Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
VISION TECHNOLOGIES KINETICS, Inc.,
Parent,
VTK MERGER SUBSIDIARY CORPORATION,
Merger Subsidiary,
MILTOPE GROUP INC.,
the Company,
AND
MILTOPE CORPORATION,
the DSS Cleared Company
DATED AS OF OCTOBER 21, 2003
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGERS..........................................................2
SECTION 1.1 The Mergers................................................2
SECTION 1.2 Effective Time.............................................2
SECTION 1.3 Closing....................................................2
SECTION 1.4 Directors and Officers of the Surviving Corporation........3
SECTION 1.5 Effect of the Mergers......................................3
SECTION 1.6 Subsequent Actions.........................................3
SECTION 1.7 Articles of Incorporation; By-Laws.........................3
SECTION 1.8 Actions by Company and the DSS Cleared Company.............4
ARTICLE II CONVERSION OF SECURITIES............................................4
SECTION 2.1 Conversion of Securities...................................4
SECTION 2.2 Dissenting Shares..........................................5
SECTION 2.3 Surrender of Shares; Stock Transfer Books..................6
SECTION 2.4 Stock Plans................................................8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................8
SECTION 3.1 Organization and Qualification.............................8
SECTION 3.2 Capitalization.............................................9
SECTION 3.3 Subsidiaries..............................................10
SECTION 3.4 Authorization.............................................11
SECTION 3.5 SEC Documents.............................................12
SECTION 3.6 No Conflicts..............................................13
SECTION 3.7 Financial Statements......................................14
SECTION 3.8 Absence of Certain Changes or Events......................14
SECTION 3.9 Tax Matters...............................................14
SECTION 3.10 Litigation................................................17
SECTION 3.11 ERISA Compliance..........................................17
SECTION 3.12 Environmental Matters.....................................19
SECTION 3.13 Real Property and Leased Property.........................20
SECTION 3.14 Intellectual Property.....................................21
SECTION 3.15 Contracts.................................................22
SECTION 3.16 Compliance With Laws......................................24
SECTION 3.17 Insurance Coverage........................................24
SECTION 3.18 Personnel; Labor Relations................................25
SECTION 3.19 Brokers and Finders.......................................26
SECTION 3.20 Opinion of Legacy.........................................26
SECTION 3.21 Vote Required.............................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY.....26
- i -
SECTION 4.1 Organization and Power....................................26
SECTION 4.2 Authorization.............................................27
SECTION 4.3 No Conflicts..............................................27
SECTION 4.4 Consents and Approvals....................................27
SECTION 4.5 Financing of the Mergers..................................28
SECTION 4.6 Finder's Fees.............................................28
SECTION 4.7 Disclosure................................................28
SECTION 4.8 Interested Stockholder....................................28
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER..............................28
SECTION 5.1 Interim Operations of the Company.........................28
SECTION 5.2 Takeover Proposals........................................31
SECTION 5.3 No Solicitation...........................................32
ARTICLE VI ADDITIONAL AGREEMENTS..............................................34
SECTION 6.1 Special Meeting; Proxy Statement..........................34
SECTION 6.2 Meeting of Stockholders of the Company....................35
SECTION 6.3 Additional Agreements.....................................35
SECTION 6.4 Notification of Certain Matters...........................37
SECTION 6.5 Access; Confidentiality...................................38
SECTION 6.6 Publicity.................................................38
SECTION 6.7 Directors' and Officers' Insurance and Indemnification....39
SECTION 6.8 Employee Benefits.........................................40
SECTION 6.9 Merger Subsidiary Compliance..............................40
SECTION 6.10 Reasonable Best Efforts...................................40
SECTION 6.11 Taxes.....................................................41
ARTICLE VII CONDITIONS........................................................41
SECTION 7.1 Conditions to Each Party's Obligation to Effect
the Mergers.........................................41
SECTION 7.2 Conditions to Parent's and Merger Subsidiary's
Obligation to Effect the Mergers....................41
SECTION 7.3 Conditions to the Company's Obligation to Effect
the Mergers.........................................43
ARTICLE VIII TERMINATION......................................................43
SECTION 8.1 Termination...............................................43
SECTION 8.2 Effect of Termination.....................................45
ARTICLE IX GENERAL PROVISIONS.................................................48
SECTION 9.1 Amendment.................................................48
SECTION 9.2 Waiver....................................................48
SECTION 9.3 Non-Survival of Representations and Warranties............48
SECTION 9.4 Notices...................................................49
SECTION 9.5 Headings..................................................49
SECTION 9.6 Exhibits, Schedules and Annexes...........................49
SECTION 9.7 Counterparts..............................................50
- ii -
SECTION 9.8 Governing Law.............................................50
SECTION 9.9 Pronouns..................................................50
SECTION 9.10 Time Periods..............................................50
SECTION 9.11 No Strict Construction....................................50
SECTION 9.12 Entire Agreement..........................................50
SECTION 9.13 Severability..............................................51
SECTION 9.14 Successors and Assigns....................................51
SECTION 9.15 Fees and Expenses.........................................51
- iii -
INDEX OF ANNEXES AND EXHIBITS
Annex A - Form of Voting Agreements......................................... A-1
Annex B - Articles of Incorporation of the DSS Cleared Company.............. B-1
Exhibit 6.6 - Joint Press Release........................................... C-1
INDEX OF DEFINED TERMS
Term Location
---- --------
Affidavit of Loss................................................. 2.3(e)
Agreement......................................................... Preamble
Alabama Law ...................................................... Recitals
Ancillary Agreement............................................... 3.4(a)
Articles of Merger................................................ 1.2
Benefit Plan...................................................... 3.11(a)
Bid............................................................... 3.15(g)(i)
Board of Directors................................................ Recitals
Cash Consideration................................................ 2.1(a)
CERCLA............................................................ 3.12(c)
Certificate of Merger............................................. 1.2
Certificates...................................................... 2.3(b)
Closing........................................................... 1.3
Closing Date...................................................... 1.3
COBRA............................................................. 3.11(f)
Code.............................................................. 3.9(m)(iv)
Common Stock...................................................... 3.2
Company........................................................... Preamble
Company Agreements................................................ 3.6
Company Financial Advisor......................................... 3.19
Company Letter.................................................... Article III
Company Representatives........................................... 5.2
Confidentiality Agreement......................................... 5.3(b)
Counterpart Plans................................................. 6.8
Covered Persons................................................... 6.7(b)
CVR............................................................... 2.1(a)
CVR Agreement..................................................... Recitals
D&O Insurance..................................................... 6.7(b)
Delaware Law...................................................... Recitals
Dissenting Shares................................................. 2.2(a)
DSS Cleared Company............................................... Preamble
DSS Cleared Company Board of Directors............................ Recitals
- iv -
Term Location
---- --------
Effective Time.................................................... 1.2
Encumbrances...................................................... 3.13(a)
Environmental Laws................................................ 3.12(c)
Environmental Permits............................................. 3.12(c)
ERISA............................................................. 3.11(a)
ERISA Affiliate................................................... 3.11(a)
Exchange Act...................................................... 3.5(a)
Exchange Agent.................................................... 2.3(a)
Exon-Xxxxxx Amendment............................................. 7.2(f)
Expense Reimbursement Amount...................................... 8.2(c)(i)
Financial Statements.............................................. 3.7(a)
GAAP.............................................................. 3.7(a)
Governmental Entity............................................... 3.6
Government Contract............................................... 3.15(g)(ii)
Great Universal................................................... Recitals
Hazardous Substances.............................................. 3.12(c)
HSR Act........................................................... 6.3(a)
Income Tax........................................................ 3.9(m)(iii)
Income Taxes...................................................... 3.9(m)(iii)
Indemnified Person(s)............................................. 6.7(a)
Intellectual Property............................................. 3.14(a)
IRS .............................................................. 3.11(a)
Leased Property................................................... 3.13(b)
Legacy............................................................ 1.8
Material Adverse Effect........................................... 3.1(b)
Material Company Consents......................................... 6.3(b)
Mergers........................................................... Recitals
Merger Consideration.............................................. 2.1(a)
Merger Subsidiary................................................. Preamble
Notice of Superior Proposal....................................... 5.3(b)
Non-employee Directors............................................ 2.4
Options........................................................... 2.4
Other Intellectual Property....................................... 3.14(a)
Outside Date...................................................... 8.1(d)
Parent............................................................ Preamble
Permitted Encumbrances............................................ 3.13(a)
Person............................................................ 2.3(d)
Proxy Statement................................................... 6.1(a)
Real Property..................................................... 3.13(a)
Record Date Stockholders.......................................... 2.1(e)
Registered Intellectual Property.................................. 3.14(a)
Regulatory Approvals.............................................. 3.6
SEC............................................................... 3.5(a)
SEC Documents..................................................... 3.5(a)
- v -
Term Location
---- --------
Section 280G Waiver............................................... 7.2(f)
Securities Act.................................................... 3.5(a)
Shares............................................................ Recitals
Special Meeting................................................... 6.1(a)
Stock Plans....................................................... 2.4
Subsequently Accepted Takeover Proposal........................... 8.2(c)(ii)(A)
Subsidiary........................................................ 3.3
Superior Proposal................................................. 5.3(b)
Surviving Corporation............................................. 1.1
Takeover Proposal................................................. 5.2
Tax............................................................... 3.9(m)(i)
Tax Authority..................................................... 3.9(m)(i)
Taxable........................................................... 3.9(m)(i)
Taxes............................................................. 3.9(m)(i)
Tax Return........................................................ 3.9(m)(ii)
Termination Fee................................................... 8.2(c)(ii)
Treasury Regulations.............................................. 3.9(m)(v)
U.S. Court........................................................ 3.10
U.S. Government................................................... 3.15(g)(iii)
Voting Agreements................................................. Recitals
WARN Act.......................................................... 3.18(a)
- iv -
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of October 21,
2003, among Vision Technologies Kinetics, Inc., a Delaware corporation
("Parent"), VTK Merger Subsidiary Corporation, an Alabama corporation and a
wholly-owned subsidiary of Parent ("Merger Subsidiary"), Miltope Group Inc., a
Delaware corporation (the "Company"), and Miltope Corporation, an Alabama
corporation and a wholly-owned subsidiary of the Company (the "DSS Cleared
Company").
RECITALS:
WHEREAS, the parties contemplate that, at the Effective Time (as
defined below), (i) the Company will merge with and into the DSS Cleared Company
and (ii) Merger Subsidiary will merge with and into the DSS Cleared Company
(collectively, the "Mergers");
WHEREAS, each of the board of directors of the Company (the "Board of
Directors") and the board of directors of the DSS Cleared Company (the "DSS
Cleared Company Board of Directors") has approved, and deems it advisable and in
the best interests of its stockholders and shareholders, respectively, to
consummate, the Mergers upon the terms and subject to the conditions set forth
herein;
WHEREAS, the board of directors of each of Parent and Merger Subsidiary
has approved, and deems it advisable and in the best interests of Merger
Subsidiary's shareholders to consummate, the Mergers upon the terms and subject
to the conditions set forth herein;
WHEREAS, also in furtherance of the transactions contemplated hereby,
each of the Board of Directors and the DSS Cleared Company Board of Directors
has approved the Mergers in accordance with the General Corporation Law of the
State of Delaware (the "Delaware Law") and the Alabama Business Corporation Act
(the "Alabama Law"), respectively, and upon the terms and subject to the
conditions set forth herein;
WHEREAS, also in furtherance of the transactions contemplated hereby,
the board of directors of each of Parent and Merger Subsidiary has approved the
Mergers in accordance with the Delaware Law and the Alabama Law upon the terms
and subject to the conditions set forth herein;
WHEREAS, the Board of Directors has determined that the consideration
to be paid in the Mergers for each share of the issued and outstanding common
stock, $0.01 par value per share, of the Company (the "Shares") is fair to the
holders of such shares and has resolved to recommend that its stockholders adopt
and approve this Agreement and the CVR Agreement (as defined below), the Mergers
and each of the transactions contemplated hereby upon the terms and subject to
the conditions set forth herein;
WHEREAS, as a condition and inducement to Parent's and Merger
Subsidiary's entering into this Agreement and incurring the obligations set
forth herein, the Company's majority stockholder, Great Universal Incorporated,
a Delaware corporation ("Great Universal"), who beneficially owns 3,664,478
Shares, concurrently herewith is entering into voting agreements
(collectively, the "Voting Agreements"), dated as of the date hereof, with
Parent, in the forms attached hereto as Annex A, pursuant to which Great
Universal has agreed, among other things, to vote the Shares held by Great
Universal in favor of the Mergers and the adoption of this Agreement, upon the
terms and subject to the conditions set forth therein;
WHEREAS, the Company, the DSS Cleared Company, Parent and Great
Universal have entered into a Contingent Value Rights Agreement dated as of the
date hereof (the "CVR Agreement") pursuant to which the Company will issue CVRs
(as defined below) as part of the Merger Consideration (as defined below); and
WHEREAS, the Company, the DSS Cleared Company, Parent and Merger
Subsidiary desire to make certain representations, warranties, covenants and
agreements in connection with the Mergers.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGERS
SECTION 1.1 THE MERGERS. Upon the terms and subject to the conditions
of this Agreement and in accordance with the Alabama Law and the Delaware Law,
at the Effective Time, the Mergers shall occur, the separate corporate existence
of the Company and Merger Subsidiary shall cease, and the DSS Cleared Company
shall continue as the surviving corporation of the Mergers. The DSS Cleared
Company as the surviving corporation after the Mergers is sometimes referred to
hereinafter as the "SURVIVING CORPORATION."
SECTION 1.2 EFFECTIVE TIME. Subject to the provisions of this
Agreement, the parties hereto shall cause articles of merger (the "ARTICLES OF
MERGER") and a certificate of merger (the "CERTIFICATE OF MERGER"), each
relating to the Mergers and in customary form and substance, to be executed and
filed on or before the Closing Date (as defined below) (or on such other date as
the Company, the DSS Cleared Company and Parent may agree) with the Secretary of
State of the State of Alabama and the Secretary of State of the State Delaware,
respectively, in such form as required by, and executed in accordance with, the
relevant provisions of the Alabama Law or the Delaware Law, as applicable. The
Mergers shall become effective on the date on which the Articles of Merger is
duly filed with the Secretary of State of the State of Alabama and the
Certificate of Merger is duly filed with the Secretary of State of the State of
Delaware, or such time as is agreed upon by the parties and specified in the
Articles of Merger or the Certificate of Merger, as applicable, and such time is
hereinafter referred to as the "EFFECTIVE TIME."
SECTION 1.3 CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 8.1 hereof and subject to the satisfaction or waiver of all
conditions set forth in Article VII hereof, the closing of the Mergers (the
"CLOSING") shall take place at 10:00 a.m. on a date (the "CLOSING DATE") to be
specified by the parties hereto, which shall be no later than the second (2nd)
business day after satisfaction or waiver of all of the conditions set forth in
Article VII
-2-
hereof provided that all such conditions continue to be so satisfied or waived
on such second (2nd) business day, and if not so satisfied or waived, the
Closing shall be automatically extended from time to time until the first (1st)
subsequent business day on which all such conditions are again so satisfied or
waived, subject, however, to Article VIII hereof, at the offices of Xxxxxx &
Xxxxxxx LLP, 000 Xxxxxxxx Xxxxxx, X.X. Xxxxx 0000, Xxxxxxxxxx, X.X. 00000,
unless another date or place is agreed to in writing by the parties hereto.
SECTION 1.4 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of Merger Subsidiary immediately before the Effective Time shall be
the initial directors of the Surviving Corporation, and the officers of the
Company immediately before the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their successors are duly elected
or appointed and qualified or until the earlier of their death, resignation or
removal in accordance with the articles of incorporation and the by-laws of the
Surviving Corporation. If, at the Effective Time, a vacancy shall exist on the
board of directors or in any office of the Surviving Corporation, such vacancy
may thereafter be filled in the manner provided by the Alabama Law.
SECTION 1.5 EFFECT OF THE MERGERS. At the Effective Time, the effect of
the Mergers shall be as provided in this Agreement and the applicable provisions
of the Alabama Law and the Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company, Merger Subsidiary and the DSS
Cleared Company shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company, Merger Subsidiary and the DSS Cleared
Company shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.6 SUBSEQUENT ACTIONS. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in the
Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company, Merger Subsidiary or the
DSS Cleared Company acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Mergers or otherwise to carry out this
Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of either the
Company, Merger Subsidiary or the DSS Cleared Company, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name and on behalf
of each of such corporations or otherwise, all such other actions and things as
may be necessary or desirable to vest, perfect or confirm any and all right,
title and interest in, to and under such rights, properties or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
SECTION 1.7 ARTICLES OF INCORPORATION; BY-LAWS.
(a) At the Effective Time, the articles of incorporation of the DSS
Cleared Company attached hereto as ANNEX B, as in effect immediately before the
Effective Time, shall be the articles of incorporation of the Surviving
Corporation until thereafter amended as provided by the Alabama Law and such
articles of incorporation.
-3-
(b) At the Effective Time, the By-Laws of the DSS Cleared Company,
as in effect immediately before the Effective Time, shall be the by-laws of the
Surviving Corporation until thereafter amended as provided by the Alabama Law,
the articles of incorporation of the Surviving Corporation and such by-laws.
