Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
Among
L-3 COMMUNICATIONS CORPORATION
BLUE ACQUISITION CORP.
and
WESTWOOD CORPORATION
Dated as of August 8, 2002
Table of Contents
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Page
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ARTICLE I THE MERGER ........................................................ 5
SECTION 1.01 Effective Time of the Merger ................................ 5
SECTION 1.02 Closing ..................................................... 5
SECTION 1.03 Effect of the Merger ........................................ 6
SECTION 1.04 Articles of Incorporation and Bylaws ........................ 6
SECTION 1.05 Directors ................................................... 6
SECTION 1.06 Officers .................................................... 6
ARTICLE II CONVERSION OF SECURITIES ......................................... 6
SECTION 2.01 Conversion of Capital Stock ................................. 6
SECTION 2.02 Exchange of Certificates .................................... 7
SECTION 2.03 Stock Options; Warrants; Convertible Notes .................. 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 10
SECTION 3.01 Organization, Qualification and Corporate Power ............. 10
SECTION 3.02 Capital Structure ........................................... 11
SECTION 3.03 Subsidiaries ................................................ 14
SECTION 3.04 Authority; Noncontravention ................................. 14
SECTION 3.05 SEC Documents ............................................... 16
SECTION 3.06 Information Supplied ........................................ 17
SECTION 3.07 Absence of Certain Changes or Events ........................ 17
SECTION 3.08 Contracts ................................................... 20
SECTION 3.09 Litigation .................................................. 23
SECTION 3.10 Taxes ....................................................... 23
SECTION 3.11 Undisclosed Liabilities ..................................... 25
SECTION 3.12 Intellectual Property ....................................... 25
SECTION 3.13 Absence of Changes in Benefit Plans ......................... 28
SECTION 3.14 Employee Benefits Matters ................................... 28
SECTION 3.15 Permits ..................................................... 30
SECTION 3.16 Leased Real Property ........................................ 30
SECTION 3.17 Labor Matters ............................................... 31
SECTION 3.18 Environmental Matters ....................................... 31
SECTION 3.19 Legal Compliance ............................................ 33
SECTION 3.20 Assets ...................................................... 33
SECTION 3.21 Insurance ................................................... 33
SECTION 3.22 Business Relationships with Affiliates ...................... 34
SECTION 3.23 Government Contracts ........................................ 34
SECTION 3.24 Government Furnished Equipment .............................. 36
SECTION 3.25 Inventories ................................................. 36
SECTION 3.26 Receivables ................................................. 36
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Table of Contents
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(continued)
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SECTION 3.27 Product Warranties ................................................ 37
SECTION 3.28 Order Backlog ..................................................... 37
SECTION 3.29 No Retention Agreements, etc ...................................... 37
SECTION 3.30 Power of Attorney/Bank Accounts ................................... 37
SECTION 3.31 Disclosure ........................................................ 37
SECTION 3.32 State Takeover Statutes ........................................... 37
SECTION 3.33 Voting Requirements ............................................... 38
SECTION 3.34 Brokers; Schedule of Fees and Expenses ............................ 38
SECTION 3.35 Opinion of Financial Advisor ...................................... 38
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB ....................... 38
SECTION 4.01 Organization ...................................................... 38
SECTION 4.02 Authority; Noncontravention ....................................... 38
SECTION 4.03 Information Supplied .............................................. 40
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS ............................... 40
SECTION 5.01 Conduct of Business ............................................... 40
SECTION 5.02 No Solicitation ................................................... 44
SECTION 5.03 Indebtedness ...................................................... 46
ARTICLE VI ADDITIONAL AGREEMENTS .................................................. 47
SECTION 6.01 Preparation of the Proxy Statement; Stockholders Meeting .......... 47
SECTION 6.02 Access to Information; Confidentiality ............................ 47
SECTION 6.03 Reasonable Best Efforts; Notification ............................. 48
SECTION 6.04 Indemnification ................................................... 49
SECTION 6.05 Employee Matters .................................................. 49
SECTION 6.06 Public Announcements .............................................. 50
SECTION 6.07 Additional Reports ................................................ 50
SECTION 6.08 Pre-Closing Date Balance Sheet .................................... 51
ARTICLE VII CONDITIONS PRECEDENT .................................................. 53
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger ........ 53
SECTION 7.02 Conditions to Obligations of Parent and Sub ....................... 53
SECTION 7.03 Conditions to Obligation of the Company ........................... 56
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER .................................... 57
SECTION 8.01 Termination ....................................................... 57
SECTION 8.02 Effect of Termination ............................................. 58
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Table of Contents
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(continued)
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SECTION 8.03 Fees and Expenses ................................................... 58
SECTION 8.04 Amendment ........................................................... 59
SECTION 8.05 Extension; Waiver ................................................... 59
ARTICLE IX GENERAL PROVISIONS ....................................................... 59
SECTION 9.01 Nonsurvival of Representations and Warranties ....................... 59
SECTION 9.02 Notices ............................................................. 59
SECTION 9.03 Definitions ......................................................... 61
SECTION 9.04 Interpretation ...................................................... 61
SECTION 9.05 Counterparts ........................................................ 62
SECTION 9.06 Entire Agreement; No Third-Party Beneficiaries ...................... 62
SECTION 9.07 Governing Law ....................................................... 62
SECTION 9.08 Assignment .......................................................... 62
SECTION 9.09 Consent to Jurisdiction ............................................. 62
SECTION 9.10 Waiver of Jury Trial1 ............................................... 63
SECTION 9.11 Enforcement ......................................................... 63
SECTION 9.12 Exhibits and Schedules .............................................. 63
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TABLE OF DEFINED TERMS
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Defined Term Section
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Adjusted Target Net Worth Section 7.02(f)
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Acquisition Agreement Section 5.02(b)
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Adverse Recommendation Change Section 5.02(b)
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Affiliate Section 9.03
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Agreement Introductory Paragraph
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Applicable Law Section 9.03
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Appraisal Rights Sections Section 2.01(d)
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Appraisal Shares Section 2.01(d)
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Articles of Merger Section 1.01
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Backlog Section 3.28
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Balance Sheet Date Section 6.08
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Balance Sheet Date Net Worth Section 7.02(f)
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Benefit Agreements Section 3.07(d)
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Benefit Plans Section 3.13
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Certificate Section 2.01(c)
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Closing Section 1.02
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Closing Date Section 1.02
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Code Section 2.02(f)
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Commonly Controlled Entity Section 3.13
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Company Introductory Paragraph
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Company Affiliated Group Section 3.10(i)
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Company Common Stock Section 2.01
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Company Disclosure Schedule Section 3.01(a)
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Company Intellectual Property Section 3.12(b)
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Company Material Adverse Effect Section 3.01(a)
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Company Preferred Stock Section 3.02(a)
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Company Stock Plans Section 3.02(a)
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Confidentiality Agreement Section 6.02
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Consent Section 3.04(d)
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Continuing Employee Section 6.05(a)
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Contract Section 3.04(c)
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Convertible Notes Section 3.02(a)
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Credit Facility Section 3.04 (c)
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Damages Section 3.18(e)
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Designated Contract Section 3.08(a)
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EACs Section 6.08
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EBITDA Section 9.03
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Effective Time Section 1.01
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Environmental Laws Section 3.18(e)
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Environmental Liabilities and Costs Section 3.18(e)
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ERISA Section 3.14(a)
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ETCs Section 6.08
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Exchange Act Section 3.04(d)
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Existing 401(K) Plan Section 6.05(b)
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Filed SEC Document Section 3.05
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GAAP Section 3.05
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Government Bid Section 3.08(a)(xix)
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Government Contract Section 3.08(a)(xx)
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Governmental Entity Section 2.02(d)
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Government Furnished Equipment Section 3.24
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Hazardous Substances Section 3.18(e)
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Indebtedness Section 7.02(f)
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Indemnified Parties Section 6.04(a)
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Intellectual Property Section 3.12(a)
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Intercompany Agreements Section 3.22
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Inventories Section 3.25
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IRS Section 3.14(a)
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Leased Real Property Section 3.16(a)
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Legal Restraints Section 7.01(c)
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Liens Section 3.04(c)
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Xxxxx 00, 0000 Xxxxxxx Sheet Section 6.08
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Merger Recital
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Merger Consideration Section 2.01(c)
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Notice Section 9.02
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NRS Section 1.01
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Other Filings Section 3.06
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Parent Introductory Paragraph
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Paying Agent Section 2.02(a)
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Pension Plan Section 3.14(a)
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Permits Section 3.15
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Permitted Liens Section 3.07(l)
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Person Section 9.03
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Pre-Closing Date Balance Sheet Section 6.08
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Post-Signing Returns Section 5.01(b)
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Proxy Statement Section 3.04(d)
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Real Property Lease Section 3.16(a)
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Real Property Leases Section 3.16(a)
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Release Section 3.18(e)
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SEC Section 3.04(d)
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SEC Documents Section 3.05
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Securities Act Section 3.05
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Share Encumbrances Section 3.03(a)
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Stock Options Section 3.02(a)
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Stockholder Approval Section 3.33
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Stockholders Agreement Recital
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Stockholders Meeting Section 6.01(b)
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Sub Introductory Paragraph
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Subsidiaries Section 9.03
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Superior Proposal Section 5.02(a)
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Surviving Corporation Section 1.03
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Takeover Proposal Section 5.02(a)
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Target Net Worth Section 7.02(f)
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Taxes Section 3.10(k)
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Warrants Section 3.02(a)
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Welfare Plan Section 3.14(c)
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AGREEMENT AND PLAN OF MERGER dated as of August 8, 2002 (this "Agreement"),
among L-3 COMMUNICATIONS CORPORATION, a Delaware corporation having its
principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Parent"), BLUE
ACQUISITION CORP., a Nevada corporation and a wholly owned Subsidiary of Parent
having its principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Sub"), and
WESTWOOD CORPORATION, a Nevada corporation having its principal office at 00000
X. 00xx Xxxxxx, Xxxxx, XX 00000 (the "Company"). Capitalized and other defined
terms shall have the respective meanings set forth or referred to in Section
9.03.
WHEREAS, the Board of Directors of each of the Company and Sub deems it in
the best interests of their respective stockholders to consummate the merger of
Sub with and into the Company in which the Company would become a wholly owned
Subsidiary of Parent (the "Merger"), on the terms and subject to the conditions
set forth in this Agreement, and such Boards of Directors have approved this
Agreement and declared its advisability (and, in the case of the Board of
Directors of the Company, recommended that this Agreement be adopted by the
Company's stockholders);
WHEREAS, simultaneously with the execution and delivery of this Agreement
and as a condition and inducement to Parent and Sub to enter into this
Agreement, Parent, Sub, the Company and certain stockholders of the Company are
entering into a stockholders agreement (the "Stockholders Agreement"), pursuant
to which, among other things, such stockholders are agreeing to vote to approve
this Agreement and to take certain other actions in furtherance of the Merger,
in each case upon the terms and subject to the conditions set forth therein;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and to prescribe various conditions to the Merger;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Effective Time of the Merger. As soon as practicable on or
after the Closing Date, the parties shall (a) file articles of merger (the
"Articles of Merger") in such form as is required by, and executed and
acknowledged in accordance with, the relevant provisions of the Nevada Revised
Statutes (the "NRS"), and (b) make all other filings or recordings required
under the NRS to effect the Merger. The Merger shall become effective at such
time as the Articles of Merger are duly filed with the Secretary of State of the
State of Nevada or at such subsequent time as Parent and the Company shall agree
and specify in the Articles of Merger (the date and time the Merger becomes
effective being the "Effective Time").
SECTION 1.02 Closing. The closing of the Merger (the "Closing") will take
place at 11:00 a.m., New York time, on a date to be specified by the parties,
which shall be not later than the second business day after satisfaction or
waiver of the conditions set forth in Article VII
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(the "Closing Date"), at the offices of Proskauer Rose LLP, 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000-0000, unless another time, date or place is agreed to in
writing by Parent and the Company.
SECTION 1.03 Effect of the Merger. At the Effective Time, Sub shall be
merged with and into the Company, the separate corporate existence of Sub shall
cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation"). The Merger shall have the effects set forth in Section
92A.250 of the NRS.
SECTION 1.04 Articles of Incorporation and Bylaws.
(a) The Articles of Incorporation of Sub, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by Applicable Law.
(b) The Bylaws of Sub, as in effect immediately prior to the Effective
Time, shall be the Bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by Applicable Law.
SECTION 1.05 Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation until their
respective successors are duly elected and qualified, unless they earlier die,
resign or are removed, as the case may be.
SECTION 1.06 Officers. The officers of Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until their
respective successors are duly elected and qualified, unless they earlier die,
resign or are removed, as the case may be.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders of any shares of
Common Stock of the Company, par value $0.003 per share (the "Company Common
Stock"), or any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of common
stock, par value $0.003 per share, of Sub shall be converted into and become one
fully paid and nonassessable share of common stock, par value $0.003 per share,
of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
of Company Common Stock that are owned by the Company as treasury stock, by any
Subsidiary of the Company, by Parent or by Sub immediately prior to the
Effective Time, shall automatically be cancelled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of Company Common
Stock issued and outstanding immediately prior to the Effective Time (other than
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shares to be cancelled and retired in accordance with Section 2.01(b) and the
Appraisal Shares) shall be converted into the right to receive $2.30 in cash,
without interest (such $2.30 amount to be appropriately adjusted to take into
account any stock dividend, split, reverse split, combination, reclassification,
merger, recapitalization, share exchange or other similar transaction occurring
after the date hereof and prior to the Effective Time and involving the
Company's capital stock) (the "Merger Consideration"). At the Effective Time,
all such shares of Company Common Stock shall no longer be outstanding and shall
automatically be cancelled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares (a "Certificate") shall cease to have any rights with respect thereto,
except the right to receive the Merger Consideration. The right of any holder of
any share of Company Common Stock to receive the Merger Consideration shall be
subject to and reduced by the amount of any withholding that is required under
applicable tax law.
(d) Appraisal Rights. Notwithstanding anything in this Agreement to
the contrary, shares (the "Appraisal Shares") of Company Common Stock issued and
outstanding immediately prior to the Effective Time that are held by any holder
who is entitled to demand and properly demands appraisal of such shares pursuant
to, and who complies in all respects with, the provisions of Sections 92A.300
through 92A.500, inclusive, of the NRS (the "Appraisal Rights Sections") shall
not be converted into the right to receive the Merger Consideration as provided
in Section 2.01(c), but instead such holder shall be entitled to payment of the
fair value of such shares in accordance with the provisions of the Appraisal
Rights Sections. At the Effective Time, the Appraisal Shares shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist, and
each holder of Appraisal Shares shall cease to have any rights with respect
thereto, except the right to receive the fair value of such shares in accordance
with the provisions of the Appraisal Rights Sections. Notwithstanding the
foregoing, if any such holder fails to perfect or otherwise waives, withdraws or
loses the right to appraisal under the Appraisal Rights Sections, or a court of
competent jurisdiction determines that such holder is not entitled to the relief
provided by the Appraisal Rights Sections, then the right of such holder to be
paid the fair value of such holder's Appraisal Shares under the Appraisal Rights
Sections shall cease and such Appraisal Shares shall be deemed to have been
converted at the Effective Time into, and shall have become, the right to
receive the Merger Consideration as provided in Section 2.01(c). The Company
shall serve prompt notice to Parent of any demands for appraisal of any shares
of Company Common Stock, withdrawals of such demands and any other instruments
served pursuant to the NRS received by the Company, and Parent shall have the
right to participate in and direct all negotiations and proceedings with respect
to such demands. The Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do or commit to do any of the foregoing.
SECTION 2.02 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate
a bank or trust company to act as agent for the payment of the Merger
Consideration upon surrender of Certificates (the "Paying Agent"). From time to
time after the Effective Time, Parent shall make available, or cause the
Surviving Corporation to make available, to the Paying Agent funds in such
amounts and at such times necessary for the payment of the Merger Consideration
pursuant
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to Section 2.01(c) upon surrender of Certificates, it being understood and
agreed that any and all interest earned on funds made available to the Paying
Agent pursuant to this Agreement shall be turned over to Parent.
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
Certificate (i) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates held
by such person shall pass, only upon proper delivery of the Certificates to the
Paying Agent and shall be in a form and have such other provisions as Parent may
reasonably specify (including a Form W-9)), and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate for cancellation to the Paying
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly completed and validly executed, and such
other documents as may reasonably be required by the Paying Agent, the holder of
such Certificate shall be entitled to receive in exchange therefor the amount of
cash into which the shares formerly represented by such Certificate shall have
been converted pursuant to Section 2.01(c), and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of shares
that is not registered in the stock transfer books of the Company, payment may
be made to a person other than the person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of such Certificate or establish to the
satisfaction of the Surviving Corporation that such tax has been paid or is not
applicable. No interest shall be paid or shall accrue on the cash payable upon
surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash paid
upon the surrender of a Certificate in accordance with the terms of this Article
II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock formerly represented by such
Certificate. At the close of business on the day on which the Effective Time
occurs the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Paying Agent for transfer or any other reason,
they shall be cancelled and exchanged as provided in this Article II.
(d) No Liability. None of Parent, Sub, the Company and the Paying
Agent shall be liable to any person in respect of any cash delivered to a public
official pursuant to any applicable abandoned property, escheat or similar law.
If any Certificates shall not have been surrendered prior to two years after the
Effective Time (or immediately prior to such earlier date on which any Merger
Consideration would otherwise escheat to or became the property of any Federal,
state or local, domestic or foreign, government or any court, administrative
agency or commission or other governmental or regulatory authority or agency,
domestic or foreign (each, a "Governmental Entity")), any such Merger
Consideration in respect thereof shall, to the extent permitted by Applicable
Law, become the property of the Surviving Corporation, free and clear of all
claims or interest of any person previously entitled thereto.
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(e) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent shall pay the Merger Consideration in respect of such lost, stolen
or destroyed Certificate.
(f) Withholding Rights. Parent, the Surviving Corporation or the
Paying Agent shall be entitled to deduct and withhold from the Merger
Consideration otherwise payable to any holder of shares of Company Common Stock
pursuant to this Agreement such amounts as Parent, the Surviving Corporation or
the Paying Agent is required to deduct and withhold with respect to the making
of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld and paid over to the appropriate taxing authority by
Parent, the Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Company Common Stock in respect of which such deduction
and withholding was made by Parent, the Surviving Corporation or the Paying
Agent.
SECTION 2.03 Stock Options; Warrants; Convertible Notes. As soon as
practicable following the date of this Agreement and prior to the Closing, the
Company shall take such actions (including obtaining any required Consents),
which actions shall be satisfactory to Parent, as may be required to effect the
following:
(a) Stock Options. At the Effective Time, all outstanding and
unexpired Stock Options (regardless of whether or not such options have vested
and regardless of whether the exercise prices per share of Company Common Stock
are below, at or above the Merger Consideration) shall be cancelled on terms and
conditions satisfactory to Parent. Each holder of a cancelled Stock Option shall
be entitled to receive, in consideration for the cancellation of such Stock
Option, an amount in cash equal to the product of (i) the number of shares of
Company Common Stock previously subject to such Stock Option and (ii) the
excess, if any, of the Merger Consideration over the exercise price per share of
Company Common Stock previously subject to such Stock Option in effect
immediately prior to such cancellation (such payment to be net of taxes and
other amounts required by Applicable Law to be withheld with respect thereto).
Payment to such holder under this Section 2.03(a) shall be made without interest
thereon, upon surrender of the certificate or other document evidencing such
Stock Option to the Surviving Corporation. Delivery of any cash payment under
this Section 2.03(a) to a holder of cancelled Stock Options shall be conditioned
upon receipt by Parent of a waiver of all of such holder's right, title and
interest in and to his or her Stock Options.
