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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
May 7, 1997
by and among
HIGH VOLTAGE ENGINEERING CORPORATION
LAUREN CORPORATION
and
PHI ACQUISITION HOLDINGS, INC.
and
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
(as to certain specified provisions only)
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TABLE OF CONTENTS
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ARTICLE I THE MERGER......................................................
Section 1.1 The Merger..................................................
Section 1.2 Conversion of Shares and Options............................
Section 1.3 Certain Payments............................................
Section 1.4 Exchange of Certificates....................................
Section 1.5 Approval of Merger..........................................
Section 1.6 Tax Refunds.................................................
Section 1.7 Holder Allocable Expenses...................................
Section 1.8 Dissenting Shares...........................................
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................
Section 2.1 Corporate Organization......................................
Section 2.2 Subsidiaries................................................
Section 2.3 Capitalization of the Company...............................
Section 2.4 Due Authorization...........................................
Section 2.5 No Conflict.................................................
Section 2.6 Financial Statements........................................
Section 2.7 Absence of Certain Changes or Events........................
Section 2.8 Contracts; No Defaults......................................
Section 2.9 Machinery, Equipment and Other Tangible Property............
Section 2.10 Owned Real Property; Facilities.............................
Section 2.11 Intellectual Property.......................................
Section 2.12 Litigation and Proceedings..................................
Section 2.14 Labor Matters...............................................
Section 2.15 Legal Compliance............................................
Section 2.16 Environmental Matters.......................................
Section 2.17 Taxes.......................................................
Section 2.18 Governmental Authorities: Consents.........................
Section 2.19 Licenses, Permits and Authorizations........................
Section 2.20 Brokers' Fees...............................................
Section 2.21 Bank Accounts, Etc..........................................
Section 2.22 Accounts Receivable.........................................
Section 2.23 Substantial Customers.......................................
Section 2.24 Directors and Officers......................................
Section 2.25 Minute Books; Stock Records.................................
Section 2.26 Inventory...................................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND
MERGER SUB..................................................
Section 3.1 Corporate Organization......................................
Section 3.2 Due Authorization...........................................
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Section 3.3 No Conflict.................................................
Section 3.4 Litigation and Proceedings..................................
Section 3.5 Governmental Authorities: Consents.........................
Section 3.6 Brokers' Fees...............................................
ARTICLE IV COVENANTS OF THE COMPANY.......................................
Section 4.1 Conduct of Business.........................................
Section 4.2 Inspection..................................................
Section 4.3 HSR Act.....................................................
Section 4.4 No Solicitations............................................
ARTICLE V COVENANTS OF ACQUIROR..........................................
Section 5.1 HSR Act.....................................................
Section 5.2 Indemnification and Insurance...............................
ARTICLE VI CONFIDENTIALITY; SUPPORT OF TRANSACTION........................
Section 6.1 Confidentiality.............................................
Section 6.2 Support of Transaction......................................
Section 6.3 Chalmers Payment............................................
ARTICLE VII CLOSING........................................................
Section 7.1 Filing......................................................
Section 7.2 Closing.....................................................
ARTICLE VIII CONDITIONS TO OBLIGATIONS.....................................
Section 8.1 Conditions to Obligations of Acquiror,
Merger Sub and the Company ..............................
Section 8.2 Conditions to Obligations of Acquiror and Merger Sub........
Section 8.3 Conditions to the Obligations of the Company................
ARTICLE IX TERMINATION/EFFECTIVENESS......................................
Section 9.1 Termination.................................................
Section 9.2 Effect of Termination.......................................
ARTICLE X CERTAIN DEFINITIONS............................................
ARTICLE XI HOLDER REPRESENTATIVE..........................................
Section 11.1 Designation and Replacement of Holder Representative........
Section 11.2 Authority and Rights of Holder Representative;
Limitations on Liability ................................
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ARTICLE XII MISCELLANEOUS..................................................
Section 12.1 Nonsurvival of Representations and Warranties...............
Section 12.2 Waiver......................................................
Section 12.3 Notices.....................................................
Section 12.4 Assignment..................................................
Section 12.5 Rights of Third Parties.....................................
Section 12.6 Expenses....................................................
Section 12.7 Construction................................................
Section 12.8 Captions; Counterparts......................................
Section 12.9 Entire Agreement............................................
Section 12.10 Amendments.................................................
Section 12.11 Publicity..................................................
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Schedules
Schedule 2.1 - Foreign Jurisdictions
Schedule 2.2 - Subsidiaries of the Company
Schedule 2.3 - Capitalization of the Company
Schedule 2.5 - Exceptions to No Conflict Representation
Schedule 2.7 - Certain Changes or Events
Schedule 2.8 - Contracts
Schedule 2.9 - Exceptions to Title to Machinery, Equipment and Other Tangible
Property
Schedule 2.10 - Facilities
Schedule 2.11 - Intellectual Property
Schedule 2.12 - Litigation and Proceedings
Schedule 2.13 - Employee Benefits
Schedule 2.14 - Labor Relations
Schedule 2.15 - Legal Compliance
Schedule 2.16 - Environmental Matters
Schedule 2.17 - Tax Matters
Schedule 2.18 - Governmental Authorities; Consents
Schedule 2.19 - Licenses, Permits and Authorizations
Schedule 2.20 - Brokers' Fees
Schedule 2.21 - Bank Accounts
Schedule 2.22 - Accounts Receivable
Schedule 2.23 - Substantial Customers
Schedule 2.24 - Directors and Officers
Schedule 2.26 - Inventory
Schedule 3.3 - Conflicts
Schedule 3.5 - Governmental Authorities; Consents (Acquiror)
Schedule 3.6 - Brokers' Fees (Acquiror)
Annexes
Annex A - Certificate of Merger
Annex B - Illustrative Determination and Allocation of the
Merger Consideration
Annex C - Form of Opinion of Counsel to the Company
Annex D - Form of Opinion of Counsel to Acquiror
Annex E - Employees; Terms of Employment
Annex F - Certificate of Incorporation of Surviving Corporation
Exhibit
Exhibit 1 - Anticipated Refunds
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as May 7, 1997 (this
"Agreement"), is entered into by and among HIGH VOLTAGE ENGINEERING CORPORATION,
a Massachusetts corporation ("Acquiror"), LAUREN CORPORATION, a Delaware
corporation and a wholly-owned subsidiary of Acquiror ("Merger Sub") and PHI
ACQUISITION HOLDINGS, INC, a Delaware corporation (the "Company") and, as to
certain specified provisions only, Chase Venture Capital Associates, L.P.
("CVCA").
WITNESSETH
WHEREAS, Acquiror, Merger Sub and the Company (Merger Sub and the Company
sometimes being referred to as the "Constituent Corporations") are hereby
adopting a plan of merger, providing for the merger (the "Merger") of Merger Sub
with and into the Company, with the Company being the surviving corporation; the
Merger will be consummated in accordance with this Agreement, such Merger to be
consummated as of the Effective Time of the Merger (as defined below);
WHEREAS, the respective Boards of Directors of Acquiror, Merger Sub and
the Company have adopted resolutions approving this Agreement; and
WHEREAS, certain defined terms used herein have the meanings assigned to
them in Article X hereof.
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AGREEMENT
In order to consummate the Merger, and in consideration of the mutual
agreements hereinafter contained, Acquiror, Merger Sub and the Company agree as
follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. At the Effective Time of the Merger, Merger Sub
will merge with and into the Company, the separate corporate existence of Merger
Sub shall cease and the Company, as the surviving corporation in the Merger
(hereinafter sometimes referred to for the periods on and after the Effective
Time of the Merger as the "Surviving Corporation"), shall continue its corporate
existence under the DGCL as a wholly-owned Subsidiary of Acquiror. The Merger
will have the effects specified under the DGCL.
Section 1.2 Conversion of Shares and Options.
(a) At the Effective Time of the Merger, by virtue of the Merger and
without any action on the part of the holder thereof:
(i) Each share of Preferred Stock (other than shares, if any,
held in treasury of the Company, which treasury shares shall be cancelled as
part of the Merger, and other than shares held by Dissenting Stockholders) that
is then issued and outstanding shall thereupon be converted into the right to
receive a portion of the Merger Consideration (defined below) equal to the
Liquidation Value thereof;
(ii) Each share of Common Stock that is then issued and
outstanding (other than shares, if any, held in the treasury of the Company,
which treasury shares shall be canceled as part of the Merger, and other than
shares held by Dissenting Stockholders) and each
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unexercised Option that is then outstanding shall thereupon terminate and be
converted into and become solely the right to receive the applicable portion of
the Common Equity Merger Consideration (defined below), as determined pursuant
to Section 1.2(c); and
(iii) Each share of the common stock, par value $ .01 per
share, of Merger Sub outstanding immediately prior to the Effective Time of the
Merger shall be converted into one fully-paid and non-assessable share of common
stock, par value $ .01 per share, of the Surviving Corporation.
(b) Subject to the adjustments set forth in Section 1.6, the "Merger
Consideration" shall consist of (i) Fifty Five Million Five Hundred Thousand
Dollars ($55,500,000) in cash, less (ii) the principal amount and accrued but
unpaid interest and outstanding on the Closing Date under the terms of the
Xxxxxx-Xxxxx Note (after any conversion thereof pursuant to the terms of the
Xxxxxx-Xxxxx Note but prior to repayment thereof as set forth in Section 1.3)
and any prepayment penalties payable by the Company thereunder, less (iii) the
principal amount and accrued but unpaid interest outstanding on the Closing Date
under the First Bank Loans and any prepayment penalties payable by the Company
thereunder, less (iv) the amount of Holder Allocable Expenses paid by Acquiror
to the Holder Representative at Closing in accordance with Section 1.7, plus (v)
(if Closing shall occur on or after August 1, 1997) the positive amount, if any,
equal to the amount by which all cash and cash equivalents of the Company and
its consolidated Subsidiaries on the Closing Date exceed the amount of all cash
and cash equivalents of the Company and its consolidated Subsidiaries on July
31, 1997, less (vi) any sums payable by the Company to Xxxxx X. Xxxxxxxx (the
"Xxxxxxxx Payment") pursuant to the executive equity compensation plan set forth
in Exhibit B to his employment agreement
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with the Physical Electronics, Inc. dated as of February 14, 1997, a copy of
which has been delivered to Acquiror, less (vii) sums payable upon Closing to
Xxxx X. Xxxxxxxx pursuant to a letter from the Company to him dated April 29,
1997, a copy of which has been delivered to Acquiror (the "Xxxxxxxx Payment")
and less (viii) an amount equal to the aggregate amount paid to former employees
of the Company or any of its Subsidiaries upon the repurchase of any shares of
Common Stock or Preferred Stock held by them after April 1, 1997 and prior to
the Closing Date. Subject to the adjustments set forth in Section 1.6, the
"Common Equity Merger Consideration" shall consist of (i) the Merger
Consideration, less (ii) the portion of the Merger Consideration into which all
shares of Preferred Stock (other than such shares, if any, held in the treasury
of the Company) are converted (or would have been converted, but for being held
by Dissenting Stockholders) by virtue of the Merger pursuant to Section
1.2(a)(i) above.
(c) The Common Equity Merger Consideration shall be allocated among
the holders of the Common Stock (other than Dissenting Stockholders and other
than shares, if any, held in the treasury of the Company) and the Options as set
forth below in this subsection 1.2(c). Each holder of Common Stock (other than
Dissenting Stockholders and other than shares, if any, held in the treasury of
the Company) shall be entitled to receive a portion of the Common Equity Merger
Consideration equal to (i) the Cash Per Fully-Diluted Common Share (as defined
below), multiplied by (ii) the number of shares of Common Stock held by such
holder immediately prior to the Effective Time of the Merger (but not including
any Common Stock issuable upon the exercise of any unexercised Options held by
such holder at the Effective Time of the Merger). Each holder of Options shall
be entitled to receive, subject to Section 1.4, a portion of the Common Equity
Merger Consideration equal to (i) the Cash Per Fully-Diluted Common Share,
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multiplied by the aggregate number of shares of Common Stock issuable upon
exercise in full of all Options held by such holder as of the Effective Time of
the Merger, minus (ii) the aggregate cash exercise price payable upon exercise
of all Options held by such holder. For purposes of the foregoing, "Cash Per
Fully-Diluted Common Share" shall mean (i) the sum of (A) the Common Equity
Merger Consideration, plus (B) the Aggregate Option Exercise Price (defined
below), divided by (ii) the Aggregate Fully-Diluted Common Shares. The
"Aggregate Fully-Diluted Common Shares" shall be the (i) aggregate number of
shares of Common Stock held by all holders immediately prior to the Effective
Time of the Merger (other than shares, if any, held in the treasury of the
Company), plus (ii) the aggregate number of shares of Common Stock issuable upon
the exercise in full of all Options (whether or not exercisable by their terms)
held by all holders immediately prior to the Effective Time of the Merger; and
the "Aggregate Option Exercise Price" shall mean the sum of the cash exercise
prices paid or payable upon exercise in full of all Options held by all holders
immediately prior to the Effective Time of the Merger.
