Exhibit 2.1
EXECUTION COPY
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** The schedules referenced in this Agreement and Plan of Merger have been
omitted pursuant to Item 601(b)(2) of Regulation S-K. Copies of the omitted
schedules will be provided to the Securities and Exchange Commission upon its
request.
AGREEMENT AND PLAN OF MERGER
among
DRS TECHNOLOGIES, INC.,
MAXCO, INC.
and
ENGINEERED SUPPORT SYSTEMS, INC.
Dated as of September 21, 2005
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TABLE OF CONTENTS
ARTICLE 1 The Merger
1.1 The Merger............................................................1
1.2 The Closing...........................................................1
1.3 Effective Time........................................................1
1.4 Articles of Incorporation, By-Laws, Directors and Officers
of the Surviving Corporation..........................................2
ARTICLE 2 Effect of the Merger on Securities of
Merger Sub and the Company
2.1 Merger Sub Stock......................................................2
2.2 Common Stock..........................................................2
2.3 Company Stock Options.................................................3
2.4 Exchange of Certificates Representing Common Stock....................4
2.5 Adjustment of Merger Consideration....................................6
2.6 Dissenting Company Shareholders.......................................6
ARTICLE 3 Representations and Warranties of the Company
3.1 Organization and Qualification........................................7
3.2 Articles of Incorporation and Bylaws..................................8
3.3 Capitalization........................................................8
3.4 Authority Relative to This Agreement..................................9
3.5 No Conflict; Required Filings and Consents...........................10
3.6 Permits; Compliance..................................................11
3.7 SEC Filings; Financial Statements; Undisclosed Liabilities...........12
3.8 Affiliate Transactions...............................................13
3.9 Absence of Certain Changes or Events.................................13
3.10 Absence of Litigation................................................13
3.11 Employee Benefit Plans...............................................14
3.12 Labor and Employment Matters.........................................17
3.13 Real Property; Title to Assets.......................................18
3.14 Intellectual Property................................................19
3.15 Taxes................................................................20
3.16 Environmental Matters................................................22
3.17 Specified Contracts..................................................23
3.18 Government Contracts.................................................25
3.19 No Suspension or Debarment...........................................26
3.20 Loss Contracts; Backlog..............................................26
3.21 Customers, Distributors and Suppliers................................27
3.22 Insurance............................................................27
3.23 Board Approval; Vote Required........................................27
3.24 Opinions of Financial Advisors.......................................28
3.25 Brokers..............................................................28
3.26 Certain Business Practices...........................................28
3.27 Information Supplied.................................................28
3.28 Export Licenses and Agreements.......................................28
3.29 Full Disclosure......................................................29
ARTICLE 4 Representations and Warranties of Parent and Merger Sub
4.1 Organization and Qualification.......................................30
4.2 Capitalization.......................................................30
4.3 Authority Relative to This Agreement.................................30
4.4 No Conflict; Required Filings and Consents...........................31
4.5 Interim Operations of Merger Sub.....................................31
4.6 Financing............................................................32
4.7 Ownership of Common Stock............................................32
4.8 Parent SEC Reports...................................................32
4.9 Information Supplied.................................................32
4.10 Absence of Litigation................................................33
4.11 Compliance...........................................................33
4.12 Certain Business Practices...........................................34
4.13 Full Disclosure......................................................34
ARTICLE 5 Covenants
5.1 Alternative Proposals................................................34
5.2 Interim Operations...................................................36
5.3 Company Shareholder Approval; Joint Proxy Statement; Parent
Registration Statement...............................................38
5.4 Filings; Other Action................................................39
5.5 Access to Information................................................40
5.6 Publicity............................................................40
5.7 Further Action.......................................................40
5.8 Insurance; Indemnity.................................................40
5.9 Benefit Plans........................................................42
5.10 Supplemental Disclosure..............................................43
5.11 NYSE Listing.........................................................43
5.12 Payment of Bank Debt.................................................43
5.13 Parent Financing.....................................................43
ARTICLE 6 Conditions
6.1 Conditions to Each Party's Obligation to Effect the Merger...........44
6.2 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger....................................................45
6.3 Conditions to Obligation of the Company to Effect the Merger.........45
ARTICLE 7 Termination
7.1 Termination..........................................................46
7.2 Effect of Termination and Abandonment................................48
7.3 Termination Fee......................................................48
7.4 Termination for Failure to Obtain Financing..........................49
7.5 Amendment............................................................49
7.6 Extension; Waiver....................................................49
ARTICLE 8 General Provisions
8.1 Nonsurvival of Representations and Warranties........................49
8.2 Notices..............................................................49
8.3 Assignment; Binding Effect...........................................51
8.4 Entire Agreement.....................................................51
8.5 Governing Law........................................................51
8.6 Fee and Expenses.....................................................51
8.7 Certain Definitions..................................................51
8.8 Headings.............................................................53
8.9 Interpretation.......................................................54
8.10 Waivers..............................................................54
8.11 Severability.........................................................54
8.12 Enforcement of Agreement.............................................54
8.13 Counterparts.........................................................54
TABLE OF DEFINED TERMS
401(k) Plans......................................................Section 8.7
Acquisition Agreement..........................................Section 5.1(b)
Action...........................................................Section 3.10
Affiliate.........................................................Section 8.7
Agreement............................................................Preamble
Alternative Proposal...........................................Section 5.1(a)
Ancillary Documents...............................................Section 5.4
Articles of Merger................................................Section 1.3
Backlog..........................................................Section 3.20
Cap........................................................... Section 5.8(a)
Cash Consideration.............................................Section 2.2(a)
Certificate....................................................Section 2.2(b)
Change in Control Agreement...................................Section 3.11(b)
Closing...........................................................Section 1.2
Closing Date......................................................Section 1.2
Code........................................................... Section 2.4(b)
Collective Bargaining Agreements.................................Section 3.12
Commitment Letter.................................................Section 4.6
Common Stock...................................................Section 2.2(a)
Company..............................................................Preamble
Company Applicable Period......................................Section 5.1(a)
Company Disclosure Schedule.........................................ARTICLE 3
Company Financial Advisor........................................Section 3.24
Company Material Adverse Effect...................................Section 8.7
Company Permits................................................Section 3.6(a)
Company Shareholder Approval......................................Section 3.4
Company Shareholders' Meeting..................................Section 5.3(a)
Company Stock Option...........................................Section 3.3(a)
Company Stock Option Plans.....................................Section 3.3(a)
Company Stock Plans............................................Section 3.3(a)
Computer Software.............................................Section 3.14(g)
Confidentiality Agreement......................................Section 5.5(b)
Continuing Employees...........................................Section 5.9(b)
Contract.......................................................Section 3.5(a)
Credit Agreement.................................................Section 5.12
Delaware Courts...................................................Section 8.5
Dissenting Common Stock...........................................Section 2.6
Effective Time....................................................Section 1.3
Environmental Claim...............................................Section 8.7
Environmental Laws............................................Section 3.16(b)
ERISA.........................................................Section 3.11(a)
ERISA Affiliate...............................................Section 3.11(b)
ESOP.......................................................... Section 3.3(a)
ESPP.......................................................... Section 3.3(a)
Exchange Act...................................................Section 3.5(b)
Exchange Agent.................................................Section 2.4(a)
Exchange Ratio.................................................Section 2.2(a)
Expense Payment................................................Section 7.3(a)
Export Approvals..............................................Section 3.28(a)
Foreign Benefit Plan..........................................Section 3.11(f)
GAAP.......................................................... Section 3.7(b)
Government Bid.............................................Section 3.18(g)(i)
Government Contract.......................................Section 3.18(g)(ii)
Governmental Authority.........................................Section 3.5(b)
group.............................................................Section 8.7
Hazardous Substance...........................................Section 3.16(d)
HSR Act........................................................Section 3.5(b)
ICA.......................................................... Section 3.5(b)
Indebtedness......................................................Section 8.7
Indemnified Party..............................................Section 5.8(b)
Infringe......................................................Section 3.14(a)
Intellectual Property.........................................Section 3.14(g)
Investments....................................................Section 3.3(d)
IRS......................................................... Section 3.11(a)
Joint Proxy Statement..........................................Section 5.3(c)
knowledge.........................................................Section 8.7
Law.......................................................... Section 3.5(a)
Leased Properties.............................................Section 3.13(b)
License Agreements................................................Section 8.7
Liens.............................................................Section 8.7
Loss Contract.....................................................Section 8.7
MBCL............................................................. Section 1.1
Merger............................................................Section 1.1
Merger Consideration...........................................Section 2.2(a)
Merger Sub...........................................................Preamble
Multiemployer Plan............................................Section 3.11(b)
Multiple Employer Plan........................................Section 3.11(b)
NYSE ..........................................................Section 2.2(a)
Option Consideration...........................................Section 2.3(i)
Other Transactions................................................Section 3.4
Outside Date................................................Section 7.1(b)(i)
Owned Intellectual Property...................................Section 3.14(c)
Owned Properties..............................................Section 3.11(a)
Parent...............................................................Preamble
Parent Common Stock Value......................................Section 2.2(a)
Parent Disclosure Schedule..........................................ARTICLE 4
Parent Material Adverse Effect....................................Section 8.7
Parent Preferred..................................................Section 4.2
Parent SEC Reports................................................Section 4.8
Parent Stock...................................................Section 2.2(a)
Parent Stock Consideration.....................................Section 2.2(a)
Parent Stockholder Vote...........................................Section 4.3
Parent Stockholders' Meeting...................................Section 5.3(b)
Parent Subsidiary.................................................Section 4.1
PBGC..................................................... Section 3.11(h)(ii)
Pension Plan..................................................Section 3.11(b)
Permitted Liens...............................................Section 3.13(c)
Person............................................................Section 8.7
Plans.........................................................Section 3.11(a)
Properties....................................................Section 3.13(b)
Registration Statement.........................................Section 5.3(c)
Xxxxxxxx-Xxxxx Act.............................................Section 3.6(c)
Scheduled Intellectual Property...............................Section 3.14(b)
SEC.......................................................... Section 3.5(b)
SEC Reports....................................................Section 3.7(a)
Securities Act.................................................Section 3.7(a)
Small Business Act............................................Section 3.18(b)
Specified Contract............................................Section 3.17(b)
SPPND..........................................................Section 3.3(a)
Subsidiary........................................................Section 3.1
Superior Proposal..............................................Section 5.1(a)
Superior Proposal Notice.......................................Section 5.1(b)
Surviving Corporation.............................................Section 1.1
Tax............................................................. Section 8.7
Tax Returns.......................................................Section 8.7
Taxes.............................................................Section 8.7
Termination Fee................................................Section 7.3(a)
Third Party Licenses..........................................Section 3.14(d)
Total Cash Consideration......................................Section 2.3(ii)
Total Cash Exercise Price.....................................Section 2.3(iv)
Total Parent Stock Exercise Price..............................Section 2.3(v)
Total Stock Consideration....................................Section 2.3(iii)
Trade Secrets.................................................Section 3.14(e)
Treasury Regulations..........................................Section 3.16(b)
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of September
21, 2005, among DRS Technologies, Inc., a Delaware corporation ("Parent"),
Maxco, Inc., a Missouri corporation and a wholly owned subsidiary of Parent
("Merger Sub"), and Engineered Support Systems, Inc., a Missouri corporation
(the "Company").
RECITALS
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company each have determined that it is in the best interests of their
respective companies and stockholders to enter into and consummate this
Agreement, providing for the merger of Merger Sub with and into the Company
with the Company as the surviving corporation, and subject to the conditions
set forth herein; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.3),
subject to the terms and conditions of this Agreement and the applicable
provisions of the General and Business Corporation Law of Missouri (the
"MBCL"), Merger Sub shall be merged with and into the Company and the separate
corporate existence of Merger Sub shall thereupon cease (the "Merger"). The
Company shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"). The Merger shall have the effects
specified in the MBCL.
1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, located at Four Times
Square, New York, New York, at 10:00 a.m., local time, as soon as practicable
but in no event later than the Outside Date (as defined in Section 7.1(b)(i)).
The date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
1.3 Effective Time. If all the conditions to the Merger set forth in
Article 6 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 7, the parties
hereto shall cause Articles of Merger meeting the requirements of the MBCL (the
"Articles of Merger") to be filed with the Secretary of State of the State of
Missouri on the Closing Date. The Merger shall become effective at the time of
filing of the Articles of Merger with the Secretary of State of the State of
Missouri in accordance with the MBCL, or at such later time which the parties
hereto shall have agreed upon and designated in such filings as the effective
time of the Merger (the "Effective Time").
1.4 Articles of Incorporation, By-Laws, Directors and Officers of the
Surviving Corporation. (a) The Amended Articles of Incorporation of the Company
as in effect immediately prior to the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation, from and after the Effective Time,
until duly amended in accordance with applicable Law and the terms thereof.
(b) The Amended and Restated By-Laws of the Company as in effect
immediately prior to the Effective Time shall be the By-Laws of the Surviving
Corporation from and after the Effective Time, until duly amended in accordance
with applicable Law, the terms thereof, and the Surviving Corporation's
Articles of Incorporation.
(c) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation from and after the
Effective Time, until their successors are duly appointed or elected in
accordance with applicable Law and the Surviving Corporation's Articles of
Incorporation and By-Laws.
(d) The directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation from and after the
Effective Time, until their successors are duly appointed or elected in
accordance with applicable Law and the Surviving Corporation's Articles of
Incorporation and By-Laws.
ARTICLE 2
EFFECT OF THE MERGER ON SECURITIES OF MERGER SUB AND THE COMPANY
At the Effective Time by virtue of the Merger and without any action
on the part of Merger Sub, the Company or the holders of any of the securities
of Merger Sub or the Company:
2.1 Merger Sub Stock. Each share of common stock, $0.01 par value per
share, of Merger Sub that is issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and nonassessable share of common stock, $0.01 par value per share,
of the Surviving Corporation.
2.2 Common Stock. Each share of common stock, par value $0.01 per
share, of the Company (the "Common Stock") issued and outstanding immediately
prior to the Effective Time (other than shares of Common Stock owned by Parent
or Merger Sub or held by the Company, all of which shall be cancelled, and
other than the shares of Dissenting Common Stock (as defined in Section 2.6))
shall be converted into the right to receive (i) the amount of $30.10 in cash
without interest (the "Cash Consideration") and (ii) a fraction of a fully paid
and nonassessable share (the "Parent Stock Consideration") of the common stock,
$.01 par value per share, of Parent ("Parent Stock") equal to one share of
Parent Stock multiplied by the Exchange Ratio. "Exchange Ratio" means (a) if
the Parent Common Stock Value is $57.20 or greater, 0.2255; (b) if the Parent
Common Stock Value is less than $57.20 but greater than $46.80, the quotient,
calculated to the nearest one-ten thousandth, resulting from dividing $12.90 by
the Parent Common Stock Value; or (c) if the Parent Common Stock Value is
$46.80 or less, 0.2756. "Parent Common Stock Value" means the average closing
sale prices for a share of Parent Stock on the New York Stock Exchange, Inc.
(the "NYSE") Composite Transactions Tape (as reported by The Wall Street
Journal (Northeast edition), or, if not reported thereby, as reported by any
other authoritative source) for each of the ten consecutive trading days ending
with the second complete trading day prior to the Closing Date (not counting
the Closing Date). The Parent Stock Consideration using the Exchange Ratio
shall be calculated to the nearest one-ten thousandth of a share of Parent
Stock and the Parent Common Stock Value shall be calculated to the nearest
one-tenth of one cent. The Cash Consideration and the Parent Stock
Consideration to be received by the holders of Common Stock hereunder (together
with the cash in lieu of fractional shares of Parent Stock as specified below)
are referred to herein collectively as the "Merger Consideration".
(b) All shares of Common Stock (other than shares to be cancelled in
accordance with Section 2.2(c)) shall cease to be outstanding and shall be
cancelled and shall cease to exist, and each holder of shares of Common Stock
(other than Merger Sub and Parent) shall thereafter cease to have any rights
with respect to such shares of Common Stock, except, subject to Section 2.5,
the right to receive, without interest, the Merger Consideration in accordance
with Section 2.4 upon the surrender of a certificate or certificates (a
"Certificate") representing such shares of Common Stock.
(c) Each share of Common Stock issued and held in the Company's
treasury at the Effective Time, or held by Merger Sub or Parent, shall, by
virtue of the Merger, cease to be outstanding and shall be cancelled without
payment of any consideration therefor.
2.3 Company Stock Options. Each Company Stock Option that is
outstanding immediately prior to the Effective Time shall be cancelled as of
the Effective Time and in exchange therefor, the holder of such Company Stock
Option shall be entitled to receive, in consideration for the cancellation of
such Company Stock Option and net of applicable withholding Taxes, the Option
Consideration (if any). The Company shall take any and all action, as may be
necessary, to effectuate the foregoing, including without limitation adopting
any plan amendments and obtaining any required consents.
(i) For purposes of this Agreement, "Option Consideration" means (x)
an amount of cash equal to the positive difference, if any, between the Total
Cash Consideration, less the Total Cash Exercise Price; and (y) the number of
shares of Parent Stock equal to the positive difference, if any, between the
Total Stock Consideration less the Total Parent Stock Exercise Price.
(ii) For purposes of this Agreement, "Total Cash Consideration" means
the product of (x) the Cash Consideration multiplied by (y) the number of
shares of Company Stock subject to such Company Stock Option immediately prior
to the Effective Time.
(iii) For purposes of this Agreement, "Total Stock Consideration"
means the product of (x) the Parent Stock Consideration multiplied by (y) the
number of shares of Company Stock subject to such Company Stock Option
immediately prior to the Effective Time.
(iv) For purposes of this Agreement, "Total Cash Exercise Price" means
the product of (x) the aggregate exercise price of such Company Stock Option,
multiplied by (y) a fraction, the numerator of which is the Cash Consideration,
and the denominator of which is the sum of (A) the Cash Consideration and (B)
the product of the Parent Stock Consideration multiplied by the Parent Common
Stock Value.
(v) For purposes of this Agreement, "Total Parent Stock Exercise
Price" means (A) the aggregate exercise price of such Company Stock Option,
multiplied by a fraction, the numerator of which is the product of the Parent
Stock Consideration and the Parent Common Stock Value and the denominator of
which is the sum of the Cash Consideration and product of the Parent Stock
Consideration and the Parent Common Stock Value, divided by (B) the Parent
Common Stock Value.
2.4 Exchange of Certificates Representing Common Stock. Prior to the
Effective Time, Parent shall appoint a commercial bank or trust company,
subject to the reasonable satisfaction of the Company, to act as Exchange Agent
hereunder for the purpose of paying, in accordance with this Article 2, the
Cash Consideration and exchanging, in accordance with this Article 2,
Certificates for the Parent Stock Consideration (the "Exchange Agent"). Parent
shall take all steps necessary to cause the Surviving Corporation to provide
the Exchange Agent with the Merger Consideration to be delivered in exchange
for all the shares of Common Stock pursuant to Section 2.2(a) as and when such
amounts are needed by the Exchange Agent.