SECTION 1.8 ACTIONS BY COMPANY AND THE DSS CLEARED COMPANY. Each of the
Board of Directors and DSS Cleared Company Board of Directors hereby approves of
and consents to the Mergers and represents to Parent and Merger Subsidiary that
each such board of directors, at a meeting duly called and held on the date
hereof, at which a majority of directors of each board was present, has
unanimously (i) determined that this Agreement and the CVR Agreement and the
transactions contemplated hereby and thereby, including the Mergers, are fair
to, and in the best interests of, the Company and the DSS Cleared Company and
their stockholders and shareholders, respectively, (ii) duly authorized, adopted
and approved this Agreement and the CVR Agreement and approved the Mergers and
the other transactions contemplated hereby, (iii) resolved to recommend that the
Company's and the DSS Cleared Company's stockholders and shareholders,
respectively, authorize, adopt and approve this Agreement and the CVR Agreement
and the transactions contemplated hereby and thereby, including the Mergers;
PROVIDED, HOWEVER, that the Company's recommendation to its stockholders may be
withheld, withdrawn, amended or modified in accordance with the terms of Section
5.3(c) hereof and (iv) taken all other action necessary to render Section 203 of
the Delaware Law inapplicable to the Mergers and the Voting Agreements. The
Company further represents, that, prior to the execution hereof, Legacy Partners
Group, LLC ("LEGACY") has delivered to the Board of Directors its written
opinion, dated the date hereof, that the Merger Consideration to be received by
the holders of Shares pursuant to the Mergers is fair to such holders of Shares
from a financial point of view.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.1 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Mergers and without any action on the part of the Company, the DSS Cleared
Company, Parent, Merger Subsidiary, or the holder of any of the following
securities:
(a) Each Share issued and outstanding immediately before the
Effective Time (other than any Shares to be canceled pursuant to Section 2.1(b)
hereof and any Dissenting Shares (as defined in Section 2.2(a) hereof, if any)),
without any action on the part of the holder thereof, shall be converted into
and solely represent the right to receive (i) an amount in cash equal to $5.78
per share, without interest (the "CASH CONSIDERATION") payable to the holder
thereof upon surrender of the certificate representing such Share or an
Affidavit of Loss (as defined in Section 2.3(e) hereof) in the manner provided
in Section 2.3 hereof and (ii) one contingent value right (a "CVR") which shall
represent the contingent right to receive the CVR Payment Amount (as defined in
the CVR Agreement), if any. The Cash Consideration and the CVR to be received in
respect of each Share pursuant to this Section 2.1(a) are together referred to
in this Agreement as the "MERGER CONSIDERATION". All such Shares, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such Shares shall cease to have any rights with respect
-4-
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate or provision of an Affidavit of Loss in accordance
with Section 2.3 hereof, without interest.
(b) Each Share held in the treasury of the Company or the DSS
Cleared Company and each Share owned by Parent, Merger Subsidiary or any direct
or indirect wholly-owned subsidiary of Parent or Merger Subsidiary immediately
before the Effective Time shall be canceled and extinguished and no payment or
other consideration shall be made with respect thereto.
(c) Each share of common stock, par value $0.01 per share, of Merger
Subsidiary issued and outstanding immediately before the Effective Time shall
thereafter represent one validly issued, fully paid and non-assessable share of
common stock, par value $0.01 per share, of the Surviving Corporation and shall
be the only issued and outstanding capital stock of the Surviving Corporation.
(d) Each share of common stock, par value $0.01 per share, of the
DSS Cleared Company, issued and outstanding immediately before the Effective
Time, without any action on the part of the holder thereof, shall, at the
Effective Time, no longer be outstanding and shall automatically be canceled and
extinguished and no payment or other consideration shall be made with respect
thereto, and each such holder thereof shall cease to have any rights with
respect thereto and shall receive no consideration in the Mergers.
(e) Under the terms of the CVR Agreement, the holders of record of
Shares immediately prior to the Effective Time (the "RECORD DATE STOCKHOLDERS")
will be entitled to receive the CVR Payment Amount, if any, in connection with
the settlement or judgment of the claims and counterclaims in the lawsuit
entitled MILTOPE CORPORATION AND IV PHOENIX GROUP, INC. V. DRS TECHNOLOGIES,
INC., DRS ELECTRONIC SYSTEMS, INC., XXXXXXX XXXXXXXX, XXXXXXXX XXXXXX, XXXXXXX
XXXXX, XXXX SHAFY, XXXXX XXXX, XXXXXX XXXXX, XXXXX XXXX, AND XXXXXXX XXXXXXX
(Case Xx. 00 0000, X.X. Xxxxxxxx Xxxxx for the Eastern District of New York;
filed October 3, 2001). As set forth in the CVR Agreement, the CVRs will not be
assignable or otherwise transferable in any manner by the holders thereof,
except by will, upon death or by operation of law.
SECTION 2.2 DISSENTING SHARES.
(a) Notwithstanding any provision of this Agreement to the contrary,
any Shares held by a holder who has demanded and perfected his demand for
appraisal of his Shares in accordance with Section 262 of the Delaware Law and
as of the Effective Time has neither effectively withdrawn nor lost his right to
such appraisal ("DISSENTING SHARES") shall not be converted into or represent a
right to receive cash pursuant to Section 2.1 hereof, but the holder thereof
shall be entitled to only such rights as are granted by the Delaware Law.
(b) Notwithstanding the provisions of Section 2.2(a) hereof, if any
holder of Shares who demands appraisal of his Shares under the Delaware Law
shall effectively withdraw or lose (through failure to perfect or otherwise) his
right to appraisal, then as of the Effective Time or the occurrence of such
event, whichever occurs later, such holder's Shares shall automatically be
-5-
converted into and represent only the right to receive the Merger Consideration
as provided in Section 2.1(a) hereof, without interest thereon, upon surrender
of the certificate or certificates representing such Shares or provision of an
Affidavit of Loss pursuant to Section 2.3 hereof.
(c) The Company shall (i) give Merger Subsidiary prompt notice of
any written demands for appraisal, withdrawals of such demands, and any other
instruments served pursuant to Section 262 of the Delaware Law and received by
the Company, and (ii) allow Merger Subsidiary to direct all negotiations and
proceedings with respect to demands for appraisal under the Delaware Law. The
Company shall not voluntarily make any payment with respect to any such demands
for appraisal and shall not, except with the prior written consent of Merger
Subsidiary or Parent, which may be given or withheld in its sole and absolute
discretion, settle or offer to settle any such demands.
SECTION 2.3 SURRENDER OF SHARES; STOCK TRANSFER BOOKS.
(a) Before the Effective Time, Merger Subsidiary shall designate a
bank or trust company reasonably acceptable to the Company to act as paying
agent for the Company and agent for holders of Shares in connection with the
Mergers (the "EXCHANGE AGENT") to receive and pay the funds necessary to make
the payment of the Cash Consideration contemplated by Section 2.l(a) hereof. At
the Effective Time, Merger Subsidiary shall deposit, or cause to be deposited,
in trust with the Exchange Agent for the benefit of holders of Shares the
aggregate Cash Consideration to which such holders shall be entitled at the
Effective Time pursuant to Section 2.1(a) hereof. The funds held by the Exchange
Agent pursuant to this Section 2.3 shall not be used for any purpose other than
the payment of the Cash Consideration pursuant hereto.
(b) Each holder of a certificate or certificates representing any
Shares canceled upon the Mergers, which immediately prior to the Effective Time
represented outstanding Shares (the "CERTIFICATES") whose Shares were converted
pursuant to Section 2.1(a) hereof may thereafter surrender such Certificate or
Certificates to the Exchange Agent, as agent for such holder, to effect the
surrender of such Certificate or Certificates on such holder's behalf for a
period ending six (6) months after the Effective Time. Merger Subsidiary agrees
that promptly after the Effective Time it shall cause the distribution to the
Record Date Stockholders as of the Effective Time of materials to facilitate
such surrender pursuant to Section 2.3(c) hereof. Upon the surrender of
Certificates, the holder of such Certificates shall be entitled to receive, in
exchange therefore, (i) cash in an amount equal to the Cash Consideration
multiplied by the number of Shares represented by such Certificates and (ii) the
number of CVRs into which such Shares have been converted pursuant to Section
2.1(a). Until so surrendered, each Certificate (other than Certificates
representing Dissenting Shares and Certificates representing Shares held by
Merger Subsidiary or Parent or in the treasury of the Company) shall represent
solely the right to receive the aggregate Merger Consideration relating thereto.
(c) Promptly after the Effective Time, the Exchange Agent shall send
to each holder of record, as of the Effective Time, of a Certificate or
Certificates theretofore evidencing Shares, other than Certificates formerly
representing Shares to be canceled pursuant to Section 2.1(b) hereof, a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent) and instructions advising such holder of the
procedure for surrendering to the Exchange
-6-
Agent such Certificates for exchange into the Merger Consideration. Upon the
surrender of a Certificate to the Exchange Agent together with and in accordance
with such transmittal form duly executed and any other documents reasonably
required by such instructions (including, without limitation, a properly
completed Internal Revenue Service Form W-9 or suitable substitute form
establishing as exemption from backup withholding), the holder thereof shall be
entitled to receive promptly in exchange therefor the Merger Consideration
deliverable in respect of each Share formerly represented thereby and such
Certificate shall forthwith be canceled. Upon such surrender, the Exchange Agent
promptly will deliver the Merger Consideration. No interest or dividends shall
be paid or accrue on the Merger Consideration.
(d) If delivery of the Merger Consideration is to be made to an
individual, general partnership, limited partnership, corporation, limited
liability company or any other legal entity (each a "PERSON"), other than the
Person in whose name a surrendered Certificate or instrument is registered, it
shall be a condition to such delivery that the Certificate or instrument so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the Person requesting such delivery in a name other than that
of the registered holder of the Certificate or instrument surrendered shall pay
to the Exchange Agent any transfer or other taxes payable by reason of the
foregoing or establish to the satisfaction of Merger Subsidiary or the Exchange
Agent that such taxes either have been paid or are not applicable.
(e) 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 ("AFFIDAVIT OF LOSS") and the
delivery of an indemnity bond in form and substance and with surety reasonably
satisfactory to the Surviving Corporation, the Surviving Corporation will
deliver or cause to be delivered in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof as
determined in accordance with this Article II and without any interest thereon.
(f) At the Effective Time, the stock transfer books of the Company
shall be closed and there shall not be any further registration of transfers of
Shares or any shares of capital stock thereafter on the records of the Company.
If, after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be canceled and exchanged for Merger Consideration as
provided in this Article II. No interest shall accrue or be paid on the Cash
Consideration or CVRs deliverable upon the surrender of a Certificate or
Certificates which immediately before the Effective Time represented outstanding
Shares.
(g) Promptly following the date which is six (6) months after the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any cash (including any interest received with
respect thereto), Certificates and other documents in its possession relating to
the transactions contemplated hereby, which had been made available to the
Exchange Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or similar laws) with respect to the
Merger Consideration deliverable upon due surrender of their Certificates,
without any interest thereon. Notwithstanding the foregoing, neither the
Surviving Corporation nor the Exchange Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
-7-
(h) The Cash Consideration paid in the Mergers shall be net to the
holder of Shares in cash, subject to reduction only for any applicable federal
back-up withholding or, as set forth in Section 2.3(d), stock transfer taxes
payable by such holder. The CVR Payment Amount, if any, paid under the CVR
Agreement shall be net to the holder of CVRs in cash, subject to adjustment as
set forth in the CVR Agreement and reduction for any applicable federal back-up
withholding.
SECTION 2.4 STOCK PLANS. Prior to the Effective Time, the Board of
Directors shall adopt appropriate resolutions and take all other actions
necessary and appropriate to provide that, immediately prior to the Effective
Time, each then outstanding option to purchase Shares (an "OPTION") granted
under any stock option plans or agreements of the Company (all of which are set
forth on Section 3.2 of the Company Letter, collectively, the "STOCK PLANS"),
will be exercisable in full and, to the extent not so exercised or validly
canceled, be forfeited as of the Effective Time. The Board of Directors may take
such action as may be necessary or desirable to permit any holder of an Option
to, in lieu of exercise, elect to have the Option canceled (a "CANCELED OPTION")
at the Effective Time and to receive, in exchange and full settlement therefor
and in consideration of the cancellation of such Option, (i) a payment in cash
(subject to any applicable withholding tax) equal to the product of (x) the
excess, if any, of the Cash Consideration over the per Share exercise price of
such Option, and (y) the number of Shares subject to such Option and (ii) only
if cash is paid pursuant to clause (i) above, one CVR for each Share subject to
such Option (together, the "OPTION CONSIDERATION"). Any such election to receive
the Option Consideration will be conditioned upon the Option holder providing to
the Company prior to the Effective Time a consent to cancellation and release in
such form as is approved by Parent. From and after the Effective Time, such
Canceled Options shall no longer be exercisable by the former holder thereof,
but shall only entitle such holder to the delivery of the Option Consideration.
At, or as soon as practicable after, the Effective Time, Parent shall or shall
cause the Surviving Corporation to provide each holder of a Canceled Option
which is validly canceled pursuant to this Section 2.4 with a lump-sum cash
payment equal to the Cash Consideration payable to such holder hereunder. The
holders of Options which are "out of the money" (I.E., having a per Share
exercise price equal to or in excess of the Cash Consideration) shall not
receive any consideration with respect to the forfeiture of such Options as of
the Effective Time. Prior to the Effective Time, the Company shall use its
reasonable best efforts to ensure that holders of Options that are neither
exercised nor canceled will have no rights with respect to the Options.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subsidiary as
set forth in this Article III, except to the extent provided in that certain
letter delivered by the Company to Parent and Merger Subsidiary dated as of the
date hereof (the "COMPANY LETTER"), as follows:
SECTION 3.1 ORGANIZATION AND QUALIFICATION.
(a) Each of the Company and the DSS Cleared Company is a corporation
duly organized, validly existing and in good standing under the laws of the
States of Delaware and Alabama, respectively. Each of the Company and the DSS
Cleared Company has all requisite
-8-
corporate power and authority and all necessary governmental approvals to carry
on its business as it is now being conducted and to own, lease and operate its
assets.
(b) Each of the Company and the DSS Cleared Company is duly
qualified or licensed to do business as a foreign corporation in good standing
in every jurisdiction where the character of its properties, owned or leased, or
the nature of its activities make such qualification, license or good standing
necessary, except where the failure to be so qualified, licensed or in good
standing would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. As used in this Agreement,
"MATERIAL ADVERSE EFFECT" means any material adverse change in or effect on the
business, operations, properties (including intangible properties), financial
condition, results of operations, assets, liabilities or prospects of the
Company and its Subsidiaries (as defined below) taken as a whole, excluding any
such changes or effects directly resulting from any one or more of the
following: (1) material adverse changes in the U.S. financial or securities
markets or the U.S. economy in general, (2) material adverse changes in the
defense industry in general, to the extent that the effects thereof do not
disproportionately impact the Company or any of its Subsidiaries, or (3) any
knowingly competitive action taken with respect to the Company's U.S. business
or operations by Parent or Singapore Technologies Engineering Ltd. or any of its
control subsidiaries, other than actions or inactions by Parent or Merger
Subsidiary which are contemplated or permitted by this Agreement or any of the
Ancillary Agreements.
(c) The Company has heretofore delivered to Parent complete and
correct copies of the Company's Certificate of Incorporation and By-Laws, each
as amended and in effect on the date hereof. The Company is not in violation of
any of the provisions of its Certificate of Incorporation or By-Laws. Complete
and correct copies of all minute books of the Company since 1995 have been made
available by the Company to Parent.
SECTION 3.2 CAPITALIZATION. The authorized capital stock of the Company
consists of 20,000,000 shares of common stock, par value $0.01 per share (the
"COMMON STOCK"). As of the date hereof, (i) 5,962,623 Shares were issued and
outstanding, (ii) 848,489 shares were issued and held in the treasury of the
Company, and (iii) a total of 532,336 Shares were reserved under the Company's
Stock Plans in respect of outstanding and future awards. Section 3.2 of the
Company Letter sets forth a true, accurate and complete list of all outstanding
Options and the exercise prices and vesting schedules thereof. Except as
disclosed in Section 3.2 of the Company Letter, all outstanding Options were
granted pursuant to the Company's 1995 Stock Option and Performance Award Plan.
All the outstanding shares of the Company's capital stock are, and all Shares
which may be issued pursuant to the exercise of outstanding Options will be,
when issued in accordance with the terms thereof, duly authorized, validly
issued, fully paid, non-assessable and free of preemptive rights. Except as
disclosed in this Section 3.2 or as set forth in Section 3.2 of the Company
Letter, (w) there are no shares of capital stock of the Company authorized,
issued or outstanding, the Common Stock is the only class of capital stock
outstanding and no other series or classes of capital stock has been authorized,
(x) there are no existing options, warrants, calls, preemptive rights,
subscriptions or other rights, agreements, arrangements or commitments of any
character, relating to the issued or unissued capital stock of the Company or
any Subsidiary obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or other equity interest in the Company or any Subsidiary or
securities convertible or exchangeable for
-9-
such shares or equity interests or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment, (y) there are
no bonds, debentures, notes or other securities having the right to vote on any
matters on which shareholders of the Company or any of its Subsidiaries may vote
issued or outstanding and (z) there are no outstanding contractual obligations
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Shares, or the capital stock of the Company or of any Subsidiary of
the Company. Except as disclosed in Section 3.2 of the Company Letter, there are
no voting trusts or other agreements to which the Company or any of its
Subsidiaries is a party with respect to the voting of the capital stock of the
Company or any Subsidiary (including, without limitation, agreements restricting
the transfer of, affecting the voting rights of, requiring the repurchase,
redemption or disposition of, or containing any right of first refusal with
respect to, requiring the registration for sale of, or granting any preemptive
or anti-dilutive right with respect to, any shares of capital stock of or other
equity interests in the Company or any Subsidiary). Except as set forth on
Section 3.2 of the Company Letter, there are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar rights with
respect to the Company.