(d) Annex B sets forth an illustrative determination and allocation
of the Merger Consideration, based on the assumptions set forth therein.
Section 1.3 Certain Payments. Immediately prior to, or concurrently with,
the Effective Time of the Merger, Acquiror will provide to the Company funds in
an amount equal to the amount required to repay the First Bank Loans and
Xxxxxx-Xxxxx Note and make the Chalmers Payment and the Xxxxxxxx Payment, in
each case immediately prior to, or concurrently with, the Effective Time of the
Merger. The Company shall apply such amount to repay in full all indebtedness
outstanding under the First Bank Loans and the Xxxxxx-Xxxxx Note and shall make
the Chalmers Payment immediately prior to, or concurrently with, the Effective
Time of
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the Merger.
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Section 1.4 Exchange of Certificates. After the Effective Time of the
Merger, each holder (other than Dissenting Stockholders) of an outstanding stock
certificate or certificates evidencing Preferred Stock or Common Stock or
certificates or agreements evidencing Options (collectively, the "Certificates")
shall surrender the same to the Acquiror at Closing or, if later, to such bank
or trust company selected by Acquiror and reasonably satisfactory to the Holder
Representative to act as the exchange agent (the "Exchange Agent") on Acquiror's
behalf. Upon surrender by a holder of such a Certificate at Closing to the
Acquiror plus such other documentation as may be reasonably be required by
Acquiror, the Acquiror shall pay such holder in cash such percentage (the
"Applicable Percentage") of the Merger Consideration into which such holder's
shares and/or Options evidenced by such Certificate shall have been converted as
a result of the Merger. Any Merger Consideration not disbursed at Closing
(except that portion attributable to shares held by Dissenting Stockholders) by
the Acquiror shall be paid to the Exchange Agent (the "Exchange Fund"). Upon
surrender by such a holder of his Certificates (other than Certificates held by
Dissenting Stockholders) following Closing to the Exchange Agent, plus such
other documentation as may be reasonably be required by Acquiror, the Acquiror
shall cause the Exchange Agent to pay such holder in cash the Applicable
Percentage of the Merger Consideration into which such a holder's shares and/or
Options shall have been converted as a result of the Merger as specified above,
without interest. Pending such surrender and exchange, such a holder's
Certificate or Certificates (other than Certificates held by Dissenting
Stockholders) shall be deemed for all purposes (other than the exchange
contemplated by this Section 1.4) to evidence such holder's Applicable
Percentage of the Merger Consideration into which such shares and/or Options
shall have been converted by the Merger; provided that
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any payment with respect to Options held by employees of the Company or
otherwise shall be reduced by any taxes required to be withheld under applicable
law with respect to such payments and amounts so withheld shall be paid to the
applicable taxing authority. Any interest, dividend or other income earned by
the Exchange Fund shall be for the sole account of the Acquiror. Any amounts in
the Exchange Fund which remain undistributed to Certificate holders for 60 days
after the Closing shall be delivered to the Acquiror upon demand by the
Acquiror, and any holders of Certificates who have not theretofore complied with
the foregoing provisions shall thereafter look only to the Acquiror for the
Merger Consideration to which they are entitled pursuant to this Agreement. None
of the Acquiror, Merger Sub or the Company shall be liable to any Certificate
holder for any amounts from the Exchange Fund or otherwise delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
Section 1.5 Approval of Merger; Effective Time of Merger.
(a) As soon as practicable following the satisfaction (or, to the
extent permitted, the waiver) of all conditions to the Merger set forth in this
Agreement, and provided that this Agreement has not been terminated pursuant to
the provisions hereof, Merger Sub and the Company shall cause a Certificate of
Merger in substantially the form of Annex A hereto (the "Certificate of Merger")
to be executed and filed with the Secretary of State of Delaware as provided in
Section 251 of the DGCL.
(b) At the Effective Time of the Merger, the Certificate of
Incorporation and Bylaws of the Company shall be amended in their entirety to
read as set forth in Annex F and, as so amended, shall be the Certificate of
Incorporation and Bylaws of the Company and the directors and officers of the
Surviving Corporation shall be the directors and officers of Merger
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Sub immediately prior to the Effective Time of the Merger.
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(c) Following execution of this Agreement, Merger Sub and the
Company shall convene meetings of, or seek the requisite written consents of
their respective stockholders to, the Merger in accordance with the DGCL and
their respective Certificates of Incorporation and Bylaws.
Section 1.6 Tax Refunds.
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(a) Promptly after the Closing Date, Acquiror shall, and shall cause each
Subsidiary and the Surviving Corporation to, use commercially reasonable efforts
to obtain a refund of any amounts paid by the Company for taxable periods (or a
portion thereof) ending on or prior to the Closing Date in respect of federal
and state corporate income tax for the Company's fiscal years ended June 30,
1995, June 28, 1996 and June 27, 1997 and any payments of estimated federal or
state corporate tax for the Surviving Corporation's fiscal year ending June 27,
1997 (each, as estimated on Exhibit 1) or made during and attributable to the
portion of such fiscal year ending on the Closing Date, that Acquiror, such
Subsidiary or the Surviving Corporation shall be entitled to claim as a result
of (i) the conversion of the Options (whether by exercise or cancellation, at
the option of the holder thereof) into the right to receive a portion of Merger
Consideration pursuant to the Merger Agreement, (ii) the payment of the Chalmers
Payment, or (iii) any combination of the foregoing (a "Refund"); provided,
however, that the Holder Representative will waive the requirement that
Acquiror, any Subsidiary of Acquiror, or the Surviving Corporation apply for a
Refund of amounts paid for state corporate income tax from a relevant taxing
authority where the Holder Representative, after consulting with Acquiror,
determines there is no reasonable likelihood of recovering a Refund of at least
$10,000 from such taxing authority, taking into account reasonable costs of
pursuing such recovery (other than costs related to the escrow arrangement
described in this Section 1.6). Exhibit 1 sets forth the Refunds that the
Company presently anticipates receiving. Acquiror and each Subsidiary of
Acquiror shall make available, or shall cause the Surviving Corporation to make
available, to the Holder Representative, promptly upon request therefor, copies
of Tax Returns (including any return, statements or reports, any schedule or
attachment thereto and any amendment thereof) prepared
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by or for the Company, the Surviving Corporation or any Subsidiary of Acquiror
in connection with a Refund prior to the filing of such Tax Returns for its
review and, in respect of Tax Returns for the Company's fiscal years ended June
30, 1995 and June 28, 1996 and the Company's or the Surviving Corporation's
fiscal year ending June 27, 1997 or any period between June 27, 1997 and the
Closing Date or any amended Tax Return for prior fiscal years, its consent, such
consent not to be unreasonably withheld. If at any time and from time to time
after the Closing Date, Acquiror, any Subsidiary of Acquiror or the Surviving
Corporation shall receive any Refund, an amount equal to (i) the amount of such
Refund minus (ii) reasonable, out-of-pocket or additional expenses (or a portion
thereof) actually incurred by the party filing the Tax Return to which such
Refund relates but only to the extent such expenses are attributable to
obtaining such Refund shall be payable upon receipt or realization to holders of
Common Stock and Options entitled to receive Common Equity Merger Consolidation
pro rata in accordance with their Applicable Percentage (the "Net Refund") which
shall be paid as follows: Acquiror shall pay fifty percent (50%) of each Net
Refund to the Holder Representative for distribution to the holders of the
Common Stock and Options entitled to receive the Common Equity Merger
Consideration pro rata in accordance with their Applicable Percentages, and
shall pay the remaining fifty percent (50%) of each Net Refund to an independent
third party bank selected by Acquiror and reasonably acceptable to the Holder
Representative (the "Escrow Agent") for deposit into an interest-bearing escrow
account selected by Acquiror (the "Escrow Account"). Fees of the Escrow Agent
shall be paid by the Acquiror and the Holder Representative in equal amounts,
and shall not be taken into account by Acquiror in computing the amount of a Net
Refund. Interest on any amounts deposited in the Escrow Account shall be paid
not less than annually to the
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Holder Representative for distribution to the holders of Common Stock and
Options entitled to receive Common Equity Merger Consideration, in accordance
with their Applicable Percentages.
(b) If a Tax Return to which a Refund relates is audited by the relevant
taxing authority at any time the Escrow Agent is holding a percentage of such
Refund, Acquiror shall notify the Holder Representative and the Escrow Agent in
writing. If an adjustment is proposed that would reduce the amount of such
Refund, Acquiror shall within 15 business days notify the Escrow Agent and the
Holder Representative in writing of such proposed adjustment. The Holder
Representative, on behalf of the holders of Common Stock and Options entitled to
receive Common Equity Merger Consideration, shall have the right to direct in a
commercially reasonable manner the conduct of the defense (including appeals, if
any) with respect to any such adjustment insofar as such adjustment would reduce
the amount of the Refund; provided that such right shall not include the power
to compel Acquiror to engage any particular firm of accountant or expert; and,
provided further, that Acquiror and its representatives shall not be required to
sign any filing or take any action which they reasonably consider to be in
violation of any applicable law. Upon final settlement or determination of the
proposed adjustment, the Holder Representative and Acquiror shall notify the
Escrow Agent. Within five (5) business days of the Escrow Agent's receipt of
such notice signed by Acquiror and Holder Representative, the Escrow Agent shall
release to the Acquiror the lesser of (i) the amount by which the Refund was
reduced plus the associated reasonable out-of-pocket costs (not including any
costs of the escrow management), or (ii) the amount on deposit in the Escrow
Account relating to such Refund (not including amounts attributable to interest
earned thereon).
(c) With respect to each Refund, the amount of such Refund as was
initially received
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by the Escrow Agent (together with any accrued interest thereon that has not
been paid to the Holder Representative as described above), as properly adjusted
to take into account the final settlement or determination of any proposed
adjustment regarding the Refund shall be released by the Escrow Agent to the
Holder Representative (x) on the date falling three years after the date the Tax
Return to which the Refund relates was filed, or (y) if such Tax Return is then
under audit by the relevant taxing authority, on the earliest of the date (i) it
becomes apparent (based on written communications from the relevant taxing
authority) that no adjustment (or no further adjustment) will be made that could
result in a reduction or loss of the Refund, or (ii) on which the audit is
completed, or (iii) such earlier date as the Acquiror and Holder Representative
shall agree in writing.
(d) If any Net Refund is not paid when due to the Holder Representative or
the Escrow Agent in accordance Section 1.6(a) additional interest shall accrue
on the amount payable, from the date falling five (5) business days after
payment of such amount is due to the date of payment, at a rate of sixteen
percent (16%) per annum. Any Refund amount payable pursuant to this Section 1.6
with respect to Options held by employees of the Company shall be paid net of
any withholding on account of taxes as may be required under applicable law with
respect to such payment.
(e) Notwithstanding anything to the contrary in this Agreement, in no
event shall Acquiror, any Subsidiary of Acquiror, or the Surviving Corporation
be required to pay any amounts in respect of Refunds to the extent that such
amounts were received by the Company on or prior to the Closing Date and Merger
Consideration was increased to reflect the Company's receipt of such amount
pursuant to Section 1.2(b)(v).
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(f) The Acquiror shall have no further recourse against the Escrow
Account, the Escrow Agent, the Holder Representative or any holders of Common
Stock or Options in respect of any Refund once the Acquiror has received a
payment in respect thereof from the Escrow Account to the full extent of its
entitlement under Section 1.6(b) or payment has been made to the Holder
Representative under Section 1.6(a) or (c).
(g) The Acquiror shall (i) for the period starting on the day following
the Closing Date, include the Surviving Corporation in the consolidated return
filed by the affiliated group that includes the Acquiror, and (ii) not make an
election to waive carryback of net operating losses with respect to the
Surviving Corporation.
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Section 1.7 Holder Allocable Expenses. Not less than two (2) Business Days
prior to the Closing Date, the Holder Representative will provide to Acquiror an
estimate (which estimate shall include such reserves as the Holder
Representative in good faith determines in its discretion 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 Holder Representative on
behalf of the Company and the holders of Common Stock and Options 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 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 specially employed by the Company and/or the
Holder Representative in connection with the Merger, including the fees of the
Escrow Agent, the fees payable to any Person listed on Schedule 2.20 hereof
(which fees, if any, shall be paid by the Holder Representative and not the
Company) and the fees and expenses of CIBC Wood Gundy Securities, Corp. pursuant
to the letter agreement from it described on Schedule 3.6 hereof up to $500,000
(which fees shall be paid by the Holder Representative and not Acquiror) and
(iii) the reasonable third party expenses of the Holder Representative incurred
in such capacity (collectively, the "Holder Allocable Expenses"). On the Closing
Date, Acquiror 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 and any other amounts to which the
Holder Representative is entitled to reimbursement under Section 11.2 hereof.