(b) As promptly as possible after the Effective Time, Parent shall
instruct the Exchange Agent to mail to each holder of record of shares of
Common Stock: (i) a letter of transmittal which shall specify that delivery
shall be effected, and risk of loss and title to such Certificate(s) shall
pass, only upon delivery of such Certificate(s) to the Exchange Agent and which
letter shall be in such form and have such other provisions as are customary
for letters of this nature and (ii) instructions for effecting the surrender of
such Certificate(s) in exchange for the Merger Consideration. Upon surrender of
such Certificate(s) to the Exchange Agent together with such letter of
transmittal, duly executed and completed in accordance with the instructions
thereto, and such other documents as may be reasonably required by the Exchange
Agent, the holder of such Certificate(s) shall be entitled to receive in
exchange therefor a certificate (or evidence of shares in book entry form)
representing that number of whole shares of Parent Stock and the amount of
cash, without interest, into which shares of Common Stock formerly represented
by such Certificate(s) shall have been converted into the right to receive
pursuant to Section 2.2 after giving effect to any required Tax withholdings,
and the shares formerly represented by the Certificate(s) so surrendered shall
forthwith be cancelled. If any portion of the Parent Stock Consideration is to
be registered in the name of a Person other than the Person in whose name the
applicable surrendered Certificate is registered, it shall be a condition to
the registration of such shares constituting such Parent Stock Consideration
that the surrendered Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the Person requesting such delivery of such shares
shall pay to the Exchange Agent any transfer or other Taxes required by reason
of such registration in the name of a Person other than the registered holder
of such Certificate or establish to the reasonable satisfaction of the Exchange
Agent that such Tax has been paid or is not applicable. No interest will be
paid or will accrue on the cash payable upon surrender of any Certificate(s),
including in lieu of any fractional shares of Parent Stock. In the event of a
transfer of ownership of Common Stock that is not registered in the transfer
records of the Company, payment may be made with respect to such Common Stock
to such a transferee if such Certificate(s) representing such shares of Common
Stock is presented to the Exchange Agent, accompanied by all documents required
to evidence and effect such transfer and to evidence that any applicable
transfer or other Taxes have been paid. Until surrendered as contemplated by
this Section 2.4(b), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
amount of Parent Stock and cash, without interest, into which the shares of
Common Stock theretofore represented by such Certificate(s) shall have been
converted pursuant to this Article 2. Except to the extent that the holder
provides the appropriate party with a validly executed IRS Form W-8 or W-9, as
the case may be, Parent, Merger Sub or the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of shares of Common Stock of the Company such
amounts as Parent, Merger Sub or the Exchange Agent are required to deduct and
withhold under the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder (the "Code"), or any provision of state,
local or foreign Tax Law, with respect to the making of such payment. To the
extent the amounts are so withheld by Parent, Merger Sub or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of shares of Common Stock of the Company in
respect of whom such deduction and withholding was made by Parent, Merger Sub
or the Exchange Agent.
(c) All shares of Parent Stock issued and all cash paid upon surrender
of Certificates in accordance with the terms of this Article 2 shall be deemed
to have been issued and paid in full satisfaction of all rights pertaining to
the shares of Common Stock theretofore represented by such Certificates. At or
after the Effective Time, there shall be no further registration of transfers
on the stock transfer books of the Company of the shares of Common Stock that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation, they
shall be cancelled and exchanged as provided in this Article 2.
(d) No dividends or other distributions with respect to Parent Stock
with a record date after the Effective Time shall be paid to the holder of any
unsurrendered Certificate, and no cash payment in lieu of fractional shares
shall be paid to any such holder pursuant to Section 2.4(e) until the surrender
of such Certificate in accordance with this Article 2. Subject to the effect of
applicable Laws, following surrender of any such Certificate, there shall be
paid to the holder of the certificate representing whole shares of Parent Stock
issued in exchange therefor, without interest, (i) at the time of such
surrender, the amount of any cash payable in lieu of a fractional share of
Parent Stock to which such holder is entitled pursuant to Section 2.4(e) and
the amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole shares of Parent
Stock and (ii) at the appropriate payment date, the amount of dividends or
other distributions with a record date after the Effective Time but prior to
such surrender and a payment date subsequent to such surrender payable with
respect to such whole shares of Parent Stock.
(e) No certificates or script, or evidence of shares in book entry
form, representing fractional shares of Parent Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests
will not entitle the owner thereof to vote or to any other rights of a
stockholder of Parent. Each holder of Common Stock exchanged pursuant to the
Merger who would otherwise be entitled to receive a fraction of a share of
Parent Stock shall receive, upon surrender of such holder's Certificates in
accordance with this Section 2.4, an amount in cash (without interest) equal to
the product obtained by multiplying (i) such fractional share interest to which
such holder (after taking into account all fractional share interests then held
by such holder) would otherwise be entitled by (ii) the average of the per
share closing sales prices of shares of Parent Stock as reported on the NYSE
Composite Transactions reporting system (as reported in The Wall Street Journal
or, in the absence thereof, by another authoritative source) during the five
(5) consecutive trading days ending on (and including) the trading day
immediately preceding the date of the Effective Time. As promptly as
practicable after the determination of the amount of cash, if any, to be paid
to holders of fractional share interests, the Exchange Agent shall so notify
Parent, and Parent shall deposit such amount with the Exchange Agent and shall
cause the Exchange Agent to forward payments to such holders of fractional
share interests subject to and in accordance with the terms of Section 2.4(b).
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.4(a) (including the proceeds of any
interest and other income received by the Exchange Agent in respect of all such
funds) that remains undistributed to the former shareholders of the Company six
(6) months after the Effective Time shall be delivered to Parent, upon demand.
Any former shareholders of the Company who have not theretofore complied with
this Article 2, with respect to the procedures for receiving the Merger
Consideration to which they are entitled, shall thereafter look only to the
Parent for payment of any Merger Consideration, without any interest thereon,
that may be payable in respect of each share of Common Stock such shareholder
held as of the Effective Time as determined pursuant to this Agreement.
(g) None of Parent, the Company, the Surviving Corporation, the
Exchange Agent or any other Person shall be liable to any former holder of
shares of Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar Laws.
(h) In the event 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 reasonably 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 which may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable in respect thereof pursuant to
this Agreement.
(i) Parent or Merger Sub shall pay all of the Exchange Agent's fees in
connection with the exchange of the Merger Consideration for Certificates.
2.5 Adjustment of Merger Consideration. In the event that, subsequent
to the date of this Agreement but prior to the Effective Time, the outstanding
shares of Common Stock or Parent Stock shall have been changed into a different
number of shares or a different class as a result of a stock split, reverse
stock split, stock dividend, subdivision, reclassification, split, combination,
exchange, recapitalization or other similar transaction, the Exchange Ratio and
Cash Consideration shall be appropriately adjusted.
2.6 Dissenting Company Shareholders. Notwithstanding any provision of
this Agreement to the contrary, to the extent permitted by the MBCL, shares of
Common Stock that are issued and outstanding immediately prior to the Effective
Time and which are held by holders of such shares of Common Stock who are
entitled to demand and properly demand payment of the fair value of such Common
Stock pursuant to Section 351.455 of the MBCL (the "Dissenting Common Stock")
will not be converted into, or represent the right to receive, the Merger
Consideration. Holders of such shares of Dissenting Common Stock will be
entitled to payment of the fair value of such Dissenting Common Stock in
accordance with the provisions of such Section 351.455 unless and until such
holders fail to perfect or effectively withdraw or lose their rights to
appraisal and payment under the MBCL. If, after the Effective Time, any such
holder fails to perfect or effectively withdraws or loses such right, such
shares of Dissenting Common Stock will thereupon be treated as if they had been
converted into and have become exchangeable for, at the Effective Time, the
right to receive the Merger Consideration, without any interest thereon, upon
the surrender of a Certificate in accordance with Section 2.4. The Company
shall give Parent: (i) prompt notice of any demands for payment of fair value
received by the Company pursuant to Section 351.455 of the MBCL, withdrawals of
such demands and any other instruments served pursuant to Section 354.455 of
the MBCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to any such demand for payment of
fair value under the MBCL. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to any demands for payment of
fair value or offer to settle or settle any such demands.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to such exceptions as are disclosed in the corresponding
sections of the disclosure schedule which is attached hereto and made a part
hereof (the "Company Disclosure Schedule") (it being understood that (a) the
disclosure of any fact or item in any section of the Company Disclosure
Schedule shall, should the existence of such fact or item be relevant to any
other section, be deemed to be disclosed with respect to that other section so
long as the relevance of such disclosure to such other section is reasonably
apparent, and (b) the disclosure of any matter or item in the Company
Disclosure Schedule shall not be deemed to constitute an acknowledgement that
such matter or item is required to be disclosed therein or is material to a
representation or warranty set forth in this Agreement and shall not be used as
a basis for interpreting the terms "material," "materially," "materiality" or
"Company Material Adverse Effect" or any word or phrase of similar import and
does not mean that such matter or item would, alone or together with any other
matter or item, could reasonably be expected to have a Company Material Adverse
Effect, as defined in Section 8.7), the Company hereby represents and warrants
to each of Parent and Merger Sub as of the date of this Agreement as follows:
3.1 Organization and Qualification. Each of the Company and each
subsidiary of the Company (each, a "Subsidiary") is a corporation, limited
partnership or limited liability company duly organized, validly existing and
in good standing under the Laws of the jurisdiction of its organization and has
the requisite corporate, limited liability company, or partnership (as the case
may be) power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now
being conducted except for such governmental approvals, the absence of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Company Material Adverse Effect. The Company and each
Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except where the failure to be
so qualified or licensed and in good standing has not had, and would not
reasonably be expected to have, a Company Material Adverse Effect.
3.2 Articles of Incorporation and Bylaws. The Company has made
available to Parent (i) all minute books of the Company and each Subsidiary
since March 5, 2002, which are complete and correct, and (ii) a complete and
correct copy of the Articles of Incorporation and the Bylaws (or similar
organizational documents), each as amended to date, of the Company and each
Subsidiary. Such Articles of Incorporation and Bylaws (or similar
organizational documents) are in full force and effect.
3.3 Capitalization.
(a) The authorized capital stock of the Company consists of 85,000,000
shares of Common Stock. As of the date hereof, (i) 41,788,943 shares of Common
Stock were issued and outstanding (excluding shares of Common Stock held in the
treasury of the Company), all of which are duly authorized, validly issued,
fully paid and nonassessable and were issued free of preemptive (or similar)
rights, (ii) no shares of Common Stock were held in the treasury of the
Company, (iii) no shares of Common Stock were held by the Subsidiaries, (iv)
4,832,019 shares of Common Stock were reserved for future issuance in
connection with the exercise of each option (a "Company Stock Option") issued
pursuant to any stock option plan, agreement or commitment maintained by the
Company (other than the ESOP, the SPPND, and the ESSP as each is defined below)
(the "Company Stock Option Plans") (including shares reserved pursuant to
outstanding Company Stock Options), (v) no shares of Common Stock were reserved
for issuance in connection with the Company's Employee Stock Ownership Plan
(the "ESOP"), (vi) 70,420 shares of Common Stock were reserved for issuance
under the Company's Stock Purchase Plan for Non-Employee Directors (of which
not more than 2,500 shares will be issued by the Company with respect to 2005)
(the "SPPND") and (vii) 1,333,418 shares of Common Stock were reserved for
issuance under the Company's Employee Stock Purchase Plan (of which no shares
will be issued following the date hereof) (the "ESPP" and, together with the
Company Stock Option Plans, the ESOP and SPPND, the "Company Stock Plans").
Section 3.3(a)(i) of the Company Disclosure Schedule sets forth, as of the
Capitalization Date, each Company Stock Option and other right to purchase or
receive shares of Common Stock under the Company Stock Plans, the expiration
date, grant date, vesting commencement date, vesting schedule, type of option
and the exercise price of each such Company Stock Option (including whether the
exercise price was less than the fair market value of the underlying Shares on
the date of grant) or right and the number of Shares issuable under each
Company Stock Option.
(b) Except as set forth in Section 3.3(b), or as set forth in Section
3.3(b) of the Company Disclosure Schedule, there are no (i) subscriptions,
calls, contracts, options, warrants or other rights, agreements, arrangements,
understandings, restrictions or commitments of any character to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
is bound relating to the issued or unissued capital stock or equity interests
of the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, other equity interests in or debt
securities of, the Company or any Subsidiary (including any rights plan or
agreement), (ii) securities of the Company or securities convertible,
exchangeable or exercisable for shares of capital stock or equity interests of
the Company or any Subsidiary, or (iii) equity equivalents, stock appreciation
rights or phantom stock, stock based performance units, ownership interests in
the Company or any Subsidiary or similar rights. All shares of Common Stock
subject to issuance as set forth in Section 3.3(a), upon issuance on the terms
and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable
and free of preemptive (or similar) rights. There are no outstanding
contractual obligations or rights of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any securities or equity interests of
the Company or any Subsidiary to vote or to dispose of any shares of capital
stock or equity interests of the Company or any Subsidiary. Except as set forth
in Section 3.3(b) of the Company Disclosure Schedule, none of the Company or
any Subsidiary nor, to the knowledge of the Company, any other Person is a
party to any shareholders' agreement, voting trust agreement or registration
rights agreement relating to any equity securities or equity interests of the
Company or any Subsidiary or any other contract relating to disposition, voting
or dividends with respect to, or bound by, any equity securities or equity
interests of the Company or of any Subsidiary. No dividends on the Common Stock
have been declared or paid since July 31, 2005. All of the issued and
outstanding shares of Common Stock have been issued by the Company in
compliance with applicable federal and state securities Laws. There are no
outstanding bonds, debentures, notes or other indebtedness of the Company or
any of its Subsidiaries having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matter for which
the Company's shareholders may vote.
(c) Each outstanding share of capital stock (or other unit of equity
interest) of each Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and was issued free of preemptive (or similar) rights, and each
such share or unit is owned by the Company, by one or more wholly owned
Subsidiaries of the Company, or by the Company and one or more wholly-owned
Subsidiaries of the Company, free and clear of all options, rights of first
refusal, agreements, limitations on the Company's or any Subsidiary's voting,
dividend or transfer rights, charges and other encumbrances or Liens of any
nature whatsoever. A true and complete list of all the Subsidiaries of the
Company together with the jurisdiction of incorporation of each Subsidiary is
set forth in Section 3.3(c) of the Company Disclosure Schedule.
(d) Section 3.3(d) of the Company Disclosure Schedule also lists any
and all Persons of which the Company directly or indirectly owns an equity or
similar interest, or an interest convertible into or exchangeable or
exercisable for an equity or similar interest, of any Person which is not a
Subsidiary (collectively, the "Investments"). The Company or a Subsidiary, as
the case may be, owns all Investments free and clear of all Liens, and there
are no outstanding contractual obligations of the Company or any Subsidiary
permitting the repurchase, redemption or other acquisition of any of its
interest in the Investments or requiring the Company or any Subsidiary to
provide funds to, make any investment (in the form of a loan, capital
contribution or otherwise) in, provide any guarantee with respect to, or
assume, endorse or otherwise become responsible for the obligations of, any
Investment (or any Person in which such Investment is made).
3.4 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Merger and the other
transactions contemplated by this Agreement to be consummated by the Company or
the Surviving Corporation (the "Other Transactions"). The execution, delivery
and performance of this Agreement by the Company and the consummation by the
Company of the Merger and the Other Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the Merger or such Other Transactions (other than
the adoption of this Agreement by the affirmative vote of the holders of
two-thirds of the then-outstanding shares of Common Stock entitled to vote
thereon (the "Company Shareholder Approval") and the filing and recordation of
appropriate merger documents as required by the MBCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to the effect of any applicable
bankruptcy, insolvency (including all Laws relating to fraudulent transfers),
reorganization, moratorium or similar Laws affecting creditors' rights
generally and subject to the effect of general principles of equity.
3.5 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company and the consummation
by the Company of the Merger and the Other Transactions will not, (i) assuming
the approval of the agreement by the shareholders of the Company as required by
the MBCL, conflict with, violate or result in a breach of the Articles of
Incorporation or Bylaws of the Company (or similar organizational documents of
any Subsidiary), (ii) assuming that all consents, approvals and other
authorizations described in Section 3.5(b) have been obtained, that all filings
and other actions described in Section 3.5(b) have been made or taken, and that
the Company pays off in full at Closing the outstanding amounts due under the
Credit Facility (as hereinafter defined), conflict with or violate any U.S.
federal, state or local or foreign statute, law, ordinance, regulation, rule,
code, executive order, judgment, decree or other order ("Law") applicable to
the Company or any Subsidiary or by which any property or asset of the Company
or any Subsidiary is bound or affected, or (iii) result in any breach or
violation of or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, require consent or result in a
loss of a benefit under, give rise to an obligation under, give to others any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a Lien on any property or asset of the Company or any
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other binding commitment,
instrument or obligation (each, a "Contract") to which the Company or any
Subsidiary is a party or by which the Company or a Subsidiary or any property
or asset of the Company or any Subsidiary is bound or affected, except, with
respect to clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which have not had, and would not
reasonably be expected to have, a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company and the consummation
by the Company of the Merger and the Other Transactions will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any supranational, national, provincial, federal, state or local or
government, regulatory or administrative authority, or any court, tribunal, or
judicial or arbitral body (a "Governmental Authority"), except for (i)
applicable requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), (ii) the pre-merger notification requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the competition or Merger Control Laws of any other applicable
jurisdiction, (iii) the notification requirements of the Investment Canada Act
(R.S. 1985, c. 28 (1st Supp.), as amended (the "ICA"), (iv) the filing with the
Securities and Exchange Commission (the "SEC") of the Joint Proxy Statement,
(v) any filings required by, and any approvals required under, the rules and
regulations of the Nasdaq National Market, (vi) the filing and recordation of
appropriate merger documents as required by the MBCL, (vii) any novations,
consents or approvals required in connection with Government Contracts or
similar novations, consents or approvals under any other Contracts with any
other Governmental Authorities, (viii) any filings required under the DOD
Industrial Security Manual for Safeguarding Classified Information, and (ix)
where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filing or notifications would not (a) prevent or
materially delay the consummation of the Merger, or (b) otherwise prevent or
materially delay performance by the Company of any of its material obligations
under the Agreement.
3.6 Permits; Compliance.
(a) Each of the Company and each Subsidiary is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exceptions, consents, certificates, approvals and orders of any Governmental
Authority necessary for each such entity to own, lease and operate its
properties or to carry on its business as it is now being conducted (the
"Company Permits") and no default has occurred under any such Company Permit,
and no written notice of violation has been received from any Governmental
Authority, except where the failure to have, or the suspension or cancellation
of, or defaults under, or violations of, any Company Permit have not had, and
would not reasonably be expected to have, a Company Material Adverse Effect. As
of the date hereof, neither the Company nor any Subsidiary has received any
written notification from any Governmental Authority threatening to revoke any
such Person's material Company Permit.