(b) Warrants. At the Effective Time, all outstanding and unexpired
Warrants (regardless of whether or not such Warrants are then exercisable and
regardless of whether the exercise prices per share of Company Common Stock are
below, at or above the Merger Consideration) shall be cancelled on terms and
conditions satisfactory to Parent. Each holder of a cancelled Warrant shall be
entitled to receive, in consideration for the cancellation of such Warrant, an
amount in cash equal to the product of (i) the number of shares of Company
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Common Stock previously subject to such Warrant and (ii) the excess, if any, of
the Merger Consideration over the exercise price per share of Company Common
Stock previously subject to such Warrant in effect immediately prior to such
cancellation (such payment to be net of taxes and other amounts required by
Applicable Law to be withheld with respect thereto). Payment to such holder
under this Section 2.03(b) shall be made without interest thereon, upon
surrender of such Warrant to the Surviving Corporation. Delivery of any cash
payment under this Section 2.03(b) to a holder of a Warrant shall be conditioned
upon receipt by Parent of a waiver of all of such holder's right, title and
interest in and to his or her Warrant.
(c) Convertible Notes. The Company shall use its best efforts to cause
all outstanding Convertible Notes to be converted in full into shares of Company
Common Stock in accordance with their respective terms and to cease to be issued
and outstanding, in each case prior to the Effective Time.
(d) Termination of Plans. As of the Effective Time, all Company Stock
Plans, and the relevant provisions of all Benefit Agreements and other Contracts
shall terminate on terms and conditions satisfactory to Parent so that on and
after the Effective Time no current or former employee, director, consultant or
other Person shall have any right or option to acquire, hold or transfer shares
of Company Common Stock or any other equity interests in the Company or any of
its Subsidiaries under any Company Stock Plan, Benefit Agreement or other
Contract.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.01 Organization, Qualification and Corporate Power.
(a) The Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and is duly qualified or licensed to conduct
business and is in good standing under the laws of each jurisdiction set forth
in Section 3.01(a) of the Company Disclosure Schedule, which are all the
jurisdictions where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing and
requirement to be in good standing necessary, except for any such failures to be
qualified and in good standing that could not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. The Company
and each of its Subsidiaries has all requisite corporate power and authority to
carry on the business in which it is now engaged and to own, lease and use the
properties now owned, leased or used by it.
For purposes of this Agreement: (i) "Company Disclosure Schedule" means the
disclosure schedule delivered by the Company to Parent prior to or
simultaneously with the execution of this Agreement; and (ii) "Company Material
Adverse Effect" means any event, occurrence, fact, condition, change, effect or
circumstance that (A) is, or that could reasonably be expected to be, materially
adverse to the assets, business, prospects, financial condition, operations,
properties, liabilities or results of operations of the Company and its
Subsidiaries, taken as a whole (other than changes that are the result of
economic factors affecting the
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economy as a whole or changes that are the result of factors generally affecting
the industry or specific markets in which the Company competes), or (B)
materially impairs or delays the ability of the Company to consummate the
transactions contemplated by, or to perform its other obligations under, this
Agreement or the Stockholders Agreement. Without limiting the foregoing and for
the avoidance of doubt, a "Company Material Adverse Effect" would be deemed to
exist in the event of (1) a ruling, decision or order (whether or not final or
nonappealable) that is adverse to the Company or any of its Subsidiaries by a
Governmental Entity affecting Contract No. DAAB07-01-D-F201 between the U.S.
Army and a Subsidiary of the Company issued pursuant to Army Solicitation No.
DAAB07-01-R-C402 (as may be amended from time to time, the "TQG Contract") in
connection with the facts alleged by the plaintiff in matter of Engineered
Electric Company d/b/a Fermont v. The United States of America, No. 02-757C,
pending in the United States Court of Federal Claims, or (2) a decision by the
Contracting Officer in respect of the TQG Contract materially impairing the
value of the TQG Contract to the Company or any of its Subsidiaries.
(b) The Company has delivered to Parent complete and correct copies of
its Articles of Incorporation and its Bylaws and the articles of incorporation
and bylaws (or similar organizational documents) of each of its Subsidiaries, in
each case as amended to the date of this Agreement. The Company has made
available to Parent and its representatives true and complete copies of the
minutes (or in the case of draft minutes, the most recent drafts thereof) of all
meetings of the stockholders, the Board of Directors and each committee of the
Board of Directors of the Company and each of its Subsidiaries held since May 1,
1996. Neither the Company nor any of its Subsidiaries is in default under or in
violation of any provision of its articles of incorporation or bylaws (or
similar organizational documents). The provisions of Sections 78.378 to 78.3793,
inclusive, of the NRS relating to "Acquisition of Controlling Interest" and
Sections 78.411 to 78.444, inclusive, of the NRS relating to "Combinations with
Interested Stockholders" are inapplicable to this Agreement, the Stockholders
Agreement and the transactions contemplated hereby and thereby (including the
Merger) as a result of the Company's actions or otherwise.
SECTION 3.02 Capital Structure.
(a) The authorized capital stock of the Company consists of 20,000,000
shares of Company Common Stock and 5,000,000 of the Company's Preferred Stock,
par value $0.001 per share (the "Company Preferred Stock"). At the close of
business on August 8, 2002: (i) 6,764,647 shares of Company Common Stock
(excluding treasury shares) were issued and outstanding, none of which were held
by any Subsidiary of the Company; (ii) 127,000 shares of Company Common Stock
were held by the Company in its treasury; (iii) no shares of Company Preferred
Stock were issued and outstanding; (iv) options to acquire 1,044,772 shares of
Company Common Stock from the Company were issued and outstanding (the "Stock
Options") pursuant to (A) the 1992 Incentive and Nonqualified Stock Option Plan
of the Company (as amended), the 1992 Directors' Stock Option Plan (as amended)
and the 2000 Directors' Stock Option Plan (collectively, the "Company Stock
Plans") as listed on Section 3.02(a)(iv)(A1-A3) of the Company Disclosure
Schedule, and (B) written employment agreements listed on Section 3.02(a)(iv)(B)
of the Company Disclosure Schedule and previously provided in true and complete
form to Parent or its counsel, (v) warrants to acquire up to 840,002 shares of
Company
-11-
Common Stock from the Company pursuant to the stock purchase warrants listed on
Section 3.02(a)(v) of the Company Disclosure Schedule and previously provided in
true and complete form to Parent or its counsel (the "Warrants") were issued and
outstanding; (vi) 1,000,000 shares of Company Common Stock were issuable upon
conversion of the 10% Convertible Subordinated Notes listed on Section
3.02(a)(vi) of the Company Disclosure Schedule and previously provided in true
and complete form to Parent or its counsel (the "1999 Notes"); (vii) 880,000
shares were issuable upon conversion of the 12% Convertible Subordinated Notes
listed in Section 3.02(a)(vii) of the Company Disclosure Schedule and previously
provided in true and complete form to Parent or to counsel (together with the
1999 Notes, the "Convertible Notes"); and (viii) (A) 288,153 shares of Company
Common Stock were reserved and available for issuance pursuant to the 1992
Incentive and Nonqualified Stock Option Plan of the Company (as amended), (B)
189,330 shares of Company Common Stock were reserved and available for issuance
pursuant to the 1992 Directors' Stock Option Plan (as amended), and (C) 250,000
shares of Company Common Stock were reserved and available for issuance pursuant
to the 2000 Directors' Stock Option Plan. Schedule 3.02(a) of the Company
Disclosure Schedule sets forth a complete and correct list, as of the close of
business on August 8, 2002, of all outstanding stock options or other rights to
purchase or acquire Company Common Stock granted under the Company Stock Plans,
the Warrants, the Convertible Notes, written employment agreements or otherwise,
including: (1) all outstanding Stock Options, the number of shares of Company
Common Stock subject to each Stock Option, the grant dates and exercise and
vesting schedule of each such Stock Option and the names of the holders of each
Stock Option; (2) all outstanding Warrants, the number of shares of Company
Common Stock issuable under each Warrant, the issue dates and exercise prices
and exercise schedule of each such Warrant and the names of the holders of each
Warrant; and (3) all outstanding Convertible Notes, the number of shares of
Company Common Stock issuable under each Convertible Note, the issue dates and
conversion prices and conversion schedule of each such Convertible Note and the
names of the holders of each Convertible Note. Other than the Stock Options, the
Warrants and the Convertible Notes, there are no outstanding rights of any
person to receive Company Common Stock under the Company Stock Plans, under any
Contract or otherwise, or on a deferred basis or otherwise.
(b) As of the close of business on August 8, 2002, there were
outstanding Stock Options, Warrants and Convertible Notes to purchase 3,716,456
shares of Company Common Stock with exercise or conversion prices, as the case
may be, on a per share basis lower than the Merger Consideration, and the
weighted average exercise or conversion price, as the case may be, of such Stock
Options, Warrants and Convertible Notes was equal to $1.07. As of the close of
business on August 8, 2002, there were outstanding Stock Options, Warrants and
Convertible Notes to purchase 48,318 shares of Company Common Stock with
exercise or conversion prices, as the case may be, on a per share basis equal to
or higher than the Merger Consideration, and the weighted average exercise or
conversion price, as the case may be, of such Stock Options, Warrants and
Convertible Notes was equal to $2.39.
(c) Except as set forth in Section 3.02(a) of the Company Disclosure
Schedule, as of the close of business on August 8, 2002, no shares of capital
stock of or other equity or voting interests in the Company, or options,
warrants, convertible notes or other rights to acquire or receive any such stock
or interests were issued, reserved for issuance or outstanding, and neither the
Company nor any of its Subsidiaries is a party to any agreement
-12-
relating to any such issuance. Since August 8, 2002, (i) there have been no
issuances by the Company of shares of capital stock of or other equity or voting
interests in the Company other than issuances of shares of Company Common Stock
pursuant to the exercise or conversion, as the case may be, of Stock Options,
Warrants or Convertible Notes, in each case outstanding on such date as required
by their terms as in effect on the date of this Agreement, and (ii) there have
been no issuances by the Company of options, warrants, convertible notes or
other rights to acquire shares of capital stock or other equity or voting
interests from the Company. There are no outstanding stock appreciation rights
or other rights that are linked in any way to the price of the Company Common
Stock or the value of the Company, any Subsidiary of the Company or any part of
the Company or any such Subsidiary.
(d) All outstanding shares of capital stock of the Company are, and
all shares that may be issued pursuant to the Stock Options, the Warrants and
the Convertible Notes will be, when issued in accordance with the terms thereof,
duly authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights or, to the Company's or any of its Subsidiaries knowledge, any
other Share Encumbrance, except as set forth in Section 3.02(d) of the Company
Disclosure Schedule. Except for the Convertible Notes, there are no bonds,
debentures, notes or other indebtedness of the Company or any of its
Subsidiaries, and no securities or other instruments or obligations of the
Company or any of its Subsidiaries the value of which is in any way based upon
or derived from any capital or voting stock of the Company, having the right to
vote (or convertible or exercisable into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of the Company may vote.
Except as set forth above, there are no securities, options, warrants,
convertible notes, calls, rights, obligations, arrangements, understandings or
Contracts of any kind to which the Company or any of its Subsidiaries is a
party, or by which the Company or any of its Subsidiaries is bound, obligating
the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of, or other
equity or voting interests in, or securities convertible or exercisable into, or
exchangeable or exercisable for, shares of capital stock of or other equity or
voting interests in the Company or any of its Subsidiaries or obligating the
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, convertible note, call, right, obligation,
arrangement, understanding or Contract. Each Stock Option intended to qualify as
an "incentive stock option" under Section 422 of the Code so qualifies and the
exercise price of each other Stock Option is not less than the fair market value
of a share of Company Common Stock as determined on the date of grant of such
Stock Option. As of the date of this Agreement, (i) the Subject Shares (as such
term is defined in the Stockholders Agreement) represent approximately 41% of
the shares of Company Common Stock outstanding (assuming the exercise, exchange
or conversion, as applicable, of all outstanding convertible securities of the
Company (including the Stock Options, the Warrants and the Convertible Notes)
which are currently exercisable, exchangeable or convertible, as applicable, or
will become exercisable, exchangeable or convertible, as applicable, at any time
within 60 days from the date of this Agreement), and (ii) the Subject Shares
that constitute shares of Company Common Stock represent approximately 31% of
the shares of Company Common Stock outstanding . There are not any outstanding
contractual obligations of the Company or any of its Subsidiaries to (A)
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries, or (B) vote or dispose of any shares of the
capital stock of any of its Subsidiaries. The Company is not a party to any
voting or other stockholders
-13-
agreements with respect to any shares of the capital stock of or other equity or
voting securities in the Company or any of its Subsidiaries and, to the
knowledge of the Company or any of its Subsidiaries, as of the date of this
Agreement, there are no irrevocable proxies and no voting or other stockholders
agreements with respect to any shares of the capital stock of or other equity or
voting interests in the Company or any of its Subsidiaries.
(e) As of the date hereof, the outstanding Indebtedness of the Company
and its Subsidiaries is as set forth on Section 3.02(e) of the Company
Disclosure Schedule.
SECTION 3.03 Subsidiaries.
(a) Section 3.03 of the Company Disclosure Schedule lists each
Subsidiary of the Company. All the outstanding shares of capital stock of or
other equity or voting interests in each such Subsidiary are owned by the
Company, by another wholly owned Subsidiary of the Company or by the Company and
another wholly owned Subsidiary of the Company, free and clear of any liens,
encumbrances, hypothecations, rights of others, charges, adverse claims or
interests, title defects, pledges, voting trusts or similar arrangements,
limitations on voting rights, options, restrictions on transfer, proxies, title
retention agreements, securityholder agreements or other similar restrictions or
limitations, (collectively, "Share Encumbrances"), excepting only restrictions
on the subsequent transfer of such shares imposed under applicable securities
laws. Except for the capital stock of or other equity or voting interests in its
Subsidiaries, the Company does not own, directly or indirectly, any capital
stock of or other equity or voting interests in any corporation, partnership,
joint venture, association or other entity.
(b) Those Subsidiaries that are Roflan Associates, Inc., a
Massachusetts corporation, and Xxxxx Xxxx Corporation, a Massachusetts
corporation, are not engaged in any business and do not conduct any activity.
SECTION 3.04 Authority; Noncontravention.
(a) The Company has the requisite corporate power and authority to
execute and deliver this Agreement and the Stockholders Agreement, to consummate
the transactions contemplated by this Agreement and the Stockholders Agreement,
subject, in the case of the Merger, to obtaining the Stockholder Approval, and
to comply with the provisions of this Agreement and the Stockholders Agreement.
The execution and delivery of this Agreement and the Stockholders Agreement by
the Company, the consummation by the Company of the transactions contemplated by
this Agreement and the Stockholders Agreement and the compliance by the Company
with the provisions of this Agreement and the Stockholders Agreement have been
duly authorized by all necessary corporate action on the part of the Company and
no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or the Stockholders Agreement or to consummate the
transactions contemplated by this Agreement or the Stockholders Agreement,
subject, in the case of the Merger, to obtaining the Stockholder Approval. Each
of this Agreement and the Stockholders Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Sub, constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms
-14-
(except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws).
(b) The Board of Directors of the Company, at a meeting duly called
and held at which all of the directors of the Company were present either in
person or by telephone, duly and with the unanimous approval of those directors
in attendance adopted resolutions (i) approving and declaring advisable the
Merger, this Agreement and the transactions contemplated by this Agreement, (ii)
declaring that it is in the best interests of the Company's stockholders that
the Company enter into this Agreement and consummate the Merger on the terms and
subject to the conditions set forth in this Agreement, (iii) declaring that the
consideration to be paid to the Company's stockholders in the Merger is fair to
such stockholders, (iv) directing that this Agreement be submitted to a vote at
a meeting of the Company's stockholders to be held as promptly as reasonably
practicable following the date of this Agreement, (v) recommending that such
stockholders adopt this Agreement, and (vi) approving the Stockholders Agreement
and the transactions contemplated thereby, which resolutions have not been
subsequently rescinded, modified or withdrawn in any way except as is expressly
and specifically permitted under Section 5.02(b).
(c) The execution and delivery of this Agreement and the Stockholders
Agreement and the consummation of the transactions contemplated hereby and
thereby and compliance by the Company with the provisions of this Agreement do
not and will not conflict with, or result in any violation or breach of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of, or result in, termination, cancellation or acceleration of any
obligation or to a loss of a material benefit under, or result in the creation
of any mortgage, pledge, security interest, encumbrance, charge, lien,
hypothecation, adverse claim or interest, easement, encroachment, title defect,
title retention agreement or other similar restriction or limitation (whether
arising by contract, by operation of law or otherwise) (collectively, "Liens")
in or upon any of the properties or assets of the Company or any of its
Subsidiaries under, or give rise to any increased, additional, accelerated or
guaranteed rights or entitlements under, any provision of: (i) the Articles of
Incorporation or Bylaws of the Company or the articles of incorporation or
bylaws (or similar organizational documents) of any of its Subsidiaries; (ii)
any loan or credit agreement (including the Credit Facility), bond, debenture,
note (including the Convertible Notes), mortgage, indenture, guarantee, lease or
other contract, commitment, agreement, instrument, arrangement, understanding,
obligation, undertaking, permit, permission, concession, franchise, license or
sublicense, whether oral or written (each, including all amendments thereof and
supplements thereto, a "Contract") to which the Company or any of its
Subsidiaries is a party or any of their respective properties or assets is
subject; or (iii) subject to the governmental filings and other matters referred
to in Section 3.04(d), any Applicable Law; other than, in the case of clauses
(ii) and (iii), any such conflicts, violations, breaches, defaults, rights,
losses, Liens or entitlements that individually or in the aggregate could not
reasonably be expected to (A) have a Company Material Adverse Effect, or (B)
prevent or materially impede, interfere with, hinder or delay the consummation
of any of the transactions contemplated by this Agreement or the Stockholders
Agreement. A true, complete and correct list of all the Contracts (including all
amendments thereof) comprising the Credit Facility are listed in Section 3.04(c)
of the Company Disclosure Schedule.
-15-
For purposes of this Agreement, "Credit Facility" means those
Contracts listed in Section 3.04(c) of the Company Disclosure Schedule,
collectively.
(d) No consent, approval, authorization, waiver, permit, grant,
franchise, concession, agreement, license, exemption or order of, registration,
certificate, declaration or filing with, or report or notice to, any Person,
including any Governmental Entity (each, a "Consent"), is required by or with
respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement or the Stockholders Agreement by the
Company, the consummation by the Company of the transactions contemplated by
this Agreement or the Stockholders Agreement or the compliance by the Company
with the provisions of this Agreement or the Stockholders Agreement, except for:
(i) any filings required under any applicable competition, merger control,
antitrust or similar law; (ii) the filing with the Securities and Exchange
Commission (the "SEC") of a proxy statement relating to the approval of this
Agreement by the Company's stockholders (as amended or supplemented from time to
time, the "Proxy Statement") and such reports under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), as may be required in connection with
this Agreement, the Stockholders Agreement and the transactions contemplated
hereby and thereby; (iii) the filing of the Articles of Merger with the
Secretary of State of the State of Nevada and appropriate documents with the
relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business; (iv) any filings required under the
rules and regulations of the Nasdaq Bulletin Board Market; (v) those Consents
listed in Section 3.04(d) of the Company Disclosure Schedule; and (vi) such
other Consents, the failure of which other Consents to be obtained or made
individually or in the aggregate could not reasonably be expected to (A) have a
Company Material Adverse Effect, or (B) prevent or materially impede, interfere
with, hinder or delay the consummation of any of the transactions contemplated
by this Agreement or the Stockholders Agreement.