From time to time (and no less frequently than quarterly commencing three months
following the Closing Date), the Holder Representative shall distribute to the
holders of
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Common Stock and Options (pro rata, in accordance with their respective
Applicable Percentages, as additional Common Equity Merger Consideration) any
portion of such cash (and any interest earned thereon) which has not been so
expended and which the Holder Representative has determined in its discretion is
in excess of the actual amounts required to pay (or to be held in reserve to
pay) such Holder Allocable Expenses and reimbursements, provided that any such
payment to holders of Options shall be paid net of any withholding on account of
taxes as may be required by applicable law. In no event will the Holder
Representative or Acquiror or the Company be responsible for payment of Holder
Allocable Expenses in excess of the cash amounts paid to the Holder
Representative by Acquiror pursuant to this Section 1.7. Such Holder Allocable
Expenses shall be reimbursed by Holders of Common Stock and Options, pro rata,
in accordance with their respective Applicable Percentages as further described
in Section 11.2.
Section 1.8 Dissenting Shares.
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(a) Notwithstanding any other provision of this Agreement to the
contrary, shares of capital stock of any class of the Company that are
outstanding immediately prior to the Effective Time of the Merger and which are
held by Dissenting Stockholders (collectively, the "Dissenting Shares") shall
not be converted into or represent the right to receive any portion of the
Merger Consideration. Such stockholders shall be entitled to receive payment of
the appraised value of such shares held by them in accordance with the
provisions of the DGCL, except that all Dissenting Shares held by such
stockholders who shall have failed to perfect or who effectively shall have
withdrawn, forfeited or lost their rights to appraisal of such shares under the
DGCL shall thereupon have been converted into, as of the Effective Time of the
Merger, the right to receive, without any interest thereon, that portion of the
Merger Consideration to which they would have been entitled in accordance with
Section 1.2 if they had not been Dissenting Stockholders, upon surrender, in the
manner provided in Section 1.4, of the Certificate or Certificates that formerly
evidenced such shares.
(b) The Company shall give the Acquiror and Merger Sub prompt notice
of any demands for appraisal received by it, withdrawals of such demands, and
any other instruments served pursuant to the DGCL and received by the Company
and relating thereto.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Acquiror and Merger Sub as of the
date of this Agreement that:
Section 2.1 Corporate Organization. The Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
State of Delaware.
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The Company is duly licensed or qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
its properties owned or leased or the nature of its activities make such
licensing or qualification necessary, except where the failure to be so licensed
or qualified or in good standing would not have a material adverse effect on the
business, operations, or financial condition of the Company and its
Subsidiaries, taken as a whole. Copies of the Certificate of Incorporation and
Bylaws of the Company, and all amendments thereto, heretofore delivered to
Acquiror are accurate and complete as of the date hereof. Schedule 2.1 contains
a true, correct and complete list of all jurisdictions in which the Company is
qualified to do business as a foreign corporation.
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Section 2.2 Subsidiaries. Schedule 2.2 sets forth a complete list of the
Subsidiaries of the Company, and the Company does not own any capital stock or
equity or proprietary interest in any other entity or enterprise other than
ULVAC-PHI, Inc., however organized and however such interest may be denominated
or evidenced, except as set forth in Schedule 2.2. Each of the Subsidiaries
listed on Schedule 2.2 is a duly incorporated, validly existing and in good
standing or appropriately recognized as legally in existence and active under
the laws of its jurisdiction) under the laws of the jurisdiction identified on
Schedule 2.2. The shares of ULVAC-PHI, Inc. owned by the Company constitute 50%
of the outstanding shares of capital stock of ULVAC-PHI, Inc., and, except as
set forth in the Basic Agreement dated as of September 1, 1982 (a copy of which
has been delivered to Acquiror) by and between Seller and ULVAC Corporation, a
Japanese corporation, there are no outstanding warrants, options, conversions
privileges, preemptive rights or other rights or agreements to purchase or
otherwise acquire any equity or other securities of any Subsidiary or ULVAC-PHI,
Inc. No corporate or partnership proceedings on the part of any Subsidiary are
necessary to authorize this Agreement and the transactions contemplated hereby.
Section 2.3 Capitalization of the Company.
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(a) The authorized capital stock of the Company consists solely of
(i) 1,000,000 shares of Class A Common Stock, of which 191,660 shares are issued
and outstanding, (ii) 1,000,000 shares of Class B Common Stock, of which 398,070
shares are issued and outstanding and of which 253,843 shares are reserved for
issuance pursuant to the Xxxxxx-Xxxxx Note, (iii) 1,000,000 shares of Class C
Common Stock, of which 411,472 shares are issued and outstanding and of which
169,595 are reserved for issuance upon exercise of outstanding Options, (iv)
700,000 shares of Preferred Stock, par value $0.01 per share, of which 600,000
shares have been designated as Series A Cumulative Redeemable Preferred Stock,
of which 569,143 shares are issued and outstanding.
(b) Except as set forth on Schedule 2.3, the Company has not granted
any outstanding options, warrants, rights or other securities convertible into
or exchangeable or exercisable for shares of the capital stock of the Company,
any other commitments or agreements providing for the issuance of additional
shares, the sale of treasury shares, or for the repurchase or redemption of
shares of the Company's capital stock, and there are no agreements of any kind
which may obligate the Company to issue, purchase, redeem or otherwise acquire
any of its capital stock.
Section 2.4 Due Authorization. The Company has all requisite corporate
power and authority, and has taken all corporate action necessary, to own, lease
and operate its assets, to conduct its business as it is presently being
conducted and as it is proposed to be conducted between the date of this
Agreement and the Closing Date and, subject to the approval by the requisite
holders of the Common Stock, to execute and deliver this Agreement, consummate
the transactions contemplated hereby and perform its obligations hereunder. The
execution and
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delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated hereby have been duly approved by the board of
directors. Other than receipt of approval of holders of a majority of the Class
A Common Stock and Class B Common Stock, voting as a single class, no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement. This Agreement has been duly executed and delivered by the Company
and, upon approval by the requisite holders of the Common Stock, will be a
legal, valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, to general principles of equity.
Section 2.5 No Conflict. Except as set forth in Schedule 2.5, the
execution and delivery of this Agreement by the Company and the consummation of
the transactions contemplated hereby does not and will not violate any provision
of, or result in the breach of, any applicable law, rule or regulation of any
governmental body, the Certificate of Incorporation, Bylaws or other
organizational documents of the Company or any of its Subsidiaries, or any
agreement, indenture or other instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries may
be bound, or of any order, judgment or decree applicable to any of them, or
terminate or result in the termination of any such agreement, indenture or
instrument, or result in the creation of any Lien, charge or encumbrance upon
any of the properties or assets of the Company or its Subsidiaries, or
constitute an event which, after notice or lapse of time or both, would result
in any such violation, breach, acceleration, termination or creation of a Lien
or result in a violation or revocation of any required license, permit or
approval from any government or other third party,
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except to the extent that the occurrence of any of the foregoing would not have
a material adverse effect on (i) the ability of the Company to enter into and
perform fully its obligations under this Agreement or (ii) the business,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole.
Section 2.6 Financial Statements. The Company has previously delivered to
Acquiror the following financial statements, all of which have been prepared in
accordance with GAAP applied on a consistent basis (except as otherwise stated
in the footnotes or the audit opinion related thereto) throughout the periods
covered thereby (subject, in the case of the financial statements referenced in
paragraph (b) below, to the absence of footnotes, normal year-end adjustments,
adjustments relating to the stock option plans, adjustments relating to the
termination of Xx. Xxxxxxxx'x employment in the Company and adjustments relating
to Xx. Xxxxxxx'x appointment as Chief Executive Officer substantially as set
forth on Schedule 2.6) and, as applicable, present fairly in all material
respects the consolidated financial position of the Company and its consolidated
Subsidiaries at the dates stated in such financial statements and the results of
their operations for the periods stated therein:
(a) the audited consolidated Balance Sheets of the Company and its
consolidated Subsidiaries as of June 28, 1996 and June 30, 1995, and the audited
consolidated Statements of Operations and Cash Flows of the Company and its
consolidated Subsidiaries for the years ended June 28, 1996 and June 30, 1995,
together with the auditors' report thereon; and
(b) the unaudited consolidated Balance Sheet of the Company and its
consolidated Subsidiaries (the "Interim Balance Sheet") as of March 28, 1997
(the "Interim Balance Sheet Date") and the unaudited consolidated Statement of
Operations of the Company
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and its consolidated Subsidiaries for the nine-month period ended March 28,
1997.
(c) As of the Interim Balance Sheet Date, neither the Company nor
any Subsidiary has any material liabilities (or liabilities which, when
aggregated with all other such liabilities, are material), present or deferred,
accrued or unaccrued, fixed, absolute or contingent except as disclosed in the
Interim Balance Sheet or arising under any Contracts, permits, licenses or other
commitments or liabilities disclosed or referred to on the Schedules (and under
those Contracts which are not required to be disclosed on the Schedules).
Section 2.7 Absence of Certain Changes or Events. Except as set forth on
Schedule 2.7 or otherwise disclosed in writing to Acquiror pursuant to this
Agreement, since the Interim Balance Sheet Date, there has not been any:
(a) actual or threatened material adverse change in the condition
(financial or otherwise), business or operations of the Company and its
Subsidiaries, taken as a whole;
(b) material increase of more than ten percent in the rate of
compensation payable or to become payable to any employee of the Company or its
Subsidiaries or any consultant, representative or agent of the Company or its
Subsidiaries, including the making of any loan to, or the payment, grant or
accrual of any bonus, incentive compensation, service award or other similar
benefit to, any such person, or the addition to, modification of, or
contribution to any Benefit Plan, arrangement, or practice described on Schedule
2.7 other than (i) contributions made for 1996 in accordance with the normal
practices of the Company or its Subsidiaries or (ii) the extension of coverage
to others who become eligible after the Interim Balance Sheet Date or (iii) such
increases, payments, grants or accruals as occur in the ordinary course of
business of the Company or its Subsidiaries;
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(c) mortgage, pledge or other encumbrance of, individually or in the
aggregate, material assets, except purchase money mortgages arising in the
ordinary course of business of the Company and its Subsidiaries;
(d) sale, assignment or transfer of, individually or in the
aggregate, material assets, other than in the ordinary course of business of the
Company and its Subsidiaries;
(e) incurrence of material indebtedness by the Company or its
Subsidiaries for borrowed money or any material commitment to borrow money
entered into by the Company or its Subsidiaries, or any material loans made or
agreed to be made by the Company or its Subsidiaries, or any material
indebtedness guaranteed by the Company or its Subsidiaries;
(f) to the Company's knowledge, incurrence by the Company or its
Subsidiaries of material liabilities (or liabilities which, when aggregated with
all other such liabilities, are material), absolute or contingent, except
liabilities incurred in the ordinary course of business of the Company and its
Subsidiaries and consistent with past practice, or increase or change in any
assumptions underlying or methods of calculating any doubtful account
contingency or other reserves of the Company or its Subsidiaries;
(g) payment, discharge or satisfaction of any material liabilities
of the Company or its Subsidiaries other than the payment, discharge or
satisfaction of material liabilities in the ordinary course of the business of
the Company and its Subsidiaries consistent with the past practice of the
Company and its Subsidiaries and, in the case of indebtedness for borrowed
money, limited to scheduled repayments disclosed in the Interim Balance Sheet or
on Schedule 4.1(i);
(h) capital expenditure in excess of $100,000 in any instance (or in
the
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aggregate with respect to any one project) by the Company or its Subsidiaries or
the incurring of any obligation by the Company or its Subsidiaries to make any
capital expenditure in excess of $100,000 in any instance (or in the aggregate
with respect to any one project) or execute any material lease, other than in
each case any capital expenditure or execution of a material lease which occurs
(i) in the ordinary course of business, or (ii) in connection the ERP project
being undertaken by the Company and its subsidiaries, or (iii) in connection
with the renewal of the lease of the Facility at Redwood City, CA with the
superior Landlord of such Facility;
(i) failure to pay or satisfy when due any obligation of Seller in
connection with the business or operations of the Company or its Subsidiaries,
except where the failure would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries,
taken as a whole;
(j) disposition or lapsing of any material Intellectual Property
rights;
(k) repurchase or redemption of any shares of the Company's capital
stock other than stock purchased from former employees of the Company or any of
its Subsidiaries and the amounts paid therefor are taken into account in the
determination of the Merger Consideration; or
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(l) agreement by the Company or any of its Subsidiaries to the
Company's knowledge to do any of the things described in the preceding clauses
(a) through (k) other than as provided for herein.