(b) To the knowledge of the Company, each of the Company and each of
its Subsidiaries and Affiliates (with respect to matters relating to the
Company's business) is, and at all times has been, in compliance in all
material respects with any Law applicable to such Person or Affiliate or by
which any property or asset of such entity is bound or affected, and has not
received written notice of any violation of any such Law.
(c) Since the enactment of the Xxxxxxxx-Xxxxx Act of 2002 and the
related rules and regulations promulgated thereunder (the "Xxxxxxxx-Xxxxx
Act"), the Company has been and is in compliance in all material respects with
the applicable provisions of the Xxxxxxxx-Xxxxx Act. The Company has designed
and implemented disclosure controls and procedures (as defined in Rule 13a-15
under the Exchange Act) to ensure that material information relating to the
Company, including its consolidated Subsidiaries, is made known on a timely
basis to the individuals responsible for the preparation of the Company's
filings with the SEC and other public disclosure documents.
(d) The Company has disclosed, based on its most recent evaluation, to
the Company's auditors and the audit committee of the Board of Directors of the
Company (i) any significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which are reasonably
likely to adversely affect in any material respect the Company's ability to
record, process, summarize and report financial information and (ii) any fraud
or allegation of fraud, whether or not material, that involves management or
other employees who have a significant role in the Company's internal controls
over financial reporting. True, correct and complete copies of any written
reports or other correspondence with respect to such disclosures (whether
prepared by the Company, its counsel or other advisors) have been provided to
Parent prior to the date of this Agreement, except in any instances where
providing such reports or other correspondence would constitute a waiver of
applicable attorney-client privilege (in which case Parent has been advised of
the subject matter thereof).
(e) The Company has not received any complaint, allegation, assertion
or claim in writing regarding the accounting practices, procedures,
methodologies or methods of the Company or its internal accounting controls,
which deals with any matter that would reasonably be expected to have a Company
Material Adverse Effect. To the knowledge of the Company, there is no reason to
believe that its auditors and its chief executive officer and chief financial
officer will not be able to give the certifications and attestations required
pursuant to the rules and regulations adopted pursuant to Section 404 of the
Xxxxxxxx-Xxxxx Act when next due.
(f) Since October 1, 2003, neither the Company nor any of its
Subsidiaries has effected any securitization transaction or other "off-balance
sheet arrangement" (as defined in Item 303 of Regulation S-K of the SEC).
3.7 SEC Filings; Financial Statements; Undisclosed Liabilities. The
Company has filed all forms, reports, statements, schedules, certifications and
other documents required to be filed by it with the SEC since November 1, 2001
(collectively, the "SEC Reports"). As of their respective dates, the SEC
Reports (including any documents or information incorporated by reference
therein and including any financial statements or schedules included therein)
(i) complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), the Exchange Act,
the Xxxxxxxx-Xxxxx Act and, in each case, the rules and regulations promulgated
thereunder, and (ii) did not, at the time they were filed, or, if amended, as
of the date of such amendment, 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 made therein, in the light of the circumstances
under which they were made, not misleading. No Subsidiary is or has been
required to file any form, report, statement, schedule, certification or other
document with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes and schedules thereto) contained in the SEC Reports was
prepared in accordance with accounting principles generally accepted in the
United States ("GAAP") applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC and the requirements
of Regulation S-X under the Securities Act) and each fairly presents, in all
material respects, the consolidated financial position, results of operations,
shareholders' equity and cash flows of the Company and its consolidated
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein (subject, in the case of unaudited statements, to the absence
of footnotes and to normal and recurring year-end adjustments). All of the
Subsidiaries are consolidated for accounting purposes.
(c) Except as set forth in the SEC Reports, and to the extent set
forth on the consolidated balance sheet of the Company and its consolidated
Subsidiaries as at October 31, 2004, included in the Company's Annual Report on
Form 10-K for the fiscal year ended October 31, 2004, neither the Company nor
any Subsidiary has any liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise), except for liabilities and obligations (i)
incurred in the ordinary course of business and in a manner consistent with
past practice since October 31, 2004, or (ii) the obligations to pay fees and
expenses to the Company's attorneys, accountants and the Company Financial
Advisor relating to the obligations contemplated by this Agreement. None of the
liabilities or obligations contemplated by the preceding sentence have had,
individually or in the aggregate, or would reasonably be expected to have a
Company Material Adverse Effect. As of the date hereof, the aggregate amount of
all Indebtedness of the Company and its Subsidiaries (other than any
Indebtedness owed by the Company to any Subsidiary or any Subsidiary to the
Company or another Subsidiary) does not exceed $75 million.
3.8 Affiliate Transactions. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, there are no transactions, agreements,
arrangements or understandings between (i) the Company or any of its
Subsidiaries, on the one hand, and (ii) any Affiliate of the Company (other
than any of its Subsidiaries), on the other hand.
3.9 Absence of Certain Changes or Events. Except as set forth in
Section 3.9 of the Company Disclosure Schedule, since October 31, 2004, there
has not occurred any Company Material Adverse Effect, or any event,
circumstance or occurrence that has had, or would reasonably be expected to
have, a Company Material Adverse Effect. Since October 31, 2004, except as
expressly contemplated by this Agreement, (a) the Company and the Subsidiaries
have conducted their businesses only in the ordinary course of business and in
a manner consistent with past practice and (b) neither the Company nor any
Subsidiary has taken any action or agreed to take any action that would be
prohibited by clauses (i) through (xviii) of Section 5.2(b) taken after the
date hereof other than in the ordinary course of business and in a manner
consistent with past practice.
3.10 Absence of Litigation. Except as set forth in Section 3.10 of the
Company Disclosure Schedule, and excluding workers' compensation claims for
which the Company is insured or has recorded adequate reserves in its financial
statements to cover such claims, there is no litigation, suit, claim, action,
proceeding, hearing, petition, grievance, complaint, charge or investigation
(an "Action") pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries or Affiliates (with respect to matters
relating to the Company's business), or any property or asset of the Company or
any Subsidiary, or to the knowledge of the Company, or any officer, director or
employee of the Company or any of its Subsidiaries or Affiliates (with respect
to matters relating to the Company's business), before any Governmental
Authority or arbitrator. Except as set forth in Section 3.10 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries or
Affiliates (with respect to matters relating to the Company's business) nor any
property or asset of the Company or of its Subsidiaries or Affiliates (with
respect to matters relating to the Company's business) is subject to any order,
writ, judgment, injunction, decree, determination or award of, or, to the
knowledge of the Company, any investigation by, any Governmental Authority.
3.11 Employee Benefit Plans. Section 3.11(a) of the Company Disclosure
Schedule lists: (i) all employee benefit plans (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) and
all material bonus, stock option, stock purchase, restricted stock, stock
bonus, stock appreciation right, employee stock ownership, profit sharing,
savings, change in control, retirement, pension, health, life insurance,
disability, accident, group insurance, vacation, holiday, sick leave, fringe
benefit, layoff, salary continuation, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements; and (ii) all employment, termination,
severance or other Contracts, agreements or commitments to which the Company,
any ERISA Affiliate or any Subsidiary is a party, with respect to which the
Company, any ERISA Affiliate or any Subsidiary has or may reasonably be
expected to have any obligation or which are maintained, contributed to or
sponsored by the Company, any ERISA Affiliate or any Subsidiary for the benefit
of any current or former employee, consultant, officer or director of the
Company or any Subsidiary (collectively, the "Plans"). The Company has made
available to Merger Sub a true and complete copy (where applicable) of (i) each
Plan (or, where a Plan has not been reduced to writing, a summary of all
material Plan terms of such Plan), (ii) each trust or funding arrangement
prepared in connection with each such Plan, (iii) the annual report on Internal
Revenue Service ("IRS") Form 5500 or any other annual report required by
applicable Law for the three (3) most recent plan years, (iv) the most recently
received IRS determination letter for each such Plan, (v) the two (2) most
recent actuarial reports and financial statements prepared in connection with
each such Plan, and (vi) the most recent summary plan description, any
summaries of material modification, any employee handbooks, and any material
written communications (or a description of any material oral communications)
by the Company or the Subsidiaries to any current or former employees,
consultants, or directors of the Company or any Subsidiary concerning the
extent of the benefits provided under a Plan. Neither the Company nor any
Subsidiary has any plan or commitment to establish any new material Plan or to
materially modify any Plan.
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, none of the Company or any Subsidiary or any other Person or entity
that, together with the Company or any Subsidiary, is or was treated as a
single employer under Section 414(b), (c), (m) or (o) of the Code (each,
together with the Company and any Subsidiary, an "ERISA Affiliate"), has now or
at any time within the past six years (and in the case of any such other Person
or entity, only during the period within the past six years that such other
Person or entity was an ERISA Affiliate) contributed to, sponsored, or
maintained: (i) a pension plan (within the meaning of Section 3(2) of ERISA)
subject to Section 412 of the Code or Title IV of ERISA (each, a "Pension
Plan"); (ii) a multiemployer plan (within the meaning of Section 3(37) or
4001(a)(3) of ERISA or the comparable provisions of any other applicable Law)
(a "Multiemployer Plan"); or (iii) a single employer pension plan (within the
meaning of Section 4001(a)(15) of ERISA) for which an ERISA Affiliate would
reasonably be expected to incur liability under Section 4063 or 4064 of ERISA
(a "Multiple Employer Plan"). Except as set forth on Section 3.11(b) of the
Company Disclosure Schedule (each, a "Change in Control Agreement"), no Plan
exists that would result in the payment to any present or former employee,
director or consultant of the Company or any Subsidiary of any money or other
property or result in the forgiveness of indebtedness or accelerate or provide
any other rights or benefits to any current or former employee, director or
consultant of the Company or any Subsidiary as a result of the consummation of
the Merger or any other transaction contemplated by this Agreement (whether
alone or in connection with any other event). No payment or other benefit that
has been or may be made to any current or former employee or independent
contractor of the Company or any Subsidiary under any Plan, employment,
severance or termination agreement, other compensation arrangement or employee
benefit plan or arrangement with the Company or any Subsidiary may be
characterized as an "excess parachute payment," as such term is defined in
Section 280G of the Code and no such Plan, arrangement or agreement provides
for, or provided for, the payment by the Company or any Subsidiary of any
amount that is not or was not reasonably deductible under Section 162(m) or
Section 404 of the Code. Neither the Company nor any of its Subsidiaries nor
any of its ERISA Affiliates is required to provide any "gross up" payments to
any employee or service provider with respect to any tax imposed under section
4999 of the Code.
(c) Each Plan that is intended to be qualified under Section 401(a) of
the Code has received a favorable determination letter from the IRS that the
Plan is so qualified, and each trust established in connection with any Plan
which is intended to be exempt from federal income taxation under Section
501(a) of the Code has received a determination letter from the IRS that it is
so exempt, and, to the knowledge of the Company, no fact or circumstance exists
that would reasonably be expected to adversely affect the qualified status of
any such Plan or the exempt status of any such trust. The ESOP is a duly
organized, validly existing employee stock ownership plan under Section 407 of
ERISA and Section 4975(e)(7) of the Code and is not a party to any outstanding
loans.
(d) (i) Each Plan and each related trust agreement, annuity Contract
or funding instrument has been established and administered, both as to form
and operation, in accordance with its terms, and in compliance with the
applicable provisions of ERISA, the Code and other applicable Laws, except to
the extent such noncompliance has not had, and would not reasonably be expected
to have a Company Material Adverse Effect, and (ii) except as set forth in
Section 3.11(d) of the Company Disclosure Schedule, no Plan provides
post-termination or retiree welfare benefits, and neither the Company nor any
Subsidiary has any obligation to provide any post-termination benefits other
than for health care continuation as required by Section 4980B of the Code or
any similar statute. All obligations to be performed at or prior to the Closing
Date with respect to each Plan (including, without limitation, those with
respect to the making or payment of contributions or premiums, as applicable)
have been or will have been performed in accordance with the relevant terms of
each Plan and all applicable Law, and no taxes are owing or exigible under any
Plan;
(e) With respect to any Plan, except as set forth in Section 3.11(e)
of the Company Disclosure Schedule, (i) no Actions (other than routine claims
for benefits in the ordinary course) are pending or, to the knowledge of the
Company, threatened, except for those that have not had, and would not
reasonably be expected to have, a Company Material Adverse Effect, (ii) to the
knowledge of the Company, no facts or circumstances exist that would reasonably
be expected to give rise to any such Actions, and (iii) no administrative
investigation, audit or other administrative proceeding by the Department of
Labor, the IRS or other Governmental Authority is pending, in progress or, to
the knowledge of the Company, threatened, except for those that have not had,
and would not reasonably be expected to have, a Company Material Adverse
Effect.
(f) Section 3.11(f) of the Company Disclosure Schedule sets forth a
complete and accurate list of each Plan that is not subject to United States
Law (each such Plan, a "Foreign Benefit Plan"). Without limiting the
representations set forth in Section 3.11(a) through (e), except as has not
had, and would not reasonably be expected to have, a Company Material Adverse
effect: (i) all employer and employee contributions to each Foreign Benefit
Plan required by Law or by the terms of such Foreign Benefit Plan have been
made or, if applicable, accrued in accordance with normal accounting practices;
(ii) the fair market value of the assets of each funded Foreign Benefit Plan,
the liability of each insurer for any Foreign Benefit Plan funded through
insurance or the book reserve established for any Foreign Benefit Plan,
together with any accrued contributions, is sufficient to procure or provide
for the accrued benefit obligations, as of the date of this Agreement, with
respect to all current and former participants in such plan according to the
actuarial assumptions and valuations most recently used and consistent with
applicable Law to determine employer contributions to such Foreign Benefit Plan
and no transaction contemplated by this Agreement shall cause such assets,
reserve or insurance obligations to be less than such benefit obligations;
(iii) each Foreign Benefit Plan required to be registered has been registered
and has been maintained in good standing with applicable regulatory
authorities; (iv) each Foreign Benefit Plan is in compliance in all material
respects with all applicable Laws; and (v) no Foreign Benefit Plan is a
registered pension plan for purposes of applicable Canadian Law.
(g) Neither the Company nor any Subsidiary nor, to the knowledge of
the Company, any fiduciary of any Plan has any material liability with respect
to any transaction in violation of Section 404 or 406 of ERISA or any
"prohibited transaction," as defined in Section 4975(c)(1) of the Code, for
which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or
(d) of the Code.
(h) Except as set forth in Section 3.11(h) of the Company Disclosure
Schedule, the Company represents as follows:
(i) The funding method used in connection with each Pension Plan which
is subject to the minimum funding requirements of ERISA is acceptable and the
actuarial assumptions used in connection with funding each such plan are
reasonable. The Company has provided Parent with a true and correct copy of the
most recent actuarial valuation for each Pension Plan. Nothing has occurred
since the date of such reports that would materially and adversely affect the
funded status of each Pension Plan as reflected in such reports. No
"accumulated funding deficiency" (for which an excise tax is due or would be
due in the absence of a waiver) as defined in Section 412 of the Code or as
defined in Section 302(a)(2) of ERISA, whichever may apply, has been incurred
with respect to any Pension Plan with respect to any plan year, whether or not
waived. Neither the Company nor any ERISA Affiliate has failed to pay when due
any "required installment," within the meaning of Section 412(m) of the Code
and Section 302(e) of ERISA, whichever may apply, with respect to any Pension
Plan. Neither the Company nor any ERISA Affiliate is subject to any lien
imposed under Section 412(n) of the Code or Section 302(f) of ERISA, whichever
may apply, with respect to any Pension Plan. Neither the Company nor any ERISA
Affiliate has any liability for unpaid contributions that are payable currently
with respect to any Pension Plan. Neither the Company nor any ERISA Affiliate
is required to provide security to a Pension Plan which covers or has covered
employees or former employees of the Company or a Subsidiary under Section
401(a)(29) of the Code.
(ii) The Company has paid all premiums (and interest charges and
penalties for late payment, if applicable) due the Pension Benefit Guarantee
Corporation (the "PBGC") with respect to each Pension Plan for each plan year
thereof for which such premiums are required. Neither the Company nor any ERISA
Affiliate has engaged in, or is a successor or parent corporation to an entity
that has engaged in, a transaction described in Section 4069 of ERISA. There
has been no "reportable event" (as defined in Section 4043(b) of ERISA and the
PBGC regulations under such Section) with respect to any Pension Plan. No
filing has been made by the Company or any ERISA Affiliate with the PBGC, and
no proceeding has been commenced by the PBGC, to terminate any Pension Plan. To
the knowledge of the Company, no condition exists and no event has occurred
that could constitute grounds for the termination of any Pension Plan by the
PBGC. Neither the Company nor any ERISA Affiliate has, at any time, (A) ceased
operations at a facility so as to become subject to the provisions of Section
4068(e) of ERISA, (B) withdrawn as a substantial employer so as to become
subject to the provisions of Section 4063 of ERISA, or (C) ceased making
contributions on or before the Closing Date to any Pension Plan subject to
Section 4064(a) of ERISA to which the Company or any ERISA Affiliate made
contributions during the six years prior to the Closing Date.
3.12 Labor and Employment Matters. Section 3.12 of the Company
Disclosure Schedule sets forth all collective bargaining agreements to which or
by which the Company or any Subsidiary is a party or bound (the "Collective
Bargaining Agreements"). Other than the Collective Bargaining Agreements,
neither the Company nor any Subsidiary is, or at any time has been, a party to
or bound by any collective bargaining agreement or other labor union agreements
applicable to Persons employed by the Company or any Subsidiary, nor, to the
knowledge of the Company, are there any such employees represented by a labor
union, works council or other labor organization or activities or proceedings
of any labor union, works council or group of employees to organize any such
employees. The Company has delivered or made available to Parent true, correct
and complete copies of each Collective Bargaining Agreement, as amended to
date. Neither the Company nor any Subsidiary party thereto nor, to the
knowledge of the Company, the other party or parties thereto, is in breach of
any term of any such Collective Bargaining Agreement. From January 1, 2003 to
the date of this Agreement, there has been no actual or, to the knowledge of
the Company or any Subsidiary, threatened work stoppage, slowdown, labor
strike, lockout or labor dispute against or affecting the Company or any
Subsidiary. The Company and its Subsidiaries (a) have no direct or indirect
liability with respect to any misclassification of any Persons as an
independent contractor rather than as an employee, except for those
misclassifications that have not had, and would not reasonably be expected to
have, a Company Material Adverse Effect, (b) are in material compliance with
all applicable Laws respecting employment, employment practices, terms and
conditions of employment and wages and hours, and (c) have complied in all
material respects with Executive Order 11246 and any similar Laws regarding
affirmative action and nondiscrimination applicable to government contractors.
The Company and its Subsidiaries are and have been in compliance with all
notice and other requirements under the Workers' Adjustment Retraining
Notification Act and any similar Laws relating to plant closings and layoffs.
3.13 Real Property; Title to Assets.
(a) Section 3.13(a) of the Company Disclosure Schedule lists by
address each parcel of real property owned by the Company or any Subsidiary
(the "Owned Properties"). There are no material leases, subleases, licenses,
occupancy agreements, options, rights, concessions or other agreements or
arrangements, written or oral, granting to any Person the right to purchase,
use or occupy any of the Owned Properties.
(b) Section 3.13(b) of the Company Disclosure Schedule lists by
address each parcel of real property leased or subleased by the Company or any
Subsidiary for which the annual rental payments exceeds $50,000 (the "Leased
Properties" and together with the Owned Properties, the "Properties"). True and
complete copies of all agreements under which the Company or any of its
Subsidiaries leases or subleases, together with all amendments and assignments,
the Leased Properties have been provided or made available to Parent and Merger
Sub. To the extent that any Person other than the Company or its Subsidiaries
has a right to use or occupy any portion of any of the Leased Properties, such
right(s) would not reasonably be expected to have a Company Material Adverse
Effect. Except as has not had, and would not reasonably be expected to have, a
Company Material Adverse Effect, (i) each agreement under which the Company or
any Subsidiaries leases or subleases the Leased Properties is a legal, valid
and binding obligation of the Company or such Subsidiary, as applicable, in
full force and effect and enforceable against the Company or such Subsidiary in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency (including all Laws relating to fraudulent transfers),
reorganization, moratorium or similar Laws affecting creditors' rights
generally and subject to the effect of general principles of equity, (ii) to
the knowledge of the Company, each such agreement is a legal, valid and binding
obligation of the counterparty thereto, in full force and effect and
enforceable against such counterparty in accordance with its terms, and (iii)
neither the Company nor any of its Subsidiaries is and, to the Company's
knowledge, no counterparty is, in breach or violation of, or in default under,
any such agreement.
(c) The Company or one of its Subsidiaries (i) has good title to all
of their material properties and assets, and (ii) owns or has a valid leasehold
interest in all of the Properties, free and clear of all Liens, except (i)
Liens for current taxes and assessments not yet past due, (ii) inchoate
mechanics' and materialmen's Liens for construction in progress, (iii)
workmen's, repairmen's, warehousemen's and carriers' Liens arising in the
ordinary course of business of the Company or such Subsidiary consistent with
past practice if the underlying obligations are not more than 30 days past due
or are being contested in good faith, and (iv) all Liens and other
imperfections of title (including matters of record) and encumbrances that do
not materially interfere with the conduct of the businesses of the Company or
any of its Subsidiaries taken as a whole (collectively, "Permitted Liens").
Except as set forth in Section 3.13(c) of the Company Disclosure Schedule,
there are no material pending or, to the knowledge of the Company, threatened
condemnation proceedings with respect to any Property or litigation or
administrative actions relating to any Property.
3.14 Intellectual Property.
(a) Except as has not had, and would not reasonably be expected to
have, a Company Material Adverse Effect, to the knowledge of the Company, (i)
the Company and its Subsidiaries own or have the valid right to use all the
Intellectual Property (as defined below) used in, or necessary in, the conduct
of the business of the Company and the Subsidiaries, and (ii) the conduct of
the business of the Company and its Subsidiaries as currently conducted does
not infringe upon, misappropriate or violate ("Infringe") any Intellectual
Property of any third party. Except as has not had, and would not reasonably be
expected to have, a Company Material Adverse Effect, no claim or demand has
been given in writing to the Company or any Subsidiary that the conduct of the
business of the Company or any Subsidiary Infringes upon or may Infringe upon
the Intellectual Property rights of any third party (including any demand that
the Company or a Subsidiary must license or refrain from using any Intellectual
Property of a third party).
(b) Section 3.14(b) of the Company Disclosure Schedule sets forth a
true and complete list of all Intellectual Property rights which are either
registered or have been applied for and are currently owned by the Company and
its Subsidiaries that are material to the business of the Company and its
Subsidiaries, taken as a whole (collectively, "Scheduled Intellectual
Property"). Each item listed on Section 3.14(b) of the Company Disclosure
Schedule has been duly registered or application filed with the U.S. Patent and
Trademark Office or such other governmental or organizational authority. Except
as has not had, and would not reasonably be expected to have, a Company
Material Adverse Effect, to the knowledge of the Company, all patent,
copyright, and trademark applications, renewals and other similar fees have
been properly paid and are current, and all patent, copyright, and trademark
registrations and filings remain in full force and effect. There are no actual
or, to the knowledge of the Company, threatened opposition proceedings,
reexamination proceedings, cancellation proceedings, interference proceedings
or other similar actions challenging the validity, existence, ownership of any
portion of the Scheduled Intellectual Property or Intellectual Property which
should have been listed in Section 3.14(b) of the Company Disclosure Schedule.
To the knowledge of the Company, none of the Scheduled Intellectual Property or
Intellectual Property which should have been listed in Section 3.14(b) of the
Company Disclosure Schedule has been previously adjudged to be invalid or
unenforceable in whole or in part.
(c) With respect to the Intellectual Property rights that are owned by
the Company or any of its Subsidiaries that are material to the business of the
Company or any of its Subsidiaries (collectively, "Owned Intellectual
Property"), to the knowledge of the Company, the Company or a Subsidiary is the
owner of the entire right, title and interest in and to such Owned Intellectual
Property and is entitled to make, use, offer for sale, sell, import, license
and transfer products made in accordance with the Owned Intellectual Property
and otherwise to exploit such Owned Intellectual Property in the continued
operation of its respective business consistent with past practice. To the
knowledge of the Company, (i) no Person has or is engaged in any activity that
has Infringed upon the Owned Intellectual Property, and (ii) the Company has
not performed any acts or made any statements, or failed to perform any acts or
make any statements, which would adversely affect either the validity or
enforceability of any of the Owned Intellectual Property against any Person.
Except as has not had, and would reasonably be expected to have, a Company
Material Adverse Effect, neither the Company nor any Subsidiary has exclusively
licensed any Owned Intellectual Property to any Person.
(d) Except as has not had, and would not reasonably be expected to
have, a Company Material Adverse Effect, to the knowledge of the Company, the
Company and its Subsidiaries use the Intellectual Property of third parties
only pursuant to valid, effective written License Agreements (collectively, the
"Third Party Licenses") that will allow the continued operation of material
aspects of the Company's business consistent with past practice. Section
3.14(b) of the Company Disclosure Schedule sets forth a true and complete list
of all third party software contained in the Owned Intellectual Property (as
defined above) that, if the Company or any of its Subsidiaries did not have the
right to make, use, offer for sale, sell, import, license, transfer,
sublicense, and otherwise exploit, would have, or could reasonably be expected
to have, a Company Material Adverse Effect.
(e) The Company and its Subsidiaries have taken commercially
reasonable actions to protect, preserve, and maintain the secrecy of the Owned
Intellectual Property that is not the subject of any patent, copyright, or
trademark registration as a trade secret under applicable Law ("Trade Secrets")
and to maintain the confidentiality of and restrict the improper use of the
Trade Secrets. Without limitation, such reasonable actions have included
requiring employees and consultants to enter into non-disclosure and
intellectual property assignment agreements and waivers of moral rights (where
applicable) to the extent that such employees or consultants have worked with
or have developed any part of the Owned Intellectual Property. To the knowledge
of the Company, (i) there has been no unauthorized disclosure of any of the
Trade Secrets, and (ii) there has been no material breach of the Company's or
any Subsidiary's security procedures wherein any of the Trade Secrets has been
improperly disclosed to a third Person.
(f) To the knowledge of the Company, the consummation of the Merger
will not result in the loss or the impairment of the right of the Company or
any of its Subsidiaries to own or use any of the material Intellectual
Property.
(g) For purposes of this Agreement, "Intellectual Property" means the
following and all rights pertaining thereto: (i) patents, patent applications,
provisional patent applications and statutory invention registrations
(including all utility models and other patent rights under the Laws of all
countries), (ii) trademarks, service marks, trade dress, distinguishing guises,
logos, trade names, service names, corporate names, domain names and other
brand identifiers, registrations and applications for registration thereof,
(iii) copyrights, proprietary designs, Computer Software (as defined below),
mask works, databases, and registrations and applications for registration
thereof, (iv) confidential and proprietary information, trade secrets, know-how
and show-how, and (v) all similar rights, however denominated, throughout the
world. For purposes of this Agreement, "Computer Software" means computer
software and includes all source code, object code, executable or binary code.
3.15 Taxes.
(a) (i) The Company and the Subsidiaries have timely filed or caused
to be filed (taking into account any extension of time to file granted or
obtained) all Tax Returns required to be filed by them, and any such filed Tax
Returns are true, correct and complete, (ii) the Company and the Subsidiaries
have timely paid any Taxes due and payable except to the extent that such Taxes
are being contested in good faith and for which the Company or the appropriate
Subsidiary has set aside adequate reserves in accordance with GAAP, (iii)
without taking into account any transactions contemplated by this Agreement and
based upon activities to date, adequate reserves in accordance with GAAP have
been established by the Company and the Subsidiaries for all Taxes not yet due
and payable in respect of taxable periods ending on the date hereof and (iv)
all amounts of Tax required to be withheld by the Company and its Subsidiaries
have been timely withheld and paid over to the appropriate Tax authority.
(b) Except as set forth in Section 3.15 of the Company Disclosure
Schedule, no deficiency for Taxes has been asserted or assessed by any
Governmental Authority in writing against the Company or any Subsidiary (or, to
the knowledge of the Company, has been threatened or proposed), except for
deficiencies which have been satisfied by payment, settled or been withdrawn or
which are being contested in good faith and are Taxes for which the Company or
the appropriate Subsidiary has set aside adequate reserves in accordance with
GAAP. There are no Liens for Taxes, other than Liens for current Taxes and
assessments not yet past due or which are being contested in good faith and for
which the Company or the appropriate Subsidiary has set aside adequate reserves
in accordance with GAAP, on the assets of the Company or any Subsidiary.
(c) (i) Except as set forth in Section 3.15 of the Company Disclosure
Schedule, there are no pending or, to the knowledge of the Company, threatened
audits, examinations, investigations or other proceedings in respect of Taxes
of the Company or any Subsidiary with respect to which the Company or a
Subsidiary has been notified in writing and (ii) neither the Company nor any
Subsidiary has waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to an assessment or deficiency for Taxes
(other than pursuant to extensions of time to file Tax Returns obtained in the
ordinary course).
(d) Except as set forth in Section 3.15 of the Company Disclosure
Schedule, neither the Company nor any Subsidiary is a party to any
indemnification, allocation or sharing agreement with respect to Taxes that
could give rise to a payment or indemnification obligation (other than
agreements among the Company and its Subsidiaries and other than customary Tax
indemnifications contained in credit or other commercial lending agreements).
(e) Neither the Company nor any of its Subsidiaries is required to
make any disclosure to the Internal Revenue Service with respect to a "listed
transaction" pursuant to Section 1.6011-4(b)(2) of the Treasury Regulations
promulgated under the Code (the "Treasury Regulations").
(f) Neither the Company nor any Subsidiary (i) has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was the Company) or (ii) has any liability for
the Taxes of any Person (other than the Company or any Subsidiary) under
Treasury Regulation section 1.1502-6 (or any similar provision of state, local
or foreign Law), as a transferee, successor, by contract or otherwise.
(g) Neither the Company nor any Subsidiary has distributed the stock
of another company in a transaction that was purported or intended to be
governed by Section 355 or Section 361 of the Code.
(h) During the past three years, no claim has ever been made by any
Taxing authority in a jurisdiction where the Company or any of its Subsidiaries
does not file a Tax Return that it is or may be subject to tax in that
jurisdiction.
3.16 Environmental Matters.
(a) Except as set forth in Section 3.16 of the Company Disclosure
Schedule, (i) the Company and its Subsidiaries are and at all times have been
in compliance with all Environmental Laws, and (ii) neither the Company nor any
Subsidiary has any material liability under any Environmental Law. Except as
set forth in Section 3.16 of the Disclosure Schedule, all Property currently
and formerly owned or leased by the Company or any Subsidiary was at all times
during which such premises were occupied by the Company or any Subsidiary, free
from material contamination from Hazardous Substances. Except as set forth in
Section 3.16 of the Company Disclosure Schedule, during the past five years (i)
neither the Company nor any Subsidiary has received (A) any notices of any
material violation or alleged material violation of, or any material liability
under, any Environmental Law or (B) any written CERCLA Section 104(e) requests,
or potentially responsible party or "PRP" notices or any similar information
request or notice under CERCLA or any similar state Law and (ii) there is no
material Environmental Claim pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary and there are no present or to
the knowledge of the Company, past events, conditions or activities, that would
give rise to any such material Environmental Claim. The Company and each
Subsidiary has, and maintains in full force and effect, all permits, licenses
and authorizations required under the Environmental Laws for the operation of
their business as it is currently operated and, based on the manner in which
the business of the Company and the Subsidiaries is currently conducted, no
modification or change to the operations of such business will be required upon
renewal of any such permits, licenses and authorizations. Except as set forth
in Section 3.16 of the Company Disclosure Statement, neither the Company nor
any Subsidiaries is responsible for, or party to any Contract by which it is
obligated to indemnify any other person with respect to, or be reasonably
responsible for, any Environmental Claim, obligations or liabilities under any
applicable Environmental Law, including, without limitation, related to the
Properties or any other real property formerly owned or operated by the Company
or any Subsidiary.
(b) For purposes of this Agreement, the term "Environmental Laws"
means all federal, state, local and foreign Laws and regulations relating to
pollution or protection of human health or the environment, including without
limitation, Laws relating to releases or threatened releases of Hazardous
Substances or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, release, transport or handling of Hazardous Substances
and all Laws and regulations with regard to recordkeeping, notification,
disclosure and reporting requirements respecting Hazardous Substances.
(c) For purposes of this Agreement, "Environmental Claim" means any
claim, action, cause of action, investigation or notice, written or oral, by
any Person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or resulting from: (i)
the presence, release or threatened release into the environment, of any
Hazardous Substance at any location, whether or not owned or operated by the
Company or any its Subsidiaries or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Law relating to Environmental Matters.
(d) For purposes of this Agreement, the term "Hazardous Substance"
means all substances defined as Hazardous Substances, Oils, Pollutants or
Contaminants in the National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R. ss. 300.5, or defined as such by, or regulated as such under,
any Law relating to Environmental Matters.
3.17 Specified Contracts.
(a) Except as disclosed in Section 3.17(a) of the Company Disclosure
Statement (i) each Specified Contract is a legal, valid and binding obligation
of the Company or a Subsidiary, as applicable, in full force and effect and
enforceable against the Company or a Subsidiary in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency (including all
Laws relating to fraudulent transfers), reorganization, moratorium or similar
Laws affecting creditors' rights generally and subject to the effect of general
principles of equity, (ii) to the knowledge of the Company, each Specified
Contract is a legal, valid and binding obligation of the counterparty thereto,
in full force and effect and enforceable against such counterparty in
accordance with its terms, (iii) neither the Company nor any of its
Subsidiaries is and, to the Company's knowledge, no counterparty is, in breach
or violation of, or in default under, any Specified Contract (which breach,
violation or default is not capable of being cured promptly without penalty),
(iv) none of the Company or any of the Subsidiaries has received any claim of
default under any Specified Contract (which default is not capable of being
cured promptly without penalty), or any written notice of an intention to, and
to the knowledge of the Company, no other party to a Specified Contract intends
to, terminate, not renew, stop work under or challenge the validity or
enforceability of any Specified Contract (including as a result of the
execution and performance of this Agreement) and (v) to the Company's
knowledge, no event has occurred which would result in a breach or violation
of, or a default under, any Specified Contract (in each case, with or without
notice or lapse of time or both).
(b) For purposes of this Agreement, the term "Specified Contract"
means any of the following Contracts (together with all exhibits and schedules
thereto) to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any of their respective properties or assets are
bound or affected as of the date hereof:
(i) any limited liability company agreement, joint venture or other
similar agreement or arrangement with respect to any material business of the
Company or any of its Subsidiaries;
(ii) any Contract relating to or evidencing Indebtedness;
(iii) any Contract filed or required to be filed as an exhibit to the
Company's Annual Report on Form 10-K pursuant to Item 601(b)(10) of Regulation
S-K under the Securities Act or disclosed or required to be disclosed by the
Company in a Current Report on Form 8-K or other SEC filing, other than Plans
disclosed in Section 3.11(a);
(iv) any Contract that purports to limit the right of the Company or
the Subsidiaries or any Affiliate of the Company (A) to engage or compete in
any line of business or (B) to compete with any Person or operate in any
location;
(v) any Contract that (A) contains most favored customer pricing
provisions or (B) grants any exclusive rights, rights of first refusal, rights
of first negotiation or similar rights to any Person;
(vi) any Contract for the acquisition or disposition, directly or
indirectly (by merger or otherwise), of assets or capital stock or other equity
interests of any Person for aggregate consideration under such Contract in
excess of $1,000,000;
(vii) any Contract between or among the Company or a Subsidiary, on
the one hand, and any of their respective Affiliates (other than the Company or
any Subsidiary), on the other hand;
(viii) any acquisition Contract pursuant to which the Company or any
of its Subsidiaries has continuing indemnification, "earn-out" or other
contingent payment obligations;
(ix) any Contract that, individually or in the aggregate, would, or
would reasonably be expected to prevent, materially delay or materially impede
the Company's ability to consummate the transactions contemplated by this
Agreement;
(x) any Contract that contains a put, call, right of first refusal or
similar right pursuant to which the Company or any Subsidiary would be required
to purchase or sell, as applicable, any ownership interests of any Person;
(xi) any Contract that involves performance of services or delivery of
goods supplies, products and/or materials or other personal property by the
Company or any Subsidiary after the date hereof which is believed by management
of the Company to be significant with respect to the Company and its
Subsidiaries taken as a whole;
(xii) any Contract which involves receipt of services or purchase of
goods, supplies, products and/or materials or other personal property by the
Company or any Subsidiary after the date hereof which is believed by management
of the Company to be significant with respect to the Company and its
Subsidiaries taken as a whole;
(xiii) any lease, rental or occupancy agreement, license, installment
and conditional sale agreement, and other Contract affecting the ownership of,
leasing of, title to, use of, or any leasehold or other interest in, any real
or personal property and involving aggregate payments in excess of $1,000,000
per annum;
(xiv) any foreign sales agent agreement;
(xv) any Contract expressly requiring capital expenditures after the
date hereof in an amount in excess of $500,000; and
(xvi) any Contract entered into during the current fiscal year
relating to the settlement of any litigation, suit, proceeding, action,
investigation, claim, judgment, award, order or decree which involves liability
of the Company or any Subsidiary.
A true and complete list of the Specified Contracts referred to in
subsections (i) through (xvi) above is set forth in Section 3.17(b) of the
Company Disclosure Schedule. True, correct and complete copies of each
Specified Contract, including all amendments thereto (except for Specified
Contracts filed prior to the date hereof as exhibits to SEC Reports), have been
provided or made available to Parent or its advisors prior to the date hereof.
