or to such other address or person in
the continental United States as we may hereafter designate to you
in writing), specifically referring to the number of this Letter of
Credit.
To the extent not inconsistent with the express terms
hereof, this Letter of Credit shall be governed by, and construed
in accordance with, the terms of the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (the "Uniform Customs"). As to
matters not governed by the Uniform Customs, this Letter of Credit
shall be governed by and construed in accordance with the law of
the State of ________, including ____________ of the Uniform
Commercial Code as in effect in the State of ________, without
giving application to choice of law principles.
This Letter of Credit and Annexes A, B and C hereto set
forth in full the terms of our undertaking, and such undertaking
shall not in any way be modified, amended, amplified or limited by
reference to any other document (including, without limitation, the
Tracor Indemnification Note and the Merger Agreement) whatsoever
except as expressly stated herein.
[BANK]
By:
Its: Authorized Signatory
Irrevocable Transferable Letter
of Credit No. ________
ANNEX A
LETTER OF CREDIT AMOUNT REDUCTION CERTIFICATE
The undersigned, TRACOR, INC., certifies as follows to
_________________________, as issuer of the above-referenced letter
of credit (the "Letter of Credit"):
1. All terms defined in the Letter of Credit are used in
this Certificate with the same meanings.
2. The outstanding principal balance of the Tracor
Indemnification Note (the "Note"), dated September ___, 1996,
executed by Applicant, and payable to the order of the Drawing
Party in the original principal amount of $5,000,000 has been
reduced to $____________ pursuant to the terms of Section 10.1 of
the Merger Agreement and the Letter of Credit Amount should
correspondingly be reduced to $_____________.
3. Tracor has complied with the requirements of
Section 2.19 of the Merger Agreement and is making this reduction
with the prior written consent of the Holder Representative or
pursuant to an order of arbitrators entered in accordance with the
provisions of Section 2.19 of the Merger Agreement.
Dated:
TRACOR, INC.,
as Applicant
By:
Title:
Irrevocable Transferable Letter
of Credit No. ________
ANNEX C
FINAL PAYMENT CERTIFICATE
The undersigned, [NAME OF DRAWING PARTY], certifies as follows
to
____________________________________________, as issuer of the
above-referenced letter of credit (the "Letter of Credit"):
1. All terms defined in the Letter of Credit are used in
this Certificate with
the same meanings.
2. The undersigned is the Exchange Agent under the Merger
Agreement, the Noteholder under the Tracor Indemnification Note,
and is the Drawing Party under the Letter of Credit and is entitled
to present this Certificate. No Surrender Event has occurred.
3. Pursuant to the Merger Agreement, the undersigned has
concurrently presented its draft ("Draft") drawn on you in the
amount of _____________________ ($____________). Such amount does
not include the amount, if any, of Losses and Damages (as defined
in the Merger Agreement) in connection with which any Tracor
Indemnified Party (as defined in the Merger Agreement) is entitled
to indemnification pursuant to Section 10.1 of the Merger
Agreement, was computed in accordance with the terms and conditions
of the Merger Agreement, and does not exceed the Letter of Credit
Amount.
4. (i) The amount of the Draft accompanying this
certificate represents the unpaid principal of the Tracor
Indemnification Note ("Note"), dated September __, 1996, executed
by Applicant, and payable to the order of the Drawing Party in the
original principal amount of $5,000,000, (ii) the amount
represented by the draft accompanying this certification is due and
owing under the Note and has not been paid, (iii) the Drawing Party
is the holder of the Note, and (iv) an Event of Default, as defined
in the Note, has occurred and is continuing.
5. The Letter of Credit is concurrently being surrendered.
Dated:
[NAME OF DRAWING PARTY],
as Drawing Party
By:
Title:
Irrevocable Transferable Letter
of Credit No. ________
ANNEX B
FORM OF DRAFT
Dated:_______________________
Pay to the order of [NAME OF DRAWING PARTY], as Noteholder
under the Tracor Indemnification Note, dated as of ____________,
1996, made by Tracor, Inc., the amount of _______________
($__________) drawn on ______________________________, as issuer of
Irrevocable Nontransferable Standby Letter of Credit No. _________,
dated ____________, 199__.