Section 2.8 Contracts; No Defaults.
(a) Schedule 2.8 (i) through (x) contains a listing of all Contracts
described in clauses (i) through (x) below to which the Company or any of its
Subsidiaries is a party or by which they or any of their properties are bound.
True, correct and complete copies of contracts referred to in clauses (i)-(x)
below have been delivered to or made available to Acquiror or its agents or
representatives.
(i) Each Contract not made in the ordinary course of business
involving expenditures or receipts by the Company or its Subsidiaries in
excess of $100,000;
(ii) Each material distribution, franchise, sales, third-party
commission, consulting, agency or advertising contract or similar
agreement to which Company or any of its Subsidiaries is a party or which
is not cancelable without penalty on thirty (30) calendar days notice;
(iii) Each Contract which involves performance of services or
delivery of goods and/or materials by or to the Company or any of its
Subsidiaries of an amount or value in excess of $100,000 and not
cancelable without penalty upon thirty (30) calendar days notice;
(iv) Each material contract or commitment relating to
commission arrangements with persons other than employees of the Company
or its Subsidiaries.
(v) Each Promissory note, loan, agreement, indenture, evidence of
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indebtedness, letter of credit, guarantee, or other instrument relating
to an obligation to pay money in excess of $100,000, whether the Company
or any of its Subsidiaries shall be the borrower, lender or guarantor
thereunder or whereby any material assets of the Company or any of its
Subsidiaries are pledged (excluding credit provided by the Company or any
of its Subsidiaries in the ordinary course of business of the Company or
its Subsidiaries to employees or purchasers of their products and any such
instruments representing accounts payable or receivable generated in the
ordinary course of business);
(vi) Each lease of real property;
(vii) Each lease of personal property involving expenditures
or liabilities in excess of $25,000 in any one year or $100,000 in the
aggregate over the term of the lease and not cancelable without penalty
upon thirty (30) calendar days notice;
(viii) Each material licensing agreement or other material
written Contract with respect to any Intellectual Property (as hereinafter
defined), including forms of Intellectual Property licenses and
sublicenses and agreements with current or former employees, consultants,
or contractors regarding the ownership, appropriation or the nondisclosure
of Intellectual Property;
(ix) Each agreement or commitment that the Company currently
anticipates will account for more than 5% of the aggregate purchases or
sales projected to be made by the Company and its Subsidiaries during the
current fiscal year; and
(x) Each agreement imposing material non-competition or
material exclusive dealing obligations on the Company or any of its
Subsidiaries.
(b) Except as set forth on Schedule 2.8, all of the Contracts listed
pursuant to
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paragraph (a) hereof are valid and in full force and effect
and the Company, or Subsidiary party thereto, has duly performed its
obligations under the Contracts listed or required to be set forth on
Schedule 2.8 or as indicated on Schedule 2.5 in all material respects to
the extent those obligations to perform have accrued. Except as set forth
on Schedule 2.8 to the best knowledge of the Company, no material
violation of, or default or breach under, any such Contracts by any party
thereto has occurred, except where violation, default or breach would not
have a material adverse effect on the business, operations or financial
condition of the Company and its Subsidiaries, taken as a whole.
Section 2.9 Machinery, Equipment and Other Tangible Property. Excluding
the Owned Real Property and except as set forth on Schedule 2.9, the Company or
one of its Subsidiaries owns and has good title to all machinery, equipment and
other tangible property reflected on the books of the Company and its
Subsidiaries as owned by the Company or its Subsidiaries and which is material
to the business and operations of the Company and its Subsidiaries taken as a
whole ("Material Equipment"), free and clear of all Liens other than Permitted
Liens. Except as set forth on Schedule 2.9, all the Material Equipment is in a
state of good repair and maintenance and is in good operating condition,
reasonable wear and tear excepted.
Section 2.10 Owned Real Property; Facilities.
(a) Owned Real Property. The Company has good and marketable fee
simple title to the Owned Real Property and all buildings and other improvements
located thereon, subject only to: (i) the Permitted Liens; and (ii) such
easements, licenses, restrictions, reservations, leases and other rights to
possession or use of the Owned Real Property, or any
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portion thereof, which do not materially interfere with the use of the Owned
Real Property as a manufacturing facility as currently used or any other use to
which the Owned Real Property may lawfully be put.
(b) Actions. There are no pending or, to the Company's knowledge,
threatened condemnation proceedings with respect to any Facility.
(c) Certificate of Occupancy and other Compliances. All Facilities
have received all material required approvals of governmental authorities
(including, without limitation, a certificate of occupancy or other similar
certificate permitting lawful occupancy of the Facilities) required in
connection with the operation thereof and have been operated and maintained in
all material respects in accordance with applicable laws, rules and regulations.
(d) Schedule 2.10 lists the Facilities of the Company and its
Subsidiaries since the Interim Balance Sheet Date. Except for the Facilities,
since May 20, 1994 the Company has not operated any manufacturing facilities.
Section 2.11 Intellectual Property. Schedule 2.11 lists each patent,
trademark, service xxxx or trade name, registered copyright or mask work which,
in each case, is material to the business and operations of the Company and its
Subsidiaries (taken as a whole) as presently conducted, and applications for any
of the foregoing (collectively, "Intellectual Property") held by the Company or
any of its Subsidiaries. The Contracts listed on Schedule 2.8 include all
material license or sublicense agreements with respect to any Intellectual
Property to which the Company or any of its Subsidiaries is a party. Except as
set forth on Schedule 2.11, (i) the Company or one or more of its Subsidiaries
has good title to each item of Intellectual Property owned by it, free and clear
of any Lien other than Permitted Liens and (ii) the Company and its
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Subsidiaries own or have the right to use pursuant to license, sublicense,
agreement or permission all items of Intellectual Property used in the operation
of the business of the Company and its Subsidiaries, as presently conducted,
except where the failure to have such rights would not have a material adverse
effect on the business, operations or financial condition of the Company and its
Subsidiaries, taken as a whole. The consummation of the transactions
contemplated hereby will not alter or impair any such right and no actions are
pending or, to the knowledge of the Company, threatened against the Company or
its Subsidiaries which would result in revocation or termination of any such
right, except to the extent that such revocation or termination would not have a
material adverse effect on the business, operations or financial condition of
the Company and its Subsidiaries taken as a whole. To the best of the Company's
knowledge, the conduct of the business of the Company and its Subsidiaries, as
currently conducted, does not, in any material respect, conflict with, or
infringe upon, the material Intellectual Property rights of any third party.
Section 2.12 Litigation and Proceedings. Except as set forth on Schedule
2.12, as at the date of this Agreement there are no lawsuits, actions, suits or
other proceedings at law or in equity, or to the knowledge of the Company,
investigations, before or by any court or other Governmental Authority or before
any arbitrator pending or, to the knowledge of the Company, threatened, against
the Company or any of its Subsidiaries, or, to the Company's knowledge, any
other person in respect of which the Company or any Subsidiary has
indemnification obligations and, as at the Closing there shall be no such
lawsuit, action, suit or proceeding in which the relief sought includes damages
in excess of $100,000 in any individual case or $1,000,000 in the aggregate.
Except as set forth on Schedule 2.12, there is no unsatisfied judgment, order or
decree
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requiring payment in excess of $100,000 or any open injunction binding upon the
Company or any of its Subsidiaries.
Section 2.13 Employee Benefit Plans. The Schedule 2.13 lists each (i)
pension, retirement, profit-sharing, employee stock ownership, deferred
compensation, stock bonus or other similar plan or arrangement, (ii) each
medical, vision, dental or other health plan or arrangement, (iii) each life
insurance plan or arrangement, (iv) each vacation, severance or other similar
plan or arrangement, (v) each stock option, stock appreciation or other similar
plan or arrangement and (vi) each other employee benefit plan, including,
without limitation, any "employee benefit plan" as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), to
which the Company or any entity which is (or at a relevant time was) a member of
a "controlled group of corporations" with or under "common control" with the
Company as defined in Section 414(b) or (c) of the Code and (an "ERISA
Affiliate") is required to contribute or which the Company or any ERISA
Affiliate sponsors, in each case, for the benefit of any of the Company's
domestic employees or former employees (the "Benefit Plans").
Section 2.14 Labor Matters.
(a) Except as set forth in Schedule 2.14, neither the Company nor
any of its Subsidiaries is a party to any labor agreement with respect to their
employees with any labor organization, union, group or association and there are
no employee unions (nor any other similar labor or employee organizations) under
local statutes, custom or practice. Neither the Company nor any Subsidiary is
now, or since May 20, 1994 has been, subject to or involved in, or threatened
with any union elections, petitions therefor or other organizational activities
and, to
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the knowledge of the Company, none of the employees of the Company or any
Subsidiary are now, or since May 20, 1994 have been, represented by any labor
union or other employee collective bargaining organization and there are no
pending grievances, disputes or controversies with any union or other employee
collective bargaining organization of such employees or threats of strikes, work
stoppages or slowdowns or pending demands for collective bargaining by any union
or other such organization, and the Company is not, nor is any Subsidiary nor,
to the knowledge of the Company, is any employee of the Company or any
Subsidiary, now subject to or involved in or threatened with any union
elections, petitions therefor or other organizational or recruiting activities,
except as disclosed in Schedule 2.14. The Company and each Subsidiary is in
compliance in all material respects with all applicable laws respecting
employment practices, employee documentation, terms and conditions of employment
and wages and hours and is not and has not engaged in any unfair labor practice.
There is no unfair labor practice charge or complaint against the Company and
any of its Subsidiaries pending before the National Labor Relations Board and
there are no facts or information to the knowledge of the Company which would
give rise thereto. Schedule 2.14 also sets forth a list of all employment
agreements with employees who earn over $75,000 per year.
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(b) Except for (i) those matters set forth on Schedule 2.14, (ii)
the Chalmers Payment, (iii) the Xxxxxxxx Payment and (iv) under the Employee
Stock Option Plans, no employee shall accrue or receive additional benefits,
service or accelerated rights to payments of benefits under any employment plan,
agreement or arrangement, including the right to receive any parachute payment,
as defined in Section 280G of the Code, or become entitled to severance,
termination allowance or similar payments as a result of the transactions
contemplated by this Agreement. Since May 20, 1994 neither the Company nor any
Subsidiary has experienced a material work slowdown or stoppage due to labor
problems.
Section 2.15 Legal Compliance. Except with respect to (a) matters set
forth on Schedule 2.15, and (b) matters addressed in Sections 2.13, 2.16 and
2.17 (as to which certain representations and warranties are made pursuant to
such Sections), the Company and its Subsidiaries are in substantial compliance
and at all times have been in substantial compliance with all laws (including
rules and regulations thereunder) of federal, state, local and foreign
governments (and all agencies thereof) applicable thereto, except where such
instances of noncompliance would not have a material adverse effect on the
business, operations or financial condition of the Company and its Subsidiaries,
taken as a whole.
Section 2.16 Environmental Matters.
(a) The following terms, when used in this Section 2.16, shall have
the following meanings. Any of these terms may, unless the context otherwise
requires, used in the singular or the plural depending on the reference.
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"Release" shall mean and include any material spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into the environment of any Hazardous Substance.
"Hazardous Substance" shall mean any "hazardous waste,"
"hazardous material," "hazardous substance," "industrial waste," "subject
waste," "pollutant," "contaminant," "toxic waste" or "toxic substance" (as
defined in or for purposes of any Environmental Law), whether solid, liquid or
gas, including but not limited to asbestos, radioactive materials, PCB's,
pesticides, and petroleum or petroleum products.
(b) Since May 20, 1994 (or, if later, the date the Company first
occupied the relevant Facility) the Facilities have been maintained and operated
in material compliance with all Environmental Laws. Prior to May 20, 1994 (or,
if later, the date the Company first occupied the relevant Facility), to the
Company's knowledge, the Facilities were maintained and operated in material
compliance with all Environmental Laws.