3.18 Government Contracts.
(a) Except as set forth in Section 3.18(a) of the Company Disclosure
Schedule: (i) each of the Company and the Subsidiaries has complied in all
respects at all times during the last three years with all material
requirements of any statute, Law, rule or regulation pertaining to any
Government Contract or Government Bid; (ii) all representations and
certifications made by each of the Company and any Subsidiary with respect to
such Government Contract during the last three years were accurate in every
respect as of their effective date, and each of the Company and the
Subsidiaries has fully complied with such representations and certifications in
all respects; and (iii) as of the date hereof, no termination or default, cure
notice or show cause notice has been issued and remains unresolved.
(b) Except as set forth in Section 3.18(b) of the Company Disclosure
Schedule: (i) neither the Company, its Subsidiaries or any of their current or
former employees is (or during the last three years has been) under any
administrative, civil or criminal investigation or indictment by any
Governmental Authority with respect to the conduct of the business of each of
the Company and the Subsidiaries; (ii) to the knowledge of the Company, there
is no pending U.S. governmental investigation of the Company or any Subsidiary,
or any of their respective officers, employees or representatives, nor within
the last three years has there been any U.S. governmental investigation of the
Company or any Subsidiary, or any of their respective officers, employees or
representatives resulting in any material adverse finding with respect to any
material alleged irregularity, misstatement or omission arising under or
relating to any Government Contract or Government Bid (other than routine
Defense Contract Audit Agency audits); and (iii) during the last three years
neither the Company nor any Subsidiary has made any voluntary disclosure in
writing to any Governmental Authority with respect to any alleged irregularity,
misstatement or omission arising under or relating to any Government Contract
or Government Bid.
(c) Except as set forth in Section 3.18(c) of the Company Disclosure
Schedule, as of the date of this Agreement, there are no outstanding written
(or to the Company's knowledge, unwritten) claims, allegations, or dispute
proceedings that have been asserted against (i) the Company or any of its
Subsidiaries, by any Governmental Authority or any prime contractor,
subcontractor or vendor relating to any Government Contract or Government Bid
to which the Company or any of its Subsidiaries is a party or (ii) by the
Company or any of its Subsidiaries against any Governmental Authority, or any
prime contractor, or subcontractor or vendor relating to any Government
Contract or Government Bid to which the Company or any of its Subsidiaries is a
party.
(d) Except as set forth in Section 3.18(d) of the Company Disclosure
Schedule, the rates and rate schedules submitted to the government of the
United States of America, its agencies and instrumentalities with respect to
Government Contracts of the Company or any Subsidiary have been closed for all
years prior to 2002.
(e) Each of the Company and the 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).
(f) Each of the Company and the Subsidiaries is in compliance in all
respects with the Small Business Act of 1958, as amended, and the regulations
promulgated thereunder (collectively, the "Small Business Act"), in connection
with the Government Contracts and Government Bids awarded or granted pursuant
to a small business set aside or 8(a) program. Each of the Company and the
Subsidiaries has an adequate system of controls and procedures to ensure
compliance with the Small Business Act.
(g) For purposes of this Section 3.18, the following terms shall have
the meanings set forth below:
(i) "Government Bid" means any quotation, bid or proposal by the
Company or any of its Subsidiaries which, if accepted or awarded, would lead to
a contract with the U.S. Government or any other entity, including a prime
contractor or a higher tier subcontractor to the U.S. Government, for the
design, manufacture or sale of products or the provision of services by the
Company or any of its Subsidiaries; and
(ii) "Government Contract" means any prime contract, subcontract,
teaming agreement or arrangement, joint venture, basic ordering agreement,
letter contract, purchase order, delivery order, Bid, change order, arrangement
or other commitment of any kind relating to the business of the Company or any
of its Subsidiaries between the Company or any of its Subsidiaries and: (A) the
U.S. Government, (B) any prime contractor to the U.S. Government or (C) any
subcontractor with respect to any contract described in clause (A) or (B).
3.19 No Suspension or Debarment. Since January 1, 2001, neither the
Company any of its Subsidiaries nor any of their respective Affiliates has been
suspended or debarred from bidding on Contracts of subcontracts for or with any
Governmental Authority. Except as set forth on Section 3.19 of the Company
Disclosure Schedule, no suspension or debarment actions with respect to
Government Contracts have been commenced or threatened in writing against the
Company, any Subsidiary or any of their respective officers, directors or
employees.
3.20 Loss Contracts; Backlog. Section 3.20 of the Company Disclosure
Schedule sets forth those Specified Contracts that are Loss Contracts for which
there are accruals in excess of $500,000. The collective Backlog of the Company
and the Subsidiaries as of July 31, 2005 with respect to Contracts for the sale
of goods or services to unaffiliated third parties where there is an official
award reported for the Company is not less than $612,753,000. "Backlog" means,
as of any given date, (i) the total amount awarded and funded under the
applicable Contract as of such date less (ii) the amount of the shipments made
in respect of such Contract of such date.
3.21 Customers, Distributors and Suppliers. Section 3.21 of the
Company Disclosure Schedule sets forth a list of the names of (a) the customers
of the Company and the Subsidiaries believed by management of the Company to be
significant with respect to the Company and its Subsidiaries taken as a whole;
and (b) the suppliers of each such division of the business believed by
management of the Company to be significant with respect to the Company and its
Subsidiaries taken as a whole. Neither the Company nor any Subsidiary has
received any communication in writing from any customer or supplier of the
Company of any intention to terminate or materially reduce purchases from or
supplies to the business of the Company and the Subsidiaries, which termination
or reduction would reasonably be expected to have a Material Adverse Effect.
3.22 Insurance. Section 3.22 of the Company Disclosure Schedule sets
forth a complete and correct list of all property, casualty and liability
material insurance policies owned or held by the Company and each Subsidiary.
With respect to each such insurance policy: (i) to the knowledge of the
Company, the policy is legal, valid, binding and enforceable in accordance with
its terms and is in full force and effect and provides insurance in such
amounts and against such risks as the management of the Company reasonably has
determined to be prudent in accordance with industry practices or as is
required by Law or regulation, and all premiums due and payable thereon have
been paid; (ii) neither the Company nor any Subsidiary is in material breach or
default (including any such breach or default with respect to the payment of
premiums or the giving of notice), and, to the Company's knowledge, no event
has occurred which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination or modification, under the policy;
(iii) to the knowledge of the Company, no insurer on the policy has been
declared insolvent or placed in receivership, conservatorship or liquidation;
and (iv) no notice of cancellation or termination has been received other than
in connection with ordinary renewals.
3.23 Board Approval; Vote Required.
(a) The Board of Directors of the Company, by resolutions duly adopted
at a meeting duly called and held, which resolutions, have not been
subsequently rescinded, modified or withdrawn in any way, has by unanimous vote
of those directors present duly (i) determined that this Agreement and the
Merger and the Other Transactions are fair to and in the best interests of the
Company and its shareholders, (ii) approved this Agreement and the Merger and
the Other Transactions and declared their advisability, and (iii) recommended
that the shareholders of the Company approve this Agreement and the Other
Transactions and directed that this Agreement be submitted for consideration by
the Company's shareholders at the Company Shareholders' Meeting. The approval
of this Agreement by the Board of Directors of the Company, constitutes
approval of this Agreement and the Merger for purposes of Sections 351.459 and
351.407 of the MBCL and represents the only action necessary to ensure that
Sections 351.459 and 351.407 of the MBCL does not and will not apply to the
execution and delivery of this Agreement or the consummation of the Merger and
the Other Transactions. No "fair price," "moratorium," "control share
acquisition," or other similar anti-takeover statute or regulation enacted
under state or federal Laws in the United States (with the exception of Section
351.459 and 351.407 of the MBCL) applicable to the Company is applicable to the
transactions contemplated by this Agreement.
(b) The only vote of the holders of any class or series of capital
stock or other securities of the Company necessary to adopt this Agreement or
consummate the Other Transactions is the Company Shareholder Approval.
3.24 Opinions of Financial Advisors. The Company has received the
opinion of Xxxxxx Brothers, Inc. (the "Company Financial Advisor"), to the
effect that, as of the date of this Agreement, the Merger consideration to be
received by the holders of Common Stock is fair, from a financial point of
view, to such holders. An executed copy of such opinion has been delivered to
Parent.
3.25 Brokers. No broker, finder or investment banker (other than the
Company Financial Advisor) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated hereby based
upon arrangements made by or on behalf of the Company. The Company has
delivered to Parent complete and accurate copies of all agreements under which
any fees or expenses are or may be payable to Xxxxxx Brothers, Inc.
3.26 Certain Business Practices. None of the Company, any of its
Subsidiaries, or any director, officer or employee of the Company or any of its
Subsidiaries has, in furtherance of any business of the Company or any of its
Subsidiaries: (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity or (ii)
made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended.
3.27 Information Supplied. The information supplied or to be supplied
by the Company for inclusion or incorporation by reference in the Registration
Statement (as defined in Section 5.3(c)) and the Joint Proxy Statement shall
not, at (i) the time the Registration Statement is declared effective, (ii) the
time the Joint Proxy Statement (or any amendment thereof or supplement thereto)
is first mailed to the shareholders of the Company and Parent and (iii) the
time of the Company Shareholders' Meeting (as defined in Section 5.3(a)),
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. All documents that the Company is responsible for filing with the
SEC in connection with the Merger or the Other Transactions contemplated by
this Agreement will comply as to form and substance with the applicable
requirements of the Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing sentence, no representation or warranty is made by the Company with
respect to statements made or incorporated by reference therein based on
information supplied by Parent or Merger Sub for inclusion or incorporation by
reference in the Registration Statement or Joint Proxy Statement.
3.28 Export Licenses and Agreements. Section 3.28(a) of the Company
Disclosure Schedule sets forth a true, correct and complete list of: (i) each
export license, technical assistance agreement, manufacturing license agreement
or other form of export approval to which the Company or any of its
Subsidiaries is a party or which apply to the Company or any of its
Subsidiaries or any of their operations or assets (collectively, "Export
Approvals") which is in effect as of the date of this Agreement and (ii) each
application for an Export Approval for which the Company of any of its
Subsidiaries has requested an Export Approval.
(b) (i) Except as set forth in Section 3.28(b) of the Company
Disclosure Schedule, the Company and its Subsidiaries have complied with each
Export Approval as required; (ii) the Company and its Subsidiaries have
complied with the requirements of any applicable Law pertaining to any Export
Approval; (iii) as of the effective date of each Export Approval, all
representations and certifications made by the Company and its Subsidiaries
with respect to any Export Approval were accurate and the Company and its
Subsidiaries have fully complied with all such representations and
certifications; and (iv) based on its export activities, including those
involving foreign nationals in the United States and abroad, the Company and
its Subsidiaries have no knowledge of any violation by them of the Arms Export
Control Act, the International Traffic In Arms Regulations, the Export
Administration Act, the Export Administration Regulations or any other United
States export regulation.
(c) Except as set forth in Section 3.28(c) of the Company Disclosure
Schedule: (i) there are no pending audits or investigations of the Company or
its Subsidiaries or any of their respective officers, employees or
representatives and (ii) within the five (5) years prior to the date of this
Agreement, there has not been any audit or investigation with respect to any
Export Approval directed or requested by any Governmental Authority of the
Company or its Subsidiaries or any of their respective officers, employees or
representatives resulting in findings materially adverse to the Company. During
the five (5) years prior to the date of this Agreement, the Company and its
Subsidiaries have not made any voluntary disclosure to any Governmental
Authority with respect to any irregularity, misstatement or omission arising
under United States trade or transaction controls or otherwise relating to the
export activities of the Company and its Subsidiaries.
3.29 Full Disclosure. No representation or warranty or other statement
made by the Company in this Agreement in connection with the Merger or the
transactions contemplated hereby contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Subject to such exceptions as are disclosed in the corresponding
sections of the disclosure schedule which is attached hereto and made a part
hereof (the "Parent Disclosure Schedule") (it being understood that (a) the
disclosure of any fact or item in any section of the Parent Disclosure Schedule
shall, should the existence of such fact or item be relevant to any other
section, be deemed to be disclosed with respect to that other section so long
as the relevance of such disclosure to such other section is reasonably
apparent, and (b) the disclosure of any matter or item in the Parent Disclosure
Schedule shall not be deemed to constitute an acknowledgement that such matter
or item is required to be disclosed therein or is material to a representation
or warranty set forth in this Agreement and shall not be used as a basis for
interpreting the terms "material," "materially," "materiality" or "Parent
Material Adverse Effect" or any word or phrase of similar import and does not
mean that such matter or item would, alone or together with any other matter or
item, could reasonably be expected to have a Parent Material Adverse Effect, as
defined in Section 8.7), Parent and Merger Sub hereby represent and warrant to
the Company as follows:
4.1 Organization and Qualification. Each of Parent, Merger Sub and
each other subsidiary of Parent (each a "Parent Subsidiary") is a corporation
validly existing and in good standing under the Laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and all
necessary governmental approvals to own, lease and operate its properties and
to carry on its business as it is now being conducted except for such
governmental approvals, the absence of which, individually or in the aggregate,
has not had and would not reasonably be expected to have a Parent Material
Adverse Effect.
4.2 Capitalization. The authorized capital stock of Parent consists of
50,000,000 shares of Parent Stock and 2,000,000 shares of preferred stock, par
value $10.00 per share ("Parent Preferred"). As of September 19, 2005: (i)
28,009,256 shares of Parent Stock were issued and outstanding, all of which are
duly authorized, validly issued, fully paid and nonassessable and were issued
free of preemptive (or similar) rights, and (ii) no shares of Parent Preferred
were issued and outstanding. Except for 3,147,025 outstanding options, there
are no (i) subscriptions, calls, contracts, options, warrants or other rights,
agreements, arrangements, understandings, restrictions or commitments of any
character to which Parent or Merger Sub is a party or by which Parent or Merger
Sub is bound relating to the issued or unissued capital stock or equity
interests of Parent or Merger Sub or obligating Parent or Merger Sub to issue
or sell any shares of capital stock of, other equity interests in or debt
securities of, Parent or Merger Sub (including any rights plan or agreement),
(ii) securities of Parent or Merger Sub or securities convertible, exchangeable
or exercisable for shares of capital stock or equity interests of Parent or
Merger Sub, or (iii) equity equivalents, stock appreciation rights or phantom
stock, stock based performance units, ownership interests in Parent or Merger
Sub or similar rights. All shares of capital stock of Parent to be issued in
connection with the Merger, when issued pursuant to this Agreement, will be
duly authorized, validly issued, fully paid and nonassessable.
4.3 Authority Relative to This Agreement. Each of Parent and Merger
Sub has all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the Merger
and the Other Transactions. The execution, delivery and performance of this
Agreement by Parent and Merger Sub and the consummation by Parent and Merger
Sub of the Merger and the Other Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate
proceedings on the part of Parent and Merger Sub are necessary to authorize
this Agreement or to consummate the Merger or such Other Transactions (other
than the authorization and approval of the issuance of Parent Stock in
connection with the Merger by the affirmative vote of the holders of a majority
of the votes cast by the holders of Parent Stock, provided, that the total
votes cast represents over 50% in interest of all securities entitled to vote,
as required by the Listed Company Manual of the NYSE (the "Parent Stockholder
Vote") and the filing and recordation of appropriate merger documents as
required by the MBCL). This Agreement has been duly and validly executed and
delivered by each of Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of each of Parent and Merger Sub, enforceable each of Parent and
Merger Sub in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency (including all Laws relating to fraudulent
transfers), reorganization, moratorium or similar Laws affecting creditors'
rights generally and subject to the effect of general principles of equity.
4.4 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub and
the consummation by Parent and Merger Sub of the Merger and the Other
Transactions will not, (i) conflict with, violate or result in a breach of the
Certificate of Incorporation or Bylaws of Parent or Merger Sub (or similar
organizational documents of any Parent Subsidiary), (ii) assuming that the
Parent Stockholder Approval has been obtained and that all filings and other
actions described in Section 4.4(b) have been made or taken, conflict with or
violate any Law applicable to Parent, Merger Sub, or any Parent Subsidiary, or
by which any property or asset of Parent, Merger Sub, or any Parent Subsidiary,
is bound or affected, or (iii) result in any breach or violation of or
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, require consent or result in a loss of a benefit
under, give rise to an obligation under, give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any property or asset of Parent, Merger Sub, or any
Parent Subsidiary, pursuant to any Contract to which Parent, Merger Sub, or any
Parent Subsidiary is a party, or by which Parent, Merger Sub, or any Parent
Subsidiary, or any property or asset of Parent, Merger Sub, or any Parent
Subsidiary, is bound or affected, except, with respect to clauses (ii) and
(iii), for any such conflicts, violations, breaches, defaults or other
occurrences which have not had, and would not reasonably be expected to have, a
Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub and
the consummation by Parent and Merger Sub of the Merger and the Other
Transactions will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Authority, except for
(i) applicable requirements of the Exchange Act, (ii) the pre-merger
notification requirements of the HSR Act, and the competition or merger control
Laws of any other applicable jurisdiction, (iii) the notification requirements
of the ICA, (iv) the filing with the SEC of the Registration Statement and
Joint Proxy Statement, (v) any filings required by, and any approvals required
under, the rules and regulations of the NYSE or the Nasdaq National Market,
(vi) the filing and recordation of appropriate merger documents as required by
the MBCL, (vii) any novations, consents or approvals required in connection
with Government Contracts or similar novations, consents or approvals under any
other Contracts with any other Governmental Authorities, (viii) any filings
required under the DOD Industrial Security Manual for Safeguarding Classified
Information, and (ix) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filing or notifications would not
(a) prevent or materially delay the consummation of the Merger, or (b)
otherwise prevent or materially delay performance by the Company of any of its
material obligations under the Agreement.
4.5 Interim Operations of Merger Sub. Merger Sub was formed solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business activities and has conducted its operations as contemplated
hereby.
4.6 Financing. Merger Sub has received and furnished a true and
correct copy to the Company of a commitment letter pursuant to which Parent has
received a commitment from a nationally-recognized financial institution to
make available funds to Merger Sub for the purpose of consummating the Merger
(the "Commitment Letter"). As of the date hereof, the Commitment Letter has not
been withdrawn and is in full force and effect and there is no breach or
default existing (or which with notice or lapse of time or otherwise may exist)
thereunder. The aggregate proceeds of the financing contemplated by the
Commitment Letter or any alternative financing arrangement contemplated by
Parent, together with cash on hand, are sufficient to pay the cash portion of
the Merger Consideration, to repay the existing indebtedness of the Company and
its Subsidiaries (excluding any indebtedness the parties agree shall not be
repaid) and to pay all fees and expenses to be paid by Parent and Merger Sub
related to the transactions contemplated by this Agreement.
4.7 Ownership of Common Stock. As of the date hereof and without
taking into account the transactions contemplated hereby, neither Parent nor
Merger Sub nor any of their Affiliates beneficially owns any shares of Common
Stock of the Company.
4.8 Parent SEC Reports. Parent has filed all forms, reports,
statements, schedules, certifications, and other documents required to be filed
by it with the SEC since March 31, 2002 (collectively, the "Parent SEC
Reports"). As of their respective dates, Parent SEC Reports (including any
documents or information incorporated by reference therein and including any
financial statements or schedules included therein) (i) complied in all
material respects with the applicable requirements of the Securities Act, the
Exchange Act, the Xxxxxxxx-Xxxxx Act and, in each case, the rules and
regulations promulgated thereunder and (ii) did not at the time they were
filed, or, if amended, as of the date of such amendment, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading. Since March
31, 2005, there has not been any event or state of facts that, individually or
in the aggregate, would reasonably be expected to have a Parent Material
Adverse Effect.
4.9 Information Supplied. The information supplied or to be supplied
by Parent or Merger Sub for inclusion or incorporation by reference in the
Registration Statement and the Joint Proxy Statement shall not, at (i) the time
the Registration Statement is declared effective, (ii) the time the Joint Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the shareholders of the Company and Parent and (iii) the time of the Parent
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 made therein, in light of the circumstances under which
they were made, not misleading. All documents that Parent or Merger Sub is
responsible for filing with the SEC in connection with the Merger or the other
transactions contemplated by this Agreement will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, no
representation or warranty is made by Parent or Merger Sub with respect to
statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in the
Registration Statement or Joint Proxy Statement.
4.10 Absence of Litigation. Except as set forth in the Parent SEC
Reports or Section 4.10 of the Parent Disclosure Schedule, there is no Action
pending or, to the knowledge of Parent, threatened against Parent or any of the
Parent Subsidiaries, or any property or asset of Parent or any Parent
Subsidiary, or, to the knowledge of Parent, any officer, director or employee
of Parent or any of the Parent Subsidiaries, before any Governmental Authority
or arbitrator, except as has not, and would not reasonably be expected to have,
a Parent Material Adverse Effect. Except as set forth in Section 4.10 of the
Parent Disclosure Schedule, neither Parent nor any of the Parent Subsidiaries
nor any property or asset of Parent or of the Parent Subsidiaries is subject to
any order, writ, judgment, injunction, decree, determination or award of, or,
to the knowledge of Parent, any investigation by, any Governmental Authority.
4.11 Compliance.
(a) To the knowledge Parent, each of Parent and each of the Parent
Subsidiaries is, and at all times has been, in compliance in all material
respects with any Law applicable to such entity or by which any property or
asset of such entity is bound or affected, and has not received written notice
of any violation of any such Law.
(b) Since the enactment of the Xxxxxxxx-Xxxxx Act, Parent has been and
is in compliance in all material respects with the applicable provisions of the
Xxxxxxxx-Xxxxx Act. Parent has designed and implemented disclosure controls and
procedures (as defined in Rule 13a-15 under the Exchange Act) to ensure that
material information relating to Parent, including its consolidated Parent
Subsidiaries, is made known on a timely basis to the individuals responsible
for the preparation of Parent's filings with the SEC and other public
disclosure documents.
(c) Parent has disclosed, based on its most recent evaluation, to
Parent's auditors and the audit committee of the Board of Directors of Parent
(i) any significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably
likely to adversely affect in any material respect Parent's ability to record,
process, summarize and report financial information and (ii) any fraud or
allegation of fraud, whether or not material, that involves management or other
employees who have a significant role in Parent's internal controls over
financial reporting. True, correct and complete copies of any written reports
or other correspondence with respect to such disclosures (whether prepared by
Parent, its counsel or other advisors) have been made available to the Company
prior to the date of this Agreement, except in any instances where providing
such reports or other correspondence would constitute a waiver of applicable
attorney-client privilege (in which case the Company has been advised of the
subject matter thereof).
(d) Parent has not received any complaint, allegation, assertion or
claim in writing regarding the accounting practices, procedures, methodologies
or methods of Parent or its internal accounting controls, which deals with any
matter that would reasonably be expected to have a Parent Material Adverse
Effect. To the knowledge of Parent, there is no reason to believe that its
auditors and its chief executive officer and chief financial officer will not
be able to give the certifications and attestations required pursuant to the
rules and regulations adopted pursuant to Section 404 of the Xxxxxxxx-Xxxxx Act
when next due.
(e) Since April 1, 2003, neither Parent nor any of the Parent
Subsidiaries has effected any securitization transaction or other "off-balance
sheet arrangement" (as defined in Item 303 of Regulation S-K of the SEC).
4.12 Certain Business Practices. None of Parent, any of the Parent
Subsidiaries or any director, officer or employee of Parent or any of the
Parent Subsidiaries has, in furtherance of any business of Parent or any of the
Parent Subsidiaries: (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful payments relating to political activity or (ii)
made any unlawful payment to any foreign or domestic government official or
employee or to any foreign or domestic political party or campaign or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended.
4.13 Full Disclosure. No representation or warranty or other statement
made by Parent in this Agreement in connection with the Merger or the
transactions contemplated hereby contains any untrue statement or omits to
state a material fact necessary to make any of them, in light of the
circumstances in which it was made, not misleading.
ARTICLE 5
COVENANTS
5.1 Alternative Proposals. (a) Neither the Company nor any of its
Subsidiaries shall, and they shall cause their officers, directors and
employees and direct their agents and representatives (including, without
limitation, any investment banker, attorney or accountant retained by the
Company or its Subsidiaries) not to initiate, solicit, or knowingly encourage,
directly or indirectly, any inquiries or the making or implementation of any
Alternative Proposal (as defined below) or participate in any negotiations
concerning, or provide any confidential information or data to, afford access
to the properties, books or records of the Company or its Subsidiaries to, or
have any discussions with, any Person relating to an Alternative Proposal, or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal; provided, however, that nothing contained in this Section 5.1 shall
prohibit the Company or its Board of Directors from: (i) at any time prior to
obtaining the Company Shareholder Approval (the "Company Applicable Period"),
participating in discussions or negotiations with, providing confidential
information or data to, or affording access to the properties, books or records
of the Company or its Subsidiaries to, any Person who has made, in the good
faith judgment of the Board of Directors of the Company after consultation with
their financial advisors, a bona fide written Alternative Proposal that would
reasonably be expected to result in a Superior Proposal (as defined below);
provided that: (w) such Alternative Proposal was not initiated, solicited or
knowingly encouraged by the Company, its Subsidiaries or their agents in
violation of this Section 5.1, (x) the Company has complied with its
obligations under this Section 5.1, (y) the Board of Directors of the Company,
after consultation with outside legal counsel, determines in good faith that
the failure to so participate in discussions or negotiations, provide
confidential information or data or afford access would result in a breach of
the fiduciary duty of the Board of Directors of the Company to shareholders of
the Company under applicable Law and (z) a copy of all the information provided
to such Person is delivered simultaneously to Parent if it has not previously
been furnished or made available to Parent or (ii) making such disclosure to
the Company's shareholders, if the Board of Directors of the Company determines
in good faith, after consultation with outside legal counsel, that the failure
to disclose such information would result in a breach of the fiduciary duty of
the Board of Directors of the Company to the shareholders of the Company under
applicable Law. Any actions permitted under clauses (i) and (ii) above, and
taken in compliance with the foregoing, shall not be deemed a breach of any
other covenant or agreement of such party contained in this Agreement.
"Alternative Proposal" means an inquiry, offer or proposal
regarding any of the following (other than the transactions
contemplated hereby) involving the Company: (i) any merger,
consolidation, share exchange, recapitalization, liquidation,
dissolution, business combination or other similar transaction; (ii)
any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 20% or more of the consolidated assets of the Company
and its Subsidiaries, taken as a whole; (iii) any tender offer
(including a self tender offer) or exchange offer that, if
consummated, would result in any Person or group beneficially owning
more than 20% of the outstanding shares of any class of equity
securities of the Company or its Subsidiaries or the filing of a
registration statement under the Securities Act in connection
therewith; or (iv) any acquisition of 20% or more of the outstanding
shares of capital stock of the Company or the filing of a registration
statement under the Securities Act in connection therewith or any
other acquisition or disposition the consummation of which would
prevent or materially diminish the benefits to Parent of the Merger.
"Superior Proposal" means any proposal made by a third party
to acquire, directly or indirectly, including pursuant to a tender
offer, exchange offer, merger, consolidation, share exchange, business
combination, recapitalization, liquidation, dissolution or other
similar transaction, for 100% of then outstanding shares of Common
Stock or all or substantially all of the consolidated assets of the
Company, which the Board of Directors of the Company determines in
good faith (after consultation with its financial advisor) to be more
favorable to the Company and the Company's shareholders from a
financial point of view than the transactions contemplated by this
Agreement taking into account at the time of determination the ability
of the Person making such proposal to consummate the transactions
contemplated by the proposal (based upon, among other things, the
availability of financing and the expectation of obtaining required
approvals).
(b) Except as expressly permitted by this Section 5.1 and Section
5.3(a)(iii), neither the Board of Directors of the Company nor any committee
thereof shall: (i) withdraw, modify or fail to make, or propose to withdraw,
modify or fail to make its approval or recommendation of the Merger or of this
Agreement and the transactions contemplated hereby; (ii) approve or recommend,
or propose to approve or recommend, any Alternative Proposal; (iii) take any
action to render the provisions of any anti-takeover statute, rule or
regulation inapplicable to any Person (other than Parent, Merger Sub or their
Affiliates) or group or to any Alternative Proposal; or (iv) cause the Company
to accept such Alternative Proposal and/or enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
an "Acquisition Agreement") related to any Alternative Proposal; provided,
however, that prior to the expiration of the Company Applicable Period, the
Board of Directors of the Company may not (other than as permitted under
Section 5.3(a)(iii)) take any of the actions detailed in clauses (i) through
(iv) above unless it complies with the terms of this Section 5.1(b) and (A)
there is an Alternative Proposal which is a Superior Proposal, (B) the Board of
Directors of the Company, after consultation with outside legal counsel,
determines in good faith that the failure to do so would result in a breach of
the fiduciary duty of the Board of Directors of the Company to the shareholders
of the Company under applicable Law, (C) the Company has provided Parent at
least two (2) business days prior written notice ("Superior Proposal Notice")
advising Parent that the Board of Directors of the Company has received a
Superior Proposal which it intends to accept, specifying the terms and
conditions of such Superior Proposal and identifying the Person making such
Superior Proposal and (D) for a period of not less than two (2) business days
after Parent's receipt from the Company of each Superior Proposal Notice, the
Company shall, if requested by Parent, negotiate in good faith with Parent to
revise this Agreement so that the Superior Proposal no longer constitutes a
Superior Proposal.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) above, the Company shall promptly advise Parent of any
request for information involving an Alternate Proposal or possible Alternate
Proposal or the submission or receipt of any Alternative Proposal, or any
inquiry with respect to or which would reasonably be expected to lead to any
Alternative Proposal, the material terms and conditions of such request,
Alternative Proposal or inquiry, and the identity of the Person making any such
request, Alternative Proposal or inquiry and its response or responses thereto.
The Company will keep Parent fully informed on a prompt basis of the status and
details (including amendments or proposed amendments) of any such request,
Alternative Proposal or inquiry. The Company shall promptly provide to Parent
copies of all written correspondence or other written material, including
material in electronic form, between the Company and any Person making any such
request, Alternative Proposal or inquiry. The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing and
will promptly request that all Persons provided confidential information
concerning the Company and its Subsidiaries pursuant to a confidentiality,
non-disclosure or similar agreement, return to the Company all of such
confidential information, without keeping any copies thereof (if permissible),
in accordance with such confidentiality, non-disclosure or similar agreements.
(d) The Company agrees that it will promptly inform it and its
Subsidiaries' respective officers, directors, representatives and agents of the
obligations undertaken in this Section 5.1.
(e) Nothing contained in this Section 5.1 shall prohibit the Company
from (i) taking and disclosing to its shareholders a position contemplated by
Rule 14e-2(a) or Item 1012(a) of Regulation M-A promulgated under the Exchange
Act or (ii) making any required disclosure to the shareholders of the Company
if, in the good faith judgment of the Board of Directors of the Company (after
consultation with outside counsel), failure to so disclose would constitute a
violation of applicable Law.
5.2 Interim Operations. (a) From the date of this Agreement until the
Effective Time, except as required by Law or as set forth in Section 5.2(a) of
the Company Disclosure Schedule, unless Parent has consented in writing
thereto, the Company shall, and shall cause its Subsidiaries to: (i) conduct
its operations according to its ordinary course of business consistent with
past practice and in compliance in all material respects with all applicable
Laws; (ii) use its commercially reasonable efforts to preserve intact its
business organizations and goodwill, keep available the services of its
officers, employees and consultants, and maintain satisfactory relationships
with those Persons having business relationships with them; (iii) upon the
discovery thereof, promptly notify Parent of the existence of any breach of any
representation or warranty contained herein (or, in the case of any
representation or warranty that makes no reference to Company Material Adverse
Effect or materiality, any breach of such representation or warranty in any
material respect) or the occurrence of any event that would cause any
representation or warranty contained herein no longer to be true and correct
(or, in the case of any representation or warranty that makes no reference to
Company Material Adverse Effect or materiality, to no longer be true and
correct in any material respect); (iv) promptly deliver to Parent true and
correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement; and (v) pay its Taxes when due.
(b) From and after the date of this Agreement until the Effective
Time, except as may be required by Law or any pre-existing contractual
obligation, and except as set forth in Section 5.2(b) of the Company Disclosure
Schedule, unless Parent has consented in writing thereto (which consent shall
not be unreasonably withheld or delayed), the Company shall not, and shall
cause its Subsidiaries not to: (i) amend its Amended Articles of Incorporation
or Amended and Restated By-Laws; (ii) offer, issue, sell or pledge any shares
of its capital stock or other ownership interest in the Company or its
Subsidiaries, or any securities convertible into or exchangeable for any such
shares or ownership interest, or any rights, warrants or options to acquire or
with respect to any such shares of capital stock, ownership interest, or
convertible or exchangeable securities other than pursuant to the Company's
existing employee benefits plans; (iii) effect any stock split or otherwise
change its capitalization as it exists on the date hereof; (iv) grant, confer
or award any option, warrant, convertible security or other right to acquire
any shares of its or its Subsidiaries' capital stock; (v) declare, set aside or
pay any dividend or make any other distribution or payment with respect to any
shares of its capital stock or other ownership interests (other than such
payments by the Subsidiaries to the Company); (vi) directly or indirectly
redeem, purchase or otherwise acquire any shares of its capital stock or
capital stock of its Subsidiaries or any securities that are convertible into
or exchangeable for any shares of capital stock of, or other equity interests
in, or any outstanding options, warrants or rights of any kind to acquire any
shares of capital stock of, or other equity interests in, the Company or any of
its Subsidiaries; (vii) sell, lease, license, mortgage, pledge, encumber,
transfer, exchange or otherwise dispose of any of its properties or assets,
whether tangible or intangible (including capital stock of its Subsidiaries),
other than the sale or disposition of inventory in the ordinary course of
business consistent with past practice or the sale, lease or other disposition
of assets which individually or in the aggregate, are obsolete or not material
to the Company and its Subsidiaries taken as a whole; (viii) acquire by merger
or consolidation with, by purchase of any equity interest of or by any other
manner, any business or entity or otherwise acquire any assets, except for
purchases of inventory, supplies or capital equipment in the ordinary course of
business; (ix) incur or assume any long-term or short-term debt, except for
working capital purposes and the purchase of capital equipment in the ordinary
course of business under the Credit Facility; (x) assume, guarantee or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person except its Subsidiaries;
(xi) make or forgive any loans, advances or capital continuations to, or
investments in, any other Person other than advances to officers or employees
in the ordinary course of business consistent with past practice; (xii)
increase the compensation (or benefits) payable to or to become payable to any
director, officer or other employee, except for payments of bonuses not to
exceed the amounts set forth on Section 5.2(b) of the Company Disclosure
Schedule, increases in salary or wages of non-officer employees in the ordinary
course of business and consistent with past practice or pursuant to any
existing employment agreements of the Company; (xiii) establish, adopt, enter
into, materially amend, or take any action to accelerate any rights or benefits
under any collective bargaining agreement or any Plan; (xiv) effect any
reorganization or recapitalization; (xv) pay, discharge, settle or satisfy any
claims, liabilities, obligations or litigation (absolute, accrued, asserted or
unasserted, contingent or otherwise) in excess of $250,000 individually and
$500,000 in the aggregate, other than the payment, discharge, settlement or
satisfaction in the ordinary course of business or in accordance with their
terms, of liabilities disclosed, reflected or reserved against in the most
recent consolidated financial statements (or the notes thereto) of the Company
included in the Company SEC Reports or incurred since the date of such
financial statements in the ordinary course of business, or cancel any
indebtedness in excess of $50,000 individually and $500,000 in the aggregate;
(xvi) take any action that would reasonably be expected to: (A) prevent, impair
or materially delay the ability of the Company, Parent or Merger Sub to
consummate the Merger or (B) cause any of the conditions to the consummation of
the Merger not to be satisfied; (xvii) make or change any Tax election, file
any amended Tax Return, enter into any closing agreement, settle or compromise
any liability with respect to Taxes, agree to any material adjustment of any
Tax attribute, file any claim for a refund of Taxes, or consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment; or (xviii) agree in writing or otherwise to take any of the
foregoing actions.
5.3 Company Shareholder Approval; Joint Proxy Statement; Parent
Registration Statement. The Company, acting through its Board of Directors,
shall: (i) call a meeting of its shareholders (the "Company Shareholders'
Meeting") for the purpose of voting upon this Agreement, (ii) hold the Company
Shareholders' Meeting as soon as practicable following the date the Joint Proxy
Statement (as defined below) is cleared by the SEC, and (iii) subject to its
fiduciary duties under applicable Law, recommend to its shareholders the
approval and adoption of this Agreement and the transactions contemplated
hereby and take all reasonable and lawful action to solicit and obtain such
approval and adoption. The record date for the Company Shareholders' Meeting
shall be a date chosen by the Board of Directors of the Company.
(b) Parent, acting through its Board of Directors, shall: (i) call a
meeting of its stockholders (the "Parent Stockholders' Meeting") for the
purpose of voting upon the issuance of Parent Stock in connection with the
Merger, (ii) hold the Parent Stockholders' Meeting as soon as practicable
following the date the Joint Proxy Statement (as defined below) is cleared by
the SEC, and (iii) subject to its fiduciary duties under applicable Law,
recommend to its stockholders the authorization and approval of the issuance of
Parent Stock in connection with the Merger and take all reasonable and lawful
action to solicit and obtain such authorization and approval. The record date
for the Parent Stockholders' Meeting shall be a date chosen by the Board of
Directors of Parent.
(c) As soon as practicable after the execution of this Agreement, (i)
the Company and Parent shall prepare and file a joint proxy statement (such
joint proxy statement, and any amendments or supplements thereto, the "Joint
Proxy Statement") with the SEC with respect to the Company Shareholders'
Meeting and the Parent Stockholders' Meeting and (ii) Parent shall prepare and
file with the SEC a registration statement on Form S-4 (together with all
amendments thereto, the "Registration Statement") in which the Joint Proxy
Statement shall be included, in connection with the registration under the
Securities Act of the shares of Parent Stock to be issued to the shareholders
of the Company in connection with the Merger. Parent and the Company will
notify each other of the receipt of any comments from the SEC or its staff and
of any request by the SEC or its staff for amendments or supplements to the
Joint Proxy Statement or the Registration Statement or for additional
information and will supply each other with copies of all correspondence
between each other or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Joint Proxy Statement or
the Merger. Each party shall give the other party and its counsel the
opportunity to review the Joint Proxy Statement prior to it being filed with
the SEC and shall give the other party and its counsel the opportunity to
review all amendments and supplements to the Joint Proxy Statement and all
responses to requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC. Each of the Company and Parent
agrees to use its reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by the
SEC. Parent and the Company shall use their reasonable best efforts to cause
the Registration Statement to become effective as promptly as practicable, and,
prior to the effective date of the Registration Statement, Parent shall take
all or any action required under any applicable federal or state securities
Laws in connection with such actions and the preparation of the Registration
Statement. As promptly as practicable after the Registration Statement shall
have become effective, each of the Company and Parent shall mail the Joint
Proxy Statement to its respective stockholders. If at any time prior to the
approval of this Agreement by each of the Company's and Parent's stockholders
there shall occur any event which must be set forth in an amendment or
supplement to the Joint Proxy Statement, the Company or Parent, as the case may
be, will prepare and mail to its stockholders such an amendment or supplement.
(d) Except for an amendment or supplement (including by incorporation
by reference) relating to an Alternative Proposal, a Superior Proposal or other
withdrawal, qualification or modification of a recommendation by the Board of
Directors of the Company, no amendment or supplement to the Joint Proxy
Statement or the Registration Statement will be made by Parent or the Company
without the approval of the other party (such approval not to be unreasonably
withheld or delayed).
5.4 Filings; Other Action. Subject to the terms and conditions herein
provided, the Company, Parent and Merger Sub shall: (i) use reasonable efforts
to cooperate with one another in: (A) determining which filings are required to
be made prior to the Effective Time with, and which consents, approvals,
permits or authorizations are required to be obtained prior to the Effective
Time from, Governmental Authorities (including all filings and submissions
under the HSR Act) or other third parties in connection with the execution and
delivery of this Agreement and any other agreements and documents contemplated
by the Agreement ("the Ancillary Documents") and the consummation of the
transactions contemplated hereby and thereby and (B) timely making all such
filings and timely seeking all such consents, approvals, permits,
authorizations and waivers; and (ii) use reasonable efforts to take, or cause
to be taken, all other action and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement; provided, however, that in no
event shall Parent or any of its subsidiaries be required to agree or commit to
divest, hold separate, offer for sale, abandon, limit its operation of or take
similar action with respect to any material assets (tangible or intangible) or
any material business interests in connection with or as a condition to
receiving the consent or approval of any Governmental Authority (including,
without limitation, under the HSR Act). If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purpose of
this Agreement, the proper officers and directors of Parent and the Surviving
Corporation shall take all such necessary action.
5.5 Access to Information. (a) From the date of this Agreement until
the Closing, each party shall, and shall cause its subsidiaries to: (i) give
the other party and its authorized representatives reasonable access during
normal business hours to all books and records (including Tax Returns) and
management of such party and its subsidiaries; (ii) permit the other party to
make such copies and inspections thereof as Parent may reasonably request; and
(iii) furnish the other party with such financial and operating data and other
information with respect to the business and properties of such party and its
subsidiaries as the other party may from time to time reasonably request;
provided that no investigation or information furnished pursuant to this
Section 5.5 shall affect any representation or warranty made herein by such
party or the conditions to the obligations of the other party to consummate the
transactions contemplated by this Agreement. The Company shall also provide to
Parent such information set forth in clauses (i)-(iii) above as may be
reasonably requested by Parent in connection with Parent's financing of the
transactions contemplated by this Agreement.
(b) All such information shall be subject to the terms and conditions
of the letter agreement, dated as of September 1, 2005, between Parent and the
Company (the "Confidentiality Agreement").
5.6 Publicity. Prior to the Effective Time, except as required by
applicable Law or listing agreement with any securities exchange, no party
shall, nor shall any party permit its Affiliates to, make any public
announcement in respect of this Agreement or the transactions contemplated
hereby without the prior written consent of the other parties, which consent
shall not be unreasonably withheld or delayed. The parties hereto agree that
the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be issued jointly by the Company and
Parent immediately after the execution of this Agreement.
5.7 Further Action. Each party hereto shall, subject to the
fulfillment at or before the Effective Time of each of the conditions of
performance set forth herein or the waiver thereof, perform such further acts
and execute such documents as may be reasonably required to effect the Merger.
5.8 Insurance; Indemnity. (a) Parent will cause the Surviving
Corporation to maintain in effect for not less than six (6) years after the
Effective Time, the Company's current directors and officers' insurance
policies (or policies of at least the same coverage containing terms and
conditions no less advantageous to the current and all former directors and
officers of the Company) with respect to acts or failures to act prior to the
Effective Time, including acts relating to the transactions contemplated by
this Agreement; provided, however, that Parent and the Surviving Corporation
shall not be required to maintain or obtain policies providing such coverage
except to the extent such coverage can be provided at an annual cost of no
greater than 150% the most recent annual premium paid by the Company prior to
the date hereof (the "Cap"); and provided, further, that if equivalent coverage
cannot be obtained, or can be obtained only by paying an annual premium in
excess of the Cap, Parent or the Surviving Corporation shall only be required
to obtain as much coverage as can be obtained by paying an annual premium equal
to the Cap.
(b) From and after the Effective Time, Parent and the Surviving
Corporation shall jointly and severally indemnify and hold harmless to the
fullest extent permitted under applicable Law, each Person who is, or has been
at any time prior to the date hereof or who becomes prior to the Effective
Time, an officer or director of the Company or any of its Subsidiaries (each,
an "Indemnified Party"), so long as such Person is, or has been, acting within
the scope of such Person's employment or fiduciary duties, against all losses,
claims, damages, liabilities, costs or expenses (including attorneys' fees),
judgments, fines, penalties and amounts paid in settlement in connection with
any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, which acts or omissions occurred prior to the Effective
Time, whether asserted or claimed prior to, at or after the Effective Time. In
the event of any such claim, action, suit, proceeding or investigation, the
Surviving Corporation shall control the defense of such Action with counsel
selected by the Surviving Corporation, which counsel shall be reasonably
acceptable to the Indemnified Party; provided, however, that the Indemnified
Party shall be permitted to participate in the defense of such Action through
counsel selected by the Indemnified Party, at the Indemnified Party's expense.
Notwithstanding the foregoing, if there is any conflict between the Surviving
Corporation and any Indemnified Parties or there are additional defenses
available to any Indemnified Parties, the Indemnified Parties shall be
permitted to participate in the defense of such Action with counsel selected by
the Indemnified Parties and Parent shall cause the Surviving Corporation to pay
the reasonable fees and expenses of such counsel, as accrued and in advance of
the final disposition of such Action to the fullest extent permitted by
applicable Law; provided, however, that the Surviving Corporation shall not be
obligated to pay the reasonable fees and expenses of more than one counsel (in
addition to any necessary local counsel) for all Indemnified Parties in any
single Action except to the extent that Indemnified Parties have conflicting
interests in the outcome of such Action.
(c) Parent shall cause the Surviving Corporation to keep in effect in
its Amended Articles of Incorporation and Amended and Restated By-Laws
provisions at least as favorable as the provisions in the Company's Certificate
of Incorporation and By-Laws that provide for exculpation of director and
officer liability and indemnification (and advancement of expenses related
thereto) of the past and present officers and directors of the Company to the
fullest extent permitted by the MBCL, so long as such Person is, or has been,
acting within the scope of such Person's employment or fiduciary duties, and
such provisions shall not be amended except as either required by applicable
Law or to make changes permitted by Law that would enhance the rights of past
or present officers and directors to exculpation, indemnification or
advancement of expenses.
(d) If Parent or the Surviving Corporation or any of their respective
successors or assigns: (i) shall consolidate with or merge into any other
Person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) shall transfer all or substantially all of
its properties and assets to any Person, then and in each such case, proper
provisions shall be made so that the successors and assigns of Parent or the
Surviving Corporation shall assume all of the obligations set forth in this
Section 5.8.
(e) The provisions of this Section 5.8 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives, and shall not be deemed exclusive of any other
rights to which an Indemnified Party is entitled, pursuant to Law, contract or
otherwise. The Surviving Corporation shall pay all expenses, including
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity obligations provided for in this Section 5.8.
(f) Notwithstanding anything to the contrary in this Section 5.8,
neither Parent nor the Surviving Corporation shall be liable for any settlement
effected without its written consent, which consent shall not be unreasonably
withheld or delayed.
5.9 Benefit Plans.
(a) Except as set forth herein, Parent shall, or shall cause the
Surviving Corporation to, assume, honor, and continue to perform all
obligations of the Company or any Subsidiary under all Plans pursuant to the
terms thereof; provided, however, that nothing herein shall limit the right of
Parent to amend or terminate such Plans in accordance with their terms.
(b) Parent agrees, for a period of twelve (12) months following the
Effective Time, to provide, or to cause the Surviving Corporation to provide,
employees of Parent and the Surviving Corporation who were employees of the
Company or its Subsidiaries immediately prior to the Effective Time
("Continuing Employees") with benefits (other than equity-based benefits and
other than individual employment agreements) that are, in the aggregate,
similar to those provided by the Company and its Subsidiaries prior to the
Effective Time. Nothing contained herein shall require Parent to continue the
employment of any employee following the Effective Time.
(c) Following the Effective Time, Parent shall, or shall cause the
Surviving Corporation to, use all reasonable efforts to give Continuing
Employees full credit for prior service with the Company and its Subsidiaries
for purposes of eligibility and vesting under any employee benefit plan
maintained by Parent except where such crediting would: (i) result in a
duplication of benefits or (ii) otherwise cause Parent or any employee benefit
plan maintained by Parent to accrue or pay for benefits that relate to any time
period prior to the Continuing Employee's participation in such plan.
(d) To the extent permissible under Parent's benefit plans, if a
Continuing Employee participates in a benefit plan, other than a long-term
disability plan, of Parent or any of its subsidiaries after the Effective Time,
Parent shall, or shall cause the Surviving Corporation to, waive any
pre-existing condition exclusions and actively-at-work requirements and provide
that any expenses incurred on or before the Effective Time by the Continuing
Employee or the Continuing Employee's covered dependent shall be taken into
account for purposes of satisfying applicable deductible, coinsurance and
maximum out-of-pocket provisions. The Company agrees to furnish Parent with any
information necessary to meet its obligations under this Section 5.9(d).
(e) With respect to matters described in this Agreement, the Company
will consult with Parent (and consider in good faith the advice of Parent)
prior to sending any notices or other communication materials to employees of
the Company and its Subsidiaries.
(f) At the request of Parent, the Company shall terminate any and all
401(k) Plans of the Company, effective not later than the day immediately
preceding the date on which the Effective Time occurs. The Company shall
provide Parent with evidence that such 401(k) Plan(s) have been terminated
pursuant to a resolution of the Company's Board of Directors (the form and
substance of which shall be subject to review and approval by Parent) not later
than the day immediately preceding the date on which the Effective Time occurs.
(g) As soon as practicable after the date hereof, the Board of
Directors of the Company shall take all action necessary to terminate the ESPP,
in accordance with section 9.2 of such plan.
5.10 Supplemental Disclosure. The Company shall give prompt notice to
Parent, and Parent shall give prompt notice to the Company, of: (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause: (A) any representation or warranty contained
in this Agreement to be untrue or inaccurate or (B) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any failure of the Company or Parent, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 5.10 shall not have any effect for the purpose of
determining the satisfaction of the conditions set forth in Article 6 of this
Agreement or otherwise limit or affect the remedies available hereunder to any
party.
5.11 NYSE Listing. Prior to the Effective Time, Parent shall cause
Parent Stock issuable in connection with the Merger to be approved for listing
on the NYSE, subject to official notice of issuance.
5.12 Payment of Bank Debt. At the Closing, Parent will cause (i) the
Surviving Corporation to pay all amounts then due and payable pursuant to that
Amended and Restated Credit Agreement, dated as of January 27, 2005 among the
Company, as the Borrower, Bank of America, N.A., as Administrative Agent, Swing
Line Lender and L/C Issuer, and the Other Lenders Party Thereto, (the "Credit
Agreement") and the Loan Documents (as defined in the Credit Agreement) and
(ii) the Credit Agreement to be terminated.
5.13 Parent Financing
(a) Parent and Merger Sub will use their reasonable commercial efforts
to obtain the financing required for the consummation of the Merger and to
satisfy all conditions to funding, whether pursuant to the Commitment Letter or
otherwise. To the extent that any portion of the financing contemplated by the
Commitment Letter becomes unavailable or Parent determines to obtain
alternative financing for the Merger, Parent and Merger Sub will use their
reasonable commercial efforts to arrange for alternative financing for the
Merger.
(b) The Company and its Subsidiaries shall use reasonable best efforts
to provide Parent and its representatives with such information, including
financial statement information and access to the Company's independent
accountants, regarding the Company and its Subsidiaries as may be reasonably
requested by Parent in connection with Parent's financing of the transactions
contemplated by this Agreement.
(c) The Company and its Subsidiaries shall cooperate with Parent and
Parent's accountants and other advisors in order to prepare any pro forma
financial statements as may be required in connection with Parent's financing
contemplated by the Commitment Letter or otherwise. The Company and its
Subsidiaries shall take such other actions as are reasonably requested by
Parent in order to consummate Parent's financing contemplated by the Commitment
Letter or otherwise, including, but not limited to, making members of its
senior management reasonably available for meetings with potential investors,
including participation in road-shows, providing access to documents and other
information for due diligence purposes, participating in due diligence
sessions, participating in presentations to rating agencies, inclusion of the
Company's financial statements in a private placement or other selling
memorandum, use reasonable efforts to arrange for the Company's accountants to
provide a customary comfort letter on the Company's financial statements
included in any offering or other selling memorandum, customary legal opinions
and other efforts customary for an acquired party in connection with a
financing in similar transactions.
ARTICLE 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to
the satisfaction or waiver, where permissible, prior to the Effective Time, of
the following conditions:
(a) HSR Approval. Any waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been terminated, and no
action shall have been instituted by the Department of Justice or Federal Trade
Commission challenging or seeking to enjoin the consummation of the Merger,
which action shall have not been withdrawn or terminated.
(b) Company Shareholder Approval. The Company Shareholder Approval
shall have been obtained.
(c) Parent Stockholder Approval. The Parent Stockholder Approval shall
have been obtained.
(d) Effectiveness of Registration Statement. The SEC shall have
declared the Registration Statement effective and no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued by the SEC and no proceeding for that purpose, and no similar proceeding
in respect of the Joint Proxy Statement, shall have been initiated or
threatened in writing by the SEC.
(e) Listing on the NYSE. The shares of Parent Stock to be issued in
the Merger shall have been approved for listing on the NYSE, subject to
official notice of issuance.
(f) No Order. There shall not have been issued any injunction,
judgment or other order, or issued or enacted any Law, which prohibits or has
the effect of prohibiting the consummation of the Merger or makes such
consummation illegal.
(g) Approvals. Other than the filings of merger documents in
accordance with the MBCL and filings pursuant to the HSR Act, all
authorizations, consents, waivers, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Authority, the failure of which to obtain, make or occur would, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect, shall have been obtained, been filed or have occurred.
6.2 Conditions to Obligation of Parent and Merger Sub to Effect the
Merger. The obligations of Parent and Merger Sub to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
additional conditions, unless waived in writing by Parent:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement (considered individually)
shall be true and correct in all material respects as of the date of this
Agreement and as of the Effective Time (without regard to materiality or
Company Material Adverse Effect) as if made at the Effective Time except that
representations and warranties given as of a specific date shall be true and
correct only as of such date. Parent shall have received a certificate signed
on behalf of the Company by the chief executive officer or the chief financial
officer of the Company to such effect.
(b) Performance of Obligations of the Company. Each of the Company and
its Subsidiaries shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Effective Time, and Parent shall have received a certificate signed on behalf
of the Company by the chief executive officer or the chief financial officer of
the Company to such effect.
(c) Company Material Adverse Effect. Since the date of this Agreement,
there shall have been no event, development or state of fact that results in or
would reasonably be expected to result in a Company Material Adverse Effect.
(d) Consent. The Company shall have obtained the consent of each
Person whose consent shall be required in connection with the transactions
contemplated hereby under any Specified Contract; provided that in no event
shall the Company or its Subsidiaries modify any terms of any Specified
Contract or make any payment(s) to any third party in excess of $150,000, in
the aggregate in connection with obtaining such consents, without the prior
written consent of Parent, which consent shall not be unreasonably withheld or
delayed.
6.3 Conditions to Obligation of the Company to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following additional
conditions, unless waived in writing by the Company:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Merger Sub contained in this Agreement (considered
individually) shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Time (without regard to materiality
or Parent Material Adverse Effect) as if made at the Effective Time except that
representations and warranties given as of a specific date shall be true and
correct only as of such date. The Company shall have received a certificate
signed on behalf of Parent by the chief executive officer or the chief
financial officer of Parent to such effect.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Effective Time, and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer or the chief financial officer
of Parent to such effect.
(c) Parent Material Adverse Effect. Since the date of this Agreement,
there shall have been no event, development or state of facts that results in
or would reasonably be expected to result in a Parent Material Adverse Effect.
ARTICLE 7
TERMINATION
7.1 Termination. This Agreement, notwithstanding adoption of this
Agreement by the stockholders of the Company, may be terminated at any time
prior to the Effective Time:
(a) by mutual written consent of the Company and Parent;
(b) by Parent or the Company:
(i) if the Effective Time shall not have occurred on or before June
30, 2006 (the "Outside Date") (provided that the right to terminate this
Agreement pursuant to this clause (i) shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of or
resulted in the failure of the Effective Time to occur on or before such date);
or
(ii) if there shall be any statute, Law, rule or regulation that makes
consummation of the Merger illegal or prohibited, or if any court of competent
jurisdiction in the United States or other Governmental Authority shall have
issued an order, judgment, decree or ruling, or taken any other action
retraining, enjoining or otherwise prohibiting the Merger and such order,
judgment, decree, ruling or other action shall have become final and
non-appealable;
(c) by Parent or the Company if the Company's Board of Directors
authorizes the Company to enter into a definitive Acquisition Agreement with
respect to a Superior Proposal in accordance with the provisions of Section
5.1;
(d) by Parent if the Board of Directors of the Company shall have
failed to recommend, or shall have withdrawn its approval or recommendation of
the Merger or shall have modified its recommendation of the Merger, in a manner
adverse to Parent or Merger Sub or shall fail to recommend against the
acceptance of any tender or exchange offer that constitutes an Alternative
Proposal or shall have resolved to do any of the foregoing;
(e) by Parent if: (i) any representation or warranty of the Company
contained in this Agreement shall not be true and correct at any time prior to
the Effective Time, in each case such that the conditions set forth in Section
6.2(a) would not be satisfied or (ii) the Company shall not have performed and
complied with each covenant or agreement contained in the Agreement and
required to be performed or complied with by it, in each case such that the
conditions set forth in Section 6.2(b) would not be satisfied, and which
breach, in the case of clause (i) and (ii) above, shall not have been cured
prior to fifteen (15) days following written notice of such breach;
(f) by the Company if: (i) any representation or warranty of Parent or
Merger Sub contained in this Agreement shall not be true and correct at any
time prior to the Effective Time, in each case such that the conditions set
forth in Section 6.3(a) would not be satisfied or (ii) Parent or Merger Sub
shall not have performed or complied with each covenant or agreement contained
in this Agreement and required to be performed or complied with by it, in each
case such that the conditions set forth in Section 6.3(b) would not be
satisfied, and which breach, in the case of clause (i) and clause (ii) above,
shall not have been cured prior to fifteen (15) days following written notice
of such breach;
(g) by Parent if there shall have been entered any injunction,
judgment ruling or decree by the government of the United States or by any
agency or instrumentality thereof that: (i) restrains or otherwise interferes
with the Merger; (ii) imposes limitations on the ability of Parent or Merger
Sub (or any of their Affiliates) effectively to acquire or hold, or requires
Parent, Merger Sub or the Company or any of their respective Affiliates or
Subsidiaries to dispose of or hold separate, any material portion of the assets
or the business of any one of them; or (iii) limits or prohibits any material
business activity by Parent, Merger Sub or any of their Affiliates, including,
without limitation, requiring the prior consent of any Person or entity
(including the government of the United States and any instrumentality thereof)
to future transactions by Parent, Merger Sub or any of their Affiliates;
(h) by Parent or the Company, if the shareholders of the Company fail
to approve and adopt this Agreement and the transactions contemplated hereby at
the Company Shareholders' Meeting, including any adjournment thereof; provided,
however, that the right to terminate this Agreement under this Section 7.1(h)
shall not be available to any party whose failure to fulfill any obligations
under this Agreement shall have been the cause of or result in the failure to
obtain the Company Shareholder Approval;
(i) by Parent or the Company, if the stockholders of Parent fail to
authorize and approve the issuance of Parent Stock in connection with the
Merger at the Parent Stockholders' Meeting, including any adjournment thereof;
provided, however, that the right to terminate this Agreement under this
Section 7.1(j) shall not be available to any party whose failure to fulfill any
obligations under this Agreement shall have been the cause of or result in the
failure to obtain the Parent Stockholder Approval;
(j) by Parent, if the financing contemplated by the Commitment Letter
shall not have become available to Parent on substantially the terms and
conditions identified in the Commitment Letter or on such other terms or
pursuant to other financing arrangements reasonably acceptable to Parent;
provided, however, that the right to terminate this Agreement under this
Section 7.1(i) shall not be available to Parent if its failure to fulfill any
obligations under Section 5.13(a) shall have been the cause of or result in the
failure of such financing becoming available; or
(k) by the Company, if the Company shall have been advised that
financing will not be available under the Commitment Letter or pursuant to
alternate financing arrangements as contemplated by Section 5.13(a) hereof, and
Parent fails to enter into a substitute Commitment Letter or alternate
arrangements with other financing sources within twenty (20) business days
thereafter.
7.2 Effect of Termination and Abandonment. In the event of termination
of this Agreement and the abandonment of the Merger pursuant to this Article 7,
all obligations of the parties hereto shall terminate, except the obligations
of the parties pursuant to this Section 7.2 and Sections 5.5(b), 5.6, 7.3, 7.4,
8.5 and 8.6 and except that nothing herein shall relieve any party from
liability for any breach of any covenant or agreement under this Agreement.
7.3 Termination Fee. If: (a) (i) Parent or the Company, as the case may
be, terminates this Agreement pursuant to Sections 7.1(b)(i), 7.1(c), 7.1(d),
or 7.1(h) and (ii) in case of a termination pursuant to Sections 7.1(b)(i) or
7.1(h) an Alternative Proposal with respect to the Company shall have been
publicly announced prior to such termination and any merger or extraordinary
transaction is, entered into or consummated by the Company within twelve (12)
months following such termination, then, in any such case, the Company shall
pay to Parent (i) a fee ("Termination Fee"), in cash, equal to $60 million and
(ii) all costs and expenses incurred or payable by or on behalf of Parent or
Merger Sub in connection with or in anticipation of the transactions
contemplated by this Agreement, including, without limitation, all attorneys'
fees, accountants' fees, financial advisors' fees, internal time charges for
Parent employees (based on customary charges in the industry) consultant fees,
commitment fees and filing fees, not to exceed $10 million in the aggregate
(the "Expense Payment"); provided, however, that the Company in no event shall
be obligated to pay more than once such Termination Fee with respect to all
such agreements and occurrences and such termination.
(b) Any payments required to be made pursuant to this Section 7.3
shall be made to Parent, by wire transfer of immediately available same day
funds to an account designated by Parent, within two (2) business days after
the termination of this Agreement pursuant to Section 7.1(c) or (d) or, if this
Agreement is terminated pursuant to Sections 7.1(b)(i) or 7.1(h), two business
days after the earlier of the entering into or the consummation of any merger
or extraordinary transaction. The Company acknowledges that the covenants
contained in Section 7.3(a) are an integral part of the transactions
contemplated in this Agreement and that without such covenants Parent would not
enter into this Agreement. Accordingly, in the event the Company fails to pay
to Parent the Termination Fee and Expense Payment, promptly when due, the
Company shall, in addition thereto, pay to Parent all costs and expenses,
including attorneys' fees and disbursements, incurred in collecting such
Termination Fee and Expense Payment together with interest on the amount of the
Termination Fee and Expense Payment or any unpaid portion thereof, from the
date such payment was due until the date such payment is received by Parent,
accrued at the fluctuating prime rate (as quoted in The Wall Street Journal) as
in effect from time to time during the period.
7.4 Termination for Failure to Obtain Financing. If this Agreement is
terminated by Parent pursuant to Section 7.1(j), or by the Company pursuant to
Section 7.1(k), Parent shall pay to the Company the sum of $20 million in cash
as liquidated damages. Parent and the Company hereby acknowledge that the
amount of damages which would be incurred by the Company as a result of such
termination are difficult to ascertain, and that the amount of liquidated
damages provided by this Section 7.4 is reasonable. Except as provided in this
Section 7.4, Parent shall not have any liability to the Company in the event of
a termination pursuant to Section 7.1(j). The payment required to be made by
this Section 7.4 shall be made to the Company within two (2) business days
after termination of this Agreement pursuant to Section 7.1(j) or Section
7.1(k) by wire transfer of immediately available same day funds to an account
designated by the Company prior to and as a condition to termination pursuant
to Section 7.1(j).
7.5 Amendment. To the extent permitted by applicable Law, this
Agreement may be amended by action taken by or on behalf of the Board of
Directors of the Company and Parent at any time before or after (i) approval
and adoption of this Agreement by the stockholders of the Company or (ii) the
authorization and approval of the issuance of Parent Stock in connection with
the Merger by the shareholders of Parent but, after any such stockholder
approval, no amendment shall be made which by Law requires the further approval
of such stockholders without such further approval of such stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of all of the parties.
7.6 Extension; Waiver. At any time prior to the Effective Time, any
party hereto, by action taken by its Board of Directors, may, to the extent
legally allowed: (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto; and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE 8
GENERAL PROVISIONS
8.1 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 after the Effective Time.
This Section 8.1 shall not limit any covenant or agreement of the parties
hereto which by its terms contemplates performance after the Effective Time.
8.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing (including facsimile or similar writing)
and shall be deemed to have been duly given or made as of the date of receipt
and shall be delivered personally or mailed by registered or certified mail
(postage prepaid, return receipt requested), sent by overnight courier or sent
by facsimile (but only if the appropriate facsimile transmission confirmation
is received), to the applicable party at the following addresses or facsimile
numbers (or at such other address or telecopy number for a party as shall be
specified by like notice):
If to Parent or Merger Sub, to:
DRS Technologies, Inc.
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx Xxxxxxxx Xxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Company, to:
Engineered Support Systems, Inc.
000 Xxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Xxxxxxxx Xxxxxx LLP
One XX Xxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Wittner, Poger, Spewak, Maylack & Xxxxxxx, P.C.
0000 Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
8.3 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto, in whole or in part (whether by operation of Law or otherwise),
without the prior written consent of the other parties. Any attempt to make any
such assignment without such consent shall be null and void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of and be enforceable by, the parties and their respective successors and
permitted assigns. Notwithstanding anything contained in this Agreement to the
contrary, except for the provisions of Article 2 and Sections 5.8 and 5.9 which
may be enforced directly by the beneficiaries thereof, nothing in this
Agreement, expressed or implied, is intended to or shall confer on any Person
other than the parties hereto or their respective permitted successors and
assigns any rights, benefits, remedies, obligations or liabilities whatsoever
under or by reason of this Agreement.
8.4 Entire Agreement. This Agreement (including the Company Disclosure
Schedule), the Confidentiality Agreement, the Ancillary Documents and any other
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect thereto.
8.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the Laws of the State of Delaware (except to the extent that
Missouri Law applies to the Merger) without regard to its rules of conflict of
Laws. Each of the Company, Parent and Merger Sub hereby irrevocably and
unconditionally: (i) consents to submit to the exclusive jurisdiction of the
state and federal courts located in the State of Delaware (the "Delaware
Courts") for any litigation arising out of or relating to this Agreement and
the transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), (ii) waives any objection to the
laying of venue of any such litigation in the Delaware Courts and (iii) agrees
not to plead or claim in any Delaware Court that such litigation brought
therein has been brought in an inconvenient forum. Each of the parties hereto
irrevocably waives any and all rights to trial by jury in any proceedings
arising out of or related to this Agreement or the transactions contemplated
hereby.
8.6 Fee and Expenses. Except as otherwise provided herein, including,
but not limited to, in Sections 2.4(i), 7.3 and 7.4, whether or not the Merger
is consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
8.7 Certain Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
(i) "401(k) Plans" means: the [Excalibur], Inc. 401(k) and Employee
Stock Ownership Plan and the Mobilized Systems, Inc. 401(k) Incentive Savings
Plan. [For Discussion]
(ii) "Affiliate" of a Person means a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, the first mentioned Person.
(iii) "Company Material Adverse Effect" means: (A) any change or
effect that is or would reasonably be expected to be materially adverse to the
business, results of operations, assets, liabilities, financial condition, or
reputation of the Company and its Subsidiaries, taken as a whole, including any
material worsening with respect to any matter disclosed in the Company
Disclosure Schedule; provided, however, that in determining whether there has
been a Company Material Adverse Effect, any adverse effect primarily resulting
from or arising in connection with the following shall be disregarded: (x) the
taking of any action permitted or required by this Agreement or the
announcement or pendency of the Merger; or (y) changes or conditions (including
GAAP (as defined in Section 3.7(b)), Law, regulation or other interpretation)
affecting the industry in which the Company or its Subsidiaries operate, so
long as such changes do not disproportionately affect the Company or its
Subsidiaries; or (B) any event, matter, condition or effect which precludes or
delays or would reasonably be expected to preclude or delay the Company from
materially performing its material obligations under this Agreement or the
consummation of the transactions contemplated hereby.
(iv) "group" has the meaning ascribed to such term under Rule
13d-5(b)(1) under the Exchange Act.
(v) "Indebtedness" means (i) indebtedness of the Company or any of its
Subsidiaries for borrowed money (including the aggregate principal amount
thereof, the aggregate amount of any accrued but unpaid interest thereon and
any prepayment penalties or other similar amounts payable in connection with
the repayment thereof on or prior to the Closing Date), (ii) obligations of the
Company or any of its Subsidiaries evidenced by bonds, notes, debentures,
letters of credit or similar instruments, (iii) obligations of the Company or
any of its Subsidiaries under capitalized leases, (iv) obligations of the
Company or any of its Subsidiaries under conditional sale, title retention or
similar agreements or arrangements creating an obligation of the Company or any
of its Subsidiaries with respect to the deferred purchase price of property,
(v) obligations in respect of interest rate and currency obligation swaps,
xxxxxx or similar arrangements and (vi) all obligations of any of the Company
or any Subsidiary to guarantee any of the foregoing types of obligations on
behalf of any Person other than the Company or any Subsidiary.
(vi) "knowledge" of with respect to the Company shall mean the actual
or constructive knowledge of any of the persons set forth in Section 8.7 of the
Company Disclosure Schedule.
(vii) "Liens" means any pledges, claims, liens, charges, encumbrances,
options to purchase or lease or otherwise acquire any interest, conditional
sales agreement, restriction (whether on voting, sale, transfer, disposition or
otherwise) and security interests of any kind or nature whatsoever.
(viii) "Loss Contract"" means any Contract to which the Company or any
Subsidiary is a party with respect to which the Company accrued a loss on the
consolidated balance sheet of the Company and the Subsidiaries as of July 31,
2005, included in the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 2005 (without regard to any selling, general and
administrative expenses accrued with respect to such Contract).
(ix) "License Agreements" means all material agreements, whether oral
or written, and whether between the Company, its Subsidiaries and third parties
or intercompany, to which the Company or any of its Subsidiaries is a party or
otherwise bound: (i) granting or obtaining any right to use or practice any
rights under any Intellectual Property (other than licenses for readily
available commercial Software having an acquisition price of less than $10,000)
or (ii) restricting the Company's or any of its Subsidiaries' rights to use any
Intellectual Property, including, without limitation, license agreements,
development agreements, distribution agreements, settlement agreements, consent
to use agreements and covenants not to xxx.
(x) "Parent Material Adverse Effect" means: (A) any change or effect
that is or would reasonably be expected to be materially adverse to the
business, results of operations, assets, liabilities or financial condition of
Parent and its subsidiaries, taken as a whole; or (B) any event, matter,
condition or effect which precludes or delays or would reasonably be expected
to preclude or delay Parent from materially performing its material obligations
under this Agreement or the consummation of the transactions contemplated
hereby; provided, however, that in determining whether there has been a Parent
Material Adverse Effect, any adverse effect primarily resulting from or arising
in connection with the following shall be disregarded: (x) the taking of any
action permitted or required by this Agreement or the announcement or pendency
of the Merger; or (y) changes or conditions (including GAAP (as defined in
Section 3.7(b)), Law, regulation or other interpretation) affecting the
industry in which Parent or its Subsidiaries operate, so long as such changes
do not disproportionately affect the Parent or its Subsidiaries; or (B) any
event, matter, condition or effect which precludes or delays or would
reasonably be expected to preclude or delay Parent from materially performing
its material obligations under this Agreement or the consummation of the
transactions contemplated hereby.
(xi) "Person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, entity or
group (as defined in the Exchange Act).
(xii) "Tax" or "Taxes" means any and all federal, state, local and
foreign income, gross receipts, payroll, employment, excise, stamp, customs
duties, capital stock, franchise, profits, withholding, social security,
unemployment, real property, personal property, sales, use, transfer, value
added, alternative or add-on minimum, estimated, or other taxes (together with
interest, penalties and additions to tax imposed with respect thereto) imposed
by any Governmental Authority; and
(xiii) "Tax Returns" means returns, declarations, claims for refund,
or information returns or statements, reports and forms relating to Taxes filed
or required to be filed with any Governmental Authority (including any schedule
or attachment thereto) with respect to the Company or the Subsidiaries,
including any amendment thereof.
8.8 Headings. Headings of the articles and sections of this Agreement
are for the convenience of the parties only, and shall be given no substantive
or interpretive effect whatsoever. The table of contents contained in this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.9 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and
vice versa, words denoting any gender shall include all genders and words
denoting natural Persons shall include corporations and partnerships and vice
versa. Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be understood to be followed by the words "without
limitation."
8.10 Waivers. No action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of any party, nor any
failure or delay on the part of any party hereto in the exercise of any right
hereunder, shall be deemed to constitute a waiver by the party taking such
action of compliance of any representations, warranties, covenants or
agreements contained in this Agreement or in any of the Ancillary Documents.
The waiver by any party hereto of a breach of any provision hereunder shall not
operate or be construed as a waiver of any prior or subsequent breach of the
same or any other provision hereunder.
8.11 Severability. Any term or provision of this Agreement that is
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
8.12 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
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 hereof in any Delaware Court,
this being in addition to any other remedy to which they are entitled at Law or
in equity.
8.13 Counterparts. This Agreement may be executed by the parties
hereto in one or more separate counterparts, each of which, when so executed
and delivered, shall be deemed to be an original. All such counterparts shall
together constitute one and the same instrument. Each counterpart may consist
of a number of copies hereof, each signed by less than all, but together signed
by all, of the parties hereto.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf, on the day and year first
written above.
ENGINEERED SUPPORT SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice Chairman and
Chief Executive Officer
DRS TECHNOLOGIES, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Chairman, President and
Chief Executive Officer
MAXCO, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: President
COMPANY DISCLOSURE SCHEDULES
Section 3.3(a)(i) Stock Options
Section 3.3(b) Stock Rights Agreements
Section 3.3(c) Subsidiaries Jurisdictions of Incorporation
Section 3.3(d) Investments
Section 3.8 Affiliate Transactions
Section 3.9 Material Events
Section 3.10 Litigation
Section 3.11(a) Benefit Plans, Employment Agreements, etc.
Section 3.11(b) Certain Pension Plans, Change in Control
Agreements
Section 3.11(d) Post-Termination and Retiree Benefits
Section 3.11(e) Plan Actions
Section 3.11(f) Foreign Benefit Plans
Section 3.11(h) Exceptions to Pension/ERISA Compliance
Section 3.12 Collective Bargaining Agreements
Section 3.13(a) Owned Real Property
Section 3.13(b) Leased Real Property
Section 3.13(c) Condemnation
Section 3.14(b) Intellectual Property
Section 3.15 Tax Claims, Audits and Indemnifications
Section 3.16 Environmental Matters
Section 3.17(a) Contract Issues
Section 3.17(b) Specified Contracts
Section 3.18(a) Government Contract Non-Compliance
Section 3.18(b) Governmental Investigations
Section 3.18(c) Government Contract Claims
Section 3.18(d) Unclosed Rate Schedules
Section 3.19 Suspensions and Debarments
Section 3.20 Loss Contracts
Section 3.21 Significant Customers and Suppliers
Section 3.22 Insurance
Section 3.28(a) Export Licenses and Agreements
Section 3.28(b) Export Approval - Compliance
Section 3.28(c) Export Approval Audits and Investigations
Section 5.2(a) Exceptions to Interim Covenants
Section 5.2(b) Exceptions to Ordinary Course
Section 8.7 Knowledge Persons
PARENT DISCLOSURE SCHEDULES
Section 4.10 Litigation