SECTION 3.3 SUBSIDIARIES. Section 3.3 of the Company Letter contains a
complete and accurate list of each of the Company's Subsidiaries, the
jurisdiction of incorporation of each such Subsidiary, and the Company's equity
interest therein. Each Subsidiary of the Company is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and carry on its
business as it is now being conducted. Each Subsidiary is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of its properties owned or leased or the nature of its activities
makes such qualification, licensing or good standing necessary, except where the
failure to be so qualified, licensed or in good standing would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Except as set forth on Section 3.3 of the Company Letter, each outstanding share
of capital stock of each Subsidiary is duly authorized, validly issued, fully
paid, non-assessable and free of preemptive rights and is owned, beneficially
and of record, by the Company or another Subsidiary free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on the Company's or any Subsidiary's voting rights,
charges or other encumbrances of any nature whatsoever. Except as disclosed in
Section 3.3 of the Company Letter, (i) there are no shares of capital stock of
any Subsidiary authorized, issued or outstanding, (ii) there are no existing
options, warrants, calls, preemptive rights, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of any Subsidiary obligating any of its Subsidiaries
to issue, transfer or sell or cause to be issued, transferred or sold any shares
of capital stock or other equity interest in a Subsidiary or securities
convertible or exchangeable for such shares or equity interests or obligating
any Subsidiary to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment, (iii) there
are no bonds, debentures, notes or other securities having the right to vote on
any matters on which shareholders of a Subsidiary may vote issued or outstanding
and (iv) there are no outstanding contractual obligations of any Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of any
Subsidiary. There are no outstanding contractual obligations of the Company or
any Subsidiary to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Subsidiary
-10-
or any other person, other than guarantees by the Company of any indebtedness or
other obligations of a wholly-owned Subsidiary. Except as set forth on Section
3.3 of the Company Letter, none of the Company or any of the Subsidiaries holds
shares of capital stock or other equity interests in any other person. Except as
disclosed in Section 3.3 of the Company Letter, there are no voting trusts or
other agreements to which any Subsidiary is a party with respect to the voting
of any capital stock or other equity interests in any other person (including,
without limitation, agreements restricting the transfer of, affecting the voting
rights of, requiring the repurchase, redemption or disposition of, or containing
any right of first refusal with respect to, requiring the registration for sale
of, or granting any preemptive or anti-dilutive right with respect to, any
shares of capital stock or other equity interests in any other person). The
Company has heretofore delivered to Parent complete and correct copies of each
Subsidiary's Certificate of Incorporation and By-Laws (and any other comparable
constituent documents), each as amended and in effect on the date hereof. Each
Subsidiary is not in violation of any of the provisions of its Certificate of
Incorporation or By-Laws (and any other comparable constituent documents).
Complete and correct copies of all minute books of each Subsidiary have been
made available by the Company to Parent. Except as set forth on Section 3.3 of
the Company Letter, there are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or other similar rights with respect to any
Subsidiary. For purposes of this Agreement, the term "SUBSIDIARY" shall mean any
corporation or other entity a majority of whose outstanding voting stock or
ownership interests ordinarily entitled to vote for the election of a majority
of the Board of Directors or other governing body is directly or indirectly
owned by the Company or one or more other Subsidiaries.
SECTION 3.4 AUTHORIZATION.
(a) Each of the Company and the DSS Cleared Company has all
requisite corporate power to execute and deliver this Agreement and all other
documents and instruments to be executed and delivered by it in connection
herewith, including without limitation the Voting Agreements and the CVR
Agreement (each, an "ANCILLARY AGREEMENT") and, subject to the adoption of this
Agreement by the stockholders of the Company, to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by each
of the Company and the DSS Cleared Company of this Agreement and all Ancillary
Agreements to which it is a party, and the consummation by it of the
transactions contemplated hereby and thereby, have been duly and validly
authorized by its board of directors and no other corporate action on the part
of the Company or the DSS Cleared Company is necessary to authorize the
execution and delivery by the Company and the DSS Cleared Company of this
Agreement and all Ancillary Agreements to which it is a party and the
consummation by it of the transactions contemplated hereby and thereby, except
the adoption and approval of this Agreement and the Mergers by the Company's
stockholders as contemplated by Section 6.1 hereof. This Agreement and each
Ancillary Agreement to which it is a party constitutes a valid and legally
binding agreement of each of the Company and the DSS Cleared Company enforceable
in accordance with its terms.
(b) Each of the Company and the DSS Cleared Company has taken all
necessary and appropriate actions so that the restrictions on business
combinations contained in Section 203 of the Delaware Law will not apply with
respect to or as a result of this Agreement, the Voting Agreements or any other
Ancillary Agreement and the transactions contemplated hereby and
-11-
thereby, including the Mergers, without any further action on the part of the
stockholders or the board of directors of either company. Complete and accurate
copies of all of the board of directors resolutions reflecting such actions have
been previously provided to Parent. No other state takeover statute or similar
statute or regulation applies or purports to apply to the Mergers or any other
transaction contemplated by this Agreement, the Voting Agreements or any other
Ancillary Agreement.
SECTION 3.5 SEC DOCUMENTS.
(a) Except as disclosed in Section 3.5(a) of the Company Letter, the
Company has timely filed with the Securities and Exchange Commission (the
"SEC"), and heretofore has made available to Parent, true and complete copies of
all reports, schedules, forms, statements and other documents required to be so
filed by it from January 1, 2000 through the date hereof under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE Act"), or the Securities Act of
1933, as amended (the "SECURITIES ACT"), including (i) the annual reports on
Form 10-K for all fiscal years ended during such period, (ii) the quarterly
reports on Form 10-Q required for all fiscal quarters during such period, and
(iii) its proxy or information statements relating to meetings of, or actions
taken without a meeting by, the stockholders of the Company held during such
period (the "SEC DOCUMENTS").
(b) As of its respective date, or if amended, as of the date of the
last such amendment, each SEC Document, including, without limitation, any
financial statements or schedules included therein (i) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading and (ii) except
as disclosed in Section 3.5(b) of the Company Letter, complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations promulgated by
the SEC thereunder. None of the Company's Subsidiaries has any class of
securities registered under, or is subject to the periodic reporting
requirements of, the Exchange Act.
(c) The Company maintains a system of accounting controls sufficient
to provide reasonable assurances that (i) transactions are executed in
accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP (as defined below) and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(d) The Company is neither engaged in any transactions with, nor has
any obligations to, any unconsolidated entities that are contractually limited
to activities that facilitate the Company's transfer of or access to assets,
including, without limitation, structured finance entities and special purpose
entities, or otherwise engage in, or have any obligations under, any off-balance
sheet transactions or arrangements.
-12-
(e) The Company is not engaged in any trading activities involving
commodity contracts or other trading contracts which are not currently traded on
a securities or commodities exchange and for which the market value cannot be
determined.
(f) The Proxy Statement (as defined below) and any other filings,
and any amendments or supplements thereto, when filed by the Company with the
SEC, or when distributed or otherwise disseminated to the Company's
stockholders, as applicable, will comply as to form in all material respects
with the applicable requirements of the Exchange Act. The Proxy Statement, as
supplemented or amended, if applicable, at the time such Proxy Statement or any
amendment or supplement thereto is first mailed to the Company's stockholders
and at the time such stockholders vote on adoption and approval of this
Agreement and the Mergers at the Special Meeting, and any other SEC filing
(other than the Proxy Statement) or any amendment or supplement thereto, at the
time of the filing and at the time of any distribution or dissemination thereof,
in each case, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. The representations and warranties contained in this Section 3.5(f)
will not apply to statements or omissions included in the Proxy Statement or any
other SEC filings based upon information furnished in writing to the Company by
Parent or Merger Subsidiary specifically for use therein.
(g) The Company has previously provided to Parent a complete and
correct copy of any amendment or modification which has not yet been filed with
the SEC to any agreement, document or other instrument which previously had been
filed by the Company with the SEC pursuant to the Securities Act or the Exchange
Act.
(h) Except as set forth in the SEC Documents, since the date of the
Company's last proxy or information statement filed with the SEC, no event has
occurred that would be required to be reported by the Company pursuant to Item
404 of Regulation S-K promulgated by the SEC.
SECTION 3.6 NO CONFLICTS. Except as disclosed in Section 3.6 of the
Company Letter and for filings, permits, authorizations, consents and approvals
as may be required under the Exchange Act, the execution, delivery or
performance of this Agreement and the Ancillary Agreements by each of the
Company and the DSS Cleared Company, the consummation by each of the Company and
the DSS Cleared Company of the transactions contemplated hereby and thereby or
compliance by each of the Company and the DSS Cleared Company with any of the
provisions hereof and thereof will not (i) conflict with or result in any breach
of any provision of the Certificate of Incorporation, the By-Laws or similar
organizational documents of the Company or any of its Subsidiaries, (ii) require
on the part of either the Company or the DSS Cleared Company any filing or
notice with, or any permit, authorization, consent, certification, waiver or
approval from, any international, national, foreign, federal, state or local
judicial, legislative, executive, administrative or regulatory body or authority
(a "GOVERNMENTAL ENTITY") including, without limitation, in relation to U.S. and
non-U.S. security matters and the HSR Act (as defined below) (collectively,
"REGULATORY APPROVALS"), (iii) require any consent or approval under, result in
a violation or breach of, or constitute a change of control or (with or without
due notice or lapse of time or both) a default (or give rise to (x) any right of
termination, vesting, amendment, cancellation or acceleration or to receive any
other or additional payments, (y) the creation of any lien or other encumbrance
on any property or asset of the Company or any
-13-
Subsidiary or (z) the loss of any benefit) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, permit,
contract (including, without limitation any Government Contract (as defined
below)) agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which any of them or any of their
properties or assets is bound (the "COMPANY AGREEMENTS"), or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Company, any of its Subsidiaries or any of their properties or assets, except in
the case of clauses (ii), (iii) and (iv) for any matter otherwise covered by
such clauses which would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
SECTION 3.7 FINANCIAL STATEMENTS.
(a) The consolidated financial statements included in the SEC
Documents (the "FINANCIAL STATEMENTS") fairly present, in all material respects,
the consolidated financial position and the consolidated results of operations
and cash flows (and changes in financial position, if any) of the Company and
its consolidated Subsidiaries as of the times and for the periods referred to
therein, subject, in the case of unaudited, interim financial statements, to the
lack of footnotes and normal year-end adjustments and to any other adjustments
or exceptions described therein, all in accordance with United States generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated therein or in the notes
thereto). The books and records of the Company and each Subsidiary have been,
and are being, maintained in accordance with applicable legal and accounting
requirements.
(b) Except as and to the extent set forth on the consolidated
balance sheet of the Company and its consolidated Subsidiaries as of December
31, 2002 included in the SEC Documents, including the notes thereto, none of the
Company or any consolidated Subsidiary has any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet or in notes thereto prepared in
accordance with GAAP applied on a consistent basis, except for liabilities or
obligations incurred in the ordinary course of business since December 31, 2002
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
SECTION 3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except to the extent
disclosed in Section 3.8 of the Company Letter or in the SEC Documents filed
prior to the date hereof, since December 31, 2002, the Company and its
Subsidiaries have conducted their businesses in the ordinary course consistent
with past practice and, since such date, there has not been (i) any Material
Adverse Effect or any event or development that would, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (ii) any
event or development that would, individually or in the aggregate, reasonably be
expected to prevent or materially delay the performance of this Agreement or any
Ancillary Agreement by the Company, or (iii) any action taken by the Company or
any Subsidiary, or any other occurrence, that, if taken or occurred during the
period from the date of this Agreement through the Effective Time, would
constitute a breach of Section 5.1.
SECTION 3.9 TAX MATTERS.
-14-
(a) Each of the Company and its Subsidiaries has timely filed all
federal income and all other material Tax Returns (as defined below) that are
required to be filed by or with respect to the Company and its Subsidiaries. All
such Tax Returns were complete and accurate in all material respects. Except as
disclosed in Section 3.9 of the Company Letter, the Company and its Subsidiaries
are not the beneficiaries of any extension of time within which to file any such
Tax Returns. The Company has delivered or made available to Parent correct and
complete copies of all federal Income Tax Returns and all other material Tax
Returns and all material examination reports, ruling requests and statements of
deficiencies assessed against or agreed to by the Company or any of its
Subsidiaries.
(b) Each of the Company and its Subsidiaries has timely paid all
Taxes (as defined below) due and owing, whether or not shown on any Tax Returns
(except for Taxes that are being contested in good faith by appropriate
proceedings) or for which reserves, which are adequate under GAAP, have been
established.
(c) Except as disclosed in Section 3.9(c) of the Company Letter,
each of the Company and its Subsidiaries has complied in all material respects
with all applicable laws, rules and regulations relating to the withholding of
Taxes and has timely withheld and paid to the proper Governmental Entity all
amounts required to have been withheld and paid in connection with amounts paid
or owing to any employee, independent contractor, creditor or stockholder.
(d) Except as disclosed in Section 3.9(d) of the Company Letter, (i)
no audits or other administrative or court proceedings are presently pending
with regard to any Taxes for which the Company or any of its Subsidiaries could
be liable, (ii) no dispute or claim concerning any Taxes for which the Company
or any of its Subsidiaries could be liable has been claimed or raised by any Tax
Authority in writing to the Company, and (iii) no claim has been made in writing
to the Company by any authority in a jurisdiction where the Company and its
Subsidiaries do not file Tax Returns that the Company or any such Subsidiary is,
or may be, subject to taxation by that jurisdiction.
(e) The unpaid Taxes of the Company and its Subsidiaries (i) did
not, as of the balance sheet date of December 31, 2002, exceed the reserve for
Tax liability (excluding any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
balance sheet contained in the year ending December 31, 2002 financial
statements (rather than any notes thereto) and (ii) will not exceed that reserve
as adjusted for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Company and its Subsidiaries
in filing their Tax Returns.
(f) There are no Encumbrances for Taxes, other than Permitted
Encumbrances (as defined below), on any of the assets of the Company or its
Subsidiaries.
(g) None of the Company or any of its Subsidiaries has (i) consented
at any time under Section 341(f)(1) of the Code (as defined below) to have the
provisions of Section 341(f)(2) of the Code apply to any disposition of any of
their assets; (ii) agreed, or is required, to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or otherwise;
(iii) made an election, or is required, to treat any of its assets as owned by
another Person pursuant to the provisions of former Section 168(f) of the Code
or as tax-exempt
-15-
bond financed property or tax-exempt use property within the meaning of Section
168 of the Code; (iv) acquired and does not own any assets that directly or
indirectly secure any debt the interest on which is tax exempt under Section
103(a) of the Code; (v) made and will not make a consent dividend election under
Section 565 of the Code; or (vi) made any of the foregoing elections or is
required to apply any of the foregoing rules under any comparable state or local
Tax provision.
(h) There are no Tax-sharing agreements or similar arrangements
(including Tax indemnity arrangements) with respect to or involving the Company
or its Subsidiaries.
(i) Except as set forth in Section 3.9(i) of the Company Letter,
neither the Company nor its Subsidiaries has any liability for the Taxes of any
Person (other than Taxes of the Company or its Subsidiaries) under Treasury
Regulations (as defined below) Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract or
otherwise.
(j) Neither the Company nor any of its Subsidiaries (while any such
Subsidiary was part of the Company's consolidated tax group) has distributed the
stock of any corporation in a transaction satisfying the requirements of Section
355 of the Code since April 16, 1997, and neither the stock of the Company nor
the stock of any of its Subsidiaries has been distributed in a transaction
satisfying the requirements of Section 355 of the Code since April 16, 1997.
(k) There is no contract, agreement, plan or arrangement covering
any employee or former employee of the Company or any ERISA Affiliate (as
defined below) that, individually or collectively, provides for the payment by
the Company of any amount that is not deductible under Section 162(a)(1) or 404
of the Code.
(l) None of the Company and its Subsidiaries has been a United State
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
(m) For purposes of this Agreement:
(i) "TAX" (including, with correlative meaning, the terms
"TAXES" and "TAXABLE") means (x) any net income, gross income, gross
receipts, sales, use, ad valorem, transfer, transfer gains, franchise,
profits, license, withholding, payroll, employment, social security (or
similar), unemployment, excise, or real or personal property tax,
together with any interest and any penalty, addition to tax or
additional amount or deductions imposed by any governmental body
(domestic or foreign) (a "TAX AUTHORITY") responsible for the
imposition of any such tax, whether disputed or not, including any
liability arising under any tax sharing agreement, with respect to the
Company or any of its Subsidiaries; (y) any liability for the payment
of any amount of the type described
-16-
in the immediately preceding clause (x) as a result of the Company or
any of its Subsidiaries being a member of an affiliated or combined
group with any other corporation at any time on or prior to the Closing
Date; and (z) any liability of the Company or any of its Subsidiaries
for the payment of any amounts of the type described in the immediately
preceding clause (x) as a result of a contractual obligation to
indemnify any other person.
(ii) "TAX RETURN" means any return, declaration, report, claim
for refund, or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
(iii) "INCOME TAX" or "INCOME TAXES" shall mean all Taxes which
are based on or measured by income.
(iv) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(v) "TREASURY REGULATIONS" shall mean the Treasury Regulations
promulgated under the Code.
SECTION 3.10 LITIGATION. Except as set forth in the SEC Documents or as
disclosed in Section 3.10 of the Company Letter, there is (i) no suit, claim,
action or proceeding pending, (ii) to the knowledge of the Company, no
investigation pending, or (iii) to the knowledge of the Company, no suit, claim,
action, proceeding or investigation threatened, in each case against the Company
or any of its Subsidiaries or for which the Company or any Subsidiary is
obligated to indemnify a third party, including but not limited to any suit or
action involving a products liability claim, at law or in equity or before any
United States federal or state court of competent jurisdiction (a "U.S. COURT"),
United States federal, state or local administrative body or arbitration
tribunal, or any foreign or other court of competent jurisdiction,
administrative body or arbitration tribunal, which (x) if determined adversely
to the Company or its Subsidiaries would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect or (y) challenges
the validity or propriety, or seeks to prevent or materially delay consummation
of the Mergers or any transaction contemplated by this Agreement, the Voting
Agreements or any other Ancillary Agreement or otherwise prevent or materially
delay performance by the Company of its material obligations under this
Agreement, the Voting Agreements or any other Ancillary Agreement.