[NAME OF DRAWING PARTY],
as Drawing Party
Exhibit E-2 to the
Agreement and Plan of Merger
Tracor Litigation Note LOC
IRREVOCABLE NONTRANSFERABLE STANDBY
LETTER OF CREDIT NO. _______
____________, 1996
[Exchange Agent]
______________________
______________________
______________________
Gentlemen:
At the request and for the account of TRACOR, INC., a
Delaware corporation (the "Corporation"), the undersigned (the
"Bank") establishes this irrevocable nontransferable standby letter
of credit (the "Letter of Credit") in the aggregate amount of U.S.
Twenty-Six Million Five Hundred Thousand Dollars ($26,500,000) (the
"Letter of Credit Amount"), in your favor as Noteholder (the
"Drawing Party") under the Tracor Litigation Note, as defined in
the hereinafter defined Merger Agreement. This Letter of Credit is
issued in connection with the Agreement and Plan of Merger, dated
August 30, 1996 (as the same may be hereafter amended, the "Merger
Agreement") by and among the Corporation, Tracor Acquisition Corp.,
a Delaware corporation, Cordant Holdings Corporation, a Delaware
corporation, Xxxxx X. Xxxxx, as the initial Holder Representative
(as defined in the Merger Agreement), and each of the Principal
Shareholders party thereto. Capitalized terms used but not defined
herein shall have the meanings assigned to such terms in the Merger
Agreement.
The Letter of Credit Amount shall be reduced from time
to time on a dollar-for-dollar basis (i) by the amount of any
payments of principal under the Tracor Litigation Note, and (ii) by
the amount of any offsets against the Tracor Litigation Note
pursuant to the terms of the Merger Agreement, by presentation of a
certificate of the Corporation in the form of Annex D
(appropriately completed) (a "Reduction Certificate"). The Letter
of Credit shall be available for drawing by you as Drawing Party
(or any successor Noteholder [as defined in the Tracor Litigation
Note] and as provided in this Letter of Credit) as set forth below
in one or more than one payments up to the maximum amount not to
exceed the Letter of Credit Amount.
This Letter of Credit shall expire at 4:00 p.m.,
________ time, on the date (the "Expiration Date") that is the
earliest to occur of the following: (i) ___________, 199__, (or
such later date to which such date has been extended in accordance
with the terms hereof, the "Scheduled Expiration Date"); (ii) the
date of payment of a Final Payment Drawing (as defined below); or
(iii) the date on which you surrender this Letter of Credit to us
for cancellation. You agree to surrender this Letter of Credit to
us, and not to make any Drawing, after the earlier of (a) the
Expiration Date, or (b) the date there is no principal amount
outstanding under the Tracor Litigation Note (each, a "Surrender
Event").
Subject to the provisions of this Letter of Credit,
demands for payment under this Letter of Credit may be made by you
(or your successors) from time to time prior to the Expiration Date
by presentation of: (i) a certificate in the form of Annex A
(appropriately completed) (a "Final Payment Certificate"), upon the
occurrence of an Event of Default, as defined in the Tracor
Litigation Note (a "Final Payment Drawing"); (ii) a certificate in
the form of Annex B (appropriately completed) (a "Partial Payment
Certificate"), in the case of the drawing for a partial payment of
the Tracor Litigation Note, or upon the occurrence of an event of
default upon which less than the entire amount of the Tracor
Litigation Note becomes due and payable, together, in each case,
with a draft in the form of Annex C (appropriately completed) drawn
on us, presented at our office located at ,
or by telecopier (at telecopier number: (___) ________) or telex
(at telex number: (___) _______, answerback: _______) (or such
other address, telecopier or telex number in the continental United
States as we may designate in a written notice delivered to you),
prior to 11:00 a.m., ________ time, on any Business Day (such
demand and presentation, a "Drawing"). Subject to the provisions
of this Letter of Credit, demands for payment under this Letter of
Credit may also be made by you (or your successors) from time to
time prior to the Expiration Date, if we have given you the Notice
of Non-Extension referred to below, by presentation of a draft in
the form of Annex B (appropriately completed) drawn on us,
presented at our office located at ________________, or by
telecopier (at telecopier number: (____)__________) or telex (at
telex number: (___)__________, answerback: ____________) (or such
other address, telecopier or telex number in the continental United
States as we may designate in a written notice delivered to you),
prior to 11:00 a.m., ___________ time, on any Business Day.