SECTION 3.05 SEC Documents. The Company has filed with the SEC, and has
heretofore made available to Parent true and complete copies of, all reports,
schedules, forms, statements and other documents required to be filed with the
SEC by the Company since May 1, 1996 (together with all information incorporated
therein by reference, the "SEC Documents"). No Subsidiary of the Company is
required to file any report, schedule, form, statement or other document with
the SEC.
As of their respective dates, each of the SEC Documents filed prior to June
15, 2002 (each a "Filed SEC Document") complied in all material respects with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act") or the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder, and none of the Filed SEC Documents at the time they
were filed contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Except to the extent that information contained in any Filed SEC
Document has been revised or superseded by a later Filed SEC Document, none of
the SEC Documents contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
-16-
Each SEC Document that the Company files with the SEC on or after June 15,
2002, as of the date thereof, will comply in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations promulgated thereunder, and none of such SEC Documents
will contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that, in the case of the Proxy Statement, no representation
is made by the Company with respect to statements made therein based on
information supplied by Parent or Sub in writing specifically for inclusion in
the Proxy Statement.
The financial statements (including the related notes) of the Company
included in the SEC Documents (including the Proxy Statement) and the Other
Filings complied, as of the date filed, or will comply when filed, as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been or will be
prepared in accordance with generally U.S. accepted accounting principles
("GAAP") (except, in the case of unaudited statements, as permitted by Form 10-Q
of the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented or will present in
all material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their consolidated results
of operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal and recurring year-end audit adjustments and the
absence of footnotes).
SECTION 3.06 Information Supplied. None of the information supplied by the
Company for inclusion or incorporation by reference in (a) the Proxy Statement,
or (b) any other document filed or to be filed with the SEC or any other
Governmental Entity in connection with the transactions contemplated by this
Agreement (collectively, the "Other Filings") will, at the respective times
filed with the SEC or other Governmental Entity and, in addition, in the case of
the Proxy Statement, at the date it or any amendment thereof or supplement
thereto is mailed to stockholders, at the time of the Stockholders Meeting and
at the Effective Time, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that, in the case of the Proxy Statement,
no representation is made by the Company with respect to statements made therein
based on information supplied by Parent or Sub in writing specifically for
inclusion in the Proxy Statement. The Proxy Statement and the Other Filings made
by the Company will comply as to form with the provisions of the Exchange Act or
other Applicable Law, as the case may be, and the rules and regulations
thereunder.
SECTION 3.07 Absence of Certain Changes or Events. Except as set forth on
Section 3.07 of the Company Disclosure Schedule, since the date of the most
recent audited financial statements included in the Filed SEC Documents, the
Company and its Subsidiaries have conducted their respective businesses only in
the ordinary course consistent with past practice, and there has not been:
(a) any Company Material Adverse Effect or any state of facts, change,
development, effect or occurrence that could reasonably be expected to result in
a Company Material Adverse Effect;
-17-
(b) any declaration, setting aside or payment of any dividend on, or
other distribution (whether in cash, stock or property) in respect of, any of
the Company's or any of its Subsidiaries' capital stock or any redemption,
retirement, acquisition or purchase of any of the Company's or any Subsidiary's
capital stock or other securities;
(c) any split, reverse split, combination or reclassification of any
of the Company's or any of its Subsidiaries' capital stock or any issuance or
the authorization of any issuance of any other securities in respect of, in lieu
of, or in substitution for, shares of capital stock or other securities of the
Company or any of its Subsidiaries;
(d) (i) any granting by the Company or any of its Subsidiaries of any
increase in compensation or benefits, except for normal increases of cash
compensation prior to the date of this Agreement in the ordinary course of
business consistent (in amount and kind) with past practice, (ii) any payment by
the Company or any of its Subsidiaries of any bonus, except for bonuses made
prior to the date of this Agreement in the ordinary course of business
consistent (in amount and kind) with past practice, in each case to any current
or former director, officer, employee or consultant, (iii) any granting by the
Company or any of its Subsidiaries to any current or former director, officer,
employee or consultant of any increase in severance or termination pay, or (iv)
any entry by the Company or any of its Subsidiaries into, or any amendment of,
or any supplement to, (A) any employment, deferred compensation, severance,
termination, employee benefit, loan, indemnification, stock repurchase, stock
option, consulting or similar Contract between the Company or any of its
Subsidiaries, on the one hand, and any current or former director, officer,
employee or consultant of the Company or any of its Subsidiaries, on the other
hand, or (B) any Contract between the Company or any of its Subsidiaries, on the
one hand, and any current or former director, officer, employee or consultant of
the Company or any of its Subsidiaries, on the other hand, the benefits of which
are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company of the nature contemplated by
this Agreement or the Stockholders Agreement (all such Contracts referred to in
this clause (iv), being herein called, collectively, the "Benefit Agreements");
(e) any amendment of, or supplement to, any Company Stock Plan, any
Stock Option, any Warrant or any Convertible Note;
(f) any damage, destruction or loss, whether or not covered by
insurance, in excess of $25,000 individually or in the aggregate;
(g) any change in financial or tax accounting methods, principles or
practices by the Company, except insofar as may have been required by a change
in GAAP or Applicable Law;
(h) any tax election that individually or in the aggregate could
reasonably be expected to have a Company Material Adverse Effect or a material
adverse effect on any of the Company's tax attributes or any settlement or
compromise of any material income tax liability;
(i) any revaluation by the Company of any of its material assets;
-18-
(j) any entering into any settlement regarding the breach,
misrepresentation, infringement or violation of, any Intellectual Property, or
any modification of any existing rights with respect thereto;
(k) any incurring, assumption or guaranty of any debt, claim,
commitment, obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due (including any Indebtedness), except (A) current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent (in
amount and kind) with past practice, and (B) any Indebtedness incurred under and
pursuant to the Credit Facility;
(l) any subjection to any Lien of any portion of the Company's or any
of its Subsidiaries' assets, properties or business (whether tangible or
intangible), other than (A) mechanic's, materialmen's, and similar Liens, in
each case that are not delinquent or which are being actively contested in good
faith by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of the Company or its applicable Subsidiary, as the case
may be, to the extent required by GAAP, (B) Liens arising under workers'
compensation, unemployment insurance, social security, retirement, and similar
legislation, in each case that are not delinquent or which are being actively
contested in good faith by appropriate proceedings if adequate reserves with
respect thereto are maintained on the books of the Company or its applicable
Subsidiary, as the case may be, to the extent required by GAAP, and (C)
statutory Liens with respect to current taxes not yet due and payable (all such
Liens under clauses (A) through (C), inclusive, collectively, "Permitted
Liens");
(m) any sale, assignment, lease to others or transfer or other
disposition of any portion of the Company's or any of its Subsidiaries' assets,
except for Inventories sold in the ordinary course of business consistent (in
amount and kind) with past practice;
(n) any receipt of any written notice of termination of any Designated
Contract (including any Contract that would have constituted a Designated
Contract but for the termination thereof prior to the date of this Agreement);
(o) any discharge, cancellation or compromise of any debt, claim,
commitment, liability or obligation (including any Indebtedness), or waiver or
release of any right of substantial value;
(p) any making of any capital expenditures or commitments therefor in
excess of $50,000 individually or in the aggregate;
(q) (i) any making of any capital investment in, any loan to, or any
acquisition of, any of the securities of, any other Person (or series of related
capital investments, loans and acquisitions involving the same Person or such
Person's Affiliates), except for overnight deposits, short-term money market
investments, or (ii) any acquisition of any entity or business (whether by the
acquisition of stock, the acquisition of all or a substantial portion of assets,
merger or otherwise);
-19-
(r) any change or authorization of any change in the articles of
incorporation or bylaws (or similar organizational documents) of the Company or
any of its Subsidiaries;
(s) any labor union organizing activity with respect to the Company or
any of its Subsidiaries, any actual or threatened employee strikes, work
stoppages, slowdowns or lockouts, or any material and adverse change in the
Company's or any of its Subsidiaries' relations with its employees,
distributors, agents, customers or suppliers;
(t) any payment or agreement to pay any brokerage or finder's fee, or
any incurring of any severance pay or retention obligations by reason of this
Agreement or any of the transactions contemplated hereby;
(u) any making of any grant of credit to any customer or distributor
on terms or in amounts materially more favorable than had been extended to that
customer or distributor in the past;
(v) any receipt of any written notice of any condemnation proceedings
commenced with respect to any Leased Real Property or written notice as to the
proposed commencement of any such proceedings; or
(w) taking of any action or knowing omission of the taking of any
action that would result in the occurrence of any of the foregoing.
SECTION 3.08 Contracts.
(a) Section 3.08(a) of the Company Disclosure Schedule contains a
true, complete and correct list of all Contracts (whether written or oral)
which, in each case, are related in any way to the Company or any of its
Subsidiaries of the types described below to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective properties or assets are bound and under which any such
Person continues to have any obligation (the "Designated Contracts"):
(i) any Contract (or group of related Contracts with the same
Person or such Person's Affiliates) for the lease of personal property from or
to third parties, in each case involving in excess of $50,000 per annum;
(ii) any Contract establishing a partnership, joint venture,
teaming arrangement or similar contract involving a sharing of profits or
expenses (including joint research and development and joint marketing
contracts);
(iii) any Contract (or group of related Contracts with the same
Person or such Person's Affiliates) under which the Company or any of its
Subsidiaries has created, incurred, secured, assumed or guaranteed (or may
create, incur, secure, assume or guarantee) any Indebtedness, or under which it
has imposed (or may impose) a Lien (other than a Permitted Lien) on any of the
Company's or any of its Subsidiaries' properties or assets, tangible or
intangible;
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(iv) any Contract that prohibits or restricts the Company or any
of its Subsidiaries from freely engaging in any business or line of business or
competing anywhere in the world;
(v) any Contract involving any officer, director, stockholder
or Affiliate of the Company or any of its Subsidiaries;
(vi) (A) any Contract which contains any provisions requiring
the Company or any of its Subsidiaries to indemnify any other party thereto
other than in the ordinary course of business consistent (in amount and kind)
with past practice; (B) any Contract not containing a waiver of incidental,
consequential and special damages in favor of the Company and its Subsidiaries;
and (C) any guarantee of the payment or performance of any Person or any
agreement to indemnify any Person, or act as a surety, or other agreement to be
contingently or secondarily liable for, or to provide credit support in respect
of, the obligations of any Person other than the endorsement of checks in the
ordinary course of business consistent (in amount and kind) with past practice;
(vii) any Contract under which the consequences of a breach,
default or termination could reasonably be expected to have a Company Material
Adverse Effect;
(viii) any Contract with a sales representative, manufacturer's
representative, distributor, and each material marketing Contract;
(ix) employment, consulting, agency, collective bargaining or
other similar Contracts, and other material instruments and arrangements
relating to or for the benefit of employees, consultants, sales representatives,
distributors, dealers, agents or independent contractors;
(x) any other Contract (or group of related Contracts with the
same Person or such Person's Affiliates) involving payments to be made or
received by or to the Company or any of its Subsidiaries in excess of $100,000
per annum;
(xi) any Contract involving the licensing of, or assignment or
transfer of, any rights in any material Intellectual Property, other than in the
ordinary course of business consistent (in amount and kind) with past practice;
(xii) any license, licensing arrangement or other Contract
providing in whole or in part for the use of, or limiting the use of, or for the
acquisition or disposition of, any material Company Intellectual Property;
(xiii) leases, licenses and other similar material Contracts, and
material Permits concerning or relating to the real property used by the Company
or any of its Subsidiaries;
(xiv) brokerage or finder's Contracts;
(xv) asset purchase agreements, stock purchase agreements and
other non-ordinary course acquisition or divestiture agreements;
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(xvi) Contracts with respect to the representation of the
Company or any of its Subsidiaries in foreign countries;
(xvii) purchase Contracts for inventory items or supplies that,
together with amounts on hand, constitute in excess of six months normal usage;
(xviii) any Contract with any employee, agent, consultant,
distributor, dealer or franchisee;
(xix) any outstanding bid, proposal or offer made by the Company
or any of its Subsidiaries which, if accepted, would result in a Government
Contract (each, a "Government Bid") or any outstanding customer option relating
to any Contract in the Backlog (or series of related bids, proposals, offers or
customer options), in each case involving an amount in excess of $500,000, or
that was bid knowing that when accepted it would result in a loss;
(xx) any prime contract, subcontract, teaming agreement or
arrangement, joint venture, basic ordering agreement, pricing agreement, letter
contract, purchase order, delivery order, change order or other similar
arrangement of any kind, between the Company or any of its Subsidiaries, on the
one hand and (A) any Governmental Entity, (B) any prime contractor of a
Governmental Entity in its capacity as a prime contractor, or (C) any
subcontractor with respect to any contract of a type described in clauses (A) or
(B) above, on the other hand (each, a "Government Contract"); and
(xxi) any other Contract not the subject matter of clauses (i)
through (xx) above that is material to the Company or any of its Subsidiaries.
(b) The Company has made available to Parent a true, complete and
accurate copy of each written Designated Contract (as amended, supplemented or
modified to date) listed in Section 3.08(a) of the Company Disclosure Schedule.
The Company has furnished to Parent an accurate summary of all oral Designated
Contracts listed in Section 3.08(a) of the Company Disclosure Schedule. With
respect to each Designated Contract: (i) such Designated Contract is a legal,
valid, binding and enforceable obligation of the Company or the applicable
Subsidiary, as the case may be, and to the Company's or any of its Subsidiaries'
knowledge, any other party thereto (subject to bankruptcy and insolvency laws
and equitable principles (whether applied at law or in equity)) and is in full
force and effect; and (ii) neither the Company nor any of its Subsidiaries nor,
to the Company's or any of its Subsidiaries' knowledge, any other party thereto
is in material breach or violation of, or material default under, any such
Designated Contract, and no event of default or event or condition exists, has
occurred, is pending or, to the knowledge of the Company or any of its
Subsidiaries, is threatened, which, after the giving of notice, lapse of time,
both or otherwise, would constitute a material violation, breach or default
thereunder by the Company or any of its Subsidiaries or, to the knowledge of the
Company or any of its Subsidiaries, any other party under such Designated
Contract. With respect to each Contract (other than a Designated Contract) to
which the Company or any of its Subsidiaries is a party or by which any of their
respective properties or assets is subject: (A) neither the Company nor any of
its Subsidiaries nor, to the Company's or any of its Subsidiaries' knowledge,
any other party thereto is in default under, any such Contract; and (B) no event
of default or event or condition
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exists, has occurred, is pending or, to the knowledge of the Company or any of
its Subsidiaries, is threatened, which, after the giving of notice, lapse of
time, both or otherwise, would constitute a default under such Contract by the
Company or any of its Subsidiaries or, to the knowledge of the Company or any of
its Subsidiaries, any other party under such Contract, except in the case of
both clauses (A) and (B) above, such defaults under such Contracts that,
individually or in the aggregate, could not reasonably be expected to have a
Company Material Adverse Effect. Except as set forth in Section 3.08(b) of the
Company Disclosure Schedule, no Consent of any third party is required under any
Designated Contract as a result of or in connection with the execution and
delivery of this Agreement or the Stockholders Agreement or the performance by
the Company of its obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby and thereby (including the Merger).
(c) Except as set forth in Section 3.08(c) of the Company Disclosure
Schedule, no outstanding bid or proposal (or series of related bids or
proposals) was bid knowing that when accepted it would result in a loss.
SECTION 3.09 Litigation. Except as set forth in Section 3.09 of the Company
Disclosure Schedule, there is not (a) any unsatisfied judgment against the
Company or any of its Subsidiaries or any of their respective assets, nor any
order, decree, stipulation or injunction to which the Company, any of its
Subsidiaries or any of their respective assets are subject, or (b) any claim,
complaint, demand, grievance, inquiry, action, suit, proceeding, hearing,
investigation, arbitration, citation, summons, or subpoena, civil, criminal,
regulatory or otherwise, in law or in equity, to which the Company or any of its
Subsidiaries is a party or, to the Company's or any of its Subsidiaries'
knowledge, which has been threatened against the Company or any of its
Subsidiaries. There is no action, suit or proceeding pending, or to the
Company's or any of its Subsidiaries' knowledge, threatened, by or against or
affecting the Company or any of its Subsidiaries in connection with or relating
to the transactions contemplated by this Agreement or of any action taken or to
be taken in connection herewith or the consummation of the transactions
contemplated hereby. Since May 1, 1996, there have been no product liability
suits, actions or proceedings involving the Company or any of its Subsidiaries
or relating to products or services manufactured, sold or provided by the
Company or any of its Subsidiaries.
SECTION 3.10 Taxes.
(a) Each of the Company and its Subsidiaries and each Company
Affiliated Group has timely filed all Federal, state and local, domestic and
foreign, income and franchise tax returns and reports and all other tax returns
and reports required to be filed by it and all such returns and reports are
complete and correct, except for such failures to file or to be complete and
correct that individually or in the aggregate could not reasonably be expected
to result in a material liability on the part of the Company or any of its
Subsidiaries. Each of the Company and its Subsidiaries and each Company
Affiliated Group has timely paid all taxes due with respect to the taxable
periods covered by such returns and reports and all other taxes, except where
the failures so to pay individually or in the aggregate could not reasonably be
expected to result in a material liability on the part of the Company or any of
its Subsidiaries, and the most recent financial statements contained in the
Filed SEC Documents reflect an adequate reserve for
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all taxes payable by the Company and its Subsidiaries for all taxable periods
and portions thereof through the date of such financial statements.
(b) There is no currently effective agreement or other document
extending, or having the effect of extending, the period of assessment or
collection of any material taxes, and no power of attorney with respect to any
taxes has been executed or filed with any taxing authority.
(c) Except as set forth in Section 3.10(c) of the Company Disclosure
Schedule, no Federal, state or other material local, domestic or foreign, tax
return or report of the Company or any of its Subsidiaries or any Company
Affiliated Group or member thereof has ever been under audit or examination by
any taxing authority.
(d) No material Liens for taxes exist with respect to any assets or
properties of the Company or any of its Subsidiaries, except for statutory Liens
for taxes not yet due.
(e) None of the Company and its Subsidiaries is a party to or bound by
any tax sharing agreement, tax indemnity obligation or similar agreement,
arrangement or practice with respect to taxes (including any advance pricing
agreement, closing agreement or other agreement relating to taxes with any
taxing authority).
(f) The Company and its Subsidiaries have complied with Applicable Law
relating to the payment and withholding of taxes (including withholding of taxes
pursuant to Sections 1441, 1442, 3121 and 3402 of the Code or similar provisions
under any Federal, state or local, domestic or foreign, laws) and have, within
the time and the manner prescribed by law, withheld from and paid over to the
proper Governmental Entities all amounts required to be so withheld and paid
over under Applicable Laws, except where the failures to so comply, withhold and
pay over, individually or in the aggregate, could not reasonably be expected to
result in a material liability on the part of the Company or any of its
Subsidiaries.
(g) Neither the Company nor any of its Subsidiaries is a real property
holding company within the meaning of Section 897 of the Code.
(h) Except as set forth in Section 3.10(h) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries (nor any predecessor
of the foregoing Persons) has been a member of a Company Affiliated Group.
(i) Neither the Company nor any of its Subsidiaries is liable for the
taxes of any Person other than the Company and its Subsidiaries under Treasury
Regulations section 1.1502-6 (or any analogous or similar provision of any
state, local or foreign law, rule or regulation), as a transferee or successor,
by contract or otherwise, for any taxable period beginning before the Closing
Date.
(j) Neither the Company nor any of its Subsidiaries is obligated to
make, and as a result of any event connected with the transactions contemplated
by this Agreement, neither the Company nor any of its Subsidiaries will become
obligated to make any "excess parachute
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payment" within the meaning of Section 280G of the Code, determined without
regard to subsection (b)(4) thereof.