SECTION 3.11 ERISA COMPLIANCE.
(a) Section 3.11(a) of the Company Letter sets forth a true and
complete list of all "employee benefit plans," as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all
other bonus, deferred compensation, pension, profit-sharing, retirement,
medical, life, disability income, severance, stock purchase, stock option,
incentive or other employee benefit plans that are currently, or were in the
past six years, maintained, contributed to, or required to be maintained or
contributed to, by the Company or any of its Subsidiaries or any other Person
that, together with the Company, is treated as a single employer under Sections
414(b), (c), (m) or (o) of the Code (each an "ERISA AFFILIATE"), for the benefit
of any current or former employees, officers or directors of the Company or any
ERISA Affiliate, or under which the Company or its ERISA Affiliates may incur
any material liability (individually, a "BENEFIT PLAN"). In addition, with
respect to each Benefit Plan, the Company has delivered or made available to
Parent correct and complete copies of (i) all Benefit Plans, including without
limitation all plan documents and all amendments thereto, (ii) all trust
-17-
agreements, insurance contracts or other funding vehicles, and all amendments
thereto, relating to any Benefit Plan, (iii) all summaries and summary plan
descriptions, including any summary of material modifications, (iv) the most
recent annual reports (Form 5500 series) filed with the IRS with respect to such
Benefit Plan, (v) the most recent determination or opinion letter, if any,
issued by the United States Internal Revenue Service ("IRS") with respect to any
Benefit Plan and any pending request for such a determination letter, and (vi)
all filings not of the type previously described made with any Governmental
Entities.
(b) Each Benefit Plan has been established and administered in all
material respects in accordance with its terms, and all contributions required
to be made under the terms of any of the Benefit Plans as of the date of this
Agreement have been timely made. The Company, each ERISA Affiliate and each
Benefit Plan are in compliance in all material respects with applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations.
(c) Except as disclosed in Section 3.11(c) of the Company Letter,
(i) all Benefit Plans intended to be qualified under Section 401(a) of the Code
have been the subject of determination or opinion letters from the Internal
Revenue Service to the effect that such Benefit Plans are qualified and exempt
from federal income Taxes under Section 401(a) and 501(a), respectively, of the
Code, and to the best knowledge of the Company nothing has occurred, whether by
action or failure to act, that would reasonably be expected to cause the loss of
such qualification, (ii) no Benefit Plan intended to be qualified under Section
401(a) of the Code has been amended since the date of its most recent
determination letter or application therefor in any material respect, except as
required by law, (iii) all Benefit Plans have been amended, to the extent
necessary, to comply with the so-called GUST legislation, (iv) no Benefit Plan
has experienced a full or partial plan termination, (v) there has been no
prohibited transaction (within the meaning of Section 406 of ERISA or Section
4975 of the Code and other than a transaction that is exempt under a statutory
or administrative exemption) with respect to any Benefit Plan that would result
in material liability to the Company or an ERISA Affiliate, (vi) each Benefit
Plan can be amended, terminated or otherwise discontinued after the Effective
Time in accordance with its terms, without material liability to the Company,
(vii) no suit, administrative proceeding, action or other litigation has been
brought, or to the knowledge of Company is threatened, against or with respect
to any Benefit Plan, including any audit or inquiry by the IRS or United States
Department of Labor (other than routine benefits claims), (viii) neither the
Company nor any ERISA Affiliate sponsors, maintains, contributes to or has an
obligation to contribute to, or has sponsored, maintained, contributed to or had
an obligation to contribute to any multiemployer plan within the meaning of
Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN") or any pension plan that is
subject to Title IV of ERISA, (ix) neither the Company nor any ERISA Affiliate
has incurred any liability due to a complete or partial withdrawal from a
Multiemployer Plan or due to the termination or reorganization of a
Multiemployer Plan, and (x) neither the Company nor any ERISA Affiliate has any
liability under ERISA Section 502. Except as disclosed in Section 3.11(c) of the
Company Letter, all reports, returns and similar documents with respect to
material Benefit Plans required to be filed with any Governmental Entity or
distributed to any Benefit Plan participant have been fully and timely filed.
(d) Except as disclosed in Section 3.11(d) of the Company Letter, no
event has occurred and, to the best knowledge of the Company, no condition
exists that would subject the Company, either directly or by reason of its
affiliation with an ERISA Affiliate, to any material
-18-
Tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other
applicable laws, rules and regulations in connection with a Benefit Plan.
(e) Except as disclosed in Section 3.11(e) of the Company Letter, no
amount that could be received (whether in cash or property or the vesting of
property) in connection with the consummation of the transactions contemplated
by this Agreement and the Ancillary Agreement by any employee, officer or
director of the Company or any of its Subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any Benefit Plan could be characterized as an "excess parachute
payment" (as defined in Section 280G(b)(1) of the Code); neither the Company nor
any of its Subsidiaries has any obligation to "gross up" or otherwise compensate
any such person with respect to the imposition of any excise tax on payments to
such person.
(f) Except as required by Law, no Benefit Plan provides any of the
following retiree or post-employment benefits to any person: medical, disability
or life insurance benefits. The Company and each ERISA Affiliate are in material
compliance with (i) the requirements of the applicable health care continuation
and notice provisions of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended, and the regulations (including proposed regulations)
thereunder ("COBRA") and any similar state law and (ii) the applicable
requirements of the Health Insurance Portability and Accountability Act of 1996,
as amended, and the regulations (including the proposed regulations) thereunder.
(g) Except as set forth in Section 3.11(g) of the Company Letter,
neither the Company nor any of its Subsidiaries maintains, sponsors, contributes
or has any liability with respect to any employee benefit plan program or
arrangement that provides benefits outside of the United States to non-resident
aliens with no United States source income.
SECTION 3.12 ENVIRONMENTAL MATTERS. Except as set forth in Section 3.12
of the Company Letter:
(a) Each of the Company and its Subsidiaries is now and has always
been in compliance with all Environmental Laws and the Company has all
Environmental Permits necessary for the conduct and operation of the business as
now being conducted, and all such permits are in good standing, except where the
failure to be in such compliance or to maintain such Environmental Permits would
not have a Material Adverse Effect.
(b) (i) There is not now and has not been any Hazardous Substance
used, generated, treated, stored, transported, disposed of, released, handled or
otherwise existing on, under, about, or emanating from or to (x) any property
currently owned, leased or operated by the Company or any Subsidiary or (y) any
property formerly owned, leased or operated by the Company or any Subsidiary (at
the time such property was so owned, leased or operated), except in all cases in
material compliance with all applicable Environmental Laws; (ii) neither the
Company nor any Subsidiary has received any notice of alleged, actual or
potential responsibility or liability for, or any inquiry or investigation
regarding, any release or threatened release of Hazardous Substances or alleged
violation of, or non-compliance with, any Environmental Law, nor is the Company
or any Subsidiary aware of any information which would reasonably be expected to
form the basis of any such notice or claim; (iii) there is no site to which the
Company or any Subsidiary has
-19-
transported or arranged for the transport of Hazardous Substances which is or
would reasonably be expected to become the subject of any action under
Environmental Laws; (iv) there is not now nor has there ever been any
underground or aboveground storage tank at any (x) property currently owned,
leased or operated by the Company or any Subsidiary or (y) any property formerly
owned, leased or operated by the Company or any Subsidiary (at the time such
property was so owned, leased or operated); (v) complete and correct copies of
sampling results, environmental or safety audits or inspections, or other
written reports concerning environmental, health or safety issues, pertaining to
any property or business currently or formerly owned, leased or operated by the
Company or any Subsidiary that are in the Company's possession or control have
been provided to Parent; and (vi) neither the Company nor any Subsidiary has
knowingly released any person or entity from any claim, liability or
responsibility under any Environmental Law nor has it knowingly waived any
rights concerning any claims under any Environmental Law.
(c) For purposes of this Agreement:
(i) "ENVIRONMENTAL LAWS" means any and all applicable
international, federal, state, or local laws, statutes, ordinances,
regulations, policies, rules, judgments, orders, court decisions,
Environmental Permit, restrictions and licenses, which regulate or
relate to the protection or clean up of the environment; the use,
treatment, storage, transportation, handling, disposal or release of
Hazardous Substances, the preservation or protection of waterways,
groundwater, drinking water, air, wildlife, plants or other natural
resources; or the health and safety of persons or property, including
without limitation protection of the health and safety of employees; or
impose liability or responsibility with respect to any of the
foregoing, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C.ss.9601 et
seq.)("CERCLA"), or any other law of similar effect;
(ii) "ENVIRONMENTAL PERMITS" means any material permit, license,
authorization or approval required under applicable Environmental Laws;
and
(iii) "HAZARDOUS SUBSTANCES" means any pollutant, chemical,
substance and any toxic, infectious, carcinogenic, reactive, corrosive,
ignitable or flammable chemical, or chemical compound, or hazardous
substance, material or waste, whether solid, liquid or gas, that is
subject to regulation, control or remediation under any Environmental
Laws, including without limitation, asbestos in any form, urea
formaldehyde, PCBs, radon gas, crude oil or any fraction thereof, all
forms of natural gas, petroleum products or by-products or derivatives.
SECTION 3.13 REAL PROPERTY AND LEASED PROPERTY.
(a) Section 3.13(a) of the Company Letter sets forth a complete list
of all real property currently owned by the Company or any of its Subsidiaries
(the "REAL PROPERTY") and all real property formerly owned by the Company or any
of its Subsidiaries. Except as set forth in Section 3.13(a) of the Company
Letter, the Company or one of its Subsidiaries has good, valid and marketable
title to the Real Property, free and clear of all liens, claims, restrictions,
mortgages and encumbrances ("ENCUMBRANCES"), other than Permitted Encumbrances
(as
-20-
defined below), except in all cases where the failure to have such title would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. As used in this Agreement, the term "PERMITTED ENCUMBRANCES"
means (i) those Encumbrances set forth in Section 3.13(a) of the Company Letter,
(ii) Encumbrances, including, without limitation, by easements, granted in favor
of any Governmental Entity or utility company for the customary provision of
utilities and services to the Real Property or any improvements thereon, (iii)
Encumbrances for water and sewage charges and current taxes not yet due and
payable or being contested in good faith, (iv) mechanics', carriers', workers',
repairers', materialmen's, warehousemen's and other similar Encumbrances arising
or incurred in the ordinary course of business, (v) Encumbrances arising or
resulting from any action taken by Parent or Merger Subsidiary, or (vi) such
other Encumbrances which, together with the Encumbrances set forth under clauses
(ii) to (v) above, are not substantial in amount, do not materially detract from
the value or impair the use of the property subject thereto, or impair the
operations of the Company or any Subsidiary and which have arisen only in the
ordinary course of business and consistent with past practice.
(b) Set forth in Section 3.13(b) of the Company Letter is a correct
and complete list of all Company Agreements under which the Company or any
Subsidiary is a lessee ("LEASED PROPERTY"). The Company and each of its
Subsidiaries enjoys peaceful and undisturbed possession under all such Company
Agreements, all of such Company Agreements are valid and none of them is in
default under any such lease, except for any matters otherwise covered by this
sentence which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(c) The Company and each of its Subsidiaries have obtained all
appropriate licenses, permits, easements and rights of way required to use and
operate the Real Property in the manner in which the Real Property and Leased
Property currently are being used and operated, except for such licenses,
permits, easements or rights of way the failure of which to have obtained would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.14 INTELLECTUAL PROPERTY.
(a) Except as disclosed in Section 3.14(a) of the Company Letter,
the Company and each Subsidiary have exclusive ownership of and title to each
issued patent, pending patent application, registered trademark, registered
trade name, registered service xxxx and registered copyright owned or used in
and material to the business of the Company and its Subsidiaries taken as a
whole (collectively, the "REGISTERED INTELLECTUAL Property"), and to the
knowledge of the Company, the Company and each Subsidiary has exclusive
ownership of and rights to use each material patent application, unregistered
trademark, trademark application, unregistered trade name, unregistered service
xxxx, unregistered copyright and other trade secret or other proprietary
intellectual property (the "OTHER INTELLECTUAL PROPERTY" and collectively with
the Registered Intellectual Property, the "INTELLECTUAL PROPERTY") owned by or
used in and material to the business of the Company and its Subsidiaries taken
as a whole.
(b) Except as set forth in Section 3.14(b) of the Company Letter:
(i) to the knowledge of the Company, the current use by the Company and each
Subsidiary of such Intellectual Property does not infringe upon the rights of
any other Person; (ii) to the knowledge of the
-21-
Company, no other Person is infringing upon the rights of the Company or any
Subsidiary in any such Intellectual Property; (iii) no written claim of
invalidity or conflicting ownership rights with respect to any Intellectual
Property has been made by a third party and no such Intellectual Property is the
subject of any pending or, to the Company's knowledge, threatened action, suit,
claim, investigation, arbitration or other proceeding; (iv) no person or entity
has given written notice to the Company or any Subsidiary that the use of any
Intellectual Property by the Company, any Subsidiary or any licensee is
infringing or has infringed any domestic or foreign patent, trademark, service
xxxx, trade name, or copyright or design right, or that the Company, any
Subsidiary or any licensee has misappropriated or improperly used or disclosed
any trade secret, confidential information or know-how; (v) the making, using,
selling, manufacturing, marketing, licensing, reproduction, distribution, or
publishing of any process, machine, manufacture or product related to any
Intellectual Property, does not and will not infringe any domestic or foreign
patent, trademark, service xxxx, trade name, copyright or other intellectual
property right of any third party, and does not and will not involve the
misappropriation or improper use or disclosure of any trade secrets,
confidential information or know-how of any third party; and (vi) there exists
no prior act or current conduct or use by the Company, any Subsidiary or, to the
Company's knowledge, any third party that would void or invalidate any
Intellectual Property; and except in the case of clauses (iii), (iv), (v) and
(vi) for any matter otherwise covered by such clauses which would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect.
SECTION 3.15 CONTRACTS.
(a) Except as disclosed in Section 3.15(a) of the Company Letter or
filed as exhibits to the SEC Documents, none of the Company Agreements (i) is
material to the business, financial condition or results of operations of the
Company and its Subsidiaries taken as a whole or is otherwise a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K
promulgated by the SEC); (ii) involves aggregate expenditures in excess of
$250,000; (iii) involves annual expenditures in excess of $50,000 and is not
cancelable within one year; (iv) contains any non-compete or exclusivity
provisions with respect to any material line of business or material geographic
area with respect to the Company, any Subsidiary or any of the Company's current
or future affiliates, or which restricts the conduct of any material line of
business by the Company, any Subsidiary or any of the Company's current or
future affiliates, or any geographic area in which the Company, any Subsidiary
or any of the Company's current or future affiliates may conduct business, in
each case in any material respect, or (v) could prohibit or materially delay the
consummation of the Mergers or any of the other transactions contemplated by
this Agreement or any Ancillary Agreement. Each of the Company Agreements is
valid, binding and enforceable and in full force and effect, except where
failure to be valid, binding and enforceable and in full force and effect would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. There are no defaults (nor does there exist any condition which
upon the passage of time or the giving of notice would cause such a default) on
the part of the Company or its Subsidiaries, nor to the Company's knowledge, on
the part of third parties, under the Company Agreements, except those defaults
that would not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
-22-
(b) Except as disclosed in Section 3.15(b) of the Company Letter or
filed as exhibits to the SEC Documents, none of the Company or any Subsidiary is
a party to or bound by any Company Agreement any of the benefits to any party of
which will be increased, or the vesting of the benefits to any party of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement, the Voting Agreements or any other Ancillary Agreement or the
value of any of the benefits to any party of which will be calculated on the
basis of any of the transactions contemplated by this Agreement, the Voting
Agreements or any other Ancillary Agreement.
(c) With respect to each Government Contract (as defined below) to
which the Company or any of its Subsidiaries is a party or Bid (as defined
below): (i) the Company or its Subsidiary that is a party to such Government
Contract or Bid has complied with all material terms and conditions and all
applicable requirements of statute, rule, regulation, order or agreement,
whether incorporated expressly, by reference or by operation of law; (ii) all
representations and certifications were current, accurate and complete in all
material respects when made, and the Company or its Subsidiary has complied with
all such representations and certifications; (iii) no allegation has been made,
either orally or in writing, that the Company or its Subsidiary that is a party
to such Government Contract or Bid is in breach or violation of any statutory,
regulatory or contractual requirement; (iv) no termination for convenience,
termination for default, cure notice or show cause notice has been issued and
received by the Company or any Subsidiary; (v) no material cost incurred by the
Company or one of its Subsidiaries or one of their respective subcontractors has
been questioned or disallowed; and (vi) no money due to the Company or one of
its Subsidiaries has been (or has threatened to be) withheld or set off.
(d) Neither the Company, any of its Subsidiaries or any of their
current or, to the Company's knowledge, former employees is (or for the last
three years has been) (i) under administrative, civil or criminal investigation,
indictment or information, audit or internal investigation with respect to any
alleged irregularity, misstatement or omission regarding a Government Contract
or Bid, or (ii) suspended or debarred from doing business with the U.S.
Government or any state or local government or declared non-responsible or
ineligible for government contracting. Neither the Company nor any of its
Subsidiaries has made a voluntary disclosure to any U.S. Government, state or
local government entity with respect to any alleged irregularity, misstatement
or omission arising under or relating to any Government Contract or Bid. The
Company does not have knowledge of any circumstances that would warrant the
institution of suspension or debarment proceedings or the finding of
non-responsibility or ineligibility on the part of the Company or one of its
Subsidiaries or any of the current employees in the future.
(e) Neither the U.S. Government, any state or local government nor any
prime contractor, subcontractor or vendor has asserted in writing any claim or
initiated any dispute proceeding against the Company or any of its Subsidiaries
or one of their current employees, nor has the Company or one of its
Subsidiaries asserted any claim or initiated any dispute proceeding, directly or
indirectly, against any such party, concerning any Government Contract or Bid.
The Company has no knowledge of any facts upon which such a claim or dispute
proceeding may be based.
-23-
(f) For purposes of this Section 3.15, the following terms shall have
the following meanings:
(i) "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 one of its Subsidiaries;
(ii) "GOVERNMENT CONTRACT" means any prime contract,
subcontract, teaming agreement or arrangement, joint venture, basic
ordering agreement, letter contract, purchase order, delivery order,
change order, arrangement or other commitment of any kind relating to the
business of the Company or one of its Subsidiaries between the Company or
one of its Subsidiaries and (x) the U.S. Government, (y) any prime
contractor to the U.S. Government or (z) any subcontractor with respect
to any contract described in clause (x) or (y).
(iii) "U.S. GOVERNMENT" means the United States government
including any and all agencies, commissions, branches, instrumentalities
and departments thereof.
SECTION 3.16 COMPLIANCE WITH LAWS. Except for laws, rules and regulations
relating to tax matters, ERISA compliance, environmental matters and
intellectual property (which are exclusively provided for in Sections 3.9, 3.11,
3.12 and 3.14 hereof, respectively), the operations of the business of the
Company and its Subsidiaries as currently conducted are not in violation of, nor
is the Company or any of its Subsidiaries in default under, or violation of, any
federal, state or local law, statute, regulation, license or permit or any
order, judgment or decree of any Governmental Entity to or by which the Company
or any of its Subsidiaries or any of their assets or properties are bound or
affected, except for such violations or defaults as have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. The Company and its Subsidiaries have been duly granted all
authorizations, licenses, permits, certificates, approvals and clearances
necessary for the Company and its Subsidiaries to own, lease and operate their
properties or to carry on their respective businesses substantially in the
manner described in the SEC Documents filed prior to the date hereof and as
currently conducted, except those the failure of which to obtain would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
SECTION 3.17 INSURANCE COVERAGE. The Company and each of its Subsidiaries
have policies of insurance and bonds with reputable insurers in such amounts and
of the type reasonably appropriate for the conduct of the business or ownership
and operation of the assets of the Company and its Subsidiaries and covering
such risks as are in accordance with normal industry practice for companies
engaged in businesses similar to that of the Company and its Subsidiaries
(taking into account the cost and availability of such insurance). All such
policies are in full force and effect, all premiums due and payable have been
paid, and no written notice of cancellation or termination has been received
with respect to any such policy. Except as disclosed in Section 3.17 of the
Company Letter, there is no material claim pending under any of such policies or
bonds as to which coverage has been denied or disputed in writing by the
underwriters of such policies or bonds and which denial or dispute is likely to
be adversely
-24-
determined to the Company and its Subsidiaries, and which if so adversely
determined, in whole or in part, would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 3.18 PERSONNEL; LABOR RELATIONS.
(a) Except as disclosed in Section 3.18(a) of the Company Letter, (i)
neither the Company nor any Subsidiary is the subject of any action,
arbitration, governmental or other examination or investigation, hearing,
administrative or other proceeding asserting that the Company or any Subsidiary
has committed an unfair labor practice (within the meaning of the National Labor
Relations Act or comparable state law) or seeking to compel the Company or any
Subsidiary to bargain with any labor organization as to wages or conditions of
employment which if adversely determined, individually or in the aggregate with
other such proceedings so adversely determined, would reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, (ii) neither
the Company nor any Subsidiary is party to any collective bargaining agreement,
(iii) there is not any strike or other labor dispute involving the Company or
any Subsidiary pending or, to the Company's knowledge, threatened, or any
activity involving any of their respective employees seeking to certify a
collective bargaining unit or engaging in any other labor organizing activity,
and (iv) since January 1, 2000, neither the Company nor any Subsidiary has
effected (A) a plant closing affecting any site of employment or one or more
facilities or operating units within any site of employment or facility of the
Company or any Subsidiary or (B) a mass layoff affecting any site of employment
or facility or operating unit within any site of employment or facility of the
Company or any Subsidiary, nor has the Company or any Subsidiary engaged in
layoffs or employment terminations sufficient in number to trigger application
of the Worker Adjustment and Retraining Notification Act (the "WARN ACT") or of
any state or local law equivalent to the WARN Act. For the purposes of this
Section 3.18, "plant closing," "mass layoff," "site of employment," "operating
unit" and "employment loss" shall have the meanings ascribed to such terms in
the WARN Act or the implementing regulations thereof, or any state or local law
equivalent to the WARN Act. None of the Company or any Subsidiary is liable for
any payment to any trust or other fund or to any Governmental Entity with
respect to unemployment compensation benefits, social security or other benefits
or obligations for employees (other than routine payments to be made in the
ordinary course of business and consistent with past practice).
(b) The Company has identified in Section 3.18(b) of the Company
Letter and has made available to Parent true and complete copies of (i) all
severance and employment agreements with directors, officers or employees of or
consultants to the Company or any Subsidiary; (ii) all severance programs and
policies of each of the Company and each Subsidiary with or relating to its
employees; and (iii) all plans, programs, agreements and other arrangements of
the Company and each Subsidiary with or relating to its directors, officers,
employees or consultants which contain change in control provisions. Except as
set forth in Section 3.18(b) of the Company Letter, none of the execution and
delivery of this Agreement or any Ancillary Agreement or the consummation of the
transactions contemplated hereby or thereby will (either alone or in conjunction
with any other event, such as termination of employment) (i) result in any
payment (including, without limitation, severance, unemployment compensation,
parachute or otherwise) becoming due to any director or any employee of the
Company or any Subsidiary or affiliate from the Company or any Subsidiary or
affiliate under
-25-
any Company Benefit Plan or otherwise, (ii) significantly increase any benefits
otherwise payable under any Company Benefit Plan or (iii) result in any
acceleration of the time of payment or vesting of any material benefits. No
individual who is a party to an employment agreement listed in Section 3.18(b)
of the Company Letter or any agreement incorporating change in control
provisions with the Company or its Subsidiaries has terminated employment or
been terminated, nor has any event occurred that could give rise to a
termination event, in either case under circumstances that has given, or could
give, rise to a severance obligation on the part of the Company under such
agreement. Section 3.18(b) of the Company Letter sets forth the Company's best
estimates of the amounts payable to the executives listed therein, as a result
of the transactions contemplated by this Agreement, any Ancillary Agreement
and/or any subsequent employment termination (including any cash-out or
acceleration of options and restricted stock and any "gross-up" payments with
respect to any of the foregoing), based on compensation data applicable as of
the date of such Company Letter and the assumptions stated on that Company
Letter.
SECTION 3.19 BROKERS AND FINDERS. No broker, finder or investment
banker, other than the Legacy and Quarterdeck Investment Partners, LLC (the
"Company Financial Advisor"), is entitled to any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated hereby. The
Company has previously provided Parent with a true and complete copy of each
agreement between the Company and each of Legacy and the Company Financial
Advisor pursuant to which such firms would be entitled to any payment in
connection with the Mergers or any other transaction contemplated by this
Agreement, the Voting Agreements or any other Ancillary Agreement.
SECTION 3.20 OPINION OF LEGACY. Legacy has delivered to the Board of
Directors its written opinion, dated the date hereof, that the Merger
Consideration to be received by the holders of Shares pursuant to the Mergers is
fair to such holders of Shares from a financial point of view.
SECTION 3.21 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding Shares is the only vote, if any, of the holders of
any class or series of capital stock or other equity interests of the Company or
the DSS Cleared Company necessary to approve the Mergers.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY
Parent and Merger Subsidiary, jointly and severally, hereby represent and
warrant to the Company and the DSS Cleared Company as follows:
SECTION 4.1 ORGANIZATION AND POWER.
(a) Parent is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Parent has all requisite
corporate power and authority to enter into this Agreement, and all other
documents and instruments to be executed and delivered
-26-
by it in connection herewith, and to carry out its obligations hereunder and
thereunder, and to own, operate and lease its properties and to carry out its
business as it is now being conducted.
(b) Merger Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of the State of its formation.
Merger Subsidiary has all requisite corporate power and authority to enter into
this Agreement, and all other documents and instruments to be executed and
delivered by it in connection herewith, and to carry out its obligations
hereunder and thereunder. Merger Subsidiary is a wholly-owned subsidiary of
Parent, has been organized solely for the purpose of consummating the Mergers
has conducted no business or operations of any nature and has incurred no
obligations or liabilities other than those created by or in connection with
this Agreement.
SECTION 4.2 AUTHORIZATION. The execution and delivery of this Agreement
and all other documents and instruments to be executed and delivered by Parent
and Merger Subsidiary in connection herewith, and the due consummation by Parent
and Merger Subsidiary of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the part of Parent and
Merger Subsidiary and no other corporate proceedings on the part of Parent or
Merger Subsidiary are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement constitutes (and each document
and instrument contemplated by this Agreement, when executed and delivered in
accordance with the provisions hereof, will constitute) a valid and legally
binding agreement of each of Parent and Merger Subsidiary, enforceable against
them in accordance with its terms.
SECTION 4.3 NO CONFLICTS. The execution, delivery and performance of
this Agreement by Parent and Merger Subsidiary and the consummation of the
transactions contemplated hereby or in connection herewith, including, without
limitation, the financing thereof, do not and will not constitute a conflict
with, breach or violation of or default (or an event which with notice or lapse
of time or both would become a default) under (i) Parent's Certificate of
Incorporation or By-Laws, as amended to date; (ii) Merger Subsidiary's Articles
of Incorporation or By-laws, as amended to date; (iii) any agreement,
instrument, license, franchise or permit to which Parent or Merger Subsidiary is
subject or by which Parent or Merger Subsidiary is bound; (iv) any statute,
administrative regulation, order, writ, injunction, decree or arbitration award
to which Parent or Merger Subsidiary is subject or by which Parent or Merger
Subsidiary is bound; or (v) any statutory or decisional law (or any duty or
obligation thereunder, derived therefrom or related thereto), rule or regulation
to which Parent, Merger Subsidiary, their respective officers, directors or
affiliates is subject or to which such Person is bound except, in the case of
clauses (iii), (iv) and (v) for any matter otherwise covered by such clauses
which (x) would not reasonably be expected to prevent or materially delay
consummation of the Mergers or otherwise prevent or materially delay performance
by Parent or Merger Subsidiary of their material obligations under this
Agreement or any agreement executed and delivered by them in connection
herewith, or (y) are not material to Merger Subsidiary or Parent.
SECTION 4.4 CONSENTS AND APPROVALS. Except for filings, approvals or
consents required by (i) the Secretary of State of the State of Delaware; (ii)
the Exchange Act; and (iii) such other statutes, rules or regulations which may
require registrations, authorizations, consents or approvals relating to matters
that, in the aggregate, are not material to Merger Subsidiary or Parent, neither
Parent nor Merger Subsidiary is required to submit any notice, report,
-27-
registration, declaration or other filing with or obtain any consent, approval
or authorization from any Governmental Entity or third party in connection with
the execution and delivery by Parent or Merger Subsidiary of this Agreement or
the consummation of the transactions contemplated hereby.
SECTION 4.5 FINANCING OF THE MERGERS. Parent and Merger Subsidiary
have, or will have at the Effective Time, the funds necessary to consummate the
Mergers.
SECTION 4.6 FINDER'S FEES. No broker, finder, investment banker or
other Person or entity, other than Xxxx Xxxxxxxxx Xxxxxxxx & Co., whose
compensation will be paid by Parent, is entitled, in connection with the
transactions contemplated hereby, to any broker's commission, finder's fee,
investment banker's fee or similar payment from Parent, Merger Subsidiary or the
Company based upon arrangements made by or on behalf of Parent or Merger
Subsidiary.
SECTION 4.7 DISCLOSURE. The information with respect to Parent or
Merger Subsidiary or any of their Subsidiaries that either of them furnishes to
the Company specifically for use in the Proxy Statement and any other related
filings, at the time of the filing thereof, at the time of any distribution or
dissemination thereof and at the time of the Special Meeting, will not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
SECTION 4.8 INTERESTED STOCKHOLDER. At no time during the three (3)
years prior to the date of this Agreement has Parent, Merger Subsidiary, or any
of their respective affiliates or associates been an "interested stockholder" of
the Company within the meaning of, and as defined in, Section 203 of the
Delaware Law.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company covenants
and agrees that, from the date hereof until the Effective Time, without the
prior written approval of Parent, which approval shall not be unreasonably
withheld, delayed or conditioned, the Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, do or agree to do, any of
the following:
(a) conduct the business of the Company and its Subsidiaries in a
manner other than in the ordinary and usual course and each of the Company and
its Subsidiaries shall, subject to the other restrictions contained in this
Agreement, use its best efforts to preserve its business organization intact and
maintain its existing relations with customers, suppliers, employees, creditors
and business associates;
(b) directly or indirectly, (i) except upon exercise of Options or
other rights to purchase Shares outstanding on the date hereof, issue, sell,
transfer or pledge or agree to sell, transfer or pledge any treasury stock of
the Company or any capital stock of any of its Subsidiaries beneficially owned
by it; (ii) amend its or any of its Subsidiaries' Certificate of Incorporation
or By-laws or similar organizational documents; or (iii) split, combine or
reclassify
-28-
the outstanding Shares or any outstanding capital stock, or authorize or create
a new class of capital stock, of any of the Subsidiaries of the Company;
(c) other than the payment of dividends or other distributions by
Subsidiaries to the Company or to other Subsidiaries: (i) declare, set aside or
pay any dividend or other distribution payable in cash, stock or property, with
respect to its capital stock or enter into any agreement with respect to the
voting of its capital stock; (ii) issue, sell, pledge, dispose of or encumber
any additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire (or stock
appreciation rights with respect to), capital stock of any class of the Company
or its Subsidiaries, other than Shares reserved for issuance on the date hereof
pursuant to the exercise of Options outstanding on the date hereof; (iii) except
as disclosed in Section 5.1(c) of the Company Letter, transfer, lease, license,
sell, mortgage, pledge, dispose of, or encumber any assets having a value in
excess of $250,000 (or authorize any of the foregoing), other than pursuant to
existing contracts or commitments or the sale or purchase of goods in the
ordinary course of business consistent with past practice, or enter into any
commitment or transaction outside the ordinary course of business consistent
with past practice; or (iv) redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock;
(d) except as disclosed in Section 5.1(d) of the Company Letter, make
any change in the compensation payable or to become payable to any of its
officers, directors, agents or consultants, or to Persons providing management
services, provided that changes in compensation payable to other employees may
be made in the ordinary course of business consistent with past practice
(provided individual increases in employee compensation do not exceed 5% per
annum), enter into or amend any employment, severance, consulting, termination
or other employment-related agreement, arrangement or Benefit Plan or make any
loans to any of its officers, directors, employees, affiliates, agents or
consultants or make any change in its existing borrowing or lending arrangements
for or on behalf of any of such Persons pursuant to a Benefit Plan or otherwise,
other than the hiring of non-management personnel in the ordinary course of
business each having an annual salary not in excess of $75,000;
(e) except (i) pursuant to Benefit Plans existing at the date hereof,
or as disclosed in Section 3.11(a) of the Company Letter, (ii) as required by
any law, rule or regulation of any Governmental Entity, (iii) as disclosed in
Section 5.1(e) of the Company Letter, and (iv) pursuant to Section 2.4 hereof,
pay or make, or amend or agree to amend any Benefit Plan, agreement or
arrangement existing at the date hereof to provide for any accrual or
arrangement for payment of any pension, retirement allowance or other employee
benefit pursuant to any existing Benefit Plan, agreement or arrangement to any
officer, director, employee or affiliate or pay or agree to pay or make any
accrual or arrangement for payment to any officers, directors, employees or
affiliates of the Company of any amount relating to unused vacation days, adopt
or pay, grant, issue, accelerate, or accrue salary or other payments or benefits
pursuant to any pension, profit-sharing, bonus, extra compensation, incentive,
deferred compensation, stock purchase, stock option, stock appreciation right or
other stock-based incentive, group insurance, severance pay, retirement or other
employee benefit plan, agreement or arrangement, or any employment or consulting
agreement with or for the benefit of any director, officer, employee, agent or
consultant, whether past or present;
-29-
(f) modify, amend or terminate any material Company Agreement or
waive, release or assign any material rights or claims, except in each case in
the ordinary course of business consistent with past practice;
(g) cancel or terminate any material insurance policy naming the
Company or any of its Subsidiaries as a beneficiary or a loss payable payee
without notice to Parent;
(h) (i) except in the ordinary course of business under lines of
credit in existence on the date hereof, incur or assume any indebtedness, in
each case for borrowed money, in a principal amount in excess of $250,000 in the
aggregate for the Company and its Subsidiaries taken as a whole; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for any obligations of any other Person (other than,
with respect to (x) the Company, any Subsidiary or (y) any Subsidiary, the
Company or any other Subsidiary) except in the ordinary course of business or
make any loans, advances or capital contributions to, or investments in, any
other Person (other than, with respect to (1) the Company, any Subsidiary or (2)
any Subsidiary, the Company or any other Subsidiary), except for any such matter
undertaken in the ordinary course of business consistent with past practice
PROVIDED, in any event, that such obligations, loans, advances, contributions or
investments do not exceed $50,000 individually and $250,000 in the aggregate;
(iii) make any commitments for, or make or authorize any, capital expenditures
other than in amounts less than $150,000 individually and $500,000 in the
aggregate other than as disclosed in Section 5.1(h) of the Company Letter or
(iv) acquire (including, without limitation, by merger, consolidation, or
acquisition of stock or assets) any interest in any Person or any division
thereof or any assets, except in the ordinary course of business consistent with
past practice;
(i) (i) change any of the accounting methods, policies or
procedures used by it unless required by GAAP or (ii) except as required by
applicable law, make any Tax election or change any Tax election already made,
adopt any Tax accounting method, change any Tax accounting method unless
required by applicable law, enter into any tax allocation agreement, tax sharing
agreement, tax indemnity agreement or closing agreement, settle any Tax claim or
assessment or consent to any Tax claim or assessment or any waiver of the
statute of limitations for any such claim or assessment;
(j) (i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations in the ordinary course of business or any
such payment, discharge or satisfaction that the Company or any of its
Subsidiaries is required to make by any law, rule or regulation of any
Governmental Entity or by any contractual obligation not prohibited by this
Section 5.1, PROVIDED such payment, discharge or satisfaction does not exceed
$250,000 in the aggregate (ii) pre-pay any long-term debt, except in the
ordinary course of business in an amount not to exceed $250,000 in the aggregate
for the Company and its Subsidiaries taken as a whole, (iii) accelerate or delay
collection of notes or accounts receivable in advance of or beyond their regular
due dates or the dates when the same would have been collected in the ordinary
course
-30-
of business consistent with past practice, (iv) except as disclosed in Section
5.1(j) of the Company Letter, delay or accelerate payment of any account payable
or in advance of its due date or the date such liability would have been paid in
the ordinary course of business consistent with past practice, or (v) vary the
inventory practices of the Company or its Subsidiaries in any material respect
from past practices;
(k) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the Mergers);
(l) (i) knowingly take, or agree to commit to take, any action that
would reasonably be expected to result in any of the conditions to the Mergers
not being satisfied, or that would give rise to a right of termination of this
Agreement for Parent or Merger Subsidiary pursuant to Section 8.1 hereof or (ii)
enter into any agreement or take any other action that would present a material
risk of delaying the Mergers or that would require a consent of a third party
for the consummation of the Mergers;
(m) enter into any agreement that would have the effect of subjecting
Parent, the Surviving Corporation or any of their affiliates to any non-compete
or other material restrictions on their respective businesses following the
Closing;
(n) waive, release, assign, settle or compromise any material
litigation or arbitration;
(o) write up, write down or write off the book value of any assets,
individually or in the aggregate, for the Company and its Subsidiaries taken as
a whole, in excess of $150,000, except for depreciation and amortization in
accordance with GAAP consistently applied and except for the write down of
obsolete inventory in the ordinary course of business;
(p) take any action to exempt or make not subject to (A) the
provisions of Section 203 of the Delaware Law, or (B) any other state takeover
law or state law that purports to limit or restrict business combinations or the
ability to acquire or vote shares, any Person (other than Parent, Merger
Subsidiary and any subsidiaries of Parent) or any action taken thereby, which
Person or action would have otherwise been subject to the restrictive provisions
thereof and not exempt therefrom;
(q) except to the extent disclosed in Section 5.1(q) of the Company
Letter, (i) effect a plant closing or mass layoff affecting any site of
employment or one or more facilities or operating units within any site of
employment or facility of the Company or any Subsidiary without the prior
written consent of Parent or (ii) terminate more than forty-nine (49) employees
within a site of employment or facility of the Company or any Subsidiary or
operating unit within a site of employment or facility or operating unit of the
Company or any Subsidiary without providing prior written notice to Parent. For
the purposes of this Section 5.1(q), "plant closing," "operating unit," and
"employment loss" shall have the meanings ascribed to such terms in Section 3.18
of this Agreement; and
(r) enter into an agreement, contract, commitment or arrangement to do
any of the foregoing, or to authorize any of the foregoing.
SECTION 5.2 TAKEOVER PROPOSALS. The Company agrees that it will, and
that it will cause the officers, directors, investment bankers, attorneys,
accountants, employees and other agents or representatives of the Company and
its Subsidiaries (collectively, the "COMPANY
-31-
REPRESENTATIVES") to, immediately cease and cause to be terminated any existing
discussions or negotiations, if any, with any Person conducted heretofore with
respect to any possibility or consideration of making a Takeover Proposal (as
defined below), and will promptly request that all confidential information
furnished on behalf of the Company with respect thereto be returned. The Company
shall notify Parent promptly (and in any event within one (1) business day) in
writing if any inquiries or proposals are received by, any information is
requested from, or any negotiations or discussions are sought to be initiated or
continued with the Company, any of its Subsidiaries or any Company
Representatives, in each case in connection with any Takeover Proposal including
the identity of the Person and its affiliates making such proposal, inquiry or
offer and any information requested from it or of any negotiations or
discussions being sought to be initiated with it, and shall furnish to Parent a
written summary of the material terms and conditions of any such proposal,
inquiry or offer. The Company agrees that it shall keep Parent fully informed
promptly of any developments in the status and terms of any of the foregoing. As
used in this Agreement, "TAKEOVER PROPOSAL" shall mean any offer or proposal
(other than the Mergers) concerning any (i) tender or exchange offer involving
more than 20% of the Shares, (ii) merger, consolidation, recapitalization,
restructuring or other business combination or similar transaction involving the
Company or any of its Subsidiaries, (iii) issuance, sale or other disposition
(including by way of merger, consolidation, business combination, share
exchange, joint venture or similar transaction) of Shares or other equity
interests representing 20% or more of the voting power of the Company, (iv)
sale, lease or disposition directly or indirectly by merger, consolidation,
business combination, share exchange, joint venture or otherwise, of assets
representing 20% or more of the consolidated assets, revenues or net income of
the Company and its Subsidiaries, or (v) combination of any of the foregoing.
SECTION 5.3 NO SOLICITATION.
(a) The Company will not, nor will it authorize or permit the Company
Representatives to, directly or indirectly: (i) encourage (including by way of
furnishing non-public information), initiate, participate in, or solicit any
offer or proposal which constitutes any Takeover Proposal; (ii) in the event of
an unsolicited Takeover Proposal for the Company, engage in negotiations or
discussions with, or provide any information to, any Person (other than Parent,
any of its affiliates or representatives) relating to or in connection with any
Takeover Proposal; or (iii) enter into any agreement with respect to any
Takeover Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Mergers or any
other transaction contemplated by this Agreement.
(b) Notwithstanding the foregoing, prior to the Effective Time, the
Company may furnish information concerning its business, properties or assets to
any Person pursuant to a customary confidentiality agreement (the terms or
provisions of which are no more favorable to such Person than the terms or
provisions with respect to Parent and Merger Subsidiary pursuant to the
Confidentiality Agreement, dated November 6, 2002, between an affiliate of
Parent and the Company Financial Advisor on behalf of the Company (the
"CONFIDENTIALITY Agreement")), and may discuss and negotiate and participate in
discussions and negotiations with such Person concerning a Takeover Proposal
only if (i) such Person has made a Superior Proposal and (ii) the Board of
Directors determines in good faith, after receiving advice from outside legal
counsel to the Company, that the failure to provide such information or to
engage in such discussions or negotiations would constitute a breach of the
fiduciary obligations of the Board of Directors to
-32-
the Company's stockholders. A "SUPERIOR PROPOSAL" shall mean a bona fide
Takeover Proposal made by a third party which was not solicited in violation of
this Agreement by the Company, any of its Subsidiaries, or any Company
Representative or affiliate of the Company, and which, in the good faith
judgment of the Board of Directors, taking into account the various legal,
financial and regulatory aspects of the Takeover Proposal and the Person making
such Takeover Proposal, (x) if accepted, would be capable of being consummated
by such third party without a financing contingency, and (y) if accepted would,
based upon the written opinion of Legacy, result in a transaction that is more
favorable to the Company's stockholders, from a financial point of view, than
the Mergers. The Company shall promptly, and in any event within one (1)
business day following any determination by the Board of Directors that a
Takeover Proposal (or any amendment thereto) is a Superior Proposal, notify
Parent in writing ("NOTICE OF SUPERIOR PROPOSAL") of such determination of the
same, which notice shall include the identity of the bidder and a reasonable
summary of the terms and conditions of the Superior Proposal or, if a Superior
Proposal is amended, the terms and conditions as so amended. If Parent does not,
within three (3) business days after Parent's receipt of a Notice of Superior
Proposal or of any such notice with respect to any amended proposal, make an
irrevocable written offer or enter into a definitive written agreement amending
this Agreement to provide for a transaction which the Board of Directors has
determined in its judgment (after receiving the advice of Legacy) to be at least
as favorable to the Company's stockholders as the Superior Proposal, the
Company, by action of its Board of Directors, may terminate this Agreement
pursuant to and in accordance with clause (iv) of Section 8.1(f) and enter into
an agreement with respect to a Superior Proposal.
(c) Neither the Board of Directors nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent or Merger Subsidiary, the approval or recommendation by the
Board of Directors or any such committee of the Mergers and the adoption and
approval of this Agreement, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal, or (iii) cause the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or other similar
agreement related to any Takeover Proposal. Nothing contained in this Section
5.3(c) shall prohibit the Company (x) from taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a) promulgated
under the Exchange Act with regard to a Takeover Proposal (provided that the
Board of Directors shall not withdraw or modify in an adverse manner its
approval or recommendation of the Mergers or this Agreement except as set forth
below) or (y) in the event that a Superior Proposal is made and the Board of
Directors determines in good faith, after receiving advice from outside counsel,
that it would otherwise constitute a breach of the fiduciary obligations of the
Board of Directors to the Company's stockholders, from withdrawing or modifying
its recommendation of the Mergers prior to the Special Meeting; PROVIDED that
such withdrawal or modification cannot be made earlier than three (3) business
days following the day of delivery of written notice to Parent of its intention
to do so, and, PROVIDED FURTHER, that such withdrawal or modification can only
be made if the Company is in compliance with all other provisions of this
Agreement. Any such withdrawal or modification shall not change the approval of
the Board of Directors for purposes of causing Section 203 of the Delaware Law
to be inapplicable to the Mergers and the Voting Agreements. Nothing contained
in this Section 5.3(c) shall affect the Company's obligations under Section
6.1(a) to hold and convene the Special Meeting and to submit this Agreement and
the Mergers for adoption and approval.
-33-
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 SPECIAL MEETING; PROXY STATEMENT. As promptly as
practicable following the date of this Agreement, the Company shall:
(a) duly call, give notice of, convene and hold a special meeting of
its stockholders (the "SPECIAL Meeting") for the purpose of obtaining the
necessary approvals of the Mergers and this Agreement by the stockholders of the
Company;
(b) prepare and, after consultation with and review by Parent and its
outside counsel, file with the SEC a preliminary proxy statement relating to the
Mergers and this Agreement and use its reasonable best efforts (i) to obtain and
furnish the information required to be included by the SEC in such proxy
statement and, after consultation with and review by Parent, to respond promptly
to any comments made by the SEC with respect to the preliminary proxy statement
and promptly cause a definitive proxy (the "PROXY STATEMENT") to be mailed to
its stockholders and, if necessary, after the Proxy Statement shall have been so
mailed, promptly circulate amended or supplemental proxy material and, if
required in connection therewith, resolicit proxies; PROVIDED, that no such
amended or supplemental proxy material will be mailed by the Company without
consultation with and review by Parent and its outside counsel (which review
shall not be unreasonably delayed) and (ii) to obtain the necessary adoption and
approval of this Agreement and the Mergers by the stockholders of the Company;
(c) include in the Proxy Statement the fairness opinion of Legacy, as
described in Section 1.8 of this Agreement, and the recommendation of the Board
of Directors that stockholders of the Company vote in favor of the approval of
the Mergers and the adoption of this Agreement, unless a Superior Proposal is
made and the Board of Directors determines, in accordance with Section 5.3(c) of
this Agreement, that including the recommendation would constitute a breach of
the fiduciary obligations of the Board of Directors to the Company's
stockholders; PROVIDED, HOWEVER, that the Company agrees that its obligations
under Section 6.1(a) to hold and convene the Special Meeting and to submit this
Agreement and the Mergers for adoption and approval shall not be affected by a
determination by the Board of Directors that it cannot make such recommendation
to the Company's stockholders;
(d) promptly notify Parent of the receipt of any comments from the SEC
and of any request from the SEC for amendments or supplements to the preliminary
proxy statement or the Proxy Statement or for additional information, and will
promptly supply Parent and its outside counsel with copies of all written
correspondence between the Company or its representatives, on the one hand, and
the SEC or members of its staff, on the other hand, with respect to the
preliminary proxy statement, the Proxy Statement or the Mergers;
(e) promptly notify Parent of the receipt of any comments from the SEC
with respect to the CVRs, supply Parent and its outside counsel with copies of
all written correspondence between the Company or its representatives, on the
one hand, and the SEC or members of its staff, on the other hand, with respect
to the CVRs, consult with Parent prior to responding to
-34-
such comments and permit Parent and its outside counsel to participate in any
and all correspondence, discussions or communications with the SEC regarding the
CVRs;
(f) promptly inform Parent and its outside counsel if at any time
prior to the Special Meeting, any event should occur that is required by
applicable law to be set forth in an amendment of, or a supplement to, the Proxy
Statement, in which case, the Company, with the cooperation and approval of and
in consultation with Parent and its outside counsel, will, upon learning of such
event, promptly prepare and mail such amendment or supplement; and (g) promptly
correct the Proxy Statement if and to the extent that it shall have become false
or misleading in any material respect (and each of Parent and Merger Subsidiary,
with respect to written information supplied by it specifically for use in the
Proxy Statement, promptly shall notify the Company of any required corrections
of such information and cooperate with the Company with respect to correcting
such information) and to supplement the information contained in the Proxy
Statement to include any information that shall become necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading in any material respect.
SECTION 6.2 MEETING OF STOCKHOLDERS OF THE COMPANY. Subject to
Section 5.3 hereof, at the Special Meeting, the Company shall use its reasonable
best efforts to solicit from stockholders of the Company proxies in favor of the
Mergers and shall take all other action necessary or, in the reasonable opinion
of Merger Subsidiary, advisable to secure any vote or consent of stockholders
required by the Delaware Law or the Alabama Law to effect the Mergers. Merger
Subsidiary agrees that it shall vote, or cause to be voted, in favor of the
Mergers all Shares directly or indirectly beneficially owned by it.
SECTION 6.3 ADDITIONAL AGREEMENTS.
(a) The Company and Parent shall use their reasonable best efforts to
(i) take, or cause to be taken, all appropriate action and do, or cause to be
done, all things necessary, proper or advisable under applicable law or
otherwise to consummate and make effective the transactions contemplated by this
Agreement as promptly as practicable, (ii) obtain from any Governmental Entities
any Regulatory Approvals required to be obtained or to avoid any action or
proceeding by any Governmental Entity (including, without limitation, those in
connection with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), in connection with the authorization, execution and
delivery of this Agreement and the consummation of the transactions contemplated
herein, including without limitation the Mergers, and (iii) make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Mergers required under (x) the Exchange Act, and any
other applicable federal or state securities Laws, (y) the Exon-Xxxxxx Amendment
and the HSR Act and (z) any other applicable law; PROVIDED, that the Company and
Parent shall cooperate with each other in connection with (1) preparing and
filing of the Proxy Statement and any other filings, (2) determining whether any
action by or in respect of, or filing with, any Governmental Entity is required,
in connection with the consummation of the Mergers and (3) seeking any such
actions, consents, approvals or waivers or making any such filings, including
providing copies of all filed documents to the non-filing party and its advisors
prior to filing and, if requested, accepting all reasonable additions, deletions
or changes suggested in connection therewith; and PROVIDED,
-35-
FURTHER, that nothing in this Section 6.3 shall require Parent to agree to (A)
the imposition of conditions, (B) the requirement of divestiture of assets or
property or (C) the requirement of expenditure of money by Parent to a third
party in exchange for any such consent. The Company and Parent shall furnish to
each other all information required for any application or other filing under
the rules and regulations of any applicable law (including all information) in
connection with the transactions contemplated by this Agreement.
(b) The Company shall give (or shall cause its Subsidiaries to give)
any notices to third parties, and use, and cause its Subsidiaries to use, all
reasonable best efforts to obtain (i) the consents under the Company Agreements
set forth in Section 3.6(a) of the Company Letter (the "MATERIAL COMPANY
CONSENTS"), and (ii) any other third party consents which are necessary, proper
or advisable to consummate the transactions contemplated in this Agreement;
PROVIDED, HOWEVER, with respect solely to (ii) above, the Company and Parent
shall coordinate and cooperate in determining whether any actions, consents,
approvals or waivers are required to be obtained from third parties in
connection with consummation of the Mergers. In the event the Company fails to
obtain any of the foregoing consents, the Company shall use all reasonable
efforts, and shall take any such actions reasonably requested by Parent, to
minimize any adverse effect upon the Company, and its businesses resulting, or
which would reasonably be expected to result after the consummation of the
Effective Time, from the failure to obtain such consent.
(c) From the date of this Agreement until the Effective Time, the
Company shall promptly notify Parent in writing of any pending or, to the
knowledge of the Company, threatened action, suit, arbitration or other
proceeding or investigation by any Governmental Entity or any other person (i)
challenging or seeking material damages in connection with the Mergers or any
other transaction contemplated by this Agreement or the Voting Agreements or
(ii) seeking to restrain or prohibit the consummation of the Mergers or any
other transaction contemplated by this Agreement or the Voting Agreements or
otherwise limit the right of Parent or any subsidiary of Parent to own or
operate all or any portion of the businesses or assets of the Company or any of
its Subsidiaries, which, in either case, would reasonably be expected to have a
Material Adverse Effect.
SECTION 6.4 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice to Parent and Merger
Subsidiary of the occurrence or non-occurrence of any event whose occurrence or
non-occurrence would be likely to cause (i) any representation or warranty made
by the Company or the DSS Cleared Company contained in this Agreement which is
qualified as to Material Adverse Effect to be untrue or inaccurate at any time
from the date hereof to the Effective Time, (ii) any other representation or
warranty made by the Company or the DSS Cleared Company contained in this
Agreement to be untrue or inaccurate at any time from the date hereof to the
Effective Time (other than such untruth or inaccuracy which would not,
individually or in the aggregate, have a Material Adverse Effect), (iii) any
condition set forth in Section 7.1 or 7.3 to be unsatisfied at any time from the
date hereof to the Closing Date or (iv) any failure on the part of the Company
or the DSS Cleared Company to comply with or satisfy in any material respect any
material covenant, condition or agreement to be complied with or satisfied by it
hereunder.
-36-
(b) Parent shall give prompt notice to the Company of the occurrence
or non-occurrence of any event whose occurrence or non-occurrence would be
likely to cause (i) any representation or warranty made by Parent or Merger
Subsidiary contained in this Agreement which is qualified as to materiality to
be untrue or inaccurate at any time from the date hereof to the Effective Time,
(ii) any other representation or warranty made by Parent or Merger Subsidiary
contained in this Agreement to be untrue or inaccurate in a material respect at
any time from the date hereof to the Effective Time, (iii) any condition set
forth in Section 7.1 or 7.2 to be unsatisfied at any time from the date hereof
to the Closing Date or (iv) any failure on the part of the Parent or Merger
Subsidiary to comply with or satisfy in any material respect any material
covenant, condition or agreement to be complied with or satisfied by it
hereunder.
(c) The delivery of any notice pursuant to this Section 6.4 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice or the right of such party to terminate this Agreement.
SECTION 6.5 ACCESS; CONFIDENTIALITY.
(a) Subject to any restrictions under applicable law, the Company
shall continue to give (and shall cause each of its Subsidiaries to give) the
officers, employees, accountants, counsel, financing sources and other
representatives of Parent, reasonable access for reasonable purposes in light of
the transactions contemplated by this Agreement, during normal business hours
during the period prior to the Closing Date to all its properties, books,
contracts, commitments and records and, during such period, the Company shall
(and shall cause each of its Subsidiaries to) furnish promptly to Parent (i) a
copy of each report, schedule, registration statement and other document
publicly filed or received by it during such period pursuant to the requirements
of federal securities laws and (ii) information regarding any material business
development of the Company or any Subsidiary and all other information
concerning its business, properties and personnel as Parent may reasonably
request; PROVIDED, HOWEVER, that the Company shall not be required to waive any
legal privilege by virtue of this Section 6.5. The Company shall use its
reasonable best efforts to enter into an appropriate agreements with Parent to
allow for disclosures under this Section 6.5(a) without waiving or otherwise
relinquishing any applicable privileges. During this period, the Company will
also consult with Parent on all matters outside the ordinary course of business
relating to the Company's business and strategy. The Company expressly agrees
that from the date hereof until the Closing Date, the Company will provide
Parent and Merger Subsidiary with all documents, materials and information in
the Company's possession or control pertaining to environmental matters
concerning any current or previous Company owned, leased or operated property,
facility, or business including compliance with and responsibility or liability
under, any Environmental Laws or related to Hazardous Substances. The Company
grants access to Parent to any of its currently owned, leased or operated
properties, for environmental investigation, including invasive testing if
reasonably warranted and recommended by a qualified consultant at the conclusion
of a Phase I Environmental Audit; PROVIDED, HOWEVER, that Parent provide a
written work plan for Company's prior review and approval for any such invasive
work. Unless otherwise required by law and until the Closing Date, Parent and
Merger Subsidiary shall hold any such information which is non-public
information in confidence and shall not use such information except in
accordance with, and shall otherwise abide by, the provisions of the
Confidentiality Agreement. No
-37-
investigation pursuant to this Section 6.5(a) shall affect any representation or
warranty made by the Company hereunder.
(b) Prior to the Closing, the Company and its accountants, counsel,
agents and other representatives shall cooperate with Parent by providing
information about the Company which is necessary for Parent and its accountants,
agents, counsel and other representatives to prepare the Disclosure Documents.
Notwithstanding the penultimate sentence of Section 6.5(a) hereof, Parent may
disclose, or cause its representatives to disclose, and at the request of
Parent, the Company shall and shall cause its Subsidiaries to disclose
information concerning the Company and its Subsidiaries and their respective
businesses, assets and properties, and the transactions contemplated by this
Agreement to prospective financing sources in connection therewith, provided
that such financing sources agree to hold such information in confidence in
accordance with, and shall otherwise abide by, the provisions of the
Confidentiality Agreement.
SECTION 6.6 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release in the form attached
hereto as Exhibit 6.6. Thereafter, so long as this Agreement is in effect and
subject to the other provisions of this Agreement, neither the Company, Parent
nor any of their respective affiliates shall issue or cause the publication of
any press release or other announcement with respect to the Mergers, this
Agreement or the other transactions contemplated hereby without the prior
consent of the other party, except after receiving the advice of outside legal
counsel, and after informing all the parties hereto, that such release or
announcement is required by law or by any listing agreement with or rules of a
national securities exchange or trading market. If so advised, Parent and the
Company shall consult with each other before issuing, and provide each other the
opportunity to comment upon, any such press release or other public statements
with respect to such transactions.
SECTION 6.7 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) Until the Effective Time the Company shall keep in effect Article
IX of its By-Laws, and thereafter for a period of six (6) years, the Surviving
Corporation shall keep in effect in its Articles of Incorporation or By-Laws
provisions which provides for indemnification and exculpation of the present or
former officers, directors, employees and agents (the "INDEMNIFIED PERSON(S)")
of the Company to the extent provided by Articles IX of the Company's By-laws on
the date hereof.
(b) The Parent shall maintain, or shall cause the Surviving
Corporation to maintain, the Company's and its Subsidiaries existing officers'
and directors' liability insurance ("D&O INSURANCE") covering those persons who
are covered by the Company's D&O Insurance as of the date hereof or as of the
Effective Time (the "COVERED Persons") for a period of one (1) year after the
Effective Time and, for a period of five (5) years thereafter, shall maintain
D&O Insurance for such Covered Persons through the D&O Insurance of an affiliate
of Parent on terms used consistent with those applicable to other officers and
directors covered under such D&O Insurance; PROVIDED, that the Surviving
Corporation may substitute therefor policies of substantially equivalent
coverage and amounts containing terms no less favorable to such former directors
or officers (but without creating any gaps in coverage); PROVIDED, FURTHER, that
the Surviving Corporation shall not in any event be required to pay an annual
premium for the D&O Insurance in excess of 150% the last annual premium paid
prior to the date of this Agreement,
-38-
which premium the Company represents and warrants to be approximately
$90,000.00; PROVIDED, FURTHER, that if the annual premiums of such insurance
coverage exceed such amount, Parent shall be obligated to obtain a policy with
the best coverage available for a cost not exceeding such amount. Each of
Parent, Merger Subsidiary and the Company acknowledge and hereby agree that each
of the Covered Persons is intended to be a third party beneficiary of the terms
of this Section 6.7(b). The Surviving Corporation shall reimburse each
Indemnified Person for his or her reasonable expenses in enforcing his or her
rights under this Section 6.7, including reasonable attorneys fees, unless a
court of competent jurisdiction shall determine, and such determination shall
have become final and non-appealable, that indemnification of such Indemnified
Person in the manner contemplated hereby, is prohibited by applicable law.
(c) If the Surviving Corporation or any successor or assign shall (i)
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)
transfer all or substantially all of its properties and assets to any
individual, corporation or other entity, then and in each such case, proper
provisions shall be made so that the successors and assigns thereof shall assume
the obligations set forth in this Section 6.7; PROVIDED, HOWEVER, no such
assignment or assumption shall relieve the Surviving Corporation (or any
successor or assign) of its obligations set forth in (or imposed pursuant to)
this Section 6.7.
SECTION 6.8 EMPLOYEE BENEFITS. On and after the Effective Time, Parent
agrees to cause the Surviving Corporation to arrange for each employee, director
and officer of the Company and its Subsidiaries who was participating in any of
the Benefit Plans of the Company or any Subsidiary immediately before the
Effective Time and who remains an employee, director or officer of the Surviving
Corporation after the Effective Time, to be eligible to participate in any
counterpart benefit plans in which employees, directors and officers of the
Surviving Corporation participate (the "COUNTERPART PLANS"), in accordance with
the terms and conditions thereof, and if such Counterpart Plans exist, to
provide that for purposes of eligibility, vesting and determination of level of
benefits, but not accrual of or entitlement to benefits, such participants shall
receive full credit for years of service with the Company and/or any Subsidiary
and prior employers to the extent such service is taken into account under such
Benefit Plans, PROVIDED that such service shall not be recognized to the extent
that such recognition would result in a duplication of benefits or to the extent
that such service was not recognized under the applicable Benefit Plan
immediately before the Effective Time. The Surviving Corporation shall give
credit under those of its Counterpart Plans that are welfare benefit plans for
all co-payments made, amounts credited toward deductibles and out-of-pocket
maximums, and time accrued against applicable waiting periods, by employees and
officers (in each case including their eligible dependents) of the Company and
the Subsidiaries, to the extent given under the applicable Benefit Plan of the
Company or any Subsidiary immediately before the Effective Time, and shall waive
all pre-existing condition restrictions otherwise applicable to employees and
officers of the Company or any Subsidiary under the Counterpart Plans that are
welfare benefit plans in which employees and officers of the Company and any
Subsidiary become eligible to participate on or following the Effective Time,
but only to the extent restrictions were not applicable to the relevant
participant under the applicable Benefit Plan immediately prior to the Effective
Time. Notwithstanding anything to the contrary herein, the Stock Plans of the
Company will not be continued after, and shall be terminated as of, the
Effective Time.
-39-
SECTION 6.9 MERGER SUBSIDIARY COMPLIANCE. Parent shall cause Merger
Subsidiary to timely perform and comply with all of its obligations under or
related to this Agreement, including, without limitation, all obligations in or
with respect to the Mergers.
SECTION 6.10 REASONABLE BEST EFFORTS.
(a) Prior to the Closing, upon the terms and subject to the terms,
provisions and conditions of this Agreement, Parent, Merger Subsidiary, the
Company and the DSS Cleared Company agree to use their respective reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement as promptly as
practicable.
(b) No party shall willfully perform any act which if performed, or
willfully omit to perform any act which if omitted to be performed, would
prevent or excuse the consummation of the Mergers.
SECTION 6.11 TAXES.
(a) Parent, Great Universal and the Company and its Subsidiaries shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Agreement and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention and (upon the other party's request) the provision
of records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company, its Subsidiaries and Great Universal
agree (i) to retain all books and records with respect to Tax matters pertinent
to each of the Company and its Subsidiaries relating to any Taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Parent, any extensions thereof) of
the respective Taxable periods, and to abide by all record retention agreements
entered into with any Taxing authority, (ii) to deliver or make available to
Parent, within sixty (60) days after the Closing Date, copies of all such books
and records, and (iii) to give the other party reasonable written notice prior
to transferring, destroying or discarding any such books and records and, if the
other party so requests, the Company and its Subsidiaries or Great Universal, as
the case may be, shall allow the other party to take possession of such books
and records. Parent and Great Universal further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
(b) All transfer, documentary, sales, use, stamp, registration and
other substantially similar Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement (collectively, "TRANSFER
TAXES") shall be borne by Great Universal and Parent equally.
(c) The Company shall have delivered to Parent a form of notice to the
Internal Revenue Service in accordance with the requirements of Treasury
Regulations Section 1.897-
-40-
2(h)(2) and in form and substance reasonably acceptable to Parent along with
written authorization for Parent to deliver such notice form to the Internal
Revenue Service on behalf of the Company upon the Closing.
ARTICLE VII
CONDITIONS
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGERS. The respective obligations of each party to effect the Mergers shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Merger Subsidiary, as the case may be, to the extent
permitted by applicable law:
(a) STOCKHOLDER APPROVAL. The Mergers and this Agreement shall have
been approved and adopted by the requisite vote of the holders of the Shares;
and
(b) NO RESTRAINTS. No statute, rule, regulation, order, decree,
judgment, ruling or injunction shall have been instituted, pending, enacted or
promulgated by any Governmental Entity or any court of competent jurisdiction
which directly restrains or prohibits the consummation of the Mergers in
accordance with the terms of this Agreement; PROVIDED, HOWEVER, that each of the
parties hereto shall have used reasonable efforts to prevent and appeal as
necessary any of the foregoing.
SECTION 7.2 CONDITIONS TO PARENT'S AND MERGER SUBSIDIARY'S OBLIGATION
TO EFFECT THE MERGERS. The respective obligations of Parent and Merger
Subsidiary to effect the Mergers shall be subject to the satisfaction on or
prior to the Closing Date of each of the following conditions, any and all of
which may be waived in whole or in part by Parent or Merger Subsidiary, as the
case may be, to the extent permitted by applicable law:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i)
Each of the Company and the DSS Cleared Company shall have performed in all
material respects each of its covenants and agreements contained in this
Agreement required to be performed at or prior to the Closing Date, (ii) each of
the representations and warranties of each of the Company and the DSS Cleared
Company made in this Agreement which is qualified as to materiality shall have
been true and correct when made and shall be true and correct in all respects as
of the Closing Date as if made on and as such date (other than representations
and warranties which address matters only as of a certain date which shall be
true and correct as of such certain date), and (iii) each of the representations
and warranties of each of the Company and the DSS Cleared Company made in this
Agreement that is not so qualified shall have been true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing Date as if made on and as of such date (other
than representations and warranties which address matters only as of a certain
date which shall be true and correct in all material respects as of such certain
date).
(b) ANCILLARY AGREEMENTS. Each of the Ancillary Agreements to which
each of the Company and the DSS Cleared Company is or will be a party shall have
been duly authorized,
-41-
executed and delivered by each of the Company and the DSS Cleared Company and
each of the Company and the DSS Cleared Company shall have performed or complied
with each such Ancillary Agreement in all material respects.
(c) MATERIAL ADVERSE EFFECT. Since the date hereof, there shall not
have occurred any Material Adverse Effect or any event or development that
would, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(d) CONSENTS. The Company shall have obtained each Material Company
Consent, each of which is in full force and effect as of the Closing Date.
(e) REGULATORY APPROVALS. All Regulatory Approvals, including in
particular under Section 721 of the Defense Production Act of 1950, as amended,
and the regulations and rules thereunder (the "EXON-XXXXXX Amendment") shall
have been obtained and shall be in full force and effect as of the Closing Date;
PROVIDED that such Regulatory Approvals shall not impose terms or conditions
which (i) restrain, prohibit or materially limit Parent's or Merger Subsidiary's
ownership or operation (or that of their respective subsidiaries or affiliates)
of all or any material portion of the business or assets of the Company (or the
Surviving Corporation) and its (or the Surviving Corporation's) Subsidiaries,
taken as a whole, or (ii) compel Parent or any of its subsidiaries or affiliates
to dispose of or hold separate all or any material portion of the business or
assets of the Company (or the Surviving Corporation) and its (or the Surviving
Corporation's) Subsidiaries, taken as a whole. Parent acknowledges that the
requirement to enter into a special security agreement or voting trust agreement
with respect to the Surviving Corporation shall not constitute a term or
condition described in clauses (i) and (ii) above.
(f) SECTION 280G WAIVERS. On or prior to the date hereof, the Company,
the DSS Cleared Company and each Person to whom any payment or benefit is
required or proposed to be made in connection or association with the
consummation of the transactions contemplated by this Agreement or any Ancillary
Agreement that could constitute an "excess parachute payment" (as defined in
Section 280G(b)(1) of the Code) shall have executed and delivered a written
waiver, in a form approved by Parent, of such Person's rights to receive such
payment or benefit to the extent necessary to avoid treatment as an "excess
parachute payment" (a "SECTION 280G WAIVER"), and each such Section 280G Waiver
shall be in full force and effect as of the Closing Date.
(g) INDEMNITY AGREEMENT. The Indemnity Agreement by and among the DSS
Cleared Company, Great Universal and Parent shall have been duly authorized,
executed and delivered by the DSS Cleared Company and Great Universal on or
prior to the date hereof, shall be in full force and effect as of the Closing
Date and neither the DSS Cleared Company nor Great Universal shall be in breach
thereof.
(h) COMPANY OFFICERS CERTIFICATE. The Company shall have delivered to
Parent a certificate, dated the Closing Date, signed by the chief executive
officer or chief financial officer of the Company, certifying that the
conditions set forth in Sections 7.2(a), (c), (d), (e) and (f) have been
satisfied.
-42-
SECTION 7.3 CONDITIONS TO THE COMPANY'S OBLIGATION TO EFFECT THE
MERGERS. The obligation of the Company to effect the Mergers shall be subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions, any and all of which may be waived in whole or in part by the
Company, to the extent permitted by applicable law:
(a) PERFORMANCE OF OBLIGATIONS; REPRESENTATIONS AND WARRANTIES. (i)
Each of Parent and Merger Subsidiary shall have performed in all material
respects each of its covenants and agreements contained in this Agreement
required to be performed at or prior to the Closing Date, (ii) each of the
representations and warranties of Parent and Merger Subsidiary made in this
Agreement which is qualified as to materiality shall have been true and correct
when made and shall be true and correct in all respects as of the Closing Date
as if made on and as such date (other than representations and warranties which
address matters only as of a certain date which shall be true and correct as of
such certain date), and (iii) each of the representations and warranties of
Parent and Merger Subsidiary made in this Agreement that is not so qualified
shall have been true and correct in all material respects when made and shall be
true and correct in all material respects on and as of the Closing Date as if
made on and as of such date (other than representations and warranties which
address matters only as of a certain date which shall be true and correct in all
material respects as of such certain date).
(b) ANCILLARY AGREEMENTS. Each of the Ancillary Agreements to which
Parent and Merger Subsidiary is or will be a party shall have been duly
authorized, executed and delivered by Parent and Merger Subsidiary, as the case
may be, and Parent and Merger Subsidiary, as the case may be, shall have
performed or complied with each such Ancillary Agreement in all material
respects.
(c) PARENT OFFICERS CERTIFICATE. Parent shall have delivered to the
Company a certificate, dated the Closing Date, signed by the chief executive
officer or chief financial officer of Parent, certifying that the condition set
forth in Section 7.3(a) has been satisfied.
ARTICLE VIII
TERMINATION
SECTION 8.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time before the
Effective Time, whether before or after stockholder approval:
(a) By mutual written consent of Parent and the Company, in each case
acting through its board of directors; or
(b) By either Parent or the Company if any court of competent
jurisdiction or other Governmental Entity shall have issued an order, decree or
ruling (which order, decree or ruling the parties hereto shall use their best
efforts to vacate), in each case permanently restraining, enjoining or otherwise
prohibiting the Mergers and such order, decree, ruling or other action shall
have become final and non-appealable and shall not have resulted from a material
breach of a representation, warranty or covenant by the terminating party; or
-43-
(c) By either Parent or the Company, if at the Special Meeting, the
stockholders of the Company reject or otherwise fail to adopt and approve this
Agreement and the Mergers; or
(d) By Parent if, without any material breach by Parent or Merger
Subsidiary of its representations, warranties or obligations under this
Agreement, the Closing shall not have occurred on or before the date which is
six months from the date of this Agreement (the "OUTSIDE DATE"), PROVIDED,
HOWEVER, that Parent may not terminate this Agreement pursuant to this Section
8.1(d) if Parent shall have (i) failed to fulfill any obligation under this
Agreement, which failure has been a principal cause of, or resulted in, the
failure of any condition to the Closing to have been satisfied on or before such
date, or (ii) otherwise materially breached this Agreement; or
(e) By the Company if, without any material breach by the Company of
its representations, warranties or obligations under this Agreement, the Closing
shall not have occurred on or before the Outside Date, PROVIDED, HOWEVER, that
the Company may not terminate this Agreement pursuant to this Section 8.1(e) if
the Company shall have (i) failed to fulfill any obligation under this
Agreement, which failure has been a principal cause of, or resulted in, the
failure of any condition to the Closing to have been satisfied on or before such
date, or (ii) otherwise materially breached this Agreement; or
(f) By the Company, if (i) Parent or Merger Subsidiary shall have
breached in any material respect any material covenant or other agreement
contained in this Agreement, (ii) any representation or warranty of Parent or
Merger Subsidiary made in this Agreement which is qualified as to materiality
shall fail to be true and correct in all respects when made or as if made at
such time, (iii) any representation or warranty of Parent or Merger Subsidiary
made in this Agreement which is not so qualified shall fail to be true and
correct in all material respects when made or as if made at such time, or (iv)
to allow the Company to enter into an agreement in accordance with Section
5.3(b) hereof with respect to a Superior Offer, but only after the Company has
convened a Special Meeting pursuant to Section 6.1(a) and the Company's
stockholders have rejected the Mergers and this Agreement, and after the Company
fulfills its obligations under Section 8.2 hereof on or prior to such
termination (provided that the Company's right to terminate this Agreement under
this Section 8.1(f)(iv) shall not be available if the Company is then in breach
of Section 5.2 or 5.3), in each case with respect to clauses (i), (ii) and
(iii), which breach or which failure to be true and correct cannot be or has not
been cured within ten (10) business days of the receipt of written notice
thereof; or
(g) By Parent, if (i) either the Company or the DSS Cleared Company
shall have breached in any material respect any material covenant or other
agreement contained in this Agreement, (ii) any representation or warranty of
either the Company or the DSS Cleared Company made in this Agreement which is
qualified as to materiality shall fail to be true and correct in all respects
when made or as if made at such time or (iii) any representation or warranty of
either the Company or the DSS Cleared Company made in this Agreement which is
not so qualified shall fail to be true and correct in all material respects when
made or as if made at such time, in each case which breach or which failure to
be true and correct cannot be or has not been cured within ten (10) business
days of the receipt of written notice thereof; or
-44-
(h) By Parent, if (i) the Board of Directors of the Company shall have
withdrawn or modified in a manner adverse to Merger Subsidiary, or failed upon
Parent's request to reconfirm, its approval or recommendation of the Mergers or
this Agreement (or determined to do any of the foregoing), (ii) the Board of
Directors shall have determined to accept, or shall have determined to recommend
to the Company's stockholders that they approve, a Takeover Proposal, or the
Company shall have entered into or shall have publicly announced its intention
to enter into, a definitive written agreement or written agreement in principle
providing for a Takeover Proposal or (iii) a tender offer or exchange offer
that, if successful, would result in any Person or group becoming a beneficial
owner of 20% or more of the outstanding Shares is commenced (other than by
Parent or an affiliate of Parent) and the Board of Directors fails to recommend
against acceptance of such offer by the stockholders of the Company (including
by taking no position or a neutral position with respect thereto); or
(i) By Parent, if (i) either of the Voting Agreements shall cease to
be in full force and effect or Great Universal is in material breach thereof; or
(ii) any Person (other than Parent, an affiliate of Parent or Great Universal)
or group becomes the beneficial owner of 20% or more of the outstanding Shares.
SECTION 8.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement as provided in
Section 8.1 hereof, written notice thereof shall forthwith be given to the other
party or parties specifying the provision hereof pursuant to which such
termination is made.
(b) In the event of termination of this Agreement by either the
Company, on one hand, or Parent and Merger Subsidiary on the other hand, as
provided in Section 8.1, this Agreement shall forthwith become null and void and
there shall be no liability on the part of Parent, Merger Subsidiary, the
Company or the DSS Cleared Company, except (i) as set forth in Sections 8.2(c),
(d) or (e) hereof and (ii) nothing herein shall relieve Parent or Merger
Subsidiary from liability for any breach of this Agreement or relieve any party
from liability, or limit its liability, for any willful breach or willful
misrepresentation hereunder, or prevent any party from asserting any equitable
remedies available to it for such willful breach or willful misrepresentation.
(c) (i) The Company shall pay to Parent an amount equal to Parent's
and Merger Subsidiary's actual and reasonably documented out-of-pocket
expenses (including without limitation, fees payable to all banks,
investment banking firms and other financial institutions and their
respective counsel, and all fees of counsel, accountants, financial
printers, experts and consultants to Parent) not in excess of $1,000,000
(the "EXPENSE REIMBURSEMENT AMOUNT") if this Agreement is terminated for
any of the following reasons:
(A) Parent or the Company shall have terminated this
Agreement pursuant to Section 8.1(c) and no Takeover Proposal
shall have been received or made known to the Company prior to the
date of termination (regardless of whether such Takeover Proposal
has been publicly announced);
-45-
(B) Parent shall have terminated this Agreement pursuant
to Section 8.1(g) or 8.1(i)(i) and no Takeover Proposal shall have
been received or made known to the Company prior to the date of
termination (regardless of whether such Takeover Proposal has been
publicly announced); or
(C) Parent shall have terminated this Agreement pursuant
to Section 8.1(d) or the Company shall have terminated this
Agreement pursuant to Section 8.1(e), and a Takeover Proposal
shall have been made known to the Company and not withdrawn prior
to the date of termination (regardless of whether such Takeover
Proposal has been publicly announced), PROVIDED, HOWEVER, if
Parent terminates this Agreement pursuant to Section 8.1(d) where
the failure of the Closing to occur by the Outside Date is due to
the existence of a Material Adverse Effect caused by the action of
the Parent or its affiliates, the Company shall not have any
obligation to pay the Expense Reimbursement Amount.
(ii) The Company shall pay Parent an amount equal to $1,800,000
(the "TERMINATION FEE") if the Agreement is terminated for any of the
following reasons:
(A) Parent or the Company shall have terminated this
Agreement pursuant to Section 8.1(c) and either (1) a Takeover
Proposal shall have been made and not withdrawn prior to the date
of the Special Meeting or (2) a binding agreement with respect to
a Takeover Proposal is entered into or the transactions
constituting a Takeover Proposal are consummated within 9 months
after such termination (the entering into a binding agreement with
respect to, or the consummation of, a Takeover Proposal within
such period, a "SUBSEQUENTLY ACCEPTED TAKEOVER PROPOSAL"),
provided any amounts payable under this Section 8.2(c)(ii)(A)
shall be less any amounts previously paid pursuant to Section
8.2(c)(i)(A) above;
(B) the Company shall have terminated this Agreement
pursuant to Section 8.1(f)(iv);
(C) Parent shall have terminated this Agreement pursuant
to Section 8.1(g) and either (1) a Takeover Proposal shall have
been received or made known to the Company prior to the date of
termination or (2) there is a Subsequently Accepted Takeover
Proposal, provided any amounts payable under this Section
8.2(c)(ii)(D) shall be less any amounts previously paid pursuant
to Section 8.2(c)(i)(B) above; or
(D) Parent shall have terminated this Agreement pursuant
to Section 8.1(h).
(E) Parent shall have terminated this Agreement pursuant
to Section 8.1(i) and a Takeover Proposal shall have been received
or made known to the Company prior to the date of termination;
provided any amounts payable under this Section 8.2(c)(ii)(E)
shall be less any amounts previously paid pursuant to Section
8.2(c)(i)(B) above.
-46-
(iii) Any Expense Reimbursement Amount or Termination Fee, as the
case may be, shall be payable by the Company in accordance with the
following:
(A) with respect to amounts payable under Sections
8.2(c)(i)(B), 8.2(c)(i)(C)(1), 8.2(c)(ii)(C)(1), 8.2(c)(ii)(D) or
8.2(c)(ii)(E), not later than one (1) business day after the date
of termination or, with respect to an Expense Reimbursement
Amount, such later date as Parent presents to the Company its
documented expenses;
(B) with respect to amounts payable under Sections
8.2(c)(ii)(A)(2), 8.2(c)(i)(C)(2) or 8.2(c)(ii)(C)(2), the earlier
of the date the binding agreement with respect to the Subsequently
Accepted Takeover Proposal is entered into or the transactions
constituting the Subsequently Accepted Takeover Proposal are
consummated; and
(C) with respect to amounts payable under Sections
8.2(c)(i)(A), 8.2(c)(ii)(A)(1) or 8.2(c)(ii)(B) on or prior to the
date of termination or, with respect to an Expense Reimbursement
Amount, such later date as Parent presents to the Company its
documented expenses.
(iv) Any Expense Reimbursement Amount or Termination Fee, as the
case may be, shall be payable by wire transfer of immediately available
funds to an account as Parent may designate in writing to the Company.
Subject to Section 8.2(b) and the following sentence, upon payment of any
Expense Reimbursement Amount or Termination Fee required to be paid
pursuant to this Section 8.2(c), the Company shall have no further
obligation to Parent or Merger Subsidiary, under this Agreement or
otherwise; PROVIDED, HOWEVER, that if the Company fails to pay promptly
the amounts required pursuant to this Section 8.2(c) and in order to
obtain such payment Parent or Merger Subsidiary commences a suit which
results in a final non-appealable judgment against the Company for such
amounts, the Company shall pay to Parent or Merger Subsidiary (x) the
costs and expenses (including reasonable attorneys' fees) incurred by
Parent or Merger Subsidiary in connection with such suit and (y) interest
on all such amounts required to be paid at the rate announced by Citibank
N.A. as its "reference rate" in effect on the date such amounts were
required to be paid. The Company's obligation to pay an Expense
Reimbursement Amount or Termination Fee, as the case may be, under this
Section 8.2 shall survive termination of this Agreement and continue
until such amount is paid, including without limitation amounts payable
under Section 8.2(c)(iii)(B).
(v) The Company acknowledges that the Expense Reimbursement
Amount and Termination Fee provided for in this Section 8.2 is an
integral part of the transactions contemplated by this Agreement and that
without the Expense Reimbursement Amount and Termination Fee provided for
above, neither Parent nor Merger Subsidiary would enter into this
Agreement.
(d) Each party, if so requested by the other party, will return
promptly every document furnished to it by or on behalf of the other party in
connection with the transactions
-47-
contemplated hereby, whether so obtained before or after the execution of this
Agreement, and any copies thereof (except for copies of documents publicly
available) which may have been made, and will use reasonable efforts to cause
its representatives and any representatives of financial institutions and
investors and others to whom such documents were furnished promptly to return
such documents and any copies thereof any of them may have made.
(e) The parties' obligations under Sections 6.5, 6.6 and Article IX
hereof shall continue indefinitely notwithstanding any termination of this
Agreement, PROVIDED THAT, with respect to Section 6.5, the parties' obligations
to keep information confidential shall terminate three (3) years from the date
hereof. This Section 8.2 shall survive any termination of this Agreement and the
Confidentiality Agreement will remain in full force and effect in the event of
such termination.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 AMENDMENT. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective boards of directors
at any time before or after adoption and approval hereof by the stockholders of
the Company but, after such adoption and approval, no amendment shall be made
which reduces the amount or changes the form of Merger Consideration to be paid
in the Mergers or in any way materially adversely affects the rights of holders
of the Shares without the further adoption and approval of such holders. This
Agreement may not be amended except by an instrument in writing signed by or on
behalf of each of the parties hereto.
SECTION 9.2 WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken by their respective boards of directors, may (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties of the other parties contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
satisfaction of any of the conditions 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, but such
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
SECTION 9.3 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Sections
6.5, 6.7, and 6.8 hereof and this Article IX, and, without limitation by the
specific enumeration of the foregoing, each and every other agreement contained
in this Agreement or any certificate or other document delivered pursuant to
this Agreement and which contemplates performance after the Effective Time,
shall survive the Mergers. None of the representations, warranties and
agreements (other than those agreements referred to in the previous sentence of
this Section 9.3) contained in this Agreement or in any exhibit, disclosure
schedule, certificate or other instrument delivered pursuant to this Agreement
shall survive the earliest to occur of the Effective Time and the termination of
this Agreement.
-48-
SECTION 9.4 NOTICES. Any notice, request, instruction or other document
to be given hereunder by any party to the others shall be deemed given if in
writing and delivered personally or sent by overnight courier (providing proof
of delivery), postage prepaid or by facsimile (which is confirmed).
if to Parent or Merger Subsidiary:
000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxx & Xxxxxxx LLP
00 Xxxxxxx Xxxxx #00-00
XXX Xxxxx 0, Xxxxxxxxx 000000
Facsimile: (x00) 0000-0000
if to the Company or the DSS Cleared Company:
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxx Xxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxx, Esq.
Xxxxx Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
or to such other address as may have been designated in a prior notice. Notices
shall be deemed to have been given when received.
SECTION 9.5 HEADINGS. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
SECTION 9.6 EXHIBITS, SCHEDULES AND ANNEXES. The Exhibits, Schedules
and Annexes referred to in this Agreement shall be deemed to be an integral part
of this Agreement as if fully rewritten herein.
-49-
SECTION 9.7 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same document.
SECTION 9.8 GOVERNING LAW.
(a) This Agreement, including all matters of construction, validity
and performance, shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, as applied to contracts made, executed
and to be fully performed in such state by citizens of such state, without
regard to conflict of laws principles.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (A) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (B) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVERS, (C) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (D) IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.8(b).
SECTION 9.9 PRONOUNS. The use of a particular pronoun herein shall not
be restrictive as to gender or number but shall be interpreted in all cases as
the context may require.
SECTION 9.10 TIME PERIODS. Unless otherwise provided herein, any action
required hereunder to be taken within a certain number of days shall be taken
within that number of calendar days; PROVIDED, HOWEVER, that if the last day for
taking such action fails on a weekend or a holiday, the period during which such
action may be taken shall be automatically extended to the next business day.
SECTION 9.11 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against either
party.
SECTION 9.12 ENTIRE AGREEMENT. This Agreement and the agreements and
documents referred to in this Agreement or delivered hereunder are the exclusive
statement of the agreement between the parties concerning the subject matter
hereof. All negotiations and prior agreements between the parties (other than
those incorporated herein, including the Confidentiality Agreement) are merged
into this Agreement, and there are no representations, warranties,
-50-
covenants, understandings, or agreements, oral or otherwise, in relation thereto
among the parties other than those incorporated herein and to be delivered
hereunder.
SECTION 9.13 SEVERABILITY. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
SECTION 9.14 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Parent may
substitute any direct or indirect wholly-owned subsidiary of Parent for Merger
Subsidiary without consent of the Company or the DSS Cleared Company, but any
such transfer or assignment will not relieve Parent, the Company or the DSS
Cleared Company of its obligations under this Agreement. Except for Sections 6.7
hereof, and except as otherwise provided in this Agreement, nothing in this
Agreement is intended or shall be construed to confer on any Person other than
the parties hereto any rights or benefits hereunder.
SECTION 9.15 FEES AND EXPENSES. Except as otherwise set forth in this
Agreement, each party hereto shall bear all fees and expenses incurred by such
party in connection with, relating to or arising out of the execution, delivery
and performance of this Agreement and the transactions contemplated hereby
(including the Mergers).
[Signature Page Follows]
-51-
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year first above written.
VISION TECHNOLOGIES KINETICS, INC.
By: /s/ XXXX XXXXXX
----------------------------------------
Name: Xxxx Xxxxxx
Title: Authorized Representative
VTK MERGER SUBSIDIARY CORPORATION
By: /s/ XXXXXX X. XXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
MILTOPE GROUP INC.
By: /s/ XXXXXX X. XXXXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and CEO
MILTOPE CORPORATION
By: /s/ XXXXXX X. XXXXXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and CEO
S-1