Such Final Payment Certificate, Partial Payment
Certificate, and draft shall be signed by you with all blanks
completed and deletions made in accordance with the directions to
do so, if any, contained in the applicable forms described above.
Payment against conforming documents presented under this Letter of
Credit shall be made by us on or before 1:00 p.m., ________ time,
on the next (or, in the case of presentation after 11:00 a.m.,
________ time, the second next) Business Day after presentation.
Payments made hereunder shall be made by wire transfer
to ______________________________, evidenced by delivery to it of a
Federal Reserve Bank wire transfer confirmation number, to it at
____________, ABA Number __________, Clearing Account No. _______
for further credit to ______________________________, Account No.
_______, Attention: _________________ (or to such other account
number or address in the continental United States as you may from
time to time designate in writing to us).
This Letter of Credit is not transferable in whole or in
part. Partial drawings are not permitted hereunder. This Letter
of Credit is irrevocable.
At any time no more than six (6) months and no less than
three (3) months prior to the then current Scheduled Expiration
Date, we may notify you in our sole discretion of our intention not
to extend the then current Scheduled Expiration Date by delivery to
you and to the Corporation of a Notice of Non-Extension in the form
of Annex E hereto. If we fail to timely deliver such Notice, the
Scheduled Expiration Date shall automatically be extended for a
period of one year. Such extension of the Scheduled Expiration
Date shall be effective upon the then currently Scheduled
Expiration Date. No further action shall be required to extend the
Scheduled Expiration Date, and no substitute for this Letter of
Credit need be issued to effect such extension.
Only you or any successor Noteholder, as Drawing Party,
may make a drawing under this Letter of Credit. Upon a payment of
the amount specified in a sight draft drawn hereunder, we shall be
fully discharged on our obligation under this Letter of Credit with
respect to such sight draft and we shall not thereafter be
obligated to make any further payment under this Letter of Credit
in respect to such sight draft to you or any other person who may
have made to you or makes to you a demand for payment of principal
of, or interest on the Tracor Litigation Note.
Communications with respect to this Letter of Credit
shall be addressed to us at ,
Attention: _______________ (or to such other address or person in
the continental United States as we may hereafter designate to you
in writing), specifically referring to the number of this Letter of
Credit.
To the extent not inconsistent with the express terms
hereof, this Letter of Credit shall be governed by, and construed
in accordance with, the terms of the Uniform Customs and Practice
for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (the "Uniform Customs"). As to
matters not governed by the Uniform Customs, this Letter of Credit
shall be governed by and construed in accordance with the law of
the State of ________, including ____________ of the Uniform
Commercial Code as in effect in the State of ________, without
giving application to choice of law principles.
This Letter of Credit and Annexes A through E hereto set
forth in full the terms of our undertaking, and such undertaking
shall not in any way be modified, amended, amplified or limited by
reference to any other document (including, without limitation, the
Tracor Preferred Stock Litigation Note and the Merger Agreement)
whatsoever except as expressly stated herein.
[BANK]
By:
Its: Authorized Signatory
Irrevocable Transferable Letter
of Credit No. ________
ANNEX A
FINAL PAYMENT CERTIFICATE
The undersigned, [NAME OF DRAWING PARTY], certifies as
follows to ____________________________________________, as issuer of the
above-referenced letter of credit (the "Letter of Credit"):
1. All terms defined in the Letter of Credit are used
in this Certificate with
the same meanings.
2. The undersigned is the Exchange Agent under the
Merger Agreement, the Noteholder under Tracor Litigation Note, and
the Drawing Party under the Letter of Credit and is entitled to
present this Certificate. No Surrender Event has occurred.
3. Pursuant to the Merger Agreement, the undersigned
has concurrently presented its draft drawn on you in the amount of
_____________________ ($____________). Such amount was computed in
accordance with the terms and conditions of the Merger Agreement
and, together with any other drafts now or previously submitted
under the Letter of Credit, does not exceed the Letter of Credit
Amount.
4. (i) The amount of the Draft accompanying this
certificate represents the unpaid principal of the Tracor
Litigation Note ("Note"), dated September __, 1996, executed by
Applicant, and payable to the order of the Drawing Party in the
original principal amount of $26,500,000, (ii) the amount
represented by the draft accompanying this certification is due and
owing under the Note and has not been paid, (iii) the Drawing Party
is the holder of the Note, and (iv) an Event of Default, as defined
in the Note, has occurred and is continuing.