(c) Except as disclosed on Schedule 2.16(c), neither the Company,
nor any of the Subsidiaries, has received any written notice since May 20, 1994,
nor, to the Company's knowledge, prior thereto, alleging that it is or was
claimed to be in violation of or in material non-compliance with the conditions
of any permit required under any Environmental Law or the provisions of any
Environmental Law, which violation has not been remedied to the satisfaction of
the person issuing the notice;
(d) There is not now pending or, to the Company's knowledge,
threatened any Action against the Company or any of the Subsidiaries under any
Environmental Law with respect to any alleged Release, handling or mishandling
of any Hazardous Substance;
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(e) Hazardous Substances. The Company has not used, generated,
treated, stored, transported or disposed of any Hazardous Substance except in
material compliance with applicable Environmental Laws;
(f) Environmental Conditions. Except as disclosed on Schedule 2.16,
or as would not have a material adverse effect on the business, operations or
financial condition of the Company and the Subsidiaries taken as a whole, no
Hazardous Substances are present or have been located on, under or about, or
have migrated or been Released on, under, about or from, the Facilities which
could form the basis of any demand, cause of action, claim or Action of any
person against the Company or the Subsidiaries or give rise to liability under
any applicable Environmental Law;
(g) CERCLA or RCRA. No current or, to the Company's knowledge, past
use, generation, treatment, transportation, storage, disposal or handling
practice of the Company with respect to any Hazardous Substance has resulted or
could reasonably be expected to result in any material liability under CERCLA or
RCRA or any Environmental Laws of similar effect;
(h) Storage Tank or Pipeline. Neither the Company nor any of its
Subsidiaries operates any underground storage tank (as defined by any
Environmental Law). There is not now and to the Company's knowledge has not been
at any time any underground or above-ground storage tank or pipeline at the
Owned Real Property where the installation, use, maintenance, repair, testing,
closure or removal of such tank or pipeline was not in material compliance with
all Environmental Laws, and there has been no material Release from or rupture
of any such tank or pipeline, including without limitation any material Release
from or in connection with the filling or emptying of such tank or pipeline;
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(i) Releases or Indemnification Agreements. Neither the Company nor
any of its Subsidiaries has released any person from or agreed to indemnify any
person against any claim any of them may have (i) under any Environmental Law,
or (ii) otherwise regarding any use, generation, treatment, storage,
transportation, disposal, migration or Release of any Hazardous Substances.
(j) Site Assessments, etc. No site assessment, audit or other
investigation has been conducted by or on behalf of the Company or any
Subsidiary as to environmental matters at any of the Facilities since May 20,
1994, except as set forth on Schedule 2.16(j).
Section 2.17 Taxes. Except as otherwise disclosed in Schedule 2.17:
(a) All material federal, state, local, and foreign tax returns of
the Company and its Subsidiaries ("Tax Returns"), including those Tax Returns
relating to income, employment, franchise, property, sales and use, and excise
taxes, and any other taxes due from and/or withheld by or required to be
withheld by the Company and its Subsidiaries (collectively, "Taxes") have been
prepared in all material respects accordance with all applicable laws and have
been duly and timely filed, except for those returns for which the time for
filing thereof has been validly extended, and the information shown on such
returns (complete copies of which have been furnished to the Acquiror by the
Company), fairly and accurately reflects the information purported to be shown
in all material respects. The Company has made available to Acquiror copies of
its federal income Tax Returns for 1994, 1995 and 1996.
(b) All Taxes or estimates thereof that are shown as due on the Tax
Returns filed have been timely and appropriately paid (or an adequate reserve
has been established therefor), except for amounts being contested in good faith
by appropriate proceedings.
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(c) To the knowledge of the Company, all Taxes that the Company and
each Subsidiary are required by law to withhold and collect to date have been
duly and timely withheld and collected, and, except for amounts being contested
in good faith in appropriate proceedings, have been paid over in to the proper
authorities to the extent due and payable.
(d) The Company is not aware of any transactions or matters or any
basis which might or could result in material additional Taxes for the Company
or any Subsidiary with respect to prior taxable periods for which an adequate
reserve has not been provided.
(e) None of the Tax Returns is being audited by any taxing
authority.
(f) No assessment, audit or other proceeding by any taxing
authority, court, or other governmental or regulatory authority is proposed or
pending with respect to the Taxes or Tax Returns.
(g) There are no outstanding agreements, waivers, or arrangements
extending the statutory period of limitations applicable to any claim for or the
period for the collection or assessment of Taxes due for any taxable period.
(h) No consent to the application of Section 341(f)(2) of the Code
(or any predecessor thereof) has been made or filed by or with respect to any of
the Company or its Subsidiaries or any of their assets and properties.
(i) None of the assets and properties of the Company or its
Subsidiaries is an asset or property that Acquiror or any of its Affiliates 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
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the Code.
Section 2.18 Governmental Authorities: Consents. Assuming the truth and
completeness of the representations and warranties of Acquiror contained in this
Agreement, no consent, approval or authorization of, or designation, declaration
or filing with, any Governmental Authority or other third party is required on
the part of the Company with respect to the Company's execution or delivery of
this Agreement or the consummation of the transactions contemplated hereby,
except for (i) applicable requirements of the HSR Act, (ii) any novations or
consents required in connection with Government Contracts or subcontracts
thereunder, (iii) any filings required under any United States export control
laws, (iv) any consents under Contracts which are not material to the business,
operations or financial condition of the Company and its Subsidiaries, taken as
a whole, (v) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware and (vi) as otherwise disclosed in Schedule 2.18.
Section 2.19 Licenses, Permits and Authorizations. Schedule 2.19 contains
a list of all material licenses, franchises and other permits of or with any
Governmental Authority which are held by the Company or any of its Subsidiaries.
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, franchises and permits constitute all of
the material licenses, 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 maintained and to conduct the business
of the Company and its Subsidiaries as currently conducted.
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Section 2.20 Brokers' Fees. Except as set forth on Schedule 2.20, no
broker, finder, investment banker or other Person is entitled to any brokerage
fee, finders' fee or other commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by the Company or
any of its Subsidiaries or Affiliates or by CVCA.
Section 2.21 Bank Accounts, Etc. Schedule 2.21 contains a true and correct
and complete list as of the date hereof of all banks, trust companies, savings
and loan associations and brokerage firms which the Company or any Subsidiary
has an account or a safe deposit box and the names of all Persons authorized to
draw thereon, to have access thereto, or to authorize transactions therein, the
names of all Persons, if any, holding powers of attorney from the Company or any
Subsidiary and a summary statement as to the terms thereof.
Section 2.22 Accounts Receivable. Except as set forth in Schedule 2.22 all
accounts and notes receivable reflected on the Interim Balance Sheet, and all
accounts and notes receivable arising subsequent to the date of the Interim
Balance Sheet, represent bona fide claims of the Company and the Subsidiaries
and, subject only to consistently recorded reserves for bad debts, have been
collected or are collectible in the aggregate recorded amounts thereof.
Section 2.23 Substantial Customers.
(a) Schedule 2.23 lists the five customers of the Company and its
Subsidiaries with the highest volume of purchases from the Company and its
Subsidiaries during the 12-month period ended the Interim Balance Sheet Date,
and the amount for which each such customer was invoiced during such period.
(b) No customer listed on Schedule 2.23 has (i) ceased, or indicated
to the Company or any Subsidiary an intention to cease, dealing with or through
the Company or any Subsidiary, (ii) reduced, or indicated an intention to
reduce, substantially its dealings with or through the Company or any
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Subsidiary, or (iii) changed, or indicated an intention to change, substantially
the terms on which it is prepared to deal with or through the Company or any
Subsidiary. Neither the Company nor any Subsidiary has any knowledge that any of
the customers listed in Schedule 2.23 will not continue to be customers of the
Company and the Subsidiaries after the closing.
Section 2.24 Directors and Officers. Schedule 2.24 sets forth the name and
current annual salary and other compensation payable by the Company or any
Subsidiary to each director and officer of the Company or any Subsidiary.
Section 2.25 Minute Books; Stock Records. The minute books of the Company
and each Subsidiary made available to the Acquiror for inspection accurately
record therein all actions taken by the Board of Directors and shareholders of
the Company or the applicable Subsidiary. The stock records of the Company and
each of the Subsidiaries made available to the Acquiror for inspection
accurately record all issuances and transfers of any capital stock of the
Company or the applicable Subsidiary.
Section 2.26 Inventory. As of the Interim Balance Sheet Date, except as
set forth in Schedule 2.26 or as reserved against by the Company on the Interim
Balance Sheet, the Company and its Subsidiaries represent that their inventory
of goods to be sold ("Inventory") is in good and merchantable condition, and is
in such condition that it can be sold in the ordinary course of business. The
values at which all Inventory is carried on the Interim Balance Sheet reflect
the historical inventory valuation policy of the Company for overhead
capitalization and of stating inventory at the lower of cost or market value.
The Company and its Subsidiaries have
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good and marketable title to the Inventory free and clear of all Liens other
than Permitted Liens. The Company and its Subsidiaries are not under any
obligation or liability with respect to accepting returns of items of Inventory
in possession of customers except in the ordinary course of business or as set
forth in Schedule 2.26 of the Disclosure Schedule.
ARTICLE IIA
REPRESENTATIONS, WARRANTIES AND OTHER UNDERTAKINGS OF CVCA
Section 2A.1 Representations. CVCA hereby represents and warrants to
Acquiror and Merger Sub as of the date of this Agreement that:
(a) CVCA has all requisite partnership power and authority and has
taken all partnership action necessary to execute and deliver this Agreement and
to perform its obligations hereunder. The execution and delivery of this
Agreement by CVCA and the consummation of the transactions contemplated hereby
have been duly and validly authorized and approved by or on behalf of CVCA and
no other proceeding on the part of CVCA is necessary to authorize this
Agreement. This Agreement has been duly and validly executed by or on behalf of
CVCA and constitutes a valid and binding obligation of CVCA, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors rights generally and subject, as to enforceability, to general
principles of equity.
(b) No Conflict. The execution and delivery of this Agreement by
CVCA does not and will not violate any provision of, or result in the breach of,
any applicable law, rule or regulations of any governmental body, the Agreement
of Limited Partnership of CVCA or any agreement, indenture or other instrument
to which CVCA is a party or by which CVCA may be
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bound, or of any order, judgment or decree applicable to CVCA, or constitute an
event which, after notice or lapse of time or both, would result in any such
violation or breach, except to the extent that the occurrence of any of the
foregoing would not have a material adverse effect on the ability of CVCA enter
into and perform fully its obligations under this Agreement.
Section 2A.2 Written Consent. Prior to Closing, CVCA shall deliver to the
Company its written consent to the Merger in accordance with Section 228 of the
DGCL in respect of the voting securities of the Company owned of record by it
and shall not, in any event, assert dissenters' rights in respect of any shares
of capital stock of the Company beneficially owned by it.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND MERGER SUB
Acquiror and Merger Sub represent and warrant to the Company as of the
date of this Agreement that:
Section 3.1 Corporate Organization. Acquiror has been duly incorporated
and is validly existing as a corporation in good standing under the laws of the
Commonwealth of Massachusetts. Merger Sub has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware. Each of Acquiror and Merger Sub is duly licensed or qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of its properties owned or leased or the nature of its
activities make such licensing or qualification necessary, except where failure
to be so licensed or qualified would not have a material adverse effect on the
ability of Acquiror or Merger Sub to enter into this Agreement or consummate the
transactions contemplated hereby. The copies of the Restated
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Articles of Organization or Certificate of Incorporation of each of Acquiror and
Merger Sub previously delivered by Acquiror to the Company are true, correct and
complete.
Section 3.2 Due Authorization. Each of Acquiror and Merger Sub has all
requisite corporate power and authority and has taken all corporate action
necessary, to own, lease and operate its assets, to conduct its businesses as it
is presently conducted, and subject to the approval by the requisite holders of
stock of Merger Sub, to execute and deliver this Agreement, to consummate the
transactions contemplated hereby and to perform its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by each of Acquiror and Merger Sub have been
duly and validly authorized and approved by the respective Boards of Directors
of Acquiror and Merger Sub, and (subject to the approval of the holder of stock
of Merger Sub, which approval shall be given by Acquiror prior to Closing) no
other corporate proceeding on the part of Acquiror or Merger Sub is necessary to
authorize this Agreement. This Agreement has been duly and validly executed and
delivered by each of Acquiror and Merger Sub and is a valid and binding
obligation of Acquiror and Merger Sub, enforceable against Acquiror and Merger
Sub in accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights generally and subject, as to enforceability, to general
principles of equity.
Section 3.3 No Conflict. Except as set forth in Schedule 3.3, the
execution and delivery of this Agreement by Acquiror and Merger Sub and the
consummation of the transactions contemplated hereby does not and will not
violate any provision of, or result in the breach of any applicable law, rule or
regulation of any governmental body, the charter, bylaws,
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as amended, or other organizational documents of Acquiror and Merger Sub, or any
agreement, indenture or other instrument to which Acquiror or any of its
Subsidiaries, including Merger Sub, is a party or by which Acquiror or any of
its Subsidiaries, including Merger Sub, may be bound, or of any order, judgment
or decree applicable to Acquiror or any of its Subsidiaries, including Merger
Sub, or terminate or result in the termination of any such agreement, indenture
or instrument, or result in the creation of any Lien, charge or encumbrance upon
any of the properties or assets of Acquiror or any of its Subsidiaries,
including Merger Sub, or constitute an event which, after notice or lapse of
time or both, would result in any such violation, breach, acceleration,
termination or creation of a Lien, except to the extent that the occurrence of
the foregoing would not have a material adverse effect on the ability of
Acquiror and Merger Sub to enter into and perform fully their respective
obligations under this Agreement.
Section 3.4 Litigation and Proceedings. There are no lawsuits, actions,
suits or other proceedings at law or in equity, or, to the knowledge of
Acquiror, investigations, before or by any court or other Governmental Authority
or before any arbitrator pending or, to the knowledge of Acquiror, threatened,
against Acquiror or any of its Subsidiaries, including Merger Sub, which, if
determined adversely, could reasonably be expected to have a material adverse
effect on the ability of Acquiror Merger Sub to enter into and perform fully
their respective obligations under this Agreement. There is no unsatisfied
judgment or any open injunction binding upon Acquiror or any of its
Subsidiaries, including Merger Sub, which could reasonably be expected to have a
material adverse effect on the ability of Acquiror or Merger Sub to enter into
and perform fully their respective obligations under this Agreement.
Section 3.5 Governmental Authorities: Consents. Assuming the truth and
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completeness of the representations and warranties of the Company contained in
this Agreement, no consent, approval or authorization of, or designation,
declaration or filing with, any Governmental Authority or other third party is
required on the part of Acquiror or any of its Subsidiaries, including Merger
Sub, with respect to Acquiror or Merger Sub's execution or delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) applicable requirements of the HSR Act, (ii) any novations or consents
required in connection with Government Contracts or subcontracts thereunder,
(iii) any filings required under any United States export control laws, (iv) the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware and (v) as otherwise disclosed in Schedule 3.5.
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Section 3.6 Brokers' Fees. Except as set forth on Schedule 3.6, no broker,
finder, investment banker or other Person is entitled to any brokerage fee,
finders' fee or other commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by Acquiror or any
of its Affiliates. All such arrangements are the sole obligation of Acquiror.
ARTICLE IV
COVENANTS OF THE COMPANY
Section 4.1 Conduct of Business. From the date hereof through the Closing,
the Company and each of its Subsidiaries shall, except as contemplated by this
Agreement, or as consented to by Acquiror in writing (which consent will not be
unreasonably withheld), operate its business in the ordinary course and
substantially in accordance with past practice and will use all commercially
reasonable efforts not to take any action inconsistent with this Agreement.
Without limiting the generality of the foregoing, unless consented to by
Acquiror in writing (which consent shall not be unreasonably withheld), the
Company shall not, and the Company shall cause each of its Subsidiaries not to,
except as contemplated by this Agreement:
(a) alter or amend the Certificate of Incorporation or Bylaws of the
Company or any of its Subsidiaries, except as otherwise required by law;
(b) enter into, extend, materially modify, terminate or renew any
Contract of a type required to be listed on Schedule 2.8, except (i) in the
ordinary course of business consistent with past practices or (ii) in connection
with the ERP project being undertaken by the Company, or (iii) in connection
with the anticipated renewal of the lease of the Facility at Redwood City, CA;
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(c) sell, assign, transfer, convey, lease or otherwise dispose of
any material assets or properties except in the ordinary course of business
consistent with past practices;
(d) (i) except as otherwise required by law make any change in the
key management structure of the Company or any of its Subsidiaries, including,
without limitation, the hiring of additional executive officers or the
terminations of existing executive officers, other than in the ordinary course
of business; or (ii) adopt, enter into or materially amend any Benefit Plan;
(e) acquire by merger or consolidation with, or merge or consolidate
with, or purchase substantially all of the assets of, or otherwise acquire any
material assets or business of, any corporation, partnership, association or
other business organization or division thereof;
(f) make any material loans or advances to any partnership, firm or
corporation, or, except for expenses incurred in the ordinary course of
business, any individual;
(g) pay any dividend or make any other distribution to holders of
Shares of Common Stock;
(h) purchase or redeem any shares of Common Stock or Preferred Stock
from the holders thereof; provided, that the Company may purchase shares of
Common Stock or Preferred Stock held by any former employee of the Company;
(i) repay any of the principal amount owed under the term loan
included in the First Bank Loans, or pay any other obligation or liability
(absolute or contingent) other than current liabilities or obligations under
Contracts and other than interest payments and regularly scheduled amortizations
with respect to obligations for borrowed money, as set forth in Schedule 4.1(i);
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(j) enter any transaction or series of transactions which,
individually or in the aggregate, is material to the Company and its
Subsidiaries taken as a whole, except in the ordinary course of business;
(k) fail to pay any material current liability or obligation (other
than when there is a bona fide dispute as to whether such liability or
obligation is due); or
(l) enter into any agreement, or otherwise become obligated, to do
any action prohibited hereunder.
Section 4.2 Inspection. Subject to (i) confidentiality obligations and
similar restrictions that may be applicable to information furnished to the
Company by third parties that may be in the Company's possession from time to
time and (ii) the terms of the Confidentiality Agreement and the provisions of
Section 6.1 hereof, the Company shall, and shall cause its Subsidiaries to,
afford to Acquiror and its accountants, counsel and other representatives
reasonable access, during normal business hours, to all of their respective
properties, books, contracts, commitments, tax returns, records and appropriate
officers and employees of the Company and its Subsidiaries, and shall furnish
such representatives with all financial and operating data and other information
concerning the affairs of the Company and its Subsidiaries as they may
reasonably request.
Section 4.3 HSR Act. (a) In connection with the transactions contemplated
by this Agreement, the Company shall (and, to the extent required, shall cause
each of its Affiliates to) comply promptly (and in any event by June 15, 1997)
with the notification and reporting requirements of the HSR Act and use all
commercially reasonable efforts to obtain early termination of the waiting
period under the HSR Act. The Company shall (and, to the extent
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required, shall cause its Affiliates to) substantially comply with any
additional requests for information, including requests for production of
documents and production of witnesses for interviews or depositions, by any
Antitrust Authority.
(b) The Company shall exercise all commercially reasonable efforts,
and the Acquiror shall cooperate fully with Company, to prevent the entry in any
Action of a Governmental Order which would prohibit, make unlawful or delay the
consummation of the transactions contemplated by this Agreement.
Section 4.4 No Solicitations. From the date hereof through the Closing or
the earlier termination of this Agreement in accordance with its terms, neither
CVCA, nor the Company nor any of its Subsidiaries shall, and neither CVCA nor
the Company shall knowingly permit their Affiliates, officers, directors,
employees, representatives and agents to, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any Person or group of Persons (other than Acquiror, Merger
Sub or any of their respective Affiliates) concerning any merger, sale of
assets, exclusive license of a material proportion of the Intellectual Property,
sale of shares of capital stock or similar transactions involving the Company or
any Subsidiary or division of the Company, and will promptly report to Acquiror
any proposal or inquiry from any Person or group as to such a transaction.
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Section 4.5 Xxxxxx-Xxxxx Note. The Company shall give all requisite
notices to the holder(s) of, and comply with the terms of, the Xxxxxx-Xxxxx Note
in connection with the transactions contemplated by this Agreement.
ARTICLE V
COVENANTS OF ACQUIROR
Section 5.1 HSR Act.
(a) In connection with the transactions contemplated by this
Agreement, Acquiror shall (and, to the extent required, shall cause each of its
Affiliates to) comply promptly (and, in any event, by June 15, 1997) with the
notification and reporting requirements of the HSR Act and use all commercially
reasonable efforts to obtain early termination of the waiting period under the
HSR Act. Acquiror shall (and, to the extent required, shall cause its Affiliates
to) substantially comply with any additional requests for information, including
requests for production of documents and production of witnesses for interviews
or depositions, by any Antitrust Authority.
(b) Acquiror shall exercise all commercially reasonable efforts, and
the Company shall cooperate fully with Acquiror, to prevent the entry in any
Action of a Governmental Order which would prohibit, make unlawful or delay the
consummation of the transactions contemplated by this Agreement.
Section 5.2 Indemnification and Insurance. From and after the Effective
Time of the Merger, Acquiror agrees that it will cause the Surviving Corporation
to continue to indemnify and hold harmless each present and former director and
officer of the Company or any of its Subsidiaries against any costs or expenses
(including reasonable attorneys' fees), judgments,
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fines, losses, claims, damages or liabilities incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time of the Merger, whether
asserted or claimed prior to, at or after the Effective Time of the Merger, to
the fullest extent that the Company or its Subsidiaries, as the case may be,
would have been permitted under its charter or bylaws in effect on the date
hereof to indemnify such person (including the advancing of expenses as incurred
to the fullest extent permitted under applicable law); provided that the person
to whom such expenses are advanced provides an undertaking to the Surviving
Corporation to repay such advances if it is ultimately determined that such
person is not entitled to indemnification; provided, further, that any
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Delaware law and
the charter and bylaws of the Company or its applicable Subsidiary shall be made
by independent counsel selected by the Surviving Corporation.
Section 5.3 Financing. Acquiror shall use commercially reasonable efforts
to ensure that the offering described in Section 8.2(g) hereof is consummated as
soon as practicable following the date hereof.
Section 5.4 Xxxxxx-Xxxxx Note. Acquiror shall give the Company sufficient
notice of the anticipated Closing Date to enable it to comply with Section 4.5
of this Agreement.
ARTICLE VI
CONFIDENTIALITY; SUPPORT OF TRANSACTION
Section 6.1 Confidentiality.
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(a) Each of the Company, CVCA and Acquiror hereby covenants that
except (i) for any governmental filings required in order to complete the
transactions contemplated herein, and (ii) as Acquiror and the Company may agree
or consent in writing, all information received by the Company, CVCA and
Acquiror and their respective representatives in contemplation, or pursuant to
the terms, of this Agreement shall be kept in confidence by the receiving party
and its representatives; provided, however, that any party hereto may disclose
such information to its legal and financial advisors, lenders, financing sources
and their respective legal advisors and representatives so long as such Persons
agree to maintain the confidentiality of such information in accordance with
this Section 6.1. If the transactions contemplated hereby shall fail to be
consummated, all copies of documents or extracts thereof containing information
and data as to one of the other parties, including all information prepared by
the receiving party or such receiving party's representatives, shall be turned
over to the party furnishing same, except that such information prepared by the
receiving party or such receiving party's representatives may be destroyed at
the option of the receiving party, with notice of such destruction (or return)
to be confirmed in writing to the disclosing party. Any information not so
destroyed (or returned) will remain subject to these confidentiality provisions
(notwithstanding any termination of this Agreement).
(b) The foregoing confidentiality provisions shall not apply to such
portions of the information received which (i) are or become generally available
to the public through no action by the receiving party or by such party's
representatives or (ii) are or become available to the receiving party on a
nonconfidential basis from a source, other than the disclosing party or its
representatives, which the receiving party believes, after reasonable inquiry,
is not prohibited
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from disclosing such portions to it by a contractual, legal or fiduciary
obligation, and shall not apply to any disclosure by Acquiror after the Closing
of any information disclosed by the Company or CVCA.
Section 6.2 Support of Transaction. Without limiting any provision hereof,
Acquiror, the Company, and their respective Subsidiaries shall each (i) use all
commercially reasonable efforts to assemble, prepare and file any information
(and, as needed, to supplement such information) as may be reasonably necessary
to obtain as promptly as practicable all governmental and regulatory consents
required to be obtained in connection with the transactions contemplated hereby,
including (at the cost and expense of the Acquiror) the financing referred to in
Section 8.2(g), (ii) use all commercially reasonable efforts to obtain all
material consents and approvals of third parties that any of Acquiror, the
Company, or their respective Subsidiaries are required to obtain in order to
consummate the Merger, (iii) take such other action as may reasonably be
necessary or as another party may reasonably request to satisfy the conditions
set forth in Article VIII or otherwise to comply with this Agreement, and (iv)
provide the other parties, and such other party's employees, officers,
accountants, lawyers, financial advisors and other representatives with access
to its personnel, properties, business and records under all reasonable
circumstances.
Section 6.3 Chalmers Payment. Between the date of this Agreement and
Closing, Acquiror and the Company agree to cooperate to ensure the deductibility
of the Chalmers Payment for Tax purposes. Following Closing, Acquiror shall (and
shall cause its Subsidiaries to) take all reasonable steps to ensure the
deductibility of the Chalmers Payment for Tax purposes and shall not take any
action which is likely to jeopardize the deductibility of the
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Chalmers Payment.
ARTICLE VII
CLOSING
Section 7.1 Filing. As soon as all of the conditions set forth in Article
VIII of this Agreement have either been fulfilled or waived, and if this
Agreement has not heretofore been terminated pursuant to its terms, the Boards
of Directors of Acquiror, Merger Sub and the Company shall direct their officers
forthwith to file and record all relevant documents with the appropriate
government officials to effectuate the Merger.
Section 7.2 Closing. The Closing shall take place at a location and time
mutually agreed upon by Acquiror and the Company at the earliest practicable
date after the conditions set forth in Section 8.1 have been satisfied, and such
date, time and location shall be confirmed in writing by such parties not less
than 5 days prior to the scheduled date of the Closing. The term "Closing," when
used in this Agreement, means the Effective Time of the Merger.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS
Section 8.1 Conditions to Obligations of Acquiror, Merger Sub and the
Company. The obligations of Acquiror, Merger Sub and the Company to consummate,
or cause to be consummated, the Merger are subject to the satisfaction of the
following conditions:
(a) All waiting periods under the HSR Act applicable to the Merger
shall have expired or been terminated.
(b) All necessary permits, approvals, clearances, filings and
consents of Governmental Authorities required to be procured by Acquiror, Merger
Sub and the Company in
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connection with the Merger and the transactions contemplated by this Agreement
shall have been procured, it being understood, however, that (i) any novations
or consents required in connection with any Government Contracts or subcontracts
thereunder and (ii) any other consents, authorizations, or approvals, the
absence of which would not have a material adverse effect on the business,
operations or financial condition of Acquiror or the Company, need not be
obtained prior to Closing.
(c) There shall not be in force any order or decree, statute, rule
or regulation enjoining or prohibiting the consummation of the Merger.
Section 8.2 Conditions to Obligations of Acquiror and Merger Sub. The
obligations of Acquiror and Merger Sub to consummate, or cause to be
consummated, the transactions contemplated by this Agreement are subject to the
satisfaction of the following additional conditions, any one or more of which
may be waived in writing by Acquiror and Merger Sub:
(a) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
both on the date hereof and as of the Closing, as if made anew at and as of that
time, and each of the covenants and agreements of the Company to be performed as
of or prior to the Closing shall have been duly performed, except in each case
for changes after the date hereof which are contemplated or permitted by this
Agreement.
(b) The Company shall have delivered to Acquiror a certificate
signed, on behalf of the Company, by an officer of the Company, dated the
Closing, certifying that, to the best of the knowledge and belief of such
officer, the conditions specified in Section 8.1, as they relate to the Company,
and subsection 8.2(a) have been fulfilled.
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(c) Any consent required for the consummation of the Merger under
any agreement, contract or license described in an annex or schedule hereto or
for the continued enjoyment by the Company and its Subsidiaries of the benefits
of any agreement, contract or license described in an annex or schedule hereto
after the Merger shall have been obtained, except where the failure to obtain
such consent would not have a material adverse effect on the business,
operations or financial condition of the Company and its Subsidiaries taken as a
whole, it being understood that any novations or consents required in connection
with the Government Contracts or subcontracts thereunder need not be obtained
prior to Closing.
(d) At the Effective Time of the Merger, (i) the aggregate number of
shares of Common Stock held by Dissenting Stockholders, if any, shall not exceed
five percent of the total number of shares of Common Stock then outstanding and
(ii) the aggregate number of shares of Preferred Stock held by Dissenting
Stockholders, if any, shall not exceed five percent of the total number of
shares of Preferred Stock then outstanding.
(e) Acquiror shall have received an opinion, dated as of the Closing
Date, from Xxxxxx & Xxxxxxx substantially in the form of Annex C.
(f) The form and substance of all actions, proceedings, instruments
and documents required to consummate the transactions contemplated by this
Agreement shall be satisfactory in all reasonable respects to Acquiror and its
counsel.
(g) Acquiror shall have received not less than $125,000,000 gross
proceeds from an offering of senior unsecured notes, or other similar
instrument.
(h) Other than the exercise by Dissenting Stockholders of their
appraisal rights under the DGCL, no legal action or other claim shall be pending
or threatened before or by
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any Governmental Authority or by any other Person seeking to restrain or
prohibit, or damages or other relief in connection with, the execution and
delivery of this Agreement or the consummation of the Merger and the
transactions contemplated thereby which might in the reasonable judgment of the
Acquiror have a material adverse effect on the Company and its Subsidiaries
taken as a whole or, assuming consummation of the Merger, the Acquiror and its
Subsidiaries taken as a whole.
(i) The Company shall have used reasonable efforts to cause the
persons listed on Annex E to enter into employment agreements with the Company
or one of its Subsidiaries, including substantially the terms set forth on Annex
E with effect from the Closing.
(j) The Holder Representative shall have delivered to Acquiror a
certificate setting forth the portion of the Merger Consideration to be paid to
each holder of Preferred Stock, Common Stock and Options upon the Closing Date
(upon compliance by such holders with Section 1.4 hereof).
(k) Between the date hereof and the Closing Date, there shall not
have occurred and be continuing any act, condition, event, omission or
development materially adversely affecting the Company and its Subsidiaries
taken as a whole from the condition thereof (financial and other) reflected in
the financial statements of the Company described in Section 2.6.
Section 8.3 Conditions to the Obligations of the Company. The obligation
of the Company to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of the following additional conditions, any one or
more of which may be waived in writing by the Company:
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(a) Each of the representations and warranties of Acquiror contained
in this Agreement shall be true and correct in all material respects both on the
date hereof and as of the Closing, as if made anew at and as of that time, and
each of the covenants and agreements of Acquiror to be performed as of or prior
to the Closing shall have been duly performed, except in each case for changes
after the date hereof which are contemplated or permitted by this Agreement.
(b) Acquiror shall have delivered to the Company a certificate
signed, on behalf of Acquiror, by an officer of Acquiror, dated the Closing,
certifying that, to the best of the knowledge and belief of such officer, the
conditions specified in Section 8.1, as they relate to Acquiror and Merger Sub,
and subsection 8.3(a) have been fulfilled.
(c) The Company shall have received an opinion, dated as of the
Closing Date, from Xxxxxxx, Xxxx & Xxxxx LLP, counsel to Acquiror substantially
in the form of Annex D.
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(d) The form and substance of all actions, proceedings, instruments
and documents required to consummate the transactions contemplated by this
Agreement shall be satisfactory in all reasonable respects to the Company and
its counsel.
(e) Other than the exercise by Dissenting Stockholders of their
appraisal rights under the DGCL, no legal action or other claim shall be pending
or threatened before or by any Governmental Authority or by any other Person
seeking to restrain or prohibit, or damages or other relief in connection with,
the execution and delivery of this Agreement or the consummation of the Merger
and the transactions contemplated thereby which might in the reasonable judgment
of the Company, have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
ARTICLE IX
TERMINATION/EFFECTIVENESS
Section 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned:
(a) By mutual written consent of Acquiror and the Company authorized
by their respective Boards of Directors, at any time prior to the Closing.
(b) Prior to the Closing, by written notice to the Company from
Acquiror, authorized by the Board of Directors of Acquiror, if (i) prior to May
31, 1997, in the course of its investigation of the business, properties,
assets, financial and legal condition, balance sheets, statements of operations
and earnings, books, contracts, agreements, leases, commitments, financial and
operating data, records, documents and files of the Company as are made
available to the Acquiror, the Acquiror becomes aware of any materially adverse
fact, matter or
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circumstance (or any combination of such facts, matters or circumstances which,
when combined, are materially adverse) of which it was not aware as of the date
of this Agreement, (ii) there is any material breach (or any combination of such
breaches which, when combined, are material) of any representation, warranty,
covenant or agreement on the part of the Company set forth in this Agreement, or
if a representation or warranty of the Company shall be untrue in any material
respect, in either case, such that the condition specified in Section 8.2(a)
hereof would not be satisfied at the Closing (a "Terminating Company Breach"),
except that, if such Terminating Company Breach is curable by the Company
through the exercise of its reasonable best efforts, then, for a period of up to
30 days from the date that written notice of the Terminating Company Breach is
given to the Company by Acquiror (the "Company Cure Period"), but only as long
as the Company continues to use its reasonable best efforts to cure such
Terminating Company Breach, such termination shall not be effective, and such
termination shall become effective only if the Terminating Company Breach is not
cured within the Company Cure Period, (iii) the conditions set forth in Sections
8.1 and 8.2 of this Agreement have not been satisfied on or before July 31,
1997, or (iv) the Closing has not occurred on or before August 31, 1997.
(c) Prior to the Closing, by written notice to Acquiror from the
Company, authorized by its Board of Directors, if (i) there is any material
breach (or any combination of such breaches which, when combined, are materially
adverse) of any representation, warranty, covenant or agreement on the part of
Acquiror set forth in this Agreement, or if a representation or warranty of
Acquiror shall be untrue in any material respect, in either case, such that the
condition specified in Section 8.3(a) hereof would not be satisfied at the
Closing (a "Terminating
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Acquiror Breach"), except that, if such Terminating Acquiror Breach is curable
by Acquiror through the exercise of its reasonable best efforts, then, for a
period of up to 30 days from the date that written notice of the Terminating
Acquiror Breach is given to the Acquiror by the Company (the "Acquiror Cure
Period"), but only as long as Acquiror continues to exercise such reasonable
best efforts to cure such Terminating Acquiror Breach, such termination shall
not be effective, and such termination shall become effective only if such
Terminating Acquiror Breach is not cured within the Acquiror Cure Period, (ii)
the conditions set forth in Sections 8.1 and 8.3 of this Agreement shall have
not been satisfied on or before July 31, 1997, or (iii) the Closing has not
occurred on or before August 31, 1997.
Section 9.2 Effect of Termination. In the event of termination and
abandonment of this Agreement pursuant to Section 9.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party hereto or its respective Affiliates, officers, directors or
stockholders. The provisions of Sections 6.1, 9.3 and 12.6 hereof shall survive
any termination of this Agreement.
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Section 9.3 Sole Remedy. Acquiror and Merger Sub hereby acknowledge and
agree that their sole and exclusive remedy for (i) any breach of any
representation or warranty of the Company or CVCA contained herein or made
pursuant hereto or in any certificate delivered pursuant hereto by the Company
or CVCA or any officer, director or representative thereof; or (ii) any breach
by the Company or CVCA, of any covenant or agreement contained herein or made
pursuant hereto other than any intentional breach of the covenants and
agreements set forth in Sections 1.1 through 1.7, 1.8(b) or Section 4.1 (but
only insofar as such breach results in an increase, pursuant to Section
1.2(b)(v), in the Merger Consideration which is payable) or Sections 4.2, 4.3,
4.4, 6.1, 6.2, 7.1 or 12.6 hereof shall be to terminate this Agreement in
accordance with Section 9.1. Under no circumstance, other than an intentional
breach described in (ii) above, shall Acquiror, Merger Sub or any Affiliate,
representative or Person acting for, on behalf of or through any of the
foregoing have any claim for indemnification, damages or otherwise as a result
of, arising out of or based upon any breach of any such representation,
warranty, covenant or agreement.
ARTICLE X
CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
"Acquiror" has the meaning specified in the Preamble hereto.
"Acquiror Cure Period" has the meaning specified in Section 9.1.
"Action" means any claim, action, suit, audit, assessment, arbitration or
inquiry, or any proceeding or investigation, by or before any Governmental
Authority.
"Affiliate" means, with respect to any specified Person, any Person that,
directly or
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indirectly, controls, is controlled by, or is under common control with, such
specified Person, through one or more intermediaries or otherwise.
"Aggregate Fully-Diluted Common Shares" has the meaning specified in
Section 1.2.
"Aggregate Option Exercise Price" has the meaning specified in Section
1.2.
"Agreement" has the meaning specified in the Preamble hereto.
"Antitrust Authorities" means the Antitrust Division of the United Stated
Department of Justice, the United States Federal Trade Commission or the
antitrust or competition law authorities of any other jurisdiction (whether
United States, foreign or multinational).
"Applicable Percentage" has the meaning specified in Section 1.4
"Benefit Plan" has the meaning specified in Section 2.12.
"Cash Per Fully-Diluted Common Share" has the meaning specified in Section
1.2.
"Certificate of Merger" has the meaning specified in Section 1.5.
"Certificates" has the meaning specified in Section 1.4.
"Chalmers Payment" has the meaning specified in Section 1.2.
"Class A Common Stock" means the Class A Common Stock, par value $ .01 per
share, of the Company.
"Class B Common Stock" means the Class B Common Stock, par value $ .01 per
share, of the Company.
"Class C Common Stock" means the Class C Common Stock, par value $ .01 per
share, of the Company.
"Closing" has the meaning specified in Section 7.2.
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"Closing Date" means the date on which the Effective Time of the Merger
occurs.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Equity Merger Consideration" has the meaning specified in Section
1.2.
"Common Stock" means (i) the Class A Common Stock, (ii) the Class B Common
Stock and (iii) the Class C Common Stock.
"Company" has the meaning specified in the Preamble hereto.
"Company Cure Period" has the meaning specified in Section 9.1.
"Confidentiality Agreement" means that certain letter agreement dated
February 16, 1996 between Hyde Park Holdings and CS First Boston Corporation.
"Constituent Corporations" has the meaning specified in the recitals
hereto.
"Contracts" means any agreements, contracts, subcontracts, leases or other
legally binding contractual commitments.
"CVCA" has the meaning specified in the Preamble hereto.
"DGCL" means the Delaware General Corporations Law.
"Dissenting Stockholders" means holders of shares of the capital stock of
the Company who are entitled to appraisal of their shares pursuant to the DGCL
and who comply with the provisions of the DGCL concerning the rights of such
holders to require appraisal of such shares.
"Effective Time of the Merger" means the time at which the Certificate of
Merger has been duly filed in the Office of the Secretary of State of Delaware
and becomes effective in accordance with the DGCL.
"Employee Stock Option Plans" means the Amended and Restated Employee
Stock
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Option Plans of the Company dated as of May 16, 1994 and August 17, 1994 each as
amended to date.
"Environmental Laws" means, collectively, all applicable foreign, U.S.
federal, state or local laws, statutes, ordinances, rules, regulations or codes
relating to protection of the environment, as in effect as of the date hereof
(including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), the Resource Conservation
and Recovery Act, as amended ("RCRA"), the Clean Air Act, as amended, and the
California Hazardous Waste Control Act, as amended).
"ERISA" has the meaning specified in Section 2.12.
"ERISA Affiliate" has the meaning specified in Section 2.12.
"Escrow Account" has the meaning specified in Section 1.6.
"Escrow Agent" has the meaning specified in Section 1.6.
"Exchange Agent" has the meaning specified in Section 1.4.
"Exchange Fund" has the meaning specified in Section 1.4.
"Facilities" means the Owned Real Property and the leased facilities at
Redwood City, CA, Munich, Germany, Geneva, Switzerland and Paris, France.
"First Bank Loans" means the loans made to Physical Electronics, Inc, a
Subsidiary of the Company, under that certain credit agreement dated as of May
20, 1994 between Physical Electronics, Inc and First Bank National Association.
"GAAP" means United States generally accepted accounting principles, as in
effect on the date hereof.
"Government Contracts" means any Contract between the Company or any of
its
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Subsidiaries and the United States Government or a department or agency thereof.
"Governmental Authority" means any Federal, state, municipal or local
government, governmental authority, regulatory or administrative agency,
governmental commission, department, board, bureau, agency or instrumentality,
court, tribunal, arbitrator or arbitral body.
"Government Order" means any order, writ, rule, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Holder Allocable Expenses" has the meaning specified in Section 1.7.
"Holder Representative" has the meaning specified in Section 11.1.
"Intellectual Property" has the meaning specified in Section 2.11.
"Interim Balance Sheet" has the meaning specified in Section 2.6.
"Interim Balance Sheet Date" has the meaning specified in Section 2.6.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
encumbrance, security interest or other lien of any kind.
"Liquidation Value" of each share of Preferred Stock means (x) Ten Dollars
($10) plus (y) all accrued and unpaid dividends thereon to the date of payment
including all compounding thereon in accordance with Section 2(b) of the
Certificate of Designation of the Preferred Stock filed with the Secretary of
State of the State of Delaware.
"Material Equipment" has the meaning specified in Section 2.9.
"Majority Holders" has the meaning specified in Section 11.1.
"Merger" has the meaning specified in the recitals hereto.
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"Merger Consideration" has the meaning specified in Section 1.2.
"Merger Sub" has the meaning specified in the Preamble hereto.
"Net Refund" has the meaning specified in Section 1.6.
"Options" means all options to purchase shares of Common Stock from the
Company (whether or not vested) issued pursuant to the Employee Stock Option
Plans.
"Owned Real Property" means the facility at 0000 Xxxxxx Xxxxx Xxxxx, Xxxx
Xxxxxxx, Xxxxxxxxx 00000.
"Xxxxxxxx Payment" has the meaning specified in Section 1.2.
"Xxxxxx-Xxxxx Note" means that certain convertible subordinated promissory
note of the Company dated as of May 20, 1994 in the principal amount of
$7,191,000, a copy of which has been delivered to Acquiror.
"Permitted Liens" means (i) mechanics, materialmen's and similar Liens
with respect to any amounts not yet due and payable or which are being contested
in good faith through appropriate proceedings, (ii) Liens for Taxes not yet due
and payable or which are being contested in good faith through appropriate
proceedings, (iii) Liens securing the obligations of the Company under the First
Bank Loans, (iv) Liens on goods in transit incurred pursuant to documentary
letters of credit, (v) Liens securing rental payments under capital lease
agreements, (vi) Liens arising in favor of the United States Government as a
result of progress payment clauses contained in any Contract, (vii) encumbrances
and restrictions on real property that do not materially interfere with the
present uses of such real property and (viii) other Liens arising in the
ordinary course of business and not incurred in connection with the borrowing of
money and which do not materially interfere with the operation of the business
of the Company and its
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Subsidiaries as currently conducted.
"Person" means any individual, firm, corporation, partnership, limited
liability company, incorporated or unincorporated association, joint venture,
joint stock company, governmental agency or instrumentality or other entity of
any kind.
"Preferred Stock" means the Series A 10% Senior Cumulative Redeemable
Preferred Stock, par value $1.00 per share, of the Company.
"Refund" has the meaning specified in Section 1.6.
"Subsidiary" means, with respect to any Person, a corporation or other
entity of which 50% or more of the voting power of the equity securities or
equity interests is owned, directly or indirectly, by such Person, provided,
that ULVAC-PHI Inc. shall not be considered a "Subsidiary" of the Company for
the purposes of this Agreement.
"Surviving Corporation" shall have the meaning specified in Section 1.1.
"Taxes" has the meaning specified in Section 2.17.
"Tax Returns" has the meaning specified in Section 2.17.
"Terminating Acquiror Breach" has the meaning specified in Section 9.1.
"Terminating Company Breach" has the meaning specified in Section 9.1.
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ARTICLE XI
HOLDER REPRESENTATIVE
Section 11.1 Designation and Replacement of Holder Representative. The
parties have agreed that it is desirable to designate a representative to act on
behalf of holders of the shares of Common Stock and Options for certain limited
purposes, as specified herein (the "Holder Representative"). The parties have
designated CVCA as the initial Holder Representative, and approval of this
Agreement by the holders of the shares of Common Stock (other than Dissenting
Shareholders) shall constitute ratification and approval of such designation. On
or prior to Closing the holders of the Common Stock and Options shall enter into
an agreement in a form approved by the Company approving the initial Holder
Representative. 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 Aggregate Fully-Diluted Common 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 Majority Holders, such appointment to become effective upon the
written acceptance thereof by the new Holder Representative.
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Section 11.2 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;
provided, however, that the Holder Representative will have no obligation to act
on behalf of the holders of the shares of Common Stock and Options, 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 and to pay such
Holder Allocable Expenses in accordance with Section 1.7 hereof. The Holder
Representative will have no liability to Acquiror, the Company or the holders of
any equity securities or Options of the Company with respect to actions taken or
omitted to be taken in its capacity as Holder Representative, except with
respect to any liability resulting primarily from 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 Section 1.7 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
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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, but solely from funds paid to
it under Section 1.7 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,
but solely from the same funds, against 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. Any liability or obligation of CVCA
hereunder shall be enforced only against CVCA and shall be non-recourse to any
general or limited partner of CVCA.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Nonsurvival of Representations and Warranties. The
representations and warranties contained in this Agreement and in any
certificate delivered pursuant hereto shall not survive beyond the Effective
Time of the Merger or termination of this Agreement and, from and after the
Closing, none of Acquiror, Merger Sub or any Affiliate, representative or Person
acting for, on behalf of or through any of the foregoing have any claim for
indemnification, damages or otherwise as a result of, arising out of or based
upon any breach of any such representation, warranty, covenant or agreement.
Section 12.2 Waiver. Subject to the provisions of applicable law, any
party to this
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Agreement may, at any time prior to the Closing, by action taken by its Board of
Directors, or officers thereunto duly authorized, waive any of the terms or
conditions of this Agreement or agree to an amendment or modification to this
Agreement by an agreement in writing executed in the same manner (but not
necessarily by the same Persons) as this Agreement.
Section 12.3 Notices. All notices and other communications among the
parties shall be in writing and shall be deemed to have been duly given when (i)
delivered in person or by private courier, or (ii) actually delivered by
registered or certified mail return receipt requested, or (iii) delivered by
telecopy (provided that it is telephonically or electronically confirmed)
addressed as follows:
(a) If to Acquiror or Merger Sub, to:
High Voltage Engineering Corporation
000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. XxXxxx, Xx.
Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx X. X'Xxxxx
Telecopy: (000) 000-0000
(b) If to the Company, to:
PHI Acquisition Holdings, Inc.
0000 Xxxxxx Xxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy: (000) 000-0000
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with copies to:
Chase Venture Capital Associates, L.P.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
and
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
(c) If to the Holder Representative, to:
with copies to:
Chase Venture Capital Associates, L.P.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopy No.: (000) 000-0000
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
or to such other address or addresses as the parties may from time to time
designate in writing.
Section 12.4 Assignment. No party hereto shall assign this Agreement or
any part hereof without the prior written consent of the other parties. Except
as otherwise provided herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors and
assigns.
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Section 12.5 Rights of Third Parties. Nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any Person,
other than the parties hereto, any right or remedies under or by reason of this
Agreement.
Section 12.6 Expenses. Except for the Holder Allocable Expenses, which
shall be paid as set forth in Section 1.7, each party hereto, other than the
Holder Representative (whose expenses shall be paid out of funds paid to the
Holder Representative under Section 1.7 in the event the transactions
contemplated hereby are consummated), shall bear its own expenses incurred in
connection with this Agreement and the transactions herein contemplated whether
or not such transactions shall be consummated, including, without limitation,
all fees of its legal counsel, financial advisers and accountants; provided
that, in the event that the transactions contemplated hereby are not
consummated, the Company shall reimburse the Holder Representative for all costs
and expenses incurred by the Holder Representative in connection with the
transactions contemplated hereby and provided, further, that whether or not the
transactions contemplated hereby are consummated the Acquiror shall reimburse
the Company for any fees and expenses incurred by the Company in connection with
the financing described in Section 8.2(g). Notwithstanding anything to the
contrary, transfer taxes, sales taxes and other similar taxes imposed on the
transaction contemplated by this Agreement shall be paid by Acquiror.
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Section 12.7 Construction. This Agreement shall be construed and enforced
in accordance with the laws of the State of New York, except as to any matters
relating to the corporate governance or the capital stock of the Company, which
shall be governed by the laws of the State of Delaware. Unless otherwise stated,
references to Sections, Articles or Annexes refer to the Sections, Articles and
Annexes to this Agreement. As used herein, the phrase "to the knowledge" of any
Person shall mean the actual knowledge of such Person's executive officers. The
parties to this Agreement participated jointly in the negotiation and drafting
of this Agreement. If an ambiguity or question of intent or interpretation
arises, then this Agreement will be construed as if drafted jointly by the
parties to this Agreement, and no presumption or burden of proof will arise
favoring or disfavoring any party to this Agreement by virtue of the authorship
of any of the provisions of this Agreement.
Section 12.8 Captions; Counterparts. The captions in this Agreement are
for convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
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Section 12.9 Entire Agreement. This Agreement (together with the
Schedules, Exhibits and Annexes to this Agreement) constitutes the entire
agreement among the parties and supersedes any other agreements, whether written
or oral, that may have been made or entered into by or among any of the parties
hereto or any of their respective Subsidiaries relating to the transactions
contemplated hereby. No representations, warranties, covenants, understandings,
agreements, oral or otherwise, relating to the transactions contemplated by this
Agreement exist between the parties except as expressly set forth in this
Agreement.
Section 12.10 Amendments. This Agreement may be amended or modified in
whole or in part, only by a duly authorized agreement in writing executed in the
same manner as this Agreement and which makes reference to this Agreement.
Section 12.11 Publicity. All press releases or other public communications
of any nature whatsoever relating to the transactions contemplated by this
Agreement, and the method of the release for publication thereof, shall be
subject to the prior mutual approval of Acquiror and the Company which approval
shall not be unreasonably withheld by any party; provided, however, that,
nothing herein shall prevent any party from publishing such press releases or
other public communications as such party may consider necessary in order to
satisfy such party's legal or contractual obligations after such consultation
with the other parties hereto as is reasonable under the circumstances.
* * * * *
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IN WITNESS WHEREOF the parties have hereunto caused this Agreement to be
duly executed as of the date first above written.
HIGH VOLTAGE ENGINEERING
CORPORATION
By: /s/ Xxxxxxxx Press
----------------------------------
Name: Xxxxxxxx Press
Title: President
LAUREN CORPORATION
By: /s/ Xxxxxxxx Press
----------------------------------
Name: Xxxxxxxx Press
Title: President
PHI ACQUISITION HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
CHASE VENTURE CAPITAL ASSOCIATES,
LP (as to certain specified provisions only)
By: CHASE CAPITAL PARTNERS, its General
Partner
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: General Partner
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