(k) As used in this Agreement:
"taxes" shall include all (i) Federal, state and local, domestic
and foreign, income, franchise, property, sales, excise, employment, payroll,
social security, value-added, ad valorem, transfer, withholding and other taxes,
including taxes based on or measured by gross receipts, profits, sales, use or
occupation, tariffs, levies, impositions, assessments or governmental charges of
any nature whatsoever, including any interest penalties or additions with
respect thereto, and any obligations under any agreements or arrangements with
any other person with respect to such amounts, (ii) liability for the payment of
any amounts of the type described in clause (i) above as a result of being a
member of an affiliated, consolidated, combined, unitary or aggregate group
(including any group liability for the taxes of any Person under Treasury
Regulations section 1.1502-6(a) (or any analogous or similar provision of any
state, local or foreign law, rule or regulation), as a transferee or successor,
by contract, or otherwise), and (iii) liability for the payment of any amounts
as a result of an express or implied obligation to indemnify any other person
with respect to the payment of any amounts of the type described in clause (i)
or (ii) above.
"Company Affiliated Group" shall mean each affiliated, combined,
consolidated or unitary group of which the Company or any of its Subsidiaries is
or has been a member.
SECTION 3.11 Undisclosed Liabilities. Neither the Company nor any of its
Subsidiaries has any debts, claims, commitments, liabilities or obligations of
any nature, whether known or unknown, absolute, accrued, contingent or otherwise
and whether due or to become due, asserted or unasserted which are or could
reasonably be expected to become material to the Company or any of its
Subsidiaries, except (a) as set forth in Section 3.11 of the Company Disclosure
Schedule, (b) as and to the extent set forth as liabilities on the most recent
consolidated balance sheet included in the Filed SEC Documents, and (c) for
liabilities and obligations that were incurred after the date of such most
recent consolidated balance sheet, in the ordinary course of business consistent
(in amount and kind) with past practice.
SECTION 3.12 Intellectual Property.
(a) For purposes of this Agreement, "Intellectual Property" means: (i)
any and all inventions, developments, improvements, discoveries, know-how,
concepts and ideas, whether patentable or not in any jurisdiction and whether or
not reduced to practice, (ii) any and all patents and patent applications
(including reissues, reexaminations, continuations, divisions,
continuations-in-part, extensions, revisions and counterparts thereof in any
jurisdiction), patent disclosures, revalidations, industrial designs, industrial
models and utility models, (iii) any and all trademarks, service marks,
certification marks, logos, trade dress, trade names, corporate names, brand
names, domain names and all other indicia of origin (whether registered or
unregistered), and including all goodwill associated therewith and all
applications and registrations therefor in any jurisdiction and any extension,
modification or renewal of any such application or registration, (iv) any and
all copyrights, copyright registrations and applications
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for registration of copyrights in any jurisdiction, and any renewals or
extensions thereof, (v) any and all writings and other works of authorship,
whether copyrighted, copyrightable or not in any jurisdiction, such works
including, without limitation, computer programs and software (including source
code, object code, data, databases and documentation therefor), together with
all translations, adaptations, derivations and combinations thereof, (vi) any
and all mask works and other semiconductor chip rights and registrations
thereof, (vii) any and all non-public information, trade secrets and proprietary
or confidential information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information and business and marketing plans
and proposals) and rights in any jurisdiction to limit the use or disclosure
thereof by any Person, (viii) any and all other intellectual property or
proprietary rights, (ix) any and all agreements, licenses, immunities, covenants
not to xxx and the like relating to any of the foregoing, (x) any and all copies
and tangible embodiments of any of the foregoing (in whatever form or medium),
and (xi) any and all claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
(b) For purposes of this Agreement, "Company Intellectual Property"
means Intellectual Property that is currently used in the business and
operations of the Company or any of its Subsidiaries or which covers any aspect
of the business and operations of the Company or any of its Subsidiaries.
(c) Section 3.12(c) of the Company Disclosure Schedule sets forth a
list of all material trademarks, service marks, trade names, and domain names,
as well as all patents, patent applications, copyright registrations, copyright
registration applications, trademark registrations, trademark registration
applications and all other registered Intellectual Property or applications
therefor owned by or licensed (as indicated) to the Company or any of its
Subsidiaries. Except as specified in Section 3.12(c) of the Company Disclosure
Schedule, all Company Intellectual Property is valid, enforceable, subsisting,
uncancelled and unrevoked.
(d) The Company or the applicable Subsidiary of the Company owns or is
validly licensed or otherwise possesses valid rights to use, the Company
Intellectual Property. The Company or the applicable Subsidiary of the Company
either exclusively owns all right, title and interest in and to the Company
Intellectual Property or uses the Company Intellectual Property pursuant to a
Contract which is not currently terminable by anyone other than the Company or
such Subsidiary. Section 3.12(d) of the Company Disclosure Schedule indicates
which material Company Intellectual Property is used by the Company or any of
its Subsidiaries pursuant to a Contract.
(e) The Company or the applicable Subsidiary has the exclusive right
to file, prosecute and maintain all of its material patent applications and
other applications to register Company Intellectual Property, and has the
exclusive right to maintain its material patents and other registrations of
Company Intellectual Property and is not aware of any written claim by third
parties regarding title to same or derivative works of same. Each of the Company
and its Subsidiaries has taken all commercially reasonable actions to maintain,
prosecute and protect its material Company Intellectual Property, including
payment of all fees, annuities and all other
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payments which have heretofore become due to any Government Entity with respect
to such material Company Intellectual Property.
(f) No allegations or claims with respect to any Company Intellectual
Property or any third party Intellectual Property have been asserted in writing
or, to the Company's or any of its Subsidiaries' knowledge, threatened by any
third party against (i) the Company, any of its Subsidiaries or any of their
respective Affiliates, or (ii) to the Company's or any of its Subsidiaries'
knowledge, against any other third party based on the third party's use of any
Company Intellectual Property.
(g) No use of any Company Intellectual Property by the Company, any of
its Subsidiaries or, to the Company's or any of its Subsidiaries' knowledge, any
of its customers constitutes or has constituted an unauthorized use, inducement
to infringe, contributory infringement, misappropriation or other violation of
the Intellectual Property of any third party and no valid grounds exist for any
bona fide claims against the Company or any of its Subsidiaries or, to the
Company's or any of its Subsidiaries' knowledge, any of its customers with
respect to any Company Intellectual Property. To the Company's or any of its
Subsidiaries' knowledge, no threats or allegations have been made, nor notice of
any kind given, by the Company, any of its Subsidiaries or any of their
respective Affiliates to any third parties regarding allegedly infringing
activities or misappropriation of or with respect to any Company Intellectual
Property. To the Company's or any of its Subsidiaries' knowledge, and except as
set forth in Section 3.12(g) of the Company Disclosure Schedule, there has not
been, and there is not presently, any material unauthorized use, infringement,
misappropriation or violation of any material Company Intellectual Property by
any Person.
(h) Except as set forth in Section 3.12(h) of the Company Disclosure
Schedule, no material Company Intellectual Property is subject to any
outstanding order, award, decision, injunction, judgment, decree, stipulation or
agreement in any manner restricting the transfer, use, enforcement or licensing
thereof. Except as set forth in Section 3.12(h) of the Company Disclosure
Schedule, neither the Company nor any of its Subsidiaries has entered into any
agreement to indemnify any other Person against any charge of infringement of
any Intellectual Property. Neither the Company nor any of its Subsidiaries has
entered into any agreement granting any third party the right to bring
infringement actions with respect to, or otherwise to enforce rights with
respect to, any of the Company Intellectual Property.
(i) No Company Intellectual Property has been supplied by the Company
or any of its Subsidiaries to any Person except pursuant to a binding license
prohibiting further distribution and disclosure. Except as listed in Section
3.12(i) of the Company Disclosure Schedule, all computer programs and software
which are distributed by the Company or any of its Subsidiaries (i) conform in
all material respects with all specifications conveyed to its customers or other
transferees, and (ii) are operative for their intended purposes free of any
material defects or deficiencies.
(j) Each of the current employees of the Company or any of its
Subsidiaries is, and each of the former employees of the Company or such
Subsidiary was, an "employee" within the meaning of and pursuant to 17 U.S.C.
101. All current and former employees, independent contractors and consultants
of the Company or such Subsidiary have assigned all of
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their respective rights in any Intellectual Property developed by such
employees, independent contractors and consultants for the Company or such
Subsidiary to the Company or such Subsidiary. No current or former employee,
independent contractor or consultant of the Company or any of its Subsidiaries
has any interest in any Company Intellectual Property.
(k) Except as set forth in Section 3.12(k) of the Company Disclosure
Schedule, none of the Company's and the Subsidiaries' rights in or to any of the
Company Intellectual Property shall be adversely affected by the execution or
delivery of this Agreement by the Company or by the performance by the Company
of any of the Company's obligations hereunder.
SECTION 3.13 Absence of Changes in Benefit Plans. Except as set forth in
Section 3.13 of the Company Disclosure Schedule or as disclosed in the Filed SEC
Documents, since the date of the most recent audited financial statements
included in the Filed SEC Documents, none of the Company or any of its
Subsidiaries has terminated, adopted, amended or agreed to amend in any material
respect any collective bargaining agreement or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock ownership, stock
purchase, stock appreciation, restricted stock, stock option, phantom stock,
performance, retirement, thrift, savings, stock bonus, paid time off,
perquisite, fringe benefit, vacation, severance, disability, death benefit,
hospitalization, medical or other welfare benefit or other material plan,
program, arrangement or understanding (whether or not legally binding)
maintained, contributed to or required to be maintained or contributed to by the
Company, its Subsidiaries or any other person or entity that, together with the
Company, is treated as a single employer under Section 414(b), (c), (m) or (o)
of the Code (each, a "Commonly Controlled Entity"), in each case providing
benefits to any current or former director, officer, employee or independent
contractor of the Company or any of its Subsidiaries and whether or not subject
to United States law (collectively, "Benefit Plans"), unless such amendment or
agreement to amend is required under applicable law, or has made any material
change in any actuarial or other assumption used to calculate funding
obligations with respect to any Benefit Plan that is a Pension Plan, or any
material change in the manner in which contributions to any such Pension Plan
are made or the basis on which such contributions are determined.
SECTION 3.14 Employee Benefits Matters.
(a) Section 3.14(a) of the Company Disclosure Schedule contains a list
of all Benefit Plans and all material Benefit Agreements, including each
"employee welfare benefit plan" (as defined in Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and "employee
pension benefit plan" (as defined in Section 3(2) of ERISA) (a "Pension Plan").
The Company has provided to Parent true, complete and correct copies of (i) each
Benefit Plan and each material Benefit Agreement (or, in the case of any
unwritten Benefit Plans or Benefit Agreements, descriptions thereof), (ii) the
two most recent annual reports required to be filed with respect to each Benefit
Plan (including reports filed on Form 5500), (iii) the most recent summary plan
description prepared for each Benefit Plan, (iv) each trust agreement and group
annuity contract relating to any Benefit Plan and (v) the most recent
determination or qualification letter issued by any Governmental Entity for each
Benefit Plan intended to qualify for favorable tax treatment. Each Benefit Plan
has been administered in accordance with its terms. The Company and its
Subsidiaries have caused the Benefit Plans and
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the administration thereof to be in compliance in all material respects with all
applicable provisions of ERISA, the Code and all other Applicable Laws. Except
as set forth in Section 3.14(a) of the Company Disclosure Schedule, all Pension
Plans intended to be tax-qualified have been the subject of determination
letters from the Internal Revenue Service ("IRS") to the effect that such
Pension Plans are qualified and exempt from United States Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code or have remaining a
period of time under applicable Treasury regulations or IRS pronouncements in
which to apply for such a letter and make any amendments necessary to obtain
such a favorable determination as to the qualified status of each such Pension
Plan; no such determination letter has been revoked (or, to the knowledge of the
Company or any of its Subsidiaries, has revocation been threatened or otherwise
communicated or considered by the IRS); no event occurred relating to any such
Pension Plan that would adversely affect the qualification of such Pension Plan
(or, if such event has occurred, that could not be corrected by means of
self-correction) or materially increase the costs relating thereto.
(b) Neither the Company nor any Commonly Controlled Entity has
maintained, contributed to or been obligated to maintain or contribute to, or
has any actual or contingent liability under, any Benefit Plan that is subject
to Title IV of ERISA, including a multiemployer plan under Section 3(37) of
ERISA.
(c) With respect to any Benefit Plan that is an employee welfare
benefit plan (each, a "Welfare Plan"), there are no understandings, agreements
or undertakings, written or oral, or summary plan description that would prevent
any such plan (including any such plan covering retirees or other former
employees) from being amended or terminated without material liability to the
Company or any of its Subsidiaries on or at any time after the Effective Time.
No Welfare Plan provides benefits after termination of employment except where
the cost thereof is borne entirely by the former employee (or his eligible
dependents or beneficiaries) or as required by Section 4980B(f) of the Code.
(d) Except as set forth in Section 3.14(d) of the Company Disclosure
Schedule, no current or former director, officer, employee or independent
contractor of the Company or any of its Subsidiaries will be entitled to any
additional compensation or benefits or any acceleration of the time of payment
or vesting of any compensation or benefits under any Benefit Plan or Benefit
Agreement as a result of the transactions contemplated by this Agreement or the
Stockholders Agreement or any benefits under any Benefit Plan or Benefit
Agreement the value of which will be calculated on the basis of any of the
transactions contemplated by this Agreement or the Stockholders Agreement.
(e) The deduction of any amount payable pursuant to the terms of the
Benefit Plans, Benefit Agreements or any other employment contracts or
arrangements will not be subject to disallowance under Section 162(m) of the
Code.
(f) The Company has received no notice of and, to the knowledge of the
Company or any of its Subsidiaries there are no, pending investigations by any
Governmental Entity with respect to, or pending termination proceedings or other
claims (except claims for benefits payable in the normal operation of the
Benefit Plans), suits or proceedings against or involving any Benefit Plan or
asserting any rights or claims to benefits under, any Benefit Plan
-29-
that could give rise to any material liability, and, to the knowledge of the
Company or any of its Subsidiaries, there are not any facts that individually or
in the aggregate have had or could reasonably be expected to have a Company
Material Adverse Effect.
(g) All contributions, premiums and benefit payments under or in
connection with the Benefit Plans that are required to have been made by the
Company or any of its Subsidiaries as of the date of this Agreement in
accordance with the terms of the Benefit Plans have been timely made or have
been reflected on the most recent consolidated balance sheet filed in or
incorporated by reference into the Filed SEC Documents.
(h) The Company and its Subsidiaries do not have any material
liability or obligations, including under or on account of a Benefit Plan or
Benefit Agreement, arising out of the hiring of persons to provide services to
the Company or any of its Subsidiaries and treating such persons as consultants
or independent contractors or other non-employee characterization and not as
employees of the Company or its Subsidiaries.
(i) No bonuses or other payments have been made under or pursuant to
the Company's 2002 Performance Incentive Plan.
SECTION 3.15 Permits. Section 3.15 of the Company Disclosure Schedule sets
forth all Consents of, with or to any Governmental Entity (collectively,
"Permits") and other Consents necessary for, or otherwise material to, the
conduct of the business of the Company and its Subsidiaries as currently
conducted and ownership of the assets of each of the Company and its
Subsidiaries. Except as set forth in Section 3.15 of the Company Disclosure
Schedule, all such Permits and other Consents have been duly obtained and are in
full force and effect, and neither the Company nor any of its Subsidiaries is in
violation of or default under any such Permits and other Consents held by it. No
such Permit or other Consent will be revoked, terminated prior to its normal
expiration date or not renewed solely as a result of the consummation of the
transactions contemplated by this Agreement or the Stockholders Agreement.
SECTION 3.16 Leased Real Property.
(a) Neither the Company nor any of its Subsidiaries owns any real
property. Section 3.16(a) of the Company Disclosure Schedule lists all real
property leased or subleased to the Company or any of its Subsidiaries as of the
date of this Agreement or leased by an Affiliate of the Company or any of its
Subsidiaries and used in the conduct of the business of the Company or any of
its Subsidiaries (the "Leased Real Property"). Neither the Company nor any of
its Subsidiaries uses any real property other than the Leased Real Property. The
Company has made available to Parent true, correct and complete copies of the
leases and subleases (as amended to date) and other agreements for occupancy,
including all amendments, extensions and other modifications thereto as of the
date of this Agreement with respect to each Leased Real Property (each, a "Real
Property Lease" and, collectively, the "Real Property Leases").
(b) With respect to each Real Property Lease, in all material
respects:
(i) such Real Property Lease is a legal, valid and binding
obligation of the Company or its applicable Subsidiary, and is in full force and
effect;
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(ii) neither the Company or its applicable Subsidiary, nor, to
the Company's or any of its Subsidiaries' knowledge, any other party to such
Real Property Lease is in breach or default, and, to the Company's or any of its
Subsidiaries' knowledge, no event has occurred which, with notice or lapse of
time, would constitute a breach or default or permit termination, modification
or acceleration thereunder; and
(iii) to the Company's or any of its Subsidiaries' knowledge,
there are no disputes, oral agreements or forbearance programs in effect as to
the Real Property Leases.
(c) The Leased Real Property is sufficient for the continued conduct
of the respective businesses of the Company and its Subsidiaries in
substantially the same manner as such businesses are currently conducted.
(d) The Real Property Leases cover all of the Leased Real Property
currently utilized by the Company or any of its Subsidiaries; the property
covered by such Real Property Leases may legally be used for such operations
conducted thereon and all necessary access from public roads and all required
utilities are legally and validly available to the property; the improvements on
the properties or their use do not violate any existing covenants, restrictions
or easements nor encroach any adjacent property not owned by the landlords under
such Real Property Leases; the improvements on the properties are in
commercially reasonable operating condition and repair and are suitable for the
purposes for which they are currently used; and the tenants have (and will in
the future have) commercially reasonable non-disturbance assurances upon all of
the terms and conditions of the Real Property Leases from all holders of
mortgages, deeds of trust and other superior Liens and from all lessors of
underlying or ground leases. No repairs or replacements of any portion of the
property covered by the Real Property Leases are required on the part of the
Company or any of its Subsidiaries to comply with Applicable Law or to maintain
good order and repair, which are beyond normal routine maintenance.
(e) Neither the Company nor any of its Subsidiaries, as applicable,
has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered
any of its interest in any of the Real Property Leases.
SECTION 3.17 Labor Matters. Neither the Company nor any of its
Subsidiaries is a party to or bound by any collective bargaining agreement, and
there are no labor unions or other organizations representing or purporting to
represent any employees of the Company or any of its Subsidiaries. Since May 1,
1996, neither the Company nor any of its Subsidiaries has experienced, or to the
Company's or any of its Subsidiaries' knowledge, there has not been threatened,
any material strikes, labor grievances, claims of unfair labor practices or
other collective bargaining disputes or other similar labor activity with
respect to any employees of the Company or any of its Subsidiaries. Neither the
Company nor any of its Subsidiaries has knowledge of any organizational effort
being made or threatened since May 1, 1996, by or on behalf of any labor union
with respect to employees of the Company or any of its Subsidiaries.
SECTION 3.18 Environmental Matters.
(a) Each of the Company and its Subsidiaries is and has been in
compliance in all material respects with all applicable Environmental Laws
pertaining to any of the properties
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and assets of its business and the use thereof by the Company or its applicable
Subsidiary, as the case may be. Except as disclosed in Section 3.18(a) of the
Disclosure Schedule, each of the Company and its Subsidiaries has obtained all
material Permits, licenses and other authorizations that are required under
Environmental Laws to operate its business and the same are listed in Section
3.18(a) of the Disclosure Schedule. Neither the Company nor any of its
Subsidiaries has received written notice of any violation of any applicable
Environmental Law relating to any of the assets or to any premises utilized by
the Company or any of its Subsidiaries and, to the Company's or any of its
Subsidiaries' knowledge, no written notice of any such violation has been
threatened.
(b) Neither the Company nor any of its Subsidiaries has caused or
taken any action that resulted in, and none of them is, subject to, any material
liability or obligation relating to (i) the environmental conditions on, under,
or about any part of the premises now or formerly utilized by its business or
other properties or assets owned, leased, operated or used by the Company or any
of its Subsidiaries in its business, including the air, soil and groundwater
conditions at such properties, or (ii) the use, management, handling, transport,
treatment, generation, storage, disposal or Release of any Hazardous Substances
by the Company or any of its Subsidiaries.
(c) No Hazardous Substances have been treated, stored or disposed of
by the Company or any of its Subsidiaries (or, to the Company's or any of its
Subsidiaries' knowledge, any other Person) at, on, or under any part of the
premises now or formerly utilized by it, except: (i) in compliance with
Environmental Laws; and (ii) which does not require investigation or remediation
pursuant to Environmental Laws.
(d) Except as disclosed in Section 3.18(d) of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has received written notice or
other written communication concerning any alleged liability for Environmental
Liabilities and Costs and, to the Company's or any of its Subsidiaries'
knowledge, there exists no writ, injunction, decree, order, judgment, lawsuit,
claim, proceeding, citation, directive, or summons, pending or threatened,
relating to any environmental matters.
(e) As used in this Agreement:
"Damages" means any and all claims, liabilities (including tax
liabilities), obligations, losses, fines, expenses, costs, proceedings,
deficiencies, judgments, penalties or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third party claims),
including out-of-pocket expenses, consulting fees, court costs, expert witness
fees and attorneys' fees and expenses incurred in the investigation or defense
of any of the same.
"Environmental Laws" means any and all Applicable Laws relating to the
protection of the environment, to human health and safety, or to any emission,
discharge, generation, processing, storage, abatement, Release, threatened
Release, arranging for the disposal or transportation of any Hazardous
Substances.
"Environmental Liabilities and Costs" means any and all Damages: (i)
relating to, or resulting from, the presence (including any allegation by a
third party of the presence) of
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Hazardous Substances in the environment in quantities or concentrations
exceeding those allowed pursuant to any Environmental Law, including claims for
diminution of property value, personal injury or property damages; and/or (ii)
imposed by, under or pursuant to Environmental Laws, based on, arising out of or
otherwise in respect of (A) any real property owned, leased or operated by the
Company or any of its Subsidiaries, or (B) the environmental conditions existing
on the Closing Date on, under or above any real property owned, leased or
operated by the Company or any of its Subsidiaries.
"Hazardous Substance" means any substance that (i) requires
investigation, removal or remediation under any Environmental Law, or is
defined, listed or identified as a "hazardous waste", "hazardous material",
"oil" or "hazardous substance" thereunder, or (ii) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any Governmental Entity or Environmental
Law.
"Release" means any releasing, disposing, discharging, injecting,
spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including the
moving of any materials through, into or upon, any land, soil, surface water,
ground water or air, or otherwise entering into the environment.
SECTION 3.19 Legal Compliance. Except as set forth in Section 3.19 of the
Company Disclosure Schedule, each of the Company and its Subsidiaries is in
compliance in all material respects with all Applicable Laws applicable to it
and to its assets. Except as set forth in Section 3.19 of the Company Disclosure
Schedule, there is not pending, or to the Company's or any of its Subsidiaries'
knowledge, threatened, any action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand or notice relating to the Company or any of its
Subsidiaries alleging any failure so to comply.
SECTION 3.20 Assets. The Company and each of its Subsidiaries has good and
valid title to its respective assets, free and clear of all Liens, except for
Permitted Liens and those Liens listed on Section 3.20 of the Company Disclosure
Schedule. The respective assets of the Company and each of its Subsidiaries
include all assets reasonably required for the conduct of the business of the
Company or such Subsidiary, as the case may be, by the Company or such
Subsidiary as such business is now being conducted. The material tangible assets
of the Company and each of its Subsidiaries are in good operating condition and
repair (normal wear and tear excepted), free from any known defects (except such
minor defects as do not interfere with the use thereof in the conduct of normal
operations), and are suitable for the purposes for which they are presently
used. All buildings, plants and other material structures currently utilized by
the Company and its Subsidiaries are, in all material respects, in good
operating condition and repair. No repairs or replacements of the material
tangible assets of the Company or any of its Subsidiaries are required on the
part of the Company or any of its Subsidiaries to comply with Applicable Law or
to maintain good order and repair, which are beyond normal routine maintenance.
SECTION 3.21 Insurance. Section 3.21 of the Company Disclosure Schedule
sets forth a complete and accurate list of all policies of fire, liability,
product liability, workmen's compensation, health and other forms of insurance
presently in effect with respect to the
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Company's and its Subsidiaries' business, true and complete copies of which have
been delivered to, or made available for review by, Parent. All such policies
are valid, outstanding and enforceable policies and provide insurance coverage
for the properties, assets and operations of the Company and each of its
Subsidiaries, of the kinds, in the amounts and against the risks customary for
similar businesses of a similar size, nature and ownership. Except as set forth
on Section 3.21 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries has been refused any insurance with respect to any aspect of
the operations of its business, nor has its coverage been limited by any
insurance carrier to which it has applied for insurance or with which it has
carried insurance. No notice of cancellation or termination has been received
with respect to any such policy. The activities and operations of the Company
and each of its Subsidiaries have been conducted in a manner so as to conform in
all material respects to all applicable provisions of such insurance policies.
SECTION 3.22 Business Relationships with Affiliates. Section 3.22 of the
Company Disclosure Schedule sets forth a true, complete and correct list
(including the parties) of all agreements, arrangements, contracts, commitments,
understandings or other relationships (written or oral) currently in effect,
between or among the Company or any of its Subsidiaries, on the one hand, and
any of its officers, directors, stockholders or Affiliates (or any Affiliate of
any of its officers, directors or stockholders), on the other hand (the
"Intercompany Agreements"). The Company heretofore has delivered or made
available to Parent true, complete and correct copies (or a detailed summary in
the case of an oral agreement) of each such Intercompany Agreement.
SECTION 3.23 Government Contracts.
(a) Except as set forth in Section 3.23(a) of the Company Disclosure
Schedule: (i) each of the Company and its Subsidiaries has complied in all
material respects with all the terms and conditions of each Government Contract
and Government Bid to which it is a party as required; (ii) each of the Company
and its Subsidiaries has complied in all material respects with all requirements
of any Applicable Law pertaining to such Government Contract or for Government
Bid; (iii) all representations and certifications made by the Company or any
Subsidiary with respect to such Government Contract or Government Bid were
accurate in every material respect as of their effective date and the Company or
its applicable Subsidiary, as the case may be, has complied in all material
respects with all such representations and certifications; and (iv) no
termination or default, cure notice or show cause notice has been issued and
remains unresolved.
(b) Except as set forth in Section 3.23(b) of the Company Disclosure
Schedule: (i) to the Company's or any of its Subsidiaries' knowledge, none of
the Company's and its Subsidiaries' employees, consultants and agents is (or
during the last five years has been) under administrative, civil or criminal
investigation or indictment by any Governmental Entity with respect to the
conduct of the business of the Company or its applicable Subsidiary, as the case
may be; (ii) there is no pending audit or, to the Company's or any of its
Subsidiaries' knowledge, investigation of the Company or any of its Subsidiaries
or, to the Company's or any of its Subsidiaries' knowledge, any of their
respective officers, employees or representatives nor within the last five years
has there been any audit or investigation of the Company or any of its
Subsidiaries or, to the Company's or any of its Subsidiaries' knowledge, any of
their respective
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officers, employees or representatives resulting in a material adverse finding
with respect to any material alleged irregularity, misstatement or omission
arising under or relating to any Government Contract or Government Bid; and
(iii) during the last five years, the Company and its Subsidiaries have not made
any voluntary disclosure in writing to the U.S. Government or any non-U.S.
government with respect to any alleged irregularity, misstatement or omission
arising under or relating to a Government Contract or Government Bid. Except as
set forth in Section 3.23(b) of the Company Disclosure Schedule, the Company and
its Subsidiaries have not had any such irregularities, misstatements or
omissions arising under or relating to any such Government Contract or
Government Bid that has led to any of the consequences set forth in clause (i)
or (ii) of the immediately preceding sentence or any other material damage,
penalty assessment, recoupment of payment or disallowance of cost.
(c) Except as set forth in Section 3.23(c) of the Company Disclosure
Schedule, there are (i) no outstanding written claims against the Company or any
of its Subsidiaries, either by the U.S. Government or any non-U.S. Government or
by any prime contractor, subcontractor, vendor or other third party arising
under or relating to any Government Bid or Government Contract, and (ii) no
written disputes between the Company or any of its Subsidiaries, on the one
hand, and the U.S. Government or any non-U.S. Government, on the other hand,
under the Contract Disputes Act or any other Federal statute or between the
Company or any of its Subsidiaries, on the one hand, and any prime contractor,
subcontractor or vendor, on the other hand, arising under or relating to any
such Government Contract or Government Bid.
(d) Except as set forth in Section 3.23(d) of the Company Disclosure
Schedule, none of the Company and its Subsidiaries, nor to the Company's or any
of its Subsidiaries' knowledge, any of their respective employees, consultants
or agents is (or during the last five years has been) suspended or debarred from
doing business with the U.S. Government or any non-U.S. government or is (or
during such period was) the subject of a finding of non-responsibility or
ineligibility for U.S. Government or non-U.S. government contracting. Except as
set forth in Section 3.23(d) of the Disclosure Schedule, each of the Company and
its Subsidiaries conducted its operations in all material respects in compliance
with all requirements of all laws pertaining to all Government Contracts and
Government Bids.
(e) Except as set forth in Section 3.23(e) of the Company Disclosure
Schedule, no statement, representation or warranty made by the Company or any of
its Subsidiaries in any Government Contract, any Government Bid or any exhibit
thereto or in any certificate, statement, list, schedule or other document
submitted or furnished to the U.S. Government or any non-U.S. government in
connection with any Government Contract or Government Bid contained on the date
so furnished or submitted (or on any other date where such statement,
representation or warranty is deemed made or brought down as of a subsequent
date either under Applicable Law or pursuant to the applicable Government
Contract or Government Bid or any exhibit thereto or in any written certificate,
statement, list, schedule or other document submitted or furnished to the U.S.
Government or any non-U.S. Government in connection with such Government
Contract or Government Bid) contained any untrue statement of material fact, or
failed to state a material fact necessary to make the statements contained
therein, in light of the circumstances in which they are made, not misleading,
except for any
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untrue statement or failure to state a material fact that would not result in
any material liability to the Company or any of its Subsidiaries as a result of
such untrue statement or failure to state a material fact.
(f) Except as set forth in Section 3.23(f) of the Company Disclosure
Schedule, no outstanding Government Bid (or series of related Government Bids)
was bid knowing that when accepted it would result in a loss.
(g) Except as set forth on Section 3.23(g) of the Company Disclosure
Schedule, the rates and rate schedules submitted to the U.S. Government with
respect to Government Contracts to which the Company or any of its Subsidiaries
is a party have been closed for all years prior to 1997.
(h) The Company and each of its Subsidiaries is in compliance in all
material respects with all national security obligations, including, without
limitation, those specified in the National Industrial Security Program
Operating Manual, DOD 5220.22-M (January 1995).
SECTION 3.24 Government Furnished Equipment. Section 3.24 of the Company
Disclosure Schedule incorporates the most recent schedule delivered to the U.S.
Government or any non-U.S. government which identifies by description or by
inventory number certain equipment and fixtures loaned, bailed or otherwise
furnished to or held by the Company or any of its Subsidiaries by or on behalf
of the United States or any foreign country (collectively, the "Government
Furnished Equipment"). Such schedule was accurate and complete in all material
respects on its date and, if dated on the Closing Date, would contain only those
additions and omit only those deletions of equipment and fixtures that have
occurred in the ordinary course of business consistent (in amount and kind) with
past practice. All Government Furnished Equipment is in such condition that if
returned to the applicable Governmental Entity on the date hereof or on the
Closing Date such Governmental Entity would not be entitled to make any claim
whatsoever or to institute any suit action or proceeding against the Company or
any of its Subsidiaries arising out of or relating to the condition in which the
Government Furnished Equipment was so returned.
SECTION 3.25 Inventories. Except as set forth in Section 3.25 of the
Company Disclosure Schedule and net of reserves as reflected in the most recent
consolidated balance sheet included in the Filed SEC Documents, (a) all
inventories of raw materials, work in process, finished products, goods, spare
parts and replacement and component parts (collectively, "Inventories") are of
such quality and quantity as to be usable in the ordinary course of business,
and (b) Inventories that are finished goods are usable and saleable in the
ordinary course of business.
SECTION 3.26 Receivables. The receivables of the Company and its
Subsidiaries (including accounts receivable, loans receivable and advances) have
arisen only from bona fide transactions in the ordinary course of business
consistent (in amount and kind) with past practice. There has not been any
material adverse change in the collectibility of such receivables since the date
of the most recent consolidated balance sheet included in the Filed SEC
Documents. Section 3.26 of the Company Disclosure Schedule sets forth a list of
all such receivables which
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are more than 30 days past due as of June 30, 2002, and of all such receivables
classified as doubtful accounts as of June 30, 2002.
SECTION 3.27 Product Warranties. Section 3.27 of the Company Disclosure
Schedule sets forth a description of the standard warranties offered by each of
the Company and its Subsidiaries with respect to its products or services (other
than warranties under Applicable Law, if any). Section 3.27 of the Company
Disclosure Schedule sets forth a list as of the date hereof of all pending or,
to the Company's or any of its Subsidiaries' knowledge, threatened product
warranty claims against the Company or any of its Subsidiaries.
SECTION 3.28 Order Backlog. A true, correct and complete list of (a) all
firm product and service purchase orders and contracts for the sale of goods or
the delivery of services by the Company or any Subsidiary to Persons other than
Governmental Entities, and (b) all firm funded product and service purchase
orders and contracts for the sale of goods or the delivery of services by the
Company or any Subsidiary to Governmental Entities (collectively, the "Backlog")
pending as of the latest practical date prior to the date of this Agreement is
set forth in Section 3.28 of the Company Disclosure Schedule.
SECTION 3.29 No Retention Agreements, etc. Except as set forth in Section
3.29 of the Company Disclosure Schedule, there are no retention agreements,
severance agreements, change of control Contracts and similar arrangements to
which the Company or any of its Subsidiaries, on the one hand, and any employee,
consultant or other Person, on the other hand, are a party.
SECTION 3.30 Power of Attorney/Bank Accounts. Section 3.30 of the Company
Disclosure Schedule sets forth the names and locations of (a) each Person
holding a power of attorney on behalf of the Company or any of its Subsidiaries,
and (b) all banks, trust companies, brokerage firms or other financial
institutions at which the Company or any of its Subsidiaries maintains an
account or safe-deposit box and the name of each Person authorized to draw
thereon or make withdrawals therefrom.
SECTION 3.31 Disclosure. Neither the Company nor any of its Subsidiaries
has knowingly failed to disclose to Parent any fact that could reasonably be
expected to have Company Material Adverse Effect. No representation or warranty
of the Company contained in this Agreement (including the Company Disclosure
Schedule) contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading in any material respect.
SECTION 3.32 State Takeover Statutes. The approval of the Merger and the
Stockholders Agreement and the transactions contemplated thereby by the Board of
Directors of the Company referred to in Section 3.04 constitutes approval of the
Merger and the Stockholders Agreement and the transactions contemplated thereby
for purposes of Sections 78.411 to 78.444, inclusive, of the NRS and represents
the only action necessary to ensure that Sections 78.411 to 78.444, inclusive,
of the NRS do not and will not apply to the execution and delivery of this
Agreement or the Stockholders Agreement or the consummation of the Merger or the
other transactions contemplated hereby or thereby. No other state takeover or
similar statute or
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regulation (including Sections 78.378 to 78.3793, inclusive, of the NRS) of any
jurisdiction (including Nevada, Louisiana, Texas and Oklahoma) is applicable to
this Agreement, the Merger, the Stockholders Agreement or the other transactions
contemplated hereby or thereby.
SECTION 3.33 Voting Requirements. The affirmative vote at the Stockholders
Meeting or any adjournment or postponement thereof of the holders of a majority
of the outstanding shares of Company Common Stock in favor of adopting this
Agreement (the "Stockholder Approval") is the only vote of the holders of any
class or series of the Company's capital stock necessary to approve or adopt
this Agreement, the Merger or the consummation of the other transactions
contemplated hereby. For purposes of the Stockholder Approval, each outstanding
share of Company Common Stock is entitled to one vote.
SECTION 3.34 Brokers; Schedule of Fees and Expenses. No broker, investment
banker, financial advisor or other person, other than New York Capital Corp.,
the fees and expenses of which will be paid by the Company, is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission, or
the reimbursement of expenses, in connection with the transactions contemplated
by this Agreement or the Stockholders Agreement based upon arrangements made by
or on behalf of the Company. The Company has delivered to Parent true and
complete copies of all agreements under which any such fees or expenses are
payable and all indemnification and other agreements related to the engagement
of the persons to whom such fees are payable. The fees and expenses of any
accountant, broker, financial advisor, consultant, legal counsel or other person
retained by the Company in connection with this Agreement or the transactions
contemplated hereby incurred or to be incurred by the Company in connection with
this Agreement and the transactions contemplated by this Agreement will not
exceed the fees and expenses set forth and identified by category of advisor in
Section 3.34 of the Company Disclosure Schedule.
SECTION 3.35 Opinion of Financial Advisor. The Company has received the
written opinion of New York Capital Corp., in customary form and based on
customary assumptions, to the effect that the Merger Consideration to be
received by the stockholders of the Company pursuant to the Merger is fair to
such stockholders from a financial point of view as of the date hereof, a copy
of which opinion has been delivered to Parent. The Company has delivered to
Parent a true, correct and complete copy of such opinion, which opinion shall be
included in the Proxy Statement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
SECTION 4.01 Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to carry on its business as now being conducted.
SECTION 4.02 Authority; Noncontravention.
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(a) Parent and Sub have the requisite corporate power and authority to
execute and deliver this Agreement and the Stockholders Agreement, to consummate
the transactions contemplated by this Agreement and the Stockholders Agreement
and to comply with the provisions of this Agreement and the Stockholders
Agreement. The execution and delivery of this Agreement and the Stockholders
Agreement by Parent and Sub, the consummation by Parent and Sub of the
transactions contemplated by this Agreement and the Stockholders Agreement and
the compliance by Parent and Sub with the provisions of this Agreement and the
Stockholders Agreement have been duly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate proceedings on the
part of Parent or Sub are necessary to authorize this Agreement or the
Stockholders Agreement or to consummate the transactions contemplated by this
Agreement or the Stockholders Agreement. Each of this Agreement and the
Stockholders Agreement has been duly executed and delivered by Parent and Sub,
as applicable, and, assuming the due authorization, execution and delivery by
the Company, constitutes a valid and binding obligation of Parent and Sub, as
applicable, enforceable against Parent and Sub, as applicable, in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws.
(b) The execution and delivery of this Agreement and the Stockholders
Agreement and the consummation of the transactions contemplated by this
Agreement and the Stockholders Agreement and compliance by Parent and Sub with
the provisions of this Agreement and the Stockholders Agreement do not and will
not conflict with, or result in any violation or breach of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of, or
result in, termination, cancellation or acceleration of any obligation or to a
loss of a material benefit under, or result in the creation of any Lien in or
upon any of the properties or assets of Parent or Sub under, or give rise to any
increased, additional, accelerated or guaranteed rights or entitlements under,
any provision of (i) the articles of incorporation or bylaws (or similar
organizational documents) of Parent or Sub, (ii) any Contract to which Parent or
Sub is party or any of their respective properties or assets is subject, or
(iii) subject to the governmental filings and other matters referred to in the
following sentence, any Applicable Law applicable to Parent or Sub or any of
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, breaches, defaults, rights, losses,
Liens or entitlements that individually or in the aggregate could not reasonably
be expected to impair in any material respect the ability of each of Parent and
Sub to perform its obligations under this Agreement or the Stockholders
Agreement or prevent or materially impede, interfere with, hinder or delay the
consummation of any of the transactions contemplated by this Agreement or the
Stockholders Agreement.
(c) No Consent is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement or the Stockholders
Agreement by Parent and Sub, the consummation by Parent and Sub of the
transactions contemplated by this Agreement or the Stockholders Agreement or the
compliance by Parent or Sub with the provisions of this Agreement or the
stockholders Agreement, except for (i) any filings required under any applicable
competition, merger control, antitrust or similar law, (ii) the filing of the
Articles of Merger with the Secretary of State of the State of Nevada and
appropriate documents with the relevant authorities of other states in which the
Company or any of its Subsidiaries is qualified to
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do business, and (iii) such other Consents, the failure of which other Consents
to be obtained or made individually or in the aggregate could not reasonably be
expected to impair in any material respect the ability of each of Parent and Sub
to perform its obligations under this Agreement or prevent or materially impede,
interfere with, hinder or delay the consummation of any of the transactions
contemplated by this Agreement.
SECTION 4.03 Information Supplied. None of the information supplied or to
be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in the Proxy Statement will, at the date the Proxy Statement is first
mailed to the Company's stockholders or at the time of the Stockholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.01 Conduct of Business.
(a) Conduct of Business by the Company. During the period from the
date of this Agreement to the Effective Time, except with the prior written
consent of Parent or as expressly and specifically contemplated by this
Agreement or as expressly and specifically set forth in Section 5.01(a) of the
Company Disclosure Schedule, the Company shall, and shall cause its Subsidiaries
to, carry on their respective businesses in the ordinary course consistent with
past practice and to comply with all Applicable Laws in all material respects
and, to the extent consistent therewith, use their reasonable best efforts to
keep available the services of their present officers and employees and to
preserve their assets and technology and preserve their relationships with
customers, suppliers, licensors, licensees, distributors and others having
business dealings with them. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the Effective Time, except
with the prior written consent of Parent or as expressly and specifically
contemplated by this Agreement or as expressly and specifically set forth in
Section 5.01(a) of the Company Disclosure Schedule, the Company shall not, and
shall not permit any of its Subsidiaries to:
(i) (A) declare, set aside or pay any dividends on, or make any
other distributions (whether in cash, stock or property) in respect of, any of
its capital stock, except for dividends by a direct or indirect wholly owned
Subsidiary of the Company to its parent, (B) split, reverse split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock, or (C) purchase, redeem or otherwise acquire any shares of
capital stock or any other securities of the Company or its Subsidiaries or any
options, warrants, calls or rights to acquire any such shares or other
securities (including any Stock Option, Warrant or Convertible Note);
(ii) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or exchangeable for, or any options, warrants, calls or rights
to acquire, any such shares, voting securities or convertible, exercisable or
exchangeable securities (other than the issuance of shares of
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Company Common Stock upon the exercise of Stock Options, Warrants or the
conversion of Convertible Notes outstanding on the date of this Agreement and in
accordance with their present terms);
(iii) amend or propose to amend its articles of incorporation or
bylaws (or similar organizational documents);
(iv) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by purchasing
all of or a substantial equity interest in, or by any other manner, any business
or any corporation, partnership, limited liability company, joint venture,
association or other entity or division thereof, or (B) any assets other than
acquisitions in the ordinary course of business consistent (in amount and kind)
with past practice of inventory, components, raw materials or other immaterial
assets;
(v) sell, lease, license, sell and leaseback, mortgage or otherwise
encumber or subject to any Lien or otherwise dispose of any of its properties or
assets (including any shares of capital stock, voting securities or other
rights, instruments or securities), except sales of inventory or used equipment,
in each case in the ordinary course of business consistent (in amount and kind)
with past practice;
(vi) (A) except for the incurrence of Indebtedness under and
pursuant to the Credit Facility, repurchase, prepay, incur or assume any
Indebtedness or guarantee any Indebtedness of another person or issue or sell
any debt securities or options, warrants, calls or other rights to acquire any
debt securities of the Company or any of its Subsidiaries, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing (it being
understood and agreed that the exception contained in this clause (A) shall not
be in limitation of Section 5.03), or (B) make any loans, advances or capital
contributions to, or investments in, any other Person, other than the Company or
any direct or indirect wholly owned Subsidiary of the Company;
(vii) make any new capital expenditure or expenditures, or incur any
obligations or liabilities in connection therewith, which is in excess of
$25,000 individually or $45,000 during any monthly period;
(viii) (A) pay, discharge, settle or satisfy any claims (including
claims of stockholders), liabilities or obligations (whether absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business consistent (in
amount and kind) with past practice or as required by their terms as in effect
on the date of this Agreement, of claims, liabilities or obligations reflected
or reserved against in the most recent audited financial statements (or the
notes thereto) of the Company included in the Filed SEC Documents (for amounts
not in excess of such reserves) or incurred since the date of such financial
statements in the ordinary course of business consistent (in amount and kind)
with past practice, (B) waive, release, grant or transfer any right of material
value, or (C) waive any benefits of, or agree to modify in any adverse respect,
or fail to enforce, any confidentiality, standstill or similar agreement to
which the Company or any of its Subsidiaries is a party;
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(ix) (A) enter into any Contract or make a bid or proposal which was
or is expected to result in a loss; (B) enter into any Contract (or group of
related Contracts with the same Person or such Person's Affiliates) involving
payments to be made or received by or to the Company or any of its Subsidiaries
in excess of $500,000 per annum; (C) modify, amend or terminate any Contract
(including the Credit Facility); or (D) waive, release or assign any material
rights or claims under any Contract;
(x) change its fiscal year, revalue any of its material assets or,
except as required by GAAP, make any changes in accounting or auditing methods,
principles or practices; or
(xi) except as required to comply with Applicable Law or any
Contract, Benefit Plan or Benefit Agreement existing on the date of this
Agreement, (A) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any current or former director, officer, employee or
consultant of the Company or any of its Subsidiaries, (B) pay to any current or
former director, officer, employee or consultant of the Company or any of its
Subsidiaries any benefit other than the payment of cash compensation in the
ordinary course of business consistent (in amount and kind) with past practice,
(C) grant any awards under any Benefit Plan (including the grant of stock
options, stock appreciation rights, stock based or stock related awards,
performance units or restricted stock or the removal of existing restrictions in
any Contract, Benefit Plan or Benefit Agreement or awards made thereunder), (D)
take any action to fund or in any other way secure the payment of compensation
or benefits under any Contract, Benefit Plan or Benefit Agreement, or (E) take
any action to accelerate the vesting or payment of any compensation or benefit
under any Contract, Benefit Plan or Benefit Agreement;
(xii) form any Subsidiary of the Company;
(xiii) enter into any Contract if consummation of the transactions
contemplated hereby or compliance by the Company with the provisions of this
Agreement will violate or conflict with, or result in any violation or breach
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of, or result in, termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any Lien in or upon any of the properties or assets of the Company or Parent
or any of their respective Subsidiaries under, or give rise to any increased,
additional, accelerated or guaranteed rights or entitlements under, any
provision of such Contract;
(xiv) take any action (or omit to take any action) if such action (or
omission) would or could reasonably be expected to result in (A) any
representation and warranty of the Company set forth in this Agreement that is
qualified as to materiality becoming untrue, (B) any such representation and
warranty that is not so qualified becoming untrue in any material respect, or
(C) any condition to the Merger set forth in Article VII not being satisfied;
(xv) adopt or enter into any employment agreement or any collective
bargaining agreement or other labor union contract applicable to the employees
of the Company or any Subsidiary thereof or terminate, either expressly or
constructively, the employment of any employee of the Company or any Subsidiary
thereof that has an employment, severance or similar agreement or arrangement
with the Company or any of its Subsidiaries;
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(xvi) maintain insurance at less than current levels or
otherwise in a manner inconsistent (in amount and kind) with past practice;
(xvii) commence any suit, claim, action or proceeding (other than
a suit, claim, action or proceeding in connection with the collection of
accounts receivable, to enforce the terms of this Agreement or as a result of a
suit, action or proceeding commenced against the Company or any of its
Subsidiaries); or
(xviii) authorize any of, or commit, resolve or agree to take any
of, the foregoing actions.
(b) Certain Tax Matters. During the period from the date of this
Agreement to the Effective Time, (i) the Company and each of its Subsidiaries
shall timely file all Federal, state and local, domestic and foreign, income and
franchise tax returns and reports and all other material tax returns and reports
("Post-Signing Returns") required to be filed by each such entity (after taking
into account any extensions) and all Post-Signing Returns shall be complete and
correct; (ii) the Company and each of its Subsidiaries will timely pay all taxes
due and payable in respect of such Post-Signing Returns that are so filed; (iii)
the Company will accrue a reserve in its books and records and financial
statements in accordance with past practice for all taxes payable by the Company
or any of its Subsidiaries for which no Post-Signing Return is due prior to the
Effective Time; (iv) the Company and each of its Subsidiaries promptly will
notify Parent of any suit, claim, action, investigation, proceeding or audit
pending against or with respect to the Company or any of its Subsidiaries in
respect of any tax and will not settle or compromise any such suit, claim,
action, investigation, proceeding or audit; and (v) none of the Company and its
Subsidiaries will make or change any material tax election without Parent's
consent.
(c) Advice of Changes; Filings. The Company and each of its
Subsidiaries shall (i) confer on a regular and frequent basis with Parent to
report on operational matters and other matters requested by Parent, and (ii)
promptly advise Parent orally and in writing of any change or event that could
reasonably be expected to have a Company Material Adverse Effect. Upon obtaining
knowledge thereof, the Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate such that the condition set forth in Section 7.02(a) would
not be satisfied. The Company and Parent shall each promptly provide the other
copies of all filings made by such party with any Governmental Entity in
connection with this Agreement and the Stockholders Agreement and the
transactions contemplated hereby and thereby.
(d) Litigation. The Company shall provide to Parent immediate written
notice and copies of all pleadings and correspondence in connection with any
suit, claim, action, investigation or proceeding before or by a Governmental
Entity against the Company, any of its Subsidiaries or any of their respective
directors or officers relating to the transactions contemplated by this
Agreement.
(e) Other Actions. Subject to Section 5.02(a), neither the Company nor
its Board of Directors shall take any action that would, or that could
reasonably be expected to, prevent or materially impede, interfere with, hinder
or delay the consummation of any of the transactions contemplated by this
Agreement, the Stockholders Agreement or have the effective
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result, directly or indirectly, of depriving Parent of any material right or
benefit to which it is entitled hereunder or under the Stockholders Agreement.
SECTION 5.02 No Solicitation.
(a) The Company shall not, nor shall it permit any of its Subsidiaries
to, or authorize or permit any director, officer or employee of the Company or
any of its Subsidiaries or any investment banker, attorney, accountant or other
advisor or representative of the Company or any of its Subsidiaries to, directly
or indirectly, (i) solicit, initiate or encourage, or take any other action
knowingly to facilitate, any Takeover Proposal or any inquiries or the making of
any proposal that constitutes or could reasonably be expected to lead to a
Takeover Proposal, or (ii) enter into, continue or otherwise participate in any
discussions or negotiations regarding, or furnish to any person any information
with respect to, or otherwise cooperate in any way with, any Takeover Proposal;
provided, however, that at any time prior to obtaining the Stockholder Approval,
the Board of Directors of the Company may, in response to a bona fide written
Takeover Proposal that such Board of Directors reasonably determines in good
faith by resolution duly adopted constitutes a Superior Proposal, and which
Takeover Proposal was unsolicited and did not otherwise result from a breach of
this Agreement (including this Section 5.02), and subject to compliance with
Sections 5.02(b) and 5.02(c), (A) furnish information with respect to the
Company and its Subsidiaries to the person making such Takeover Proposal (and
its representatives) pursuant to a confidentiality agreement having terms that
are at least as favorable to the Company as the terms contained in the
Confidentiality Agreement, provided that all such information is provided on a
prior basis to Parent, and (B) participate in discussions or negotiations with
the person making such Takeover Proposal (and its representatives) regarding
such Takeover Proposal, but in each case only to the extent the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, by resolution duly adopted, that the failure to take such
action would constitute a breach of the fiduciary duties of the Board of
Directors of the Company under Applicable Law. Without limiting the foregoing,
it is understood that any violation of the restrictions set forth in this
Section 5.02(a) by any director, officer or employee of the Company or any of
its Subsidiaries or any investment banker, attorney, accountant or other advisor
or representative of the Company or any of its Subsidiaries shall be deemed to
be a breach of this Section 5.02(a) by the Company.
The term "Takeover Proposal" means any inquiry, proposal or offer from
any person (other than by Parent or Sub) relating to any direct or indirect
acquisition, in one transaction or a series of transactions, including any
merger, consolidation, tender offer, exchange offer, stock acquisition, asset
acquisition, binding share exchange, business combination, recapitalization,
liquidation, dissolution, joint venture or similar transaction, of (1) assets or
businesses that constitute or represent 15% or more of the total revenue,
operating income, EBITDA or assets of the Company and its Subsidiaries, taken as
a whole, or (2) 15% or more of the outstanding shares of Company Common Stock,
or 15% or more of the outstanding shares of capital stock of, or other equity or
voting interests in, any of the Company's Subsidiaries directly or indirectly
holding, individually or taken together, the assets or businesses referred to in
clause (1) above, in each case other than the transactions contemplated by this
Agreement and the Stockholders Agreement.
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The term "Superior Proposal" means any bona fide binding written offer
not solicited, initiated, facilitated or encouraged by or on behalf of the
Company or any of its Subsidiaries made by a third party that if consummated
would result in such third party (or in the case of a direct merger between such
third party and the Company, the stockholders of such third party) acquiring,
directly or indirectly, more than 50% of the voting power of the Company Common
Stock or all or substantially all the assets of the Company and its
Subsidiaries, taken as a whole, for consideration consisting of cash and/or
securities that the Board of Directors of the Company determines in its good
faith judgment by resolution duly adopted (after consultation with a financial
advisor of nationally recognized reputation) (x) to have a higher value than the
consideration to be received by the Company's stockholders in connection with
the Merger, taking into account, among other things, any changes to the terms of
this Agreement proposed by Parent in response to such Superior Proposal or
otherwise, and (y) is reasonably capable of being consummated.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall: (i) withdraw (or modify in a manner adverse to Parent or Sub) or
propose publicly to withdraw (or modify in a manner adverse to Parent or Sub)
the recommendation or declaration of advisability by such Board of Directors or
any such committee of this Agreement or the Merger, or resolve or agree to take
any such action (any such action or any such resolution or agreement to take
such action being referred to herein as an "Adverse Recommendation Change"),
unless the Board of Directors of the Company (A) receives a Takeover Proposal
that such Board of Directors reasonably determines in good faith by resolution
duly adopted constitutes a Superior Proposal, and which Takeover Proposal was
unsolicited and did not otherwise result from a breach of this Agreement
(including this Section 5.02), (B) reasonably determines in good faith, after
consultation with outside counsel, by resolution duly adopted, that the failure
to make an Adverse Recommendation Change in connection with such Superior
Proposal would constitute a breach of its fiduciary duties under Applicable Law,
and (C) gives Parent five business days' prior written notice of its intention
to take any such action (it being understood and agreed that no such permitted
Adverse Recommendation Change shall change the approval of the Board of
Directors of the Company for purposes of causing any state takeover statute or
other state law to be inapplicable to the transactions contemplated by this
Agreement and the Stockholder Agreement (including the Merger), or change the
obligation of the Company to present the Merger for approval at a duly called
Stockholders Meeting on the earliest practicable date determined in consultation
with Parent); (ii) recommend, adopt or approve, or propose publicly to
recommend, adopt or approve, any Takeover Proposal, or resolve or agree to take
any such action; or (iii) cause or permit the Company or any of its Subsidiaries
to enter into any letter of intent, memorandum of understanding, agreement in
principle, acquisition agreement, merger agreement, option agreement, joint
venture agreement, partnership agreement or other agreement (each, an
"Acquisition Agreement") constituting or related to, or which is intended to or
is reasonably likely to lead to, any Takeover Proposal (other than a
confidentiality agreement referred to in Section 5.02(a)) or resolve or agree to
take any such action.
(c) In addition to the obligations of the Company set forth in
Sections 5.02(a) and 5.02(b), the Company promptly shall (but in any event
within one calendar day) advise Parent in writing (i) of any direct or indirect
request for information that the Company reasonably believes could lead to or
contemplates a Takeover Proposal or of any Takeover
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Proposal, or any inquiry the Company reasonably believes could lead to any
Takeover Proposal, the specific terms and conditions of such request, Takeover
Proposal or inquiry (including any subsequent material amendment or modification
to such terms and conditions) and the identity of the person making any such
request, Takeover Proposal or inquiry, and (ii) if the Board of Directors of the
Company shall make any determination as to any Takeover Proposal as contemplated
by the proviso to the first sentence of Section 5.02(a). The Company shall keep
Parent informed on a current basis of the status and specific details (including
material amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry.
(d) Nothing contained in this Section 5.02 or elsewhere in this
Agreement shall prohibit the Company from (i) taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act, or (ii) making any disclosure to the Company's stockholders if the
Board of Directors of the Company determines in good faith, after consultation
with outside counsel, by resolution duly adopted, that the failure so to
disclose would be inconsistent with Applicable Law; provided, however, that in
no event shall the Company or its Board of Directors or any committee thereof
take, agree or resolve to take any action prohibited by Section 5.02(b).
(e) If prior to the Stockholder Approval, the Board of Directors of
the Company receives a Takeover Proposal that such Board of Directors reasonably
determines in good faith by resolution duly adopted constitutes a Superior
Proposal and that was not solicited, initiated, facilitated or encouraged after
the date of this Agreement in violation of this Agreement, then the Board of
Directors of the Company may (subject to this and the following sentences of
this Section 5.02(e)) terminate this Agreement pursuant to Section 8.01(f) and
enter into a definitive acquisition agreement with respect to such Takeover
Proposal; provided, however, that, prior to any such termination, (i) the
Company has provided Parent written notice that it intends to terminate this
Agreement pursuant to Section 8.01(f), identifying the Takeover Proposal then so
determined to be a Superior Proposal and the parties thereto and all of the
material terms thereof, (ii) the Company has delivered a copy of the definitive
acquisition agreement for such Takeover Proposal in the form to be entered into,
and (iii) at least five days after the Company has provided the notice referred
to in clause (i) above and at least 48 hours after the Company has made the
delivery required in clause (ii) above (provided such Board of Directors
reasonably determines in good faith by resolution duly adopted that such
Takeover Proposal continues to be a Superior Proposal), the Company delivers to
Parent (A) a written notice of termination of this Agreement pursuant to Section
8.01(f), and (B) the Termination Fee (as provided in Section 8.03(b)). For
purposes of this Section 5.02(e), the term "Takeover Proposal" shall have the
meaning set forth in Section 8.03(b)(i)(B).
SECTION 5.03 Indebtedness. The Company will take all actions necessary to
ensure that the condition precedent set forth in Section 7.02 (f) will be
satisfied. In addition, during the period commencing on the Balance Sheet Date
and ending on the Closing Date, the Company shall not (and the Company shall
cause all of its Subsidiaries to not) incur any Indebtedness (other than for
interest accruing during such period under and pursuant to the terms of those
instruments governing the Indebtedness of the Company or any of its Subsidiaries
existing on the Balance Sheet Date).
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ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Preparation of the Proxy Statement; Stockholders Meeting.
(a) As promptly as reasonably practicable following the date of this
Agreement, the Company shall prepare and file with the SEC the Proxy Statement
and the Company shall use its reasonable best efforts to respond as promptly as
practicable to any comments of the SEC with respect thereto and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
reasonably practicable following the date of this Agreement. The Company shall
promptly notify Parent upon the receipt of any comments from the SEC or its
staff or any request from the SEC or its staff for amendments or supplements to
the Proxy Statement and shall provide Parent with copies of all correspondence
between the Company and its representatives, on the one hand, and the SEC and
its staff, on the other hand. Notwithstanding anything to the contrary stated
above, prior to filing or mailing the Proxy Statement (or any amendment thereof
or supplement thereto) or responding to any comments of the SEC with respect
thereto, the Company shall (i) provide Parent an opportunity to review, comment
on and approve such document or response, (ii) include in such document or
response all comments reasonably proposed by Parent and (iii) not file or mail
such document or respond to the SEC prior to receiving Parent's approval.
(b) The Company shall, as promptly as reasonably practicable following
the date of this Agreement, establish a record date (which will be as promptly
as reasonably practicable following the date of this Agreement) for, duly call,
give notice of, convene and hold a meeting of its stockholders (the
"Stockholders Meeting") for the purpose of obtaining the Stockholder Approval,
regardless of whether the Board of Directors of the Company determines at any
time that this Agreement is no longer advisable and recommends that the
stockholders of the Company reject it or any other Adverse Recommendation Change
has occurred. The Company shall cause the Stockholders Meeting to be held as
promptly as reasonably practicable after the date of this Agreement, but in any
event shall be on the 9th business day of a month. Subject to Section
5.02(b)(i), the Company shall, through its Board of Directors, recommend to its
stockholders that they adopt this Agreement, and shall include such
recommendation in the Proxy Statement. Without limiting the generality of the
foregoing, the Company agrees that its obligations pursuant to this Section
6.01(b) shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company or any other person of any Takeover
Proposal.
SECTION 6.02 Access to Information; Confidentiality. The Company shall, and
shall cause each of its Subsidiaries to, afford to Parent, and to Parent's
officers, employees, investment bankers, attorneys, accountants and other
advisors and representatives, full access during normal business hours during
the period prior to the Effective Time or the termination of this Agreement
pursuant to Article VIII to all their respective properties, books, contracts,
commitments, directors, officers, employees, attorneys, accountants, auditors
(and, to the extent within the Company's control, former auditors), other
advisors and representatives and records and, during such period, the Company
shall, and shall cause each of its Subsidiaries to, make available to Parent (a)
a copy of each report, schedule, form, statement and other document filed or
received by it during such period pursuant to the requirements of Applicable
Law, and (b) all
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other information concerning its business, properties and personnel as Parent
may reasonably request (including the work papers of independent public
accountants). Except as required by Applicable Law, Parent will hold, and will
direct its officers, employees, investment bankers, attorneys, accountants and
other advisors and representatives to hold, any and all information received
from the Company, directly or indirectly, in confidence in accordance with the
Confidentiality Agreement, dated October 6, 2000, between Parent and Quarterdeck
Investment Partners, Inc. (as it may be amended from time to time, the
"Confidentiality Agreement").
SECTION 6.03 Reasonable Best Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use its reasonable best efforts to
take, or cause to be taken, all actions that are necessary, proper or advisable
to consummate and make effective the Merger and the other transactions
contemplated by this Agreement and the Stockholders Agreement, including using
its reasonable best efforts to accomplish the following: (i) the taking of all
acts necessary to cause the conditions precedent set forth in Article VII to be
satisfied; (ii) the obtaining of all necessary actions, nonactions and Consents
from Governmental Entities and the making of all necessary registrations,
declarations and filings (including registrations, declarations and filings with
Governmental Entities, if any); (iii) the taking of all steps as may be
necessary to avoid any suit, claim, action, investigation or proceeding by any
Governmental Entity; (iv) the obtaining of all Consents from third parties; and
(v) the defending of any suit, claim, action, investigation or proceeding,
whether judicial or administrative, challenging or seeking to restrain or
prohibit the consummation of the transactions contemplated by this Agreement,
including the Merger. In connection with and without limiting the foregoing, the
Company and its Board of Directors shall, if any state takeover statute or
similar statute or regulation is or becomes applicable to this Agreement, the
Stockholders Agreement, the Merger or any of the other transactions contemplated
hereby or thereby, use their reasonable best efforts to ensure that the Merger
and the other transactions contemplated hereby or thereby may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on this
Agreement, the Stockholders Agreement, the Merger and the other transactions
contemplated hereby or thereby. The Company and Parent will provide such
assistance, information and cooperation to each other as is reasonably required
to obtain any actions, nonactions and Consents referred to above and, in
connection therewith, will notify the other party promptly following the receipt
of any comments from any Governmental Entity and of any request by any
Governmental Entity for amendments, supplements or additional information in
respect of any registration, declaration or filing with such Governmental Entity
and will supply the other party with copies of all correspondence between such
person or any of its representatives, on the one hand, and any Governmental
Entity, on the other hand.
(b) Notwithstanding Section 6.03(a) or any other provision of this
Agreement to the contrary, in no event shall any party hereto be obligated to:
(i) agree to, or proffer to, divest or hold separate, or enter into any
licensing or similar arrangement with respect to, any assets (whether tangible
or intangible) or any portion of any business of Parent, the Company or any of
their respective Subsidiaries; or (ii) litigate any suit, claim, action,
investigation or proceeding, whether judicial or administrative, (A) seeking to
prohibit or limit the ownership or
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operation by the Company, Parent or any of their respective Affiliates of a
material portion of the business or assets of the Company and its Subsidiaries,
taken as a whole, or Parent and its Subsidiaries, taken as a whole, or to
require any such person to dispose of or hold separate any material portion of
the business or assets of the Company and its Subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, as a result of the Merger, or (B)
seeking to prohibit Parent or any of its Affiliates from effectively controlling
a material portion of the business or operations of the Company or its
Subsidiaries.
(c) Without limiting the generality of the foregoing, the Company
shall give Parent the opportunity to participate in the defense of any
litigation against the Company and/or its directors relating to the transactions
contemplated by this Agreement.
SECTION 6.04 Indemnification.
(a) Parent agrees that all rights to indemnification now existing for
actions occurring prior to the Effective Time in favor of any individual who at
or prior to the Effective Time was a director, officer, employee or agent of the
Company or any of its Subsidiaries (the "Indemnified Parties") as provided in
their respective articles of incorporation or bylaws (or similar organizational
documents), shall survive the Merger and shall continue in full force and effect
for a period of not less than six years from the Effective Time unless otherwise
required by law; provided, however, that if any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until final disposition of any and all
such claims.
(b) Parent agrees that the Company and, from and after the Effective
Time, the Surviving Corporation shall cause to be maintained in effect for not
less than three years (except as provided in the last proviso of this Section
6.04(b)) from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company; provided, however that
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are not significantly less
advantageous to the beneficiaries of the current policies and provided that such
substitution shall not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Effective Time; provided further, however that
the Surviving Corporation shall not be required to pay an annual premium in
excess of 150% of the last annual premium paid by the Company prior to the date
hereof (which the Company represents to be $42,000 for the 12-month period
ending March 31, 2003) and if the Surviving Corporation is unable to obtain the
insurance required by this Section 6.04(b) it shall obtain as much comparable
insurance as possible for an annual premium equal to such maximum amount.
SECTION 6.05 Employee Matters.
(a) For a period of at least 12 months following the Effective Date,
Parent shall provide (or shall cause the Surviving Corporation or its
Subsidiaries to provide) each employee who is employed by the Company or any of
its Subsidiaries as of the Closing Date (a "Continuing Employee") with
compensation and employee benefits (other than stock or other equity or
equity-linked based plans) which are substantially comparable in the aggregate
to those provided by the Company or such Subsidiary as of the date hereof. The
Company acknowledges
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that following the Effective Date all employee benefits will be provided to
employees of the Surviving Corporation under plans sponsored by Parent or an
Affiliate of Parent. Parent will use its reasonable best efforts (i) to waive or
have the Surviving Corporation waive any waiting period or limitations regarding
pre-existing conditions with respect to Continuing Employees and their
beneficiaries under any group health or other benefit plan maintained by Parent
for the benefit of any Continuing Employees after the Effective Date, (ii) to
credit any covered expenses incurred by any employee under the Company's group
health plan prior to the Effective Date towards any deductibles, limits or
out-of-pocket maximums under any group health plan maintained by Parent for the
benefit of any Continuing Employees after the Effective Date, (iii) to credit
the service of each Continuing Employee with the Company or any of its
Subsidiaries prior to the Effective Date for the purposes of determining such
Continuing Employee's years of service under plans maintained by Parent for the
benefit of any Continuing Employee after the Effective Date, (iv) provide
severance benefits to Continuing Employees terminated without cause within 12
months of the Effective Date that are substantially comparable to the severance
that would have been provided by the Company under the Company's severance plans
in effect on the date hereof, and (v) provide continuation health care coverage
to all Continuing Employees and their qualified beneficiaries who incur a
qualifying event on and after the Effective Date in accordance with the
continuation health care coverage requirements of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended. In addition, Parent shall assume
responsibility for the cafeteria plan which is maintained under Section 125 of
the Code for the benefit of the Continuing Employees of the Company, and the
Company shall provide to Parent prior to the Effective Date a list of those
Continuing Employees participating in the cafeteria plan, together with a list
of their elections made prior to the Effective Date, and any balances in their
respective accounts as of the Effective Date.
(b) The Company will cause the Company's Retirement Savings 401(K) Plan
(the "Existing 401(K) Plan") to be amended to provide that the transactions
contemplated by this Agreement shall be a distributable event under the Existing
401(K) Plan. Parent will amend its 401(K) Plan to accept rollover contributions
and direct rollovers from the Continuing Employees, including any outstanding
loans held under the Existing 401(K) Plan.
SECTION 6.06 Public Announcements. Parent and Sub, on the one hand, and the
Company, on the other hand, will, to the extent reasonably practicable, consult
with each other before issuing, and give each other a reasonable opportunity to
review and comment upon, any press release or other public statements with
respect to this Agreement, the Stockholders Agreement, the Merger and the other
transactions contemplated hereby and thereby, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Applicable Law, court process or by obligations pursuant to
any listing agreement with any national securities exchange or national
securities quotation system. The parties agree that the initial press release to
be issued with respect to the transactions contemplated by this Agreement and
the Stockholders Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 6.07 Additional Reports. The Company timely shall file all SEC
Documents and Other Filings required to be filed by it with the SEC or other
Governmental
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Entities on or after the date of this Agreement, and promptly shall furnish to
Parent copies of such SEC Documents and Other Filings which it so files.
SECTION 6.08 Pre-Closing Date Balance Sheet. The Company shall prepare and
deliver to Parent on or prior to the sixth business day of the month during
which the Closing will occur an unaudited consolidated balance sheet of the
Company and its Subsidiaries (the "Pre-Closing Date Balance Sheet") at and as of
the last day of the most recently completed calendar month ending immediately
preceding the Closing Date (the "Balance Sheet Date"), to be prepared as set
forth in this Section 6.08 using actual data through the Balance Sheet Date. The
Company shall provide to Parent any information and back-up materials reasonably
requested by Parent with respect thereto. The Pre-Closing Date Balance Sheet
shall be prepared applying GAAP on a basis consistent with the audited
consolidated balance sheet of the Company and its Subsidiaries at and as of
March 31, 2002 included in the SEC Documents (the "March 31, 2002 Balance
Sheet") through full application of the accounting methods, treatments, policies
and procedures used by the Company in preparing the March 31, 2002 Balance
Sheet, shall fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the date thereof, and shall
contain changes in contract estimates at completion ("EACs") and estimates to
complete ("ETCs") determined on a basis consistent with the method used for the
determination of such amounts in the March 31, 2002 Balance Sheet, except as
modified or set forth in subparagraphs (i) through (vii) below in this Section
6.08:
(i) Adjustment of Reserves and Valuation Accounts. The amount of
any reserve or valuation accounts shall be determined by applying methods,
practices, assumptions, policies, factors and underlying data consistent with
those used in determining the reserves or valuation accounts included in the
March 31, 2002 Balance Sheet, and there shall be no increases or decreases made
to any reserves or valuation accounts in the Pre-Closing Date Balance Sheet
(including contract reserves, purchase accounting reserves, deferred tax asset
valuation accounts, allowances for bad debts, inventory reserves of any kind,
warranty reserves, income tax reserves and other reserves), except to the extent
that such changes are required by documented and substantiated changes in facts
and events occurring after March 31, 2002 and on or before the Balance Sheet
Date and are not solely the result of changes in management estimates. It is
further understood that there shall be no increase in the Balance Sheet Date Net
Worth as a result of any reversal, reduction or other usage of reserves included
in the March 31, 2002 Balance Sheet unless such reversal, reduction or usage was
caused by facts or events that occurred after March 31, 2002, and on or before
the Balance Sheet Date; provided, however, that if such facts causing such
reversal or reduction existed and applied to, and were known or should have been
known as of March 31, 2002, the reversals or reductions also shall be made to
the March 31, 2002 Balance Sheet for purposes of increasing the Target Net
Worth.
(ii) Contract Estimates at Completion. There shall be no changes to
the contract EACs from those contract EACs used in the preparation of the March
31, 2002 Balance Sheet, except to the extent that such changes are required by
documented and substantiated changes in facts and events occurring after March
31, 2002 and on or before the Balance Sheet Date and are not solely the result
of changes in management estimates. Notwithstanding subparagraph (vi) below in
this Section 6.08, it is further understood that if the contract EACs used in
preparation of the March 31, 2002 Balance Sheet are discovered to have
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been incorrect because of estimating errors, of any kind, including because
certain costs were omitted from or included in those contract EACs, for whatever
reason(s), including misallocation of direct or indirect costs to such contract
EACs, such errors (including costs that were omitted from or included in the
contract EACs) in the preparation of the March 31, 2002 Balance Sheet shall be
corrected in the contract EACs used in the preparation of the Pre-Closing Date
Balance Sheet.
(iii) Loss Contracts. There shall be no changes made to the
provisions for loss contracts from those used in the preparation of the March
31, 2002 Balance Sheet, except to the extent that such changes are required by
documented and substantiated changes in facts and events occurring after March
31, 2002 and on or before the Balance Sheet Date and are not solely the result
of changes in management estimates. It is further understood that loss contract
reserves for contract bids and proposals and unexercised contract options of the
Company that were in a loss position and outstanding at March 31, 2002 and which
are awarded or exercised during the period between March 31, 2002 through and
including the Balance Sheet Date shall be accrued and included in the
Pre-Closing Date Balance Sheet.
(iv) Adjustment of Liability and Accrual Accounts. The amount of
all liability and accrual accounts, shall be determined by applying methods,
practices, assumptions, policies, factors and underlying data consistent with
those used in determining such accounts included in the March 31, 2002 Balance
Sheet, and there shall be no changes made to any accounts, except to the extent
that such changes are required by documented and substantiated changes in facts
and events occurring after March 31, 2002 and on or before the Balance Sheet
Date and are not solely the result of changes in management estimates. It is
further understood that there shall be no increase in the Balance Sheet Date Net
Worth as a result of reversals or reductions of liability and accrual accounts,
unless such reversal or reduction was caused by facts or events that occur after
March 31, 2002 and on or before the Balance Sheet Date; provided, however, that
if such facts causing such reversal or reduction existed and applied to, and
were known or should have been known as of March 31, 2002, the reversals or
reductions also shall be made to the March 31, 2002 Balance Sheet for purposes
of increasing the Target Net Worth.
(v) Consistent Application of Accounting Policies, Methods and
Practices. The accounting policies, methods and practices and their related
applications used by the Company to prepare the Pre-Closing Date Balance Sheet
shall be consistent with those underlying the March 31, 2002 Balance Sheet. Use
of different or alternative accounting policies and methods that are otherwise
in accordance with GAAP is not permitted because such use violates this
consistency requirement. Specifically, the Company shall be precluded from
waiving or allowing "inconsistency" adjustments recorded by the Company during
the preparation of the Pre-Closing Date Balance Sheet on the basis of
"materiality" as the term is used and understood by the Company and Ernst &
Young LLP.
(vi) Accounting for Certain Assumed Liabilities. The Pre-Closing
Date Balance Sheet shall include liabilities required by GAAP for all assumed
obligations of the Company that accrue from March 31, 2002 to the Balance Sheet
Date including those that accrue because of the passage of time or the
achievement or reasonably expected achievement of a performance measurement,
even if such liabilities were not included in the March 31, 2002 Balance Sheet.
Examples of these types of liabilities include, but are not limited to
warranties,
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customer and vendor claims against the Company, litigation, taxes, management
incentive bonuses, profit sharing plans, employer matching contributions for
sponsored savings plans, and compensated absences (vacation time, sick pay,
etc.). Such liabilities shall be accrued on a pro rata basis as of the Balance
Sheet Date even if the Company's accounting policies, including those accounting
policies underlying the March 31, 2002 Balance Sheet, only required that such
liabilities be accrued at the end of the Company's fiscal year.
(vii) Goodwill and Other Intangible Assets. Notwithstanding GAAP
or the Company's accounting policies, there shall be no increases or decreases
to goodwill and other intangible assets from those used in preparation of the
March 31, 2002 Balance Sheet and included in the Target Net Worth.
The Company shall provide Parent such access to the books and records
of the Company and its Subsidiaries and appropriate employees of the Company as
may reasonably be required for the review of the Pre-Closing Date Balance Sheet.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained.
(b) Antitrust. Any waiting period (and any extension thereof)
applicable to the Merger under any applicable competition, merger control,
antitrust or similar law shall have been terminated or shall have expired.
(c) No Injunctions or Legal Restraints. No temporary restraining
order, preliminary or permanent injunction or other order or decree issued by
any court of competent jurisdiction or other legal restraint or prohibition
(collectively, "Legal Restraints") which has the effect of preventing the
consummation of the Merger shall be in effect.
SECTION 7.02 Conditions to Obligations of Parent and Sub. The
obligations of Parent and Sub to effect the Merger are further subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained herein that is qualified as to materiality
shall be true and correct, and each of the representations and warranties of the
Company contained herein that is not so qualified shall be true and correct in
all material respects (except that the representations and warranties of the
Company set forth in Section 3.02 shall be true and correct in all respects), in
each case as of the date of this Agreement and as of the Closing Date with the
same effect as though made as of the Closing Date except that the accuracy of
representations and warranties that by their terms speak as of a specified date
will be determined as of such date. Parent shall
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have received a certificate signed on behalf of the Company by the chief
executive officer and chief financial officer of the Company to such effect.
(b) Performance of Obligations of the Company. The Company shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Closing Date, and Parent shall have
received a certificate signed on behalf of the Company by the chief executive
officer and the chief financial officer of the Company to such effect.
(c) No Litigation. There shall not be pending any suit, action or
proceeding brought by any Governmental Entity or any other third party (or any
such suit, action or proceeding threatened by any Governmental Entity): (i)
challenging or seeking to restrain or prohibit the consummation of the Merger;
(ii) seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of their respective Affiliates of a material portion of the
business or assets of the Company and its Subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, or to require any such person to
dispose of or hold separate any material portion of the business or assets of
the Company and its Subsidiaries, taken as a whole, or Parent and its
Subsidiaries, taken as a whole, as a result of the Merger; (iii) seeking to
impose limitations on the ability of Parent or any of its Affiliates to acquire
or hold, or exercise full rights of ownership of, any shares of Company Common
Stock, including the right to vote the Company Common Stock on all matters
properly presented to the stockholders of the Company; or (iv) seeking to
prohibit Parent or any of its Affiliates from effectively controlling a material
portion of the business or operations of the Company or its Subsidiaries.
(d) Legal Restraint. No Legal Restraint that could reasonably be
expected to result, directly or indirectly, in any of the effects referred to in
clauses (i) through (iv) of Section 7.02(c) shall be in effect.
(e) Consents. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that Parent or the Company shall have
obtained all Consents of all Governmental Entities or third parties required in
connection with this Agreement and the transactions contemplated by this
Agreement.
(f) Indebtedness. Parent shall have received evidence, in form and
substance reasonably satisfactory to it, that on the Balance Sheet Date: (a) the
aggregate Indebtedness of the Company and its Subsidiaries, on a consolidated
basis, shall be not more than $4,593,000; or (b) the Balance Sheet Date Net
Worth shall be equal or greater to the sum of (i) the Adjusted Target Net Worth
as of the Balance Sheet Date plus (ii) the amount by which the aggregate
Indebtedness of the Company and its Subsidiaries as of the Balance Sheet Date
exceeds $4,593,000. In addition, during the period commencing on the Balance
Sheet Date and ending on the Closing Date, neither the Company nor any of its
Subsidiaries shall have incurred any Indebtedness (other than for interest
accruing during such period under and pursuant to the terms of those instruments
governing the Indebtedness of the Company or any of its Subsidiaries existing on
the Balance Sheet Date).
For purposes of this Agreement:
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(i) "Adjusted Target Net Worth", as of any date, shall mean the
Target Net Worth as of such date minus $302,593. On the date of this Agreement,
the Adjusted Target Net Worth is equal to $11,705,000.
(ii) "Balance Sheet Date Net Worth" means, with respect to the
Company and its Subsidiaries, on a consolidated basis, (x) the excess of the
consolidated assets set forth on the Pre-Closing Date Balance Sheet over the
consolidated liabilities (excluding for purposes of this calculation (A) the
Indebtedness of the Company and its Subsidiaries, and (B) the aggregate
outstanding principal amount in respect of the Convertible Notes) set forth on
the Pre-Closing Date Balance Sheet, reduced by (y) the aggregate amount of cash
received by the Company in respect of Stock Options and Warrants exercised at
any time after March 31, 2002, if any.
(iii) "Indebtedness" shall mean, with respect to any Person, (A)
any indebtedness for borrowed money of such Person (including any interest
accruing on such indebtedness), (B) any capital lease obligations or any other
similar capital obligations of such Person, (C) any synthetic lease obligations
or any other similar lease obligations of such Person, (D) any obligations of
such Person under any derivative agreements or any other similar agreements
(including interest-rate, exchange-rate, commodity and equity-linked
agreements), (E) any obligations of such Person in respect of off-balance-sheet
agreements or transactions that are in the nature of, or in substitution of,
financings, and (F) any indebtedness or other obligations of any other Person of
the type specified in any of the foregoing clauses, the payment or collection of
which such Person has guaranteed or in respect of which such Person is liable,
contingently or otherwise, including liable by way of agreement to purchase
products or securities, to provide funds for payment, to maintain working
capital or other balance sheet conditions or otherwise to assure a creditor
against loss; provided, however, that, with respect to the Company and its
Subsidiaries, the term "Indebtedness" shall not include the aggregate
outstanding principal amount in respect of the Convertible Notes (it being
understood and agreed, however, that the term "Indebtedness" shall include any
accrued and unpaid interest on the Convertible Notes).
(iv) "Target Net Worth" shall mean $12,007,593 (i.e., the excess
of the consolidated assets set forth on the March 31, 2002 Balance Sheet over
the consolidated liabilities (excluding for purposes of this calculation the
Indebtedness of the Company and its Subsidiaries) set forth on the March 31,
2002 Balance Sheet), as such $12,007,593 amount may be increased from time to
time pursuant to, and in accordance with, the procedures set forth in Section
6.08.
(g) No Material Adverse Effect. Since the date of the latest audited
balance sheet included in the Filed SEC Documents, there shall not have occurred
any Company Material Adverse Effect.
(h) Dissenters' Rights. The aggregate number of shares of Company
Common Stock which are entitled to vote at the Stockholders Meeting and are held
of record by a Person or Persons who exercise their appraisal right under the
NRS to dissent from the proposed Merger, shall not exceed five percent (5%) of
the total number of issued and
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outstanding shares of Company Common Stock held of record as of the record date
for the Stockholders Meeting and entitled to vote on the proposed Merger at such
meeting.
(i) Convertible Securities. All the actions contemplated by Section
2.03 shall have been fully effected.
(j) Intercompany Agreements. All Intercompany Agreements shall have
been terminated and of no force and effect pursuant to termination agreements
satisfactory to Parent other than (A) those Intercompany Agreements between the
Company or any wholly owned Subsidiary of the Company, on the one hand, and any
wholly owned Subsidiary of the Company, on the other hand, and (B) those
Intercompany Agreements listed in Section 7.02(j) of the Company Disclosure
Schedule.
(k) FIRPTA Certificate. The Company shall have executed and delivered
to Parent a certificate, dated the Closing Date and sworn under penalty of
perjury, in form and substance satisfactory to Parent.
(l) Base Period R&E Information. The Company shall have delivered to
Parent on the Company's letterhead, all information reasonably requested by
Parent relating to the Company's base period research and experimental expenses
and any other information reasonably requested by Parent to allow Parent to
claim research and experimental tax credits in accordance with the relevant
sections of the Code and the regulations prescribed pursuant to the Code.
(m) Pre-Closing Date Balance Sheet. The Company's covenants and
agreements set forth in Section 6.08 shall have been performed. The Pre-Closing
Date Balance Sheet shall have been prepared and delivered to Parent at least two
full business days prior to the Closing Date.
SECTION 7.03 Conditions to Obligation of the Company. The obligation of the
Company to effect the Merger is further subject to the satisfaction or waiver on
or prior to the Closing Date of the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Sub contained herein that is qualified as to
materiality shall be true and correct, and each of the representations and
warranties of Parent and Sub contained herein that is not so qualified shall be
true and correct in all material respects, in each case as of the date of this
Agreement and as of the Closing Date with the same effect as though made as of
the Closing Date except that the accuracy of representations and warranties that
by their terms speak as of a specified date will be determined as of such date.
The Company shall have received a certificate signed on behalf of Parent by an
authorized signatory of Parent to such effect.
(b) Performance of Obligations of Parent and Sub. Parent and Sub shall
have performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Closing Date, and the Company
shall have received a certificate signed on behalf of Parent by an authorized
signatory of Parent to such effect.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether before or after the Stockholder Approval has been obtained:
(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated within 180
days after the date of this Agreement for any reason; provided, however, that
the right to terminate this Agreement under this Section 8.01(b)(i) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(ii) if any Legal Restraint having the effect set forth in
Section 7.01(c) shall be in effect and shall have become final and
nonappealable; or
(iii) if the Stockholder Approval shall not have been obtained at
the Stockholders Meeting duly convened therefor or at any adjournment or
postponement thereof.
(c) by Parent if: (i) an Adverse Recommendation Change has occurred;
or (ii) the Board of Directors of the Company or any committee thereof shall
have failed to confirm its recommendation and declaration of advisability of
this Agreement and the Merger within ten business days after a written request
by Parent that it do so;
(d) by Parent: (i) if the Company shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (A) would give
rise to the failure of a condition set forth in Section 7.02(a) or 7.02(b), and
(B) has not been or is incapable of being cured by the Company within 15
calendar days after its receipt of written notice thereof from Parent; or (ii)
if any Legal Restraint having any of the effects referred to in clauses (i)
through (iv) of Section 7.02(c) shall be in effect and shall have become final
and nonappealable;
(e) by the Company, if Parent shall have breached in any material
respect any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform (i) would give
rise to the failure of a condition set forth in Section 7.03(a) or 7.03(b), and
(ii) has not been or is incapable of being cured by Parent within 15 calendar
days after its receipt of written notice thereof from the Company;
(f) by the Company, if the Board of Directors of the Company shall
have approved, and the Company shall concurrently with such termination enter
into, a definitive agreement providing for the implementation of the
transactions contemplated by a Takeover Proposal that such Board of Directors
reasonably determines in good faith by resolution duly adopted constitutes a
Superior Proposal; provided, however, that (i) such Takeover Proposal was
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not solicited, initiated, facilitated or encouraged by the Company and did not
otherwise result from a breach of Section 5.02, (ii) the Board of Directors of
the Company shall have complied with all the requirements of Section 5.02
(including Section 5.02(e)) in connection with such Takeover Proposal, and (iii)
no termination pursuant to this Section 8.01(f) shall be effective unless the
Company shall simultaneously pay to Parent the Termination Fee (as provided in
Section 8.03(b)). For purposes of this Section 8.01(f), the term "Takeover
Proposal" shall have the meaning set forth in Section 8.03(b)(i)(B).
SECTION 8.02 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Sub or the Company, other than the
provisions of Section 3.34, Section 5.01(e), the last sentence of Section 6.02,
this Section 8.02, Section 8.03 and Article IX, which shall survive any such
termination. In addition and without limiting the foregoing, if such termination
results from a material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement, then such
termination shall not affect such party's liabilities or obligations in respect
of such material breach.
SECTION 8.03 Fees and Expenses.
(a) Whether or not the Merger is consummated, except as otherwise
provided herein, all costs and expenses incurred in connection with this
Agreement, the Merger and the other transactions contemplated by this Agreement
shall be paid by the party incurring such expenses.
(b) If: (i) (A) this Agreement is terminated by either Parent or the
Company pursuant to Section 8.01(b)(iii), and (B) within 12 months of the date
of such termination, the Company or any of its Subsidiaries enters into any
Acquisition Agreement with respect to, or consummates, any Takeover Proposal
(solely for purposes of this Section 8.03(b)(i)(B), the term "Takeover Proposal"
shall have the meaning set forth in the definition of Takeover Proposal
contained in Section 5.02(a) except that all references to 15% shall be deemed
references to 40%); (ii) this Agreement is terminated by Parent pursuant to
Section 8.01(c), or (iii) this Agreement is terminated by the Company pursuant
to Section 8.01(f), then the Company shall pay Parent a fee equal to $1,100,000
(the "Termination Fee") by wire transfer of same day funds to an account
designated by Parent (x) in the case of a termination by Parent pursuant to
Section 8.01(c), within two business days after such termination, (y) in the
case of a payment as a result of any event referred to in Section 8.03(b)(i)(B),
upon the first to occur of any such events, and (z) in the case of a termination
by the Company pursuant to Section 8.01(f), simultaneously with such
termination.
(c) If (i) this Agreement is terminated by either Parent or the
Company pursuant to Section 8.01(b)(iii), (ii) this Agreement is terminated by
the Company pursuant to Section 8.01(b)(i), (iii) this Agreement is terminated
by Parent pursuant to Section 8.01(c) or Section 8.01(d)(i), or (iv) this
Agreement is terminated by the Company pursuant to Section 8.01(f), then (in
addition to any Termination Fee to which Parent may be entitled to pursuant to
Section 8.03(b)) the Company shall reimburse Parent for all its reasonable
out-of-pocket expenses actually incurred in connection with this Agreement
(including legal fees), the
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Stockholders Agreement and the transactions contemplated hereby and thereby,
which amount shall be payable by wire transfer of same day funds within three
business days of written demand therefor.
(d) The Company acknowledges that the agreements contained in Sections
8.03(b) and 8.03(c) are an integral part of the transactions contemplated by
this Agreement, and that, without these agreements, Parent would not enter into
this Agreement. Accordingly, if the Company fails promptly to pay the amounts
due pursuant to Sections 8.03(b) and 8.03(c), and, in order to obtain such
payment, Parent commences a suit that results in a judgment against the Company
for the amounts set forth in Sections 8.03(b) and 8.03(c), the Company shall pay
to Parent its reasonable costs and expenses (including attorneys' fees and
expenses) in connection with such suit and any appeal relating thereto, together
with interest on the amounts set forth in Sections 8.03(b) and 8.03(c) at the
prime rate of Citibank, N.A. in effect on the date such payment was required to
be made.
SECTION 8.04 Amendment. This Agreement may be amended by the parties
hereto at any time, whether before or after the Stockholder Approval has been
obtained; provided, however, that, after the Stockholder Approval has been
obtained, there shall be made no amendment that by law requires further approval
by stockholders of the parties without the further approval of such
stockholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
SECTION 8.05 Extension; Waiver. At any time prior to the Effective Time,
the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein or in any document delivered
pursuant hereto, or (c) waive compliance with any of the agreements or
conditions contained herein; provided, however, that, after the Stockholder
Approval has been obtained, there shall be made no waiver that by law requires
further approval by stockholders of the parties without the further approval of
such stockholders. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure or delay by any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights nor shall any single or partial exercise by any party to
this Agreement of any of its rights under this Agreement preclude any other or
further exercise of such rights or any other rights under this Agreement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 9.01
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
SECTION 9.02 Notices. All notices, requests, demands, approvals,
consents, waivers and other communications required or permitted to be given
under this Agreement (each,
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a "Notice") shall be in writing and shall be (a) delivered personally, (b)
mailed by first-class, registered or certified mail, return receipt requested,
postage prepaid, (c) sent by next-day or overnight mail or delivery, or (d) sent
by facsimile transmission, provided that the original copy thereof also is sent
by pre-paid, first class certified or registered mail or by next-day or
overnight mail or personal delivery,
if to Parent or Sub, to
L-3 Communications Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxxxx X. Xxxxxxx, Esq.
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Gerkis, Esq.
if to the Company, to
Westwood Corporation
00000 X. 00xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. XxXxx
with a copy to:
Xxxxxx & Xxxxxxx
A Professional Corporation
0000 Xxxxx Xxxxx Tower
00 X. 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: C. Xxxxxxx Xxxxxx, Xx., Esq.
or, in each case, at such other address as may be specified in a Notice to the
other parties hereto. Any Notice shall be deemed effective and given upon
receipt (or refusal of receipt).
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SECTION 9.03 Definitions.
(a) Capitalized and other defined terms shall have the respective
meanings ascribed thereto in the sections of this Agreement referred to in the
table of definitions contained in this Agreement.
(b) As used in this Agreement:
"Affiliate" of any person means another person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first person.
"Applicable Law" means, with respect to any Person, any and all
provisions of any and all (i) constitutions, treaties, statutes, laws (including
the common law), rules, regulations, ordinances or codes of any Governmental
Entity applicable to such Person or any of is assets, (ii) Permits applicable to
such Person or any of its assets, and (iii) orders, decisions, injunctions,
judgments, awards and decrees of or agreements with any Governmental Entity, in
each case in this clause (iii) specifically naming or applicable to such Person
or any of its assets.
"EBITDA" means, for any period of time, the sum for the Company and
its Subsidiaries, calculated in accordance with GAAP, of (i) net sales for such
period, minus (ii) costs of sales for such period, minus (iii) operating
expenses for such period; provided, however; that EBITDA shall in any event
exclude (A) depreciation and amortization expenses, (B) interest expense, (C)
extraordinary items, (D) income taxes exclusive of franchise taxes, and (E) all
gains or losses in connection with sales or dispositions of assets and
investments not in the ordinary course of business.
"Knowledge" or "knowledge" of any Person and words or phrases of
similar import, means, with respect to any Person, the knowledge of such Person
after due inquiry.
"Person" or "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust, Governmental
Entity, unincorporated organization or other entity.
"Subsidiary" means, with respect to any Person, each corporation or
other Person in which such Person owns or controls, directly or indirectly,
capital stock or other equity interests representing at least 50% of the
outstanding voting stock or other equity interests.
SECTION 9.04 Interpretation.
(a) When a reference is made in this Agreement to an Article or to a
Section, Subsection, Exhibit or Schedule, such reference shall be to an Article
of, a Section or Subsection of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and
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words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
words "date hereof" shall refer to the date of this Agreement. The term "or" is
not exclusive. The word "extent" in the phrase "to the extent" shall mean the
degree to which a subject or other thing extends, and such phrase shall not mean
simply "if". The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms. Any agreement or instrument
defined or referred to herein or in any agreement or instrument that is referred
to herein means such agreement or instrument as from time to time amended,
modified or supplemented. References to a person are also to its permitted
successors and assigns.
(b) The parties hereto have participated jointly in the negotiation
and drafting of the Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties hereto, and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
SECTION 9.05 Counterparts. This Agreement may be executed with counterpart
signature pages, or in one or more counterparts (including by telecopy), all of
which counterparts shall be considered one and the same agreement and shall
become effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties.
SECTION 9.06 Entire Agreement; No Third-Party Beneficiaries. This Agreement
(a) constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement, except for the Confidentiality Agreement and
any agreement entered into by the parties on the date of this Agreement, and (b)
except for the provisions of Section 6.04, is not intended to confer upon any
person other than the parties hereto any rights or remedies.
SECTION 9.07 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to conflicts of laws rules.
SECTION 9.08 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any of or all its rights, interests and obligations under this
Agreement to Parent or to any direct or indirect wholly owned Subsidiary of
Parent, but no such assignment shall relieve Sub of any of its obligations
hereunder. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
SECTION 9.09 Consent to Jurisdiction. Each of the parties hereto
irrevocably and unconditionally submits to the exclusive jurisdiction of (a) any
New York State court, and (b) any Federal court of the United States of America
sitting in the State of New York, for the purposes of any suit, action or other
proceeding arising out of this Agreement or any transaction contemplated hereby
(and each agrees that no such action, suit or proceeding relating to this
Agreement shall be brought by it or any of its Affiliates except in such
courts). Each of the
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parties hereto further agrees that, to the fullest extent permitted by
Applicable Law, service of any process, summons, notice or document by U.S.
registered mail to such person's respective address set forth in Section 9.02
shall be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of the parties
hereto irrevocably and unconditionally waives (and agrees not to plead or claim)
any objection to the laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated hereby in (i) any New
York State court, or (ii) any Federal court of the United States of America
sitting in the State of New York, or that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
SECTION 9.10 Waiver of Jury Trial. Each party hereto hereby waives, to the
fullest extent permitted by Applicable Law, any right it may have to a trial by
jury in respect of any suit, action or other proceeding directly or indirectly
arising out of, under or in connection with this Agreement. Each party hereto
(a) certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such party would not, in the event of
any action, suit or proceeding, seek to enforce the foregoing waiver, and (b)
acknowledges that it and the other parties hereto have been induced to enter
into this Agreement, by, among other things, the mutual waiver and
certifications in this Section 9.10.
SECTION 9.11 Enforcement. The parties agree that irreparable damage would
occur if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York or in any New York state court, this being in
addition to any other remedy to which they are entitled at law or in equity.
SECTION 9.12 Exhibits and Schedules. All exhibits and schedules to this
Agreement shall constitute a part of this Agreement and are incorporated herein
by reference.
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IN WITNESS WHEREOF, Parent, Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
L-3 COMMUNICATIONS CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Senior Vice President
BLUE ACQUISITION CORP.
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
--------------------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: Vice President
WESTWOOD CORPORATION
By: /s/ Xxxxxx X. XxXxx
--------------------------------------------------
Name: Xxxxxx X. XxXxx
Title President