5. The Letter of Credit is concurrently being surrendered.
Dated:
[NAME OF DRAWING PARTY],
as Drawing Party
By:
Title:
Irrevocable Transferable Letter
of Credit No. ________
ANNEX B
PARTIAL PAYMENT CERTIFICATE
The undersigned, [NAME OF DRAWING PARTY], certifies as follows
to ____________________________________________, as issuer of the
above-referenced letter of credit (the "Letter of Credit"):
1. All terms defined in the Letter of Credit are used in
this Certificate with
the same meanings.
2. The undersigned is the Exchange Agent under the Merger
Agreement, the Noteholder under the Tracor Litigation Note, and the
Drawing Party under the Letter of Credit and is entitled to present
this Certificate. No Surrender Event has occurred.
3. Pursuant to the Merger Agreement, the undersigned has
concurrently presented its draft drawn on you in the amount of
_____________________ ($____________). Such amount was computed in
accordance with the terms and conditions of the Merger Agreement
and does not, together with any other drafts now or previously
submitted under the Letter of Credit, exceed the Letter of Credit
Amount.
4. (i) The amount of the Draft accompanying this
certificate represents a partial payment of the unpaid principal of
the Tracor Litigation Note ("Note"), dated September __, 1996,
executed by Applicant, and payable to the order of the Drawing
Party in the original principal amount of $26,500,000, together
with any other drafts now or previously submitted under the Letter
of Credit, (ii) the amount represented by the draft accompanying
this certification is due and owing under the Note and has not been
paid, (iii) the Drawing Party is the holder of the Note, and (iv)
an Event of Default, as defined in the Note, has occurred and is
continuing.
Dated:
[NAME OF DRAWING PARTY],
as Drawing Party
By:
Title:
Irrevocable Transferable Letter
of Credit No. ________
ANNEX C
FORM OF DRAFT
Dated:_______________________
Pay to the order of [NAME OF DRAWING PARTY], as Noteholder
under the Tracor Litigation Note, dated as of ____________, 1996,
made by Tracor, Inc., the amount of _________________
($____________) drawn on ______________________________, as issuer
of Irrevocable Nontransferable Standby Letter of Credit No.
_________, dated ____________, 199__.
[NAME OF DRAWING PARTY],
as Drawing Party
Irrevocable Transferable Letter
of Credit No. ________
ANNEX D
LETTER OF CREDIT AMOUNT REDUCTION CERTIFICATE
The undersigned, TRACOR, INC., certifies as follows to
_________________________, as issuer of the above-referenced letter
of credit (the "Letter of Credit"):
1. All terms defined in the Letter of Credit are used in
this Certificate with the same meanings.
2. The outstanding principal balance of the Tracor
Litigation Note (the "Note"), dated September ___, 1996, executed
by Applicant, and payable to the order of the Drawing Party in the
original principal amount of $26,500,000 has been reduced to
$____________ pursuant to the terms of ___________ of the Merger
Agreement and the Letter of Credit Amount should correspondingly be
reduced to $_____________.
3. Tracor has complied with the requirements of
Section 2.19 of the Merger Agreement and is making this reduction
with the prior written consent of the Holder Representative or
pursuant to an order of arbitrators entered in accordance with the
provisions of Section 2.19 of the Merger Agreement.
Dated:
TRACOR, INC.,
as Applicant
By:
Title:
Irrevocable Transferable Letter
of Credit No. ________
ANNEX E
NOTICE OF NON-EXTENSION
[NAME OF DRAWING PARTY] , as Drawing Party
TRACOR, INC.
0000 Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Gentlemen:
Reference is hereby made to that certain Irrevocable
Nontransferable Standby Letter of Credit No.__________, dated
____________, 1996 (the "Letter of Credit"), established by us in
favor of [NAME OF DRAWING PARTY], as Drawing Party (as defined in
the Letter of Credit). We hereby notify you that, in accordance
with the terms of the Letter of Credit and that certain
Reimbursement Agreement, dated as of ____________, 1996, between
Tracor, Inc., a Delaware corporation, and us, the Letter of Credit
will not be extended beyond the currently Scheduled Expiration Date
(as defined in the Letter of Credit) of ________________________.
This letter should be attached to the Letter of Credit
and made a part thereof.
[BANK]
By
Name:
Title:
