AGREEMENT AND PLAN OF MERGER
dated as of October 18 , 1995
by and among
LOGICON, INC.
LIN, INC.
and
GEODYNAMICS CORPORATION
4
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to
which it is attached but is inserted for convenience only.
Page
No.
ARTICLE I
THE MERGER
1.01 The Merger. 1
1.02 Effective Time 1
1.03 Closing. 1
1.04 Articles of Incorporation and Bylaws of the
Surviving Corporation. 2
1.05 Directors and Officers of the Surviving
Corporation. 2
1.06 Effects of the Merger 2
1.07 Further Assurances 2
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. 2
2.02 Delivery of Certificates; Payment. 4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 Organization and Qualification. 5
3.02 Capital Stock. 6
3.03 Authority Relative to this Agreement. 7
3.04 Non-Contravention; Approvals and Consents. 7
3.05 SEC Reports and Financial Statements. 8
3.06 Absence of Certain Changes or Events. 9
3.07 Absence of Undisclosed Liabilities. 9
3.08 Legal Proceedings. 9
3.09 Information Supplied. 10
3.10 Compliance with Laws and Orders. 10
3.11 Compliance with Agreements; Certain Agreements. 10
3.12 Taxes. 11
3.13 Employee Benefit Plans; ERISA. 12
5
3.14 Insurance. 14
3.15 Labor Matters. 14
3.16 Environmental Matters. 15
3.17 Tangible Property and Assets. 16
3.18 Intellectual Property Rights 16
3.19 Vote Required. 16
3.20 Opinion of Financial Advisor. 17
3.21 Company Not an Interested Stockholder or an
Acquiring Person 17
3.22 Section 1203 of the CGCL Not Applicable. 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
4.01 Organization and Qualification. 17
4.02 Authority Relative to this Agreement. 17
4.03 Non-Contravention; Approvals and Consents. 18
4.04 Information Supplied. 19
4.05 Vote Required. 19
4.06 Parent Not an Interested Party or a Restricted
Owner 19
4.07 Certain Provisions Not Applicable. 19
4.08 Exon-Xxxxxx 19
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent. 20
5.02 No Solicitations 22
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality 23
6.02 Preparation of Proxy Statement. 24
6.03 Approval of Stockholders. 24
6.04 Auditor's Letters 24
6.05 Regulatory and Other Approvals 24
6.06 Company Stock Plans 25
6.07 Directors' and Officers' Indemnification and
Insurance 26
6.08 Expenses. 27
6.09 Brokers or Finders. 27
6.10 Standstill. 27
6
6.11 Notice and Cure 28
6.12 Fulfillment of Conditions 28
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect
the Merger. 28
7.0 Conditions to Obligation of Parent and Sub to
Effect the Merger. 29
7.03 Conditions to Obligation of the Company to Effect
the Merger. 30
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. 31
8.02 Effect of Termination. 32
8.03 Amendment. 33
8.04 Waiver. 33
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties,
Covenants and Agreements. 33
9.02 Knowledge 34
9.03 Notices. 34
9.04 Entire Agreement. 35
9.05 Public Announcements. 35
9.06 No Third Party Beneficiary. 35
9.07 No Assignment; Binding Effect. 35
9.08 Headings. 35
9.09 Invalid Provisions 35
9.10 Governing Law 36
9.11 Counterparts. 36
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EXHIBITS
EXHIBIT A Pro Forma Balance Sheet
EXHIBIT B Letter of the Company's Independent Auditors
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GLOSSARY OF DEFINED TERMS
The following terms, when used in this Agreement, have
the meanings ascribed to them in the corresponding Sections of
this Agreement listed below:
"Acquisition Transaction" -- Section 5.02
"Antitrust Division" -- Section 6.05
"Average Price" -- Section 2.01
"CERCLA" -- Section 3.16(b)
"Certificate of Merger" -- Section 1.02
"Certificates" -- Section 2.02(b)
"CFIUS" -- Section 6.05
"CGCL" -- Section 1.01
"Closing" -- Section 1.03
"Closing Date" -- Section 1.03
"Code" -- Section 3.12(e)
"Company" -- Preamble
"Company Common Stock" -- Section 2.01(b)
"Company Disclosure Letter" -- Section 3.01
"Company Employee Benefit Plan" -- Section 3.13(c)(i)
"Company Financial Statements" -- Section 3.05
"Company Option Plans" -- Section 2.01(f)
"Company Permits" -- Section 3.10
"Company Preferred Stock" -- Section 3.02
"Company SEC Reports" -- Section 3.05
"Company Stock Option" -- Section 6.07
"Company Stockholders' Approval" -- Section 6.03
"Company Stockholders' Meeting" -- Section 6.03
"Constituent Corporations" -- Section 1.01
"Contracts" -- Section 3.04(a)
"Conversion Amount" -- Section 2.01(c)
"Conversion Number" -- Section 2.01(f)
"Dissenting Share" -- Section 2.01(d)
"Earnout Payment" -- Section 2.01(e)
"Earnout Shares" -- Section 2.01(e)
"Effective Time" -- Section 1.02
"Environmental Law" -- Section 3.16(e)(i)
"Environmental Permits" -- Section 3.16(a)
"ERISA" -- Section 3.13(a)(i)
"Exchange Act" -- Section 3.04(b)
"Exchange Agent" -- Section 2.02(a)
"Exchange Fund" -- Section 2.02(a)
"Exon-Xxxxxx Amendment" -- Section 4.08
"FTC" -- Section 6.05
"GAAP" -- Section 3.12
"Governmental or Regulatory Authority" -- Section 3.04(a)
"Hazardous Material" -- Section 3.16(e)(ii)
"HSR Act" -- Section 3.04(b)
"Indemnified Liabilities" -- Section 6.08(a)
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"Indemnified Parties" -- Section 6.08(a)
"Indemnifying Party" -- Section 6.08(a)
"Intellectual Property" -- Section 3.18
"Laws" -- Section 3.04(a)
"LCT" -- Section 2.01(e)
"Lien" -- Section 3.02(b)
"material" -- Section 3.01
"material adverse effect" -- Section 3.01
"materially adverse" -- Section 3.01
"Merger" -- Preamble
"Options" -- Section 3.02
"Orders" -- Section 3.04(a)
"Original Conversion Amount" -- Section 2.01(c)
"Original Total Conversion Amount" -- Section 2.01(e)
"Parent" -- Preamble
"Parent Common Stock" -- Section 2.01(f)
"Parent Disclosure Letter" -- Section 4.01
"PBGC" -- Section 3.13(a)(iii)
"Plan" -- Section 3.13(c)(ii)
"Potential Acquiror" -- Section 5.02
"LCT Pro Forma Balance Sheet" -- Section 5.01(b)(I)
"Proxy Statement" -- Section 3.09
"qualified stock options" -- Section 6.07
"Representative" -- Section 5.02
"SEC" -- Section 3.04(b)
"Secretary of State" -- Section 1.02
"Securities Act" -- Section 3.05
"Significant Subsidiary" -- Section 5.02
"Sub" -- Preamble
"Sub Common Stock" -- Section 2.01(a)
"Subsidiary" -- Section 2.01(b)
"Surviving Corporation" -- Section 1.01
"Surviving Corporation Common Stock" -- Section 2.01(a)
"Tax Returns" -- Section 3.12
"Taxes" -- Section 3.12
"Trading Day" -- Section 2.01
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This AGREEMENT AND PLAN OF MERGER dated as of October
18, 1995 is made and entered into by and among Logicon, Inc., a
Delaware corporation ("Parent"), LIN, Inc., a Delaware
corporation wholly owned by Parent ("Sub"), and Geodynamics
Corporation, a California corporation (the "Company").
Whereas, the Boards of Directors of Parent, Sub and the
Company have each determined that it is advisable and in the best
interests of their respective stockholders to consummate, and
have approved, the business combination transaction provided for
herein in which Sub would merge with and into the Company and the
Company would become a wholly-owned subsidiary of Parent (the
"Merger"); and
Whereas, Parent, Sub and the Company desire to make
certain representations, warranties and agreements in connection
with the Merger and also to prescribe various conditions to the
Merger.
Now, Therefore, in consideration of the mutual
covenants and agreements set forth in this Agreement, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
1.01 The Merger. At the Effective Time (as defined in
Section 1.02), upon the terms and subject to the conditions of
this Agreement, Sub shall be merged with and into the Company in
accordance with the General Corporation Law of the State of
California (the "CGCL"). The Company shall be the surviving
corporation in the Merger (the "Surviving Corporation"). Sub and
the Company are sometimes referred to herein as the "Constituent
Corporations". As a result of the Merger, the outstanding shares
of capital stock of the Constituent Corporations shall be
converted or canceled in the manner provided in Article II.
1.02 Effective Time. At the Closing (as defined in
Section 1.03), a certificate of merger (the "Certificate of
Merger") shall be duly prepared and executed by the Surviving
Corporation and thereafter delivered to the Secretary of State of
the State of California (the "Secretary of State") for filing, as
provided in Section 1103 of the CGCL, on, or as soon as
practicable after, the Closing Date (as defined in Section 1.03).
The Merger shall become effective at the time of the filing of
the Certificate of Merger with the Secretary of State (the date
and time of such filing being referred to herein as the
"Effective Time").
1.03 Closing. The closing of the Merger (the
"Closing") will take place at the offices of Geodynamics
Corporation, 00000 Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxx 00000, or at such other place as the parties hereto
mutually agree, on a date and at a time to be specified by the
parties, which shall in no event be later than 10:00 a.m., local
time, on the fifth business day following satisfaction of the
condition set forth in Section 7.01(a), provided that the other
closing conditions set forth in Article VII have been satisfied
or, if permissible, waived in accordance with this Agreement, or
on such other date as the parties hereto mutually agree (the
"Closing Date"). At the Closing there shall be delivered to
Parent, Sub and the Company the certificates and other documents
and instruments required to be delivered under Article VII.
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1.04 Articles of Incorporation and Bylaws of the
Surviving Corporation. At the Effective Time, (i) the Articles
of Incorporation of the Company as in effect immediately prior to
the Effective Time shall be the Articles of Incorporation of the
Surviving Corporation until thereafter amended as provided by law
and such Articles of Incorporation, and (ii) the Bylaws of
Company as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation until thereafter
amended as provided by law, the Articles of Incorporation of the
Surviving Corporation and such Bylaws.
1.05 Directors and Officers of the Surviving
Corporation. The directors of the Sub and the officers of the
Sub immediately prior to the Effective Time shall, from and after
the Effective Time, be the directors and officers, respectively,
of the Surviving Corporation until their successors shall have
been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the
Surviving Corporation's Articles of Incorporation and Bylaws.
1.06 Effects of the Merger. Subject to the foregoing,
the effects of the Merger shall be as provided in the applicable
provisions of the CGCL.
1.07 Further Assurances. Each party hereto will
execute such further documents and instruments and take such
further actions as may reasonably be requested by one or more of
the others to consummate the Merger, to vest the Surviving
Corporation with full title to all assets, properties, rights,
approvals, immunities and franchises of either of the Constituent
Corporations and to effect the other purposes of this Agreement.
ARTICLE II
CONVERSION OF SHARES
2.01 Conversion of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part
of the holder thereof:
(a) Capital Stock of Sub. Each issued and outstanding
share of the common stock of Sub ("Sub Common Stock") shall be
converted into and become one fully paid and nonassessable share
of common stock of the Surviving Corporation ("Surviving
Corporation Common Stock").
(b) Cancellation of Treasury Stock and Stock Owned by
Parent and Subsidiaries. All shares of common stock, no par
value, of the Company ("Company Common Stock") that are owned by
the Company as treasury stock and any shares of Company Common
Stock owned by Parent, Sub or any other wholly-owned Subsidiary
(as hereinafter defined) of Parent shall be canceled and retired
and shall cease to exist and no stock of Parent or other
consideration shall be delivered in exchange therefor. As used
in this Agreement, "Subsidiary" means, with respect to any party,
any corporation or other organization, whether incorporated or
unincorporated, of which more than fifty percent (50%) of either
the equity interests in, or the voting control of, such
corporation or other organization is, directly or indirectly
through Subsidiaries or otherwise, beneficially owned by such
party.
(c) Company Common Stock. Each issued and outstanding
share of Company Common Stock (other than shares to be canceled
in accordance with Section 2.01(b) and other than Dissenting
Shares (as defined in Section 2.01(d)) shall be converted into
the right to receive the "Conversion Amount" net to the holder in
cash. The "Conversion Amount" shall be $11.25 (the "Original
Conversion Amount") as adjusted pursuant to Section 2.01(e). All
such shares of Company Common Stock 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
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respect thereto, except the right to receive the Conversion
Amount in cash to be paid in consideration therefor, upon the
surrender of such certificate in accordance with Section 2.02,
without interest.
(d) Dissenting Shares.
(i) Notwithstanding any provision of this Agreement to
the contrary, each outstanding share of Company Common Stock the
holder of which has not voted in favor of the Merger, has
perfected such holder's right to an appraisal of such holder's
shares in accordance with the applicable provisions of the CGCL
and has not effectively withdrawn or lost such right to appraisal
(a "Dissenting Share"), shall not be converted into or represent
a right to receive the Conversion Amount in cash pursuant to
Section 2.01(c), but the holder thereof shall be entitled only to
such rights as are granted by the applicable provisions of the
CGCL; provided, however, that any Dissenting Share held by a
person at the Effective Time who shall, after the Effective Time,
withdraw the demand for appraisal or lose the right of appraisal,
in either case pursuant to the CGCL, shall be deemed to be
converted into, as of the Effective Time, the right to receive
the Conversion Amount in cash pursuant to Section 2.01(c).
(ii) The Company shall give Parent (x) prompt notice
of any written demands for appraisal, withdrawals of demands for
appraisal and any other instruments served pursuant to the
applicable provisions of the CGCL relating to the appraisal
process received by the Company and (y) the opportunity to direct
all negotiations and proceedings with respect to demands for
appraisal under the CGCL. The Company will not voluntarily make
any payment with respect to any demands for appraisal and will
not, except with the prior written consent of Parent, settle or
offer to settle any such demands.
(e) LaFehr and Chan Technologies, Inc. ("LCT") Earnout
Payment. The Company shall use reasonable diligence and timely
efforts to negotiate prior to the Closing Date a liquidated
payment, part in cash and part in Company Common Stock, to
discharge all obligations of the Company to pay the purchase
price for the shares of stock of LCT purchased from LCT's former
shareholders (the "Earnout Payment"). The Earnout Payment shall
be payable to LCT's former shareholders at or prior to the
Closing. For purposes of this Section 2.01(e) the cash portion
of the Earnout Payment shall be deemed to be reduced by any cash
repaid by LCT to the Company after the date hereof. The Original
Conversion Amount shall be reduced to an amount equal to the
quotient obtained by dividing (a) the Original Total Conversion
Amount, reduced by the cash portion of the Earnout Payment, by
(b) the sum of (i) the number of shares outstanding on the date
hereof, (ii) the number of shares underlying Options to acquire
Company Common Stock outstanding on date hereof, and (iii) the
number of shares of Company Common stock issued to former
shareholders of LCT in the Earnout Payment. The "Original Total
Conversion Amount" means the Original Conversion Amount set forth
in Section 2.01(c) multiplied by the sum of (i) the number of
shares outstanding on the date hereof, and (ii) the number of
shares underlying Options to acquire Company Common Stock
outstanding on the date hereof.
(f) Stock Option Plans. Subject to the terms and
conditions of the Company's stock option plans described in
Section 3.02 of the Company Disclosure Letter (as hereinafter
defined) (the "Company Option Plans") and the stock option
agreements executed pursuant thereto, the Company Option Plans
and each unexercised option to purchase Company Common Stock
granted thereunder that is outstanding at the Effective Time
shall be assumed by Parent and continued in accordance with their
respective terms and each such option shall become a right to
purchase shares of the fully paid and nonassessable shares of
common stock, par value $.10 per share, of Parent ("Parent Common
Stock") equal to the product of (i) a fraction (the "Conversion
Number"), (A) the numerator of which is the Conversion Amount as
adjusted pursuant to Section 2.01(e) and (B) the denominator of
which is the Average Price (as hereinafter defined) of Parent
Common Stock and (ii) the number of shares of Company Common
Stock subject to such option immediately prior to the Effective
Time, as more fully described in Section 6.06. The Company will
13
use reasonable diligence and timely efforts to cause all vested
options to be exercised prior to the Closing.
The "Average Price" shall be equal to the arithmetic
average of the Sales Price (as hereinafter defined) on each of
the last 20 Trading Days (as hereinafter defined) preceding the
third day before the Closing Date. The term "Sales Price" shall
mean, on any Trading Day, the average of the high and low sales
prices of Parent Common Stock reported on the NYSE Composite Tape
on such day. The term "Trading Day" shall mean any day on which
securities are traded on a national securities exchange.
2.02 Delivery of Certificates; Payment.
(a) Exchange Agent. At the Effective Time, Parent
shall deposit with Bank of America N.T. & S.A. or such other bank
or trust company designated before the Effective Date by the
Company and reasonably acceptable to Parent (the "Exchange
Agent"), an amount of cash equal to the aggregate amount payable
in accordance with Section 2.01(c), to be held for the benefit of
and distributed to the holders of Company Common Stock in
accordance with this Section. The Exchange Agent shall agree to
hold such funds (such funds, together with earnings thereon,
being referred to herein as the "Exchange Fund") for delivery as
contemplated by this Section and upon such additional terms as
may be agreed upon by the Exchange Agent, the Company and Parent
before the Effective Time. If for any reason (including losses)
the amount of cash in the Exchange Fund is inadequate to pay the
cash amounts to which holders of shares of Company Common Stock
shall be entitled pursuant to Section 2.01(c), Parent shall make
available to the Exchange Agent additional funds for the payment
thereof.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, the Surviving Corporation
shall cause the Exchange Agent to mail to each holder of record
of a certificate or certificates which immediately prior to the
Effective Time represented outstanding shares of Company Common
Stock (the "Certificates") whose shares are converted pursuant to
Section 2.01(c) into the right to receive cash (i) 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 shall
be in such form and have such other provisions as the Surviving
Corporation may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for
cash in pursuant to Section 2.01(c). Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with
such letter of transmittal duly executed and completed in
accordance with its terms, the holder of such Certificate shall
be entitled to receive in exchange for the cash amount payable in
accordance with Section 2.01(c), which such holder has the right
to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be canceled. In no
event shall the holder of any Certificate be entitled to receive
interest on any funds to be received in the Merger. In the event
of a transfer of ownership of Company Common Stock which is not
registered in the transfer records of the Company, the cash
amount payable in accordance with Section 2.01(c), may be issued
to a transferee if the Certificate representing such Company
Common Stock is presented to the Exchange Agent accompanied by
all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02(b),
each Certificate shall be deemed at any time after the Effective
Time for all corporate purposes of the Surviving Corporation,
except for rights to receive cash pursuant to Section 2.01(c),
rights to receive declared but unpaid dividends pursuant to
Section 5.01(b)(ii)(B) or rights existing as contemplated in
Section 2.01(d), to be canceled and not outstanding.
(c) Distributions with Respect to Unexchanged Shares.
No cash payment shall be paid to any holder of Company Common
Stock with respect to any Certificate that has not been
14
surrendered pursuant to this Section until the holder of record
of such Certificate shall surrender such Certificate in
accordance with this Section.
(d) No Further Ownership Rights in Company Common
Stock. All cash paid pursuant to this Article II upon surrender
for exchange of Certificates in accordance with the terms hereof
shall be deemed to have been paid at the Effective Time in full
satisfaction of all rights pertaining to the shares of Company
Common Stock represented thereby, subject, however, to the
Surviving Corporation's obligation to pay any dividends which may
have been declared by the Company on such shares of Company
Common Stock in accordance with the terms of this Agreement and
which remained unpaid at the Effective Time. From and after the
Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock which were outstanding immediately
prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this
Section.
(e) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of
the Company for one hundred eighty (180) days after the Effective
Time shall be delivered to Parent, upon demand, and any
stockholders of the Company who have not theretofore complied
with this Article II shall thereafter look only to Parent
(subject to abandoned property, escheat and other similar laws)
as general creditors for payment of their claim for any cash
payable pursuant to Section 2.01 and this Section.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub
as follows:
3.01 Organization and Qualification. Each of the
Company and its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has full corporate power and
authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties,
except (in the case of any Subsidiary) for such failures to be so
organized, existing and in good standing or to have such power
and authority which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material
adverse effect on the Company and its Subsidiaries taken as a
whole. Each of the Company and its Subsidiaries is duly
qualified, licensed or admitted to do business and is in good
standing in each jurisdiction in which the ownership, use or
leasing of its assets and properties, or the conduct or nature of
its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed
or admitted and in good standing which, individually or in the
aggregate, are not having and could not be reasonably expected to
have a material adverse effect on the Company and its
Subsidiaries taken as a whole. As used in this Agreement, any
reference to any event, change or effect being "material" or
"materially adverse" or having a "material adverse effect" on or
with respect to an entity (or group of entities taken as a whole)
means such event, change or effect is material or materially
adverse, as the case may be, to the business, condition
(financial or otherwise), properties, assets (including
intangible assets), liabilities (including contingent
liabilities), prospects or results of operations of such entity
(or, if with respect thereto, of such group of entities taken as
a whole). Section 3.01 of the letter dated the date hereof and
delivered to Parent and Sub by the Company concurrently with the
execution and delivery of this Agreement (the "Company Disclosure
Letter") sets forth the name and jurisdiction of incorporation of
each Subsidiary of the Company. Except as disclosed in
Section 3.01 of the Company Disclosure Letter, the Company does
not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable
15
for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or
entity.
3.02 Capital Stock. (a) The authorized capital stock
of the Company consists solely of 10,000,000 shares of Company
Common Stock and 2,035,000 shares of preferred stock (the
"Company Preferred Stock"). As of October 2, 1995, 2,662,414
shares of Company Common Stock were issued and outstanding and
1,367,750 shares of Company Common Stock were reserved for
issuance pursuant to the Company Option Plans, of which 912,488
are covered by outstanding options or outstanding commitments.
There has been no change in the number of issued and outstanding
shares of Company Common Stock or shares of Company Common Stock
held in treasury or reserved for issuance since such date other
than pursuant to the establishment or maintenance of the Company
Option Plans and there has been no increase in the number or
shares covered by outstanding options or outstanding commitments.
As of the date hereof, no shares of Company Preferred Stock are
issued and outstanding. All of the issued and outstanding shares
of Company Common Stock are, and all shares reserved for issuance
will be, upon issuance in accordance with the terms specified in
the instruments or agreements pursuant to which they are
issuable, duly authorized, validly issued, fully paid and
nonassessable. Except pursuant to this Agreement and except as
set forth in Section 3.02 of the Company Disclosure Letter, there
are no outstanding subscriptions, options, warrants, rights
(including "phantom" stock rights), preemptive rights or other
contracts, commitments, understandings or arrangements, including
any right of conversion or exchange under any outstanding
security, instrument or agreement (together, "Options"),
obligating the Company or any of its Subsidiaries to issue or
sell any shares of capital stock of the Company or to grant,
extend or enter into any Option with respect thereto.
(b) Except as disclosed in Section 3.02 of the Company
Disclosure Letter, all of the outstanding shares of capital stock
of each Subsidiary of the Company are duly authorized, validly
issued, fully paid and nonassessable and are owned, beneficially
and of record, by the Company or a Subsidiary wholly owned,
directly or indirectly, by the Company, free and clear of any
liens, claims, mortgages, encumbrances, pledges, security
interests, equities and charges of any kind (each a "Lien").
Except as disclosed in Section 3.02 of the Company Disclosure
Letter, there are no (i) outstanding Options obligating the
Company or any of its Subsidiaries to issue or sell any shares of
capital stock of any Subsidiary of the Company or to grant,
extend or enter into any such Option or (ii) voting trusts,
proxies or other commitments, understandings, restrictions or
arrangements in favor of any person other than the Company or a
Subsidiary wholly owned, directly or indirectly, by the Company
with respect to the voting of or the right to participate in
dividends or other earnings on any capital stock of any
Subsidiary of the Company.
(c) Except as disclosed in Section 3.02 of the Company
Disclosure Letter, there are no outstanding contractual
obligations of the Company or any Subsidiary of the Company to
repurchase, redeem or otherwise acquire any shares of Company
Common Stock or any capital stock of any Subsidiary of the
Company or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any
Subsidiary of the Company or any other person.
3.03 Authority Relative to this Agreement. The
Company has full corporate power and authority to enter into this
Agreement and, subject to obtaining the Company Stockholders'
Approval (as defined in Section 6.03), to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly approved by the
Board of Directors of the Company, the Board of Directors of the
Company has recommended adoption of this Agreement by the
stockholders of the Company and directed that this Agreement be
submitted to the stockholders of the Company for their
consideration, and no other corporate proceedings on the part of
the Company or its stockholders are necessary to authorize the
16
execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby, other than obtaining the Company
Stockholders' Approval. This Agreement has been duly and validly
executed and delivered by the Company and, subject to the
obtaining of the Company Stockholders' Approval, constitutes a
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
3.04 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by
the Company do not, and the performance by the Company of its
obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or
lapse of time or both) a default under, result in or give to any
person any right of payment or reimbursement, termination,
cancellation, modification or acceleration of, or result in the
creation or imposition of any Lien upon any of the assets or
properties of the Company or any of its Subsidiaries under, any
of the terms, conditions or provisions of (i) the certificates or
articles of incorporation or bylaws (or other comparable charter
documents) of the Company or any of its Subsidiaries, or (ii)
subject to the obtaining of the Company Stockholders' Approval
and the taking of the actions described in paragraph (b) of this
Section, (x) any statute, law, rule, regulation or ordinance
(together, "Laws"), or any judgment, decree, order, writ, permit
or license (together, "Orders"), of any court, tribunal,
arbitrator, authority, agency, commission, official or other
instrumentality of the United States or any state, county, city
or other political subdivision (a "Governmental or Regulatory
Authority"), applicable to the Company or any of its Subsidiaries
or any of their respective assets or properties, or (y) any note,
bond, mortgage, security agreement, indenture, license,
franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind (together,
"Contracts") to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any
of their respective assets or properties is bound, excluding from
the foregoing clauses (x) and (y) conflicts, violations,
breaches, defaults, terminations, modifications, accelerations
and creations and impositions of Liens which, individually or in
the aggregate, could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken
as a whole or on the ability of the Company to consummate the
transactions contemplated by this Agreement.
(b) Except (i) for the filing of a pre-merger
notification report by the Company under Section 7A of the
Xxxxxxx Act (Title II of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976), as amended, and the rules and
regulations thereunder (the "HSR Act"), (ii) for the filing of
the Proxy Statement (as that term is defined in Section 4.08)
with the Securities and Exchange Commission (the "SEC") pursuant
to the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the "Exchange Act") and (iii) for the
filing of the Certificate of Merger and other appropriate merger
documents required by the CGCL with the Secretary of State and
appropriate documents with the relevant authorities of other
states in which the Constituent Corporations are qualified to do
business and (iv) as disclosed in Section 3.04 of the Company
Disclosure Letter, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any
of the terms, conditions or provisions of any Law or Order of any
Governmental or Regulatory Authority or any Contract to which the
Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective
assets or properties is bound for the execution and delivery of
this Agreement by the Company, the performance by the Company of
its obligations hereunder or the consummation of the transactions
contemplated hereby, other than such consents, approvals,
actions, filings and notices which the failure to make or obtain,
as the case may be, individually or in the aggregate, could not
17
be reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole or on the ability
of the Company to consummate the transactions contemplated by
this Agreement.
3.05 SEC Reports and Financial Statements. The
Company delivered to Parent prior to the execution of this
Agreement a true and complete copy of each form, report,
schedule, registration statement, definitive proxy statement and
other document (together with all amendments thereof and
supplements thereto) filed by the Company or any of its
Subsidiaries with the SEC since May 31, 1991 (as such documents
have since the time of their filing been amended or supplemented,
the "Company SEC Reports"), which are all the documents (other
than preliminary material) that the Company and its Subsidiaries
were required to file with the SEC since such date. As of their
respective dates, the Company SEC Reports (i) complied as to form
in all material respects with the requirements of the Securities
Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act") or the Exchange Act, as the case may be,
and (ii) 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.
The audited consolidated financial statements and unaudited
interim consolidated financial statements (including, in each
case, the notes, if any, thereto) included in the Company SEC
Reports (the "Company Financial Statements") complied as to form
in all material respects with the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to
unaudited statements as permitted by Form 10-Q of the SEC) and
fairly present (subject, in the case of the unaudited interim
financial statements, to normal, recurring year-end audit
adjustments) the consolidated financial position of the Company
and its consolidated subsidiaries as at the respective dates
thereof and the consolidated results of their operations and cash
flows for the respective periods then ended. Except as set forth
in Section 3.05 of the Company Disclosure Letter, each Subsidiary
of the Company is treated as a consolidated subsidiary of the
Company in the Company Financial Statements for all periods
covered thereby.
3.06 Absence of Certain Changes or Events. Except as
disclosed in the Company SEC Reports filed prior to the date of
this Agreement, (a) since June 2, 1995 there have not been any
changes, events or developments which collectively have a
material adverse effect on the Company and its Subsidiaries taken
as a whole, and after taking into effect any positive
developments which have occurred, other than those occurring as a
result of general economic or financial conditions , and (b)
except as disclosed in Section 3.06 of the Company Disclosure
Letter, between such date and the date hereof (i) the Company and
its Subsidiaries have conducted their respective businesses only
in the ordinary course consistent with past practice and (ii)
neither the Company nor any of its Subsidiaries has taken any
action which, if taken after the date hereof, would constitute a
breach of any provision of clause (ii) of Section 5.01(b).
3.07 Absence of Undisclosed Liabilities. Except for
matters reflected or reserved against in the balance sheet for
the period ended June 2, 1995 included in the Company Financial
Statements or as disclosed in Section 3.07 of the Company
Disclosure Letter, neither the Company nor any of its
Subsidiaries had at such date, or has incurred since that date,
any liabilities or obligations (whether absolute, accrued,
contingent, fixed or otherwise, or whether due or to become due)
of any nature that would be required by generally accepted
accounting principles to be reflected on a consolidated balance
sheet of the Company and its consolidated subsidiaries (including
the notes thereto), except liabilities or obligations (i) which
were incurred in the ordinary course of business consistent with
past practice and (ii) which have not been, and could not be
reasonably expected to be, individually or in the aggregate,
materially adverse to the Company and its Subsidiaries taken as a
whole.
18
3.08 Legal Proceedings. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement or
in Section 3.08 of the Company Disclosure Letter, (i) there are
no actions, suits, arbitrations or proceedings pending or, to the
knowledge of the Company and its Subsidiaries, threatened
against, relating to or affecting, nor to the knowledge of the
Company and its Subsidiaries are there any Governmental or
Regulatory Authority investigations or audits pending or
threatened against, relating to or affecting, the Company or any
of its Subsidiaries or any of their respective assets and
properties which, if determined adversely to the Company or any
of its Subsidiaries, individually or in the aggregate, could be
reasonably expected to have a material adverse effect on the
Company and its Subsidiaries taken as a whole or on the ability
of the Company to consummate the transactions contemplated by
this Agreement, and there are no facts or circumstances known to
the Company or any of its Subsidiaries that could be reasonably
expected to give rise to any such action, suit, arbitration,
proceeding, investigation or audit, and (ii) neither the Company
nor any of its Subsidiaries is subject to any Order of any
Governmental or Regulatory Authority which, individually or in
the aggregate, is having or could be reasonably expected to have
a material adverse effect on the Company and its Subsidiaries
taken as a whole or on the ability of the Company to consummate
the transactions contemplated by this Agreement.
3.09 Information Supplied. The proxy statement
relating to the Company Stockholders' Meeting (as defined in
Section 6.03), as amended or supplemented from time to time (as
so amended and supplemented, the "Proxy Statement"), and any
other documents to be filed by the Company with the SEC or any
other Governmental or Regulatory Authority in connection with the
Merger and the other transactions contemplated hereby will (in
the case of the Proxy Statement and any such other documents
filed with the SEC under the Exchange Act or the Securities Act)
comply as to form in all material respects with the requirements
of the Exchange Act and the Securities Act, respectively, and
will not, on the date of its filing or, in the case of the Proxy
Statement, at the date it is mailed to stockholders of the
Company and at the time of the Company Stockholders' Meeting,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to
information supplied in writing by or on behalf of Parent or Sub
expressly for inclusion therein and information incorporated by
reference therein from documents filed by Parent or any of its
Subsidiaries with the SEC.
3.10 Compliance with Laws and Orders. The Company and
its Subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals of all Governmental and
Regulatory Authorities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for
failures to hold such permits, licenses, variances, exemptions,
orders and approvals which, individually or in the aggregate, are
not having and could not be reasonably expected to have a
material adverse effect on the Company and its Subsidiaries taken
as a whole. The Company and its Subsidiaries are in compliance
with the terms of the Company Permits, except failures so to
comply which, individually or in the aggregate, are not having
and could not be reasonably expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole.
Except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, the Company and its Subsidiaries are not
in violation of or default under any Law or Order of any
Governmental or Regulatory Authority, except for violations
which, individually or in the aggregate, are not having and could
not be reasonably expected to have a material adverse effect on
the Company and its Subsidiaries taken as a whole.
19
3.11 Compliance with Agreements; Certain Agreements.
(a) Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement, neither the Company
nor any of its Subsidiaries nor to the knowledge of the Company
and its Subsidiaries any other party thereto is in breach or
violation of, or in default in the performance or observance of
any term or provision of, and no event has occurred which, with
notice or lapse of time or both, could be reasonably expected to
result in a default under, (i) the certificates of incorporation
or bylaws (or other comparable charter documents) of the Company
or any of its Subsidiaries or (ii) any Contract to which the
Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective
assets or properties is bound, except in the case of clause (ii)
for breaches, violations and defaults which, individually or in
the aggregate, are not having and could not be reasonably
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(b) Except as disclosed in Section 3.11 of the Company
Disclosure Letter or in the Company SEC Reports filed prior to
the date of this Agreement or as provided for in this Agreement,
as of the date hereof, neither the Company nor any of its
Subsidiaries is a party to any oral or written (i) consulting
agreement not terminable on 30 days' or less notice involving the
payment of more than $25,000 per annum or $250,000 per annum in
the aggregate for all such agreements, (ii) union or collective
bargaining agreement, (iii) agreement with any executive officer
or other key employee of the Company or any of its Subsidiaries
the benefits of which are contingent or vest, or the terms of
which are materially altered, upon the occurrence of a
transaction involving the Company or any of its Subsidiaries of
the nature contemplated by this Agreement, (iv) agreement with
respect to any executive officer or other key employee of the
Company or any of its Subsidiaries providing any term of
employment or compensation guarantee or (v) except as disclosed
in the Company's Disclosure Letter, agreement or plan, including
any stock option, stock appreciation right, restricted stock or
stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement. Except as disclosed
in Section 3.11 of the Company Disclosure Letter, as of the date
hereof, neither the Company nor any of its Subsidiaries is party
to any written employment agreement.
3.12 Taxes. Except as disclosed in the SEC Reports or
in Section 3.12 of the Company Disclosure Letter (with paragraph
references corresponding to those set forth below):
(a) All material Tax Returns required to be filed with
respect to the Company and its Subsidiaries have been duly and
timely filed, and all such Tax Returns are true and complete in
all material respects. The Company and each of its Subsidiaries
have duly and timely paid all Taxes that are shown as due, or
claimed or asserted by any taxing authority to be due, from it
for the periods covered by such Tax Returns and have made all
required estimated payments of Taxes sufficient to avoid any
penalties for underpayment, or have duly provided for all such
Taxes in the financial statements included in the SEC Reports.
There are no Liens with respect to Taxes (except for Liens for
Taxes not yet due) upon any of the assets or properties of the
Company or any of its Subsidiaries.
(b) With respect to any period for which Tax Returns
have not yet been filed, or for which Taxes are not yet due or
owing, the Company and its Subsidiaries have made sufficient
current accruals for such Taxes in accordance with GAAP, and such
current accruals through June 2, 1995 are duly provided for in
the financial statements included in the SEC Reports.
(c) The material Tax Returns of the Company and its
Subsidiaries have not been audited or examined by the United
States Internal Revenue Service (the "IRS") and the statute of
20
limitations for all periods through 1990 has expired. There are
no outstanding agreements, waivers or arrangements extending the
statutory period of limitation applicable to any claim for, or
the period for the collection or assessment of, Taxes due from
the Company or any of its Subsidiaries for any taxable period.
The Company has previously delivered to Parent true and complete
copies of each of the United States federal, state, local and
foreign income Tax Returns, for each of the last three taxable
years, filed by the Company or any of its Subsidiaries.
(d) No audit or other proceeding by any court,
governmental or regulatory authority, or similar entity is
pending or, to the knowledge of the Company, threatened with
respect to any material Taxes due from the Company or any of its
Subsidiaries or any material Tax Return filed by or relating to
the Company or any of its Subsidiaries. To the knowledge of the
Company, no assessment of Tax is proposed or, based on existing
facts and circumstances, is threatened against the Company or any
of its Subsidiaries or any of their respective assets or
properties.
(e) No election under any of Section 108, 338 or 4977
of the Internal Revenue Code of 1986, as amended and the rules
and regulations thereunder (the "Code") (or any predecessor
provisions) has been made or filed by or with respect to the
Company or any of its Subsidiaries or any of their assets or
properties. No consent to the application of Section 341(f)(2)
of the Code (or any predecessor provision) has been made or filed
by or with respect to the Company or any of its Subsidiaries or
any of their assets or properties.
(f) Neither the Company nor any of its Subsidiaries
has agreed to or is required to make any adjustment pursuant to
Section 481(a) of the Code (or any predecessor provision) by
reason of any change in any accounting method or has any
application pending with any taxing authority requesting
permission for any changes in any accounting method of any of
them, and the IRS has not proposed any such adjustment or change
in accounting method.
(g) Neither the Company nor any of its Subsidiaries
has been or is in violation (or with notice or lapse of time or
both, would be in violation) of any applicable Law relating to
the payment or withholding of any material Taxes. The Company
and its Subsidiaries have duly and timely withheld from employee
salaries, wages and other compensation and paid over to the
appropriate taxing authorities all material amounts required to
be so withheld and paid over for all periods under all applicable
Laws based upon information provided by such employees to the
Company and its Subsidiaries.
"GAAP" shall mean generally accepted accounting
principles, consistently applied throughout the specified period
and in the immediately prior comparable period, except as
disclosed in the notes to the Company's financial statements.
"Taxes" shall mean all taxes, charges, fees, levies or
other similar assessments or liabilities, including without
limitation, income, gross receipts, ad valorem, premium, excise,
real property, personal property, windfall profit, sales, use,
transfer, licensing, withholding, employment, payroll and
franchise taxes imposed by the United States or any state, local
or foreign Governmental or Regulatory Authority; and such term
shall include any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in
connection with any such tax or any contest or dispute thereof.
"Tax Returns" shall mean any report, return or other
information required to be supplied to a taxing authority in
connection with Taxes.
21
3.13 Employee Benefit Plans; ERISA.
(a) Except as disclosed in the Company SEC Reports
filed prior to the date of this Agreement or as set forth in
Section 3.13 of the Company Disclosure Letter:
(i) to the knowledge of the Company and its
Subsidiaries, no prohibited transaction within the meaning
of Section 406 or 407 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975
of the Code with respect to any Company Employee Benefit
Plan (as defined below) has occurred during the five-year
period preceding the date of this Agreement;
(ii) there is no outstanding liability (except for
premiums due) under Title IV of ERISA with respect to any
Company Employee Benefit Plan;
(iii) neither the Pension Benefit Guaranty Corporation
(the "PBGC"), the Company nor any of its Subsidiaries has
instituted proceedings to terminate any Company Employee
Benefit Plan;
(iv) full payment has been made of all amounts which
the Company or any of its Subsidiaries were required to have
paid as a contribution to the Company Employee Benefit Plans
as of the last day of the most recent fiscal year of each of
the Company Employee Benefit Plans ended prior to the date
of this Agreement, and none of the Company Employee Benefit
Plans has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the
Code), whether or not waived, as of the last day of the most
recent fiscal year of each such Company Employee Benefit
Plan ended prior to the date of this Agreement;
(v) the value on a termination basis of accrued
benefits under each of the Company Employee Benefit Plans
which is subject to Title IV of ERISA, based upon the
actuarial assumptions used for funding purposes in the most
recent actuarial report prepared by such Company Employee
Benefit Plan's actuary with respect to each such Company
Employee Benefit Plan, did not, as of its latest valuation
date, exceed the then current value of the assets of such
Company Employee Benefit Plan;
(vi) each of the Company Employee Benefit Plans which
is intended to be "qualified" within the meaning of
Section 401(a) of the Code has been determined by the IRS to
be so qualified and such determination has not been
modified, revoked or limited;
(vii) each of the Company Employee Benefit Plans is,
and its administration is and has been during the five-year
period preceding the date of this Agreement in all material
respects in compliance with, and none of the Company nor any
of its Subsidiaries has received any claim or notice that
any such Company Employee Benefit Plan is not in compliance
with, all applicable laws and orders and prohibited
transaction exemptions, including, without limitation, the
requirements of ERISA;
(viii) to the knowledge of the Company and its
Subsidiaries, there are no material pending, threatened or
anticipated claims involving any of the Company Employee
Benefit Plans;
(ix) to the knowledge of the Company and its
Subsidiaries, during the five-year period preceding the date
of this Agreement, none of the Company or any of its
Subsidiaries has entered into any transaction which could
subject such entity to liability under Section 302(c)(ii),
22
4062, 4063, 4064, or 4069 of ERISA and no "reportable event"
within the meaning of Section 4043 of ERISA has occurred
with respect to any Company Employee Benefit Plan;
(x) none of the Company or any of its Subsidiaries is
in default in performing any of its contractual obligations
under any of the Company Employee Benefit Plans or any
related trust agreement or insurance contract;
(xi) there are no material outstanding liabilities of
any Company Employee Benefit Plan other than liabilities for
benefits to be paid to participants in such Company Employee
Benefit Plan and their beneficiaries in accordance with the
terms of such Company Employee Benefit Plan; and
(xii) none of the Company or any of its Subsidiaries
maintains or is obligated to provide benefits under any
life, medical or health plan which provides benefits to
retirees or other terminated employees other than benefit
continuation rights under the Consolidated Omnibus
Reconciliation Act of 1985, as amended.
(b) Except as set forth in Section 3.13 of the Company
Disclosure Letter, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby constitutes a change in control or has or will accelerate
benefits under any Company Employee Benefit Plan.
(c) As used herein:
(i) "Company Employee Benefit Plan" means any Plan
entered into, established, maintained, contributed to or
required to be contributed to by the Company or any of its
Subsidiaries and existing on the date of this Agreement or
at any time subsequent thereto and on or prior to the
Effective Time and, in the case of a Plan which is subject
to Part 3 of Title I of ERISA, Section 412 of the Code or
Title IV of ERISA, at any time during the five-year period
preceding the date of this Agreement; and
(ii) "Plan" means any employment, bonus, incentive
compensation, deferred compensation, pension, profit
sharing, retirement, stock purchase, stock option, stock
ownership, stock appreciation rights, phantom stock, leave
of absence, layoff, vacation, day or dependent care, legal
services, cafeteria, life, health, medical, accident,
disability, workmen's compensation or other insurance,
severance, separation, termination, change of control or
other benefit plan, agreement, practice, policy or
arrangement of any kind, whether written or oral, including,
but not limited to any "employee benefit plan" within the
meaning of Section 3(3) of ERISA.
3.14 Insurance. The Company delivered to Parent prior
to the execution of this Agreement a true and complete list of
all liability, property, workers' compensation, directors' and
officers' liability and other insurance policies currently in
effect that insure the business, operations, properties, assets
or employees of the Company or any of its Subsidiaries. Such
insurance policies are placed with financially sound and
reputable insurers and, in light of the respective business,
operations, assets and properties of the Company and its
Subsidiaries, are in amounts and have coverages that are
reasonable and customary for persons engaged in such businesses
and operations and having such assets and properties.
3.15 Labor Matters. Except as disclosed in the
Company SEC Reports filed prior to the date of this Agreement or
in Section 3.15 of the Company Disclosure Letter, there are no
material controversies pending or, to the knowledge of the
Company and its Subsidiaries, threatened between the Company or
23
any of its Subsidiaries and any representatives of its employees,
and, to the knowledge of the Company and its Subsidiaries, there
are no material organizational efforts presently being made
involving any of the now unorganized employees of the Company or
any of its Subsidiaries. Since June 3, 1995, there has been no
work stoppage, strike or other concerted action by employees of
the Company or any of its Subsidiaries.
3.16 Environmental Matters. (a) Each of the Company
and its Subsidiaries has obtained all licenses, permits,
authorizations, approvals and consents from Governmental or
Regulatory Authorities which are required under any applicable
Environmental Law (as defined below) in respect of its business
or operations ("Environmental Permits"), except for such failures
to have Environmental Permits which, individually or in the
aggregate, could not reasonably be expected to have a material
adverse effect on the Company and its Subsidiaries taken as a
whole. Each of such Environmental Permits is in full force and
effect and each of the Company and its Subsidiaries is in
compliance in all material respects with the terms and conditions
of all such Environmental Permits and with any applicable
Environmental Law, except for such failures to be in compliance
which, individually or in the aggregate, could not reasonably be
expected to have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(b) No oral or written notification of a "release" (as
defined in 42 U.S.C. SECTION 9601(22)) of a Hazardous Material has been
filed by or on behalf of the Company or any of its Subsidiaries
and no site or facility now or previously owned, operated or
leased by the Company or any of its Subsidiaries is listed or
proposed for listing on the National Priorities List promulgated
pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, and the rules
and regulations promulgated thereunder ("CERCLA") or on any
similar state or local list of sites requiring investigation or
clean-up.
(c) No Liens have arisen under or pursuant to any
Environmental Law on any site or facility owned, operated or
leased by the Company or any of its Subsidiaries, other than any
such real property not individually or in the aggregate material
to the Company and its Subsidiaries taken as a whole, and no
action of any Governmental or Regulatory Authority has been taken
or, to the knowledge of the Company and its Subsidiaries, is in
process which could subject any of such properties to such Liens,
and neither the Company nor any of its Subsidiaries would be
required to place any notice or restriction relating to the
presence of Hazardous Materials at any such site or facility
owned by it in any deed to the real property on which such site
or facility is located.
(d) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by,
or which are in the possession of, the Company or any of its
Subsidiaries in relation to any site or facility now or
previously owned, operated or leased by the Company or any of its
Subsidiaries which have not been delivered to Parent prior to the
execution of this Agreement.
(e) As used herein:
(i) "Environmental Law" means any Law or Order of any
Governmental or Regulatory Authority relating to the
regulation or protection of human health, safety or the
environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals
or industrial, toxic or hazardous substances or wastes into
the environment (including, without limitation, ambient air,
soil, surface water, ground water, wetlands, land or
subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous
substances or wastes; and
24
(ii) "Hazardous Material" means (A) any petroleum or
petroleum products, flammable explosives, radioactive
materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers
or other equipment that contain dielectric fluid containing
levels of polychlorinated biphenyls (PCBs); (B) any
chemicals or other materials or substances which are now or
hereafter become defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants" or
words of similar import under any Environmental Law; and (C)
any other chemical or other material or substance, exposure
to which is now or hereafter prohibited, limited or
regulated by any Governmental or Regulatory Authority under
any Environmental Law.
3.17 Tangible Property and Assets. Except as
disclosed in the Company SEC Reports filed prior to the date of
this Agreement, the Company and its Subsidiaries have good and
marketable title to, or have valid leasehold interests in or
valid rights under contract to use, all tangible property and
assets used in and, individually or in the aggregate, material to
the conduct of the businesses of the Company and its Subsidiaries
taken as a whole (including all tangible property and assets
reflected on the latest audited balance sheet included in such
Company SEC Reports or acquired since such date, other than
property or assets disposed of since such date or held subject to
a lease or other contract permitted to expire in accordance with
its terms since such date, in either case in the ordinary course
of business), free and clear of all Liens other than (i) any
statutory Lien arising in the ordinary course of business by
operation of law with respect to a liability that is not yet due
or delinquent and (ii) any minor imperfection of title or similar
Lien which individually or in the aggregate with other such Liens
does not materially impair the value of the property or asset
subject to such Lien or the use of such property or asset in the
conduct of the business of the Company or any such Subsidiary.
All such property and assets are, in all material respects, in
good working order and condition, ordinary wear and tear
excepted, and adequate and suitable for the purposes for which
they are presently being used.
3.18 Intellectual Property Rights. The Company and
its Subsidiaries have all right, title and interest in, or a
valid and binding license to use, all Intellectual Property (as
defined below) individually or in the aggregate material to the
conduct of the businesses of the Company and its Subsidiaries
taken as a whole. Neither the Company nor any Subsidiary of the
Company is in default (or with the giving of notice or lapse of
time or both, would be in default) in any material respect under
any license to use such Intellectual Property, such Intellectual
Property is not being infringed by any third party, and neither
the Company nor any Subsidiary of the Company is infringing any
Intellectual Property of any third party, except for such
defaults and infringements which, individually or in the
aggregate, are not having and could not be reasonably expected to
have a material adverse effect on the Company and its
Subsidiaries taken as a whole. For purposes of this Agreement,
"Intellectual Property" means patents and patent rights,
trademarks and trademark rights, trade names and trade name
rights, service marks and service xxxx rights, service names and
service name rights, copyrights and copyright rights, software
and other proprietary intellectual property rights and all
pending applications for and registrations of any of the
foregoing.
3.19 Vote Required. Assuming the accuracy of the
representation and warranty contained in Section 4.05, the
affirmative vote of the holders of record of at least a majority
of the outstanding shares of Company Common Stock with respect to
the adoption of this Agreement is the only vote of the holders of
any class or series of the capital stock of the Company required
to adopt this Agreement and approve the Merger and the other
transactions contemplated hereby.
3.20 Opinion of Financial Advisor. The Company has
received the opinion of X.X. Xxxxxxx & Sons, Inc., dated the date
hereof, to the effect that, as of the date hereof, the
consideration to be received in the Merger by the stockholders of
the Company is fair from a financial point of view to the
25
stockholders of the Company, and a true and complete copy of such
opinion has been delivered to Parent prior to the execution of
this Agreement. Such opinion will be updated prior to the filing
of the Proxy Statement.
3.21 Company Not an Interested Stockholder or an
Acquiring Person. Neither the Company nor any of its affiliates
or associates is an "interested person" (as such term is defined
in Section 1203 of the CGCL), or an owner, directly or
indirectly, of shares of Parent or the Sub representing more than
50 percent of the voting power of Parent or the Sub within the
meaning of Section 1101 of the CGCL.
3.22 Section 1203 of the CGCL Not Applicable. The
provisions of Section 1203 of the CGCL will not, before the
termination of this Agreement, assuming the accuracy of the
representation and warranty contained in Section 4.05, apply to
this Agreement, the Merger or the other transactions contemplated
hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as
follows:
4.01 Organization and Qualification. Each of Parent
and its Subsidiaries (including Sub) is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has full corporate power
and authority to conduct its business as and to the extent now
conducted and to own, use and lease its assets and properties,
except (in the case of any Subsidiary) for such failures to be so
organized, existing and in good standing or to have such power
and authority which, individually or in the aggregate, are not
having and could not be reasonably expected to have a material
adverse effect on Parent and its Subsidiaries taken as a whole.
Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only
as contemplated hereby. Each of Parent and its Subsidiaries is
duly qualified, licensed or admitted to do business and is in
good standing in each jurisdiction in which the ownership, use or
leasing of its assets and properties, or the conduct or nature of
its business, makes such qualification, licensing or admission
necessary, except for such failures to be so qualified, licensed
or admitted and in good standing which, individually or in the
aggregate, are not having and could not be reasonably expected to
have a material adverse effect on Parent and its Subsidiaries
taken as a whole. Section 4.01 of the letter dated the date
hereof and delivered by Parent and Sub to the Company
concurrently with the execution and delivery of this Agreement
(the "Parent Disclosure Letter") sets forth the name and
jurisdiction of incorporation of each Subsidiary of Parent.
4.02 Authority Relative to this Agreement. Each of
Parent and Sub has full corporate power and authority to enter
into this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement by each of
Parent and Sub and the consummation by each of Parent and Sub of
the transactions contemplated hereby have been duly and validly
approved by its Board of Directors and by Parent in its capacity
as the sole stockholder of Sub, and no other corporate
proceedings on the part of either of Parent or Sub or their
stockholders are necessary to authorize the execution, delivery
and performance of this Agreement by Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by each of Parent and Sub and constitutes a legal,
valid and binding obligations of each of Parent and Sub
enforceable against each of Parent and Sub in accordance with its
terms, except as enforceability may be limited by bankruptcy,
26
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
4.03 Non-Contravention; Approvals and Consents.
(a) The execution and delivery of this Agreement by
each of Parent and Sub do not, and the performance by each of
Parent and Sub of its obligations hereunder and the consummation
of the transactions contemplated hereby will not, conflict with,
result in a violation or breach of, constitute (with or without
notice or lapse of time or both) a default under, result in or
give to any person any right of payment or reimbursement,
termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the
assets or properties of Parent or any of its Subsidiaries under,
any of the terms, conditions or provisions of (i) the
certificates or articles of incorporation or bylaws (or other
comparable charter documents) of Parent or any of its
Subsidiaries, or (ii) subject to the taking of the actions
described in paragraph (b) of this Section, (x) any Laws or
Orders of any Governmental or Regulatory Authority applicable to
Parent or any of its Subsidiaries or any of their respective
assets or properties, or (y) any Contracts to which Parent or any
of its Subsidiaries is a party or by which Parent or any of its
Subsidiaries or any of their respective assets or properties is
bound, excluding from the foregoing clauses (x) and (y)
conflicts, violations, breaches, defaults, terminations,
modifications, accelerations and creations and impositions of
Liens which, individually or in the aggregate, could not be
reasonably expected to have a material adverse effect on Parent
and its Subsidiaries taken as a whole or on the ability of Parent
and Sub to consummate the transactions contemplated by this
Agreement.
(b) Except (i) for the filing of a pre-merger
notification report by Parent under the HSR Act, (ii) for the
filing of the Certificate of Merger and other appropriate merger
documents required by the CGCL with the Secretary of State and
appropriate documents with the relevant authorities of other
states in which the Constituent Corporations are qualified to do
business and (iii) as disclosed in Section 4.03 of the Parent
Disclosure Letter, no consent, approval or action of, filing with
or notice to any Governmental or Regulatory Authority or other
public or private third party is necessary or required under any
of the terms, conditions or provisions of any Law or Order of any
Governmental or Regulatory Authority or any Contract to which
Parent or any of its Subsidiaries is a party or by which Parent
or any of its Subsidiaries or any of their respective assets or
properties is bound for the execution and delivery of this
Agreement by each of Parent and Sub, the performance by each of
Parent and Sub of its obligations hereunder or the consummation
of the transactions contemplated hereby, other than such
consents, approvals, actions, filings and notices which the
failure to make or obtain, as the case may be, individually or in
the aggregate, could not be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries taken as a
whole or on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.
(c) Except as disclosed in Parent SEC Reports filed
prior to the date of this Agreement (i) there are no actions,
suits, arbitrations or proceedings pending or, to the knowledge
of Parent and its Subsidiaries, threatened against, relating to
or affecting, nor to the knowledge of Parent and its Subsidiaries
are there any Governmental or Regulatory Authority investigations
or audits pending or threatened against, relating to or
affecting, Parent or any of its Subsidiaries or any of their
respective assets and properties which, if determined adversely
to Parent or any of its Subsidiaries, individually or in the
aggregate, could be reasonably expected to have a material
adverse effect on Parent and its Subsidiaries taken as a whole or
on the ability of Parent to consummate the transactions
contemplated by this Agreement, and there are no facts or
circumstances known to Parent or any of its Subsidiaries that
could be reasonably expected to give rise to any such action,
suit, arbitration, proceeding, investigation or audit, and (ii)
neither Parent nor any of its Subsidiaries is subject to any
27
Order of any Governmental or Regulatory Authority which,
individually or in the aggregate, is having or could be
reasonably expected to have a material adverse effect on Parent
and its Subsidiaries taken as a whole or on the ability of Parent
to consummate the transactions contemplated by this Agreement.
4.04 Information Supplied. Any documents filed or to
be filed by Parent, or supplied by Parent for filing with the SEC
or any other Governmental or Regulatory Authority in connection
with the Merger and the other transactions contemplated hereby
will (in the case of any documents filed with the SEC under the
Securities Act or the Exchange Act) comply as to form in all
material respects with the requirements of the Exchange Act and
the Securities Act, respectively, and will not, on the date of
its filing or at the time it becomes effective under the
Securities Act, at the date the Proxy Statement is mailed to
stockholders of the Company, at the time of the Company
Stockholders' Meeting and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation is
made by Parent or Sub with respect to information supplied in
writing by or on behalf of the Company expressly for inclusion
therein and information incorporated by reference therein from
documents filed by Parent or any of its Subsidiaries with the
SEC.
4.05 Vote Required. Assuming the accuracy of the
representation and warranty contained in Section 3.21, the
affirmative vote of Parent as sole stockholder of the Sub is the
only vote of the holders of any class or series of the capital
stock of Parent or Sub required to approve the Merger and the
other transactions contemplated hereby.
4.06 Parent Not an Interested Party or a Restricted
Owner. Neither Parent nor any of its affiliates or associates
(including Sub) is an "interested person" (as such term is
defined in Section 1203 of the CGCL), or an owner, directly or
indirectly, of shares of the Company representing more than 50
percent of the voting power of the Company within the meaning of
Section 1101 of the CGCL.
4.07 Certain Provisions Not Applicable. None of the
provisions of Parent's Certificate of Incorporation, Section
1203 or the Final Two Sentences of Section 1103 of the CGCL or
the provisions of Section 203 of the DGCL will, before the
termination of this Agreement, assuming the accuracy of the
representation and warranty contained in Section 3.21, apply to
this Agreement, the Merger or the other transactions contemplated
hereby.
4.08 Exon-Xxxxxx Amendment. Parent is not a "foreign
person" for purposes of Section 721 of the Defense Production Act
of 1950, as amended, and any successor thereto and the
regulations issued pursuant thereto or in consequence thereof
(the "Exon-Xxxxxx Amendment").
4.09 Financing. Parent has available to it sufficient
funds to fulfill its obligations under this Agreement.
28
ARTICLE V
COVENANTS
5.01 Covenants of the Company and Parent. At all
times from and after the date hereof until the Effective Time,
the Company and Parent each covenants and agrees as to itself and
its Subsidiaries that (except as expressly contemplated or
permitted by this Agreement, or to the extent that the other
party shall otherwise consent in writing, which consent shall not
be unreasonably withheld):
(a) Ordinary Course. Subject to paragraph (b) of this
Section, each party and each of its Subsidiaries shall conduct
their respective businesses only in, and none of the Company,
Parent and such Subsidiaries shall take any action except in, the
ordinary course consistent with past practice.
(b) Without limiting the generality of paragraph (a)
of this Section, (i) each party and its Subsidiaries shall use
all commercially reasonable efforts to preserve intact in all
material respects their present business organizations and
reputation, to keep available the services of their key officers
and employees, to maintain their assets and properties in good
working order and condition, ordinary wear and tear excepted, to
maintain insurance on their tangible assets and businesses in
such amounts and against such risks and losses as are currently
in effect, to preserve their relationships with customers and
suppliers and others having significant business dealings with
them and to comply in all material respects with all Laws and
Orders of all Governmental or Regulatory Authorities applicable
to them, and (ii) the Company shall not, nor shall it permit any
of its Subsidiaries to:
(A) amend or propose to amend its certificate or
articles of incorporation or bylaws (or other comparable
corporate charter documents);
(B) declare, set aside or pay any dividends on or
make other distributions in respect of any of its capital
stock, except that the Company may continue the declaration
and payment of regular quarterly cash dividends on Company
Common Stock with usual record and payment dates for such
dividends in accordance with past dividend practice, except
that the Company may declare and pay a special dividend
equal to the proceeds of a disposition of LCT, or may effect
a spin-off of its interest in LCT to the Company's
shareholders, in either case subject to the limitations set
for in subparagraph (I) below, and except for the
declaration and payment of dividends by a wholly owned
Subsidiary solely to its parent corporation, (x) split,
combine, reclassify or take similar action with respect to
any of its capital stock or issue or authorize or propose
the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, (y)
adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such liquidation or
a dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization or (z) directly or
indirectly redeem, repurchase or otherwise acquire any
shares of its capital stock or any Option with respect
thereto; provided, however, that the foregoing shall not
restrict the ability of the Company to enter into any
transaction referenced in subparagraph (I) below;
(C) issue, deliver or sell, or authorize or propose
the issuance, delivery or sale of, any shares of its capital
stock or any Option with respect thereto (other than (w) the
issuance of shares of Company Common Stock upon exercise of
presently outstanding Options pursuant to plans disclosed in
Section 3.02 of the Company Disclosure Letter, (x) the
issuance by a wholly-owned Subsidiary of its capital stock
to its parent corporation, or modify or amend any right of
any holder of outstanding shares of capital stock or Options
with respect thereto, (y) issuances of Company Common Stock
in connection with the Earnout Payment and (z) issuances of
LCT stock in connection with the transactions referred to in
subparagraph (I) below);
29
(D) acquire (by merging or consolidating with, or by
purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner) any
business or any corporation, partnership, association or
other business organization or division thereof or otherwise
acquire or agree to acquire any assets other than in the
ordinary course of its business consistent with past
practice;
(E) other than dispositions in the ordinary course of
its business consistent with past practice or a disposition
of the Company's interest in LCT, sell, lease, grant any
security interest in or otherwise dispose of or encumber any
of its assets or properties;
(F) except to the extent required by applicable law,
(x) permit any material change in (A) any pricing,
marketing, purchasing, investment, accounting, financial
reporting, inventory, credit, allowance or tax practice or
policy or (B) any method of calculating any bad debt,
contingency or other reserve for accounting, financial
reporting or tax purposes or (y) make any material tax
election or settle or compromise any material income tax
liability with any Governmental or Regulatory Authority;
(G) (x) incur (which shall not be deemed to include
entering into credit agreements, lines of credit or similar
arrangements until borrowings are made under such
arrangements) any indebtedness for borrowed money or
guarantee any such indebtedness other than in the ordinary
course of its business consistent with past practice in an
aggregate principal amount exceeding $1,000 (net of any
amounts of any such indebtedness discharged during such
period), or (y) voluntarily purchase, cancel, prepay or
otherwise provide for a complete or partial discharge in
advance of a scheduled repayment date with respect to, or
waive any right under, any indebtedness for borrowed money
other than in the ordinary course of its business consistent
with past practice in an aggregate principal amount
exceeding $1,000;
(H) enter into, adopt, amend in any material respect
(except as may be required by applicable law) or terminate
any Company Employee Benefit Plan or other agreement,
arrangement, plan or policy between such party or one of its
Subsidiaries and one or more of its directors, officers or
employees, or, except for normal increases in the ordinary
course of business consistent with past practice that, in
the aggregate, do not result in a material increase in
benefits or compensation expense to such party and its
Subsidiaries taken as a whole, increase in any manner the
compensation or fringe benefits of any director, officer or
employee or pay any benefit not required by any plan or
arrangement in effect as of the date hereof;
(I) enter into any contract or amend or modify any
existing contract, or engage in any new transaction outside
the ordinary course of business consistent with past
practice or not on an arm's length basis, with any affiliate
of such party or any of its Subsidiaries, provided, however,
that the Company is expressly permitted to dispose of its
interest in LCT as reflected by the "Pro Forma Balance
Sheet" dated as of September 1, 1995 attached to the
Disclosure Letter but not to exceed an aggregate
shareholders equity (disregarding the effect of any earnout
payment) of $8,915,000 increased by net earnings, or
decreased by net losses or asset write downs, and with no
advances by the Company to LCT or intercompany obligations
of LCT to the Company in excess of the amounts shown on the
LCT Proforma Balance Sheet, whether by spin-off to the
Company's shareholders, disposition to third parties or
otherwise and the Company may distribute the proceeds of any
such disposition to its shareholders provided that any such
distribution to Company shareholders shall be net of all
transaction costs including taxes in excess of $1,458,000
arising from the disposition; and provided further that if
the transaction costs including taxes in excess of
$1,458,000 arising from the disposition exceed the proceeds
of such disposition then such excess shall be deemed to be a
cash amount paid in respect of the Earnout Payment and shall
30
cause an adjustment of the Conversion Amount as provided in
section 2.01(e). Any expenses in addition to transaction
costs incurred by LCT from September 1, 1995 to Closing paid
or required to be paid by the Company on behalf of LCT and
not paid by LCT to the Company prior to Closing shall be
deemed to be a transaction cost and shall be adjusted as
provided in Section 2.01(e). For purposes of the foregoing,
(i) any liability of LCT transferred to or assumed by the
Company in excess of $597,000 reflected as an adjustment in
the LCT Pro Forma Balance Sheet shall be deemed to be a
transaction cost, and (ii) any transaction costs (including
without limitation legal and accounting fees, investment
bankers' fees, costs of soliciting proxies, SEC filing fees,
and related expenses) arising from the negotiation and
implementation of this Agreement and the sale or disposition
of LCT, to the extent the aggregate of such transaction
costs exceeds $600,000, shall be deemed to be transaction
costs arising from the sale or disposition of LCT.
In estimating the tax liability above, each party recognizes
that a significant block of LCT stock may be sold to a third
party at a price which may reflect a control premium, this
purchase price may, therefore, not proportionately reflect
the fair market value of 100% of LCT.
The parties further agree that the estimate of the Parent's
tax liability per this Section 5.01(I) will be prepared in a
manner consistent with the estimates and methods to be used
in the filing of Geodynamics' tax return actually reflecting
the gain.
(J) make any capital expenditures or commitments for
additions to plant, property or equipment constituting
capital assets except in the ordinary course of business
consistent with past practice in an aggregate amount not
exceeding $100,000;
(K) make any change in the lines of business in which
it participates or is engaged other than such changes
effected in connection with any disposition of LCT;
(L) without the prior written consent of Parent, which
consent shall not unreasonably be withheld, do any of the
following: enter into any fixed price contracts in excess of
$50,000; enter into any new lease agreements; invest any excess
cash in instruments with a maturity date beyond ninety days;
appoint any additional officers of the Company; effect any
changes to the management structure of the Company other then
those changes disclosed to Parent prior to the execution of this
Agreement; make any capital expenditure or commitment to make a
capital expenditure towards the purchase of a management
information system; increase the salary of any officer or
employee in a manner inconsistent with past practice but in no
event shall any increase exceed eight percent (8%); or grant to
any officer or employee any bonus payment, provided however the
Company may make spot awards which collectively shall not exceed
$25,000. Subject to the foregoing, the Company and Parent will
establish an interim working committee chaired by the Company's
Chief Executive Officer and an individual chosen by the Chief
Executive Officer of Parent to facilitate the transition and
management of the Company in anticipation of the closing of this
transaction. In addition, the Chief Financial Officer of the
Company and of Parent shall participate as members of the interim
working committee; or
(M) enter into any contract, agreement, commitment or
arrangement to do or engage in any of the foregoing.
(c) Advice of Changes. Each party shall confer on a
regular and frequent basis with the other with respect to its
business and operations and other matters relevant to the Merger,
and shall promptly advise the other, orally and in writing, of
any change or event, including, without limitation, any
complaint, investigation or hearing by any Governmental or
Regulatory Authority (or communication indicating the same may be
31
contemplated) or the institution or threat of litigation
including any shareholder litigation, having, or which, insofar
as can be reasonably foreseen, could have, a material adverse
effect on the Company and its Subsidiaries taken as a whole or on
the ability of the Company or Parent, as the case may be, to
consummate the transactions contemplated hereby.
5.02 No Solicitations. No party shall, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or
permit any officer, director, employee, investment banker,
financial advisor, attorney, accountant or other agent or
representative (each, a "Representative") retained by or acting
for or on behalf of it or any of its Subsidiaries to, directly or
indirectly, initiate, solicit, encourage, or, unless the Board of
Directors believes, on the basis of advice furnished by
independent legal counsel, that the failure to take such actions
would constitute a breach of applicable fiduciary duties,
participate in any negotiations regarding, furnish any
confidential information in connection with, endorse or otherwise
cooperate with, assist, participate in or facilitate the making
of any proposal or offer for, or which may reasonably be expected
to lead to, an Acquisition Transaction (as defined below), by any
person, corporation, partnership or other entity or group (a
"Potential Acquiror"); provided, however, that nothing contained
in this Section shall prohibit the Company or its Board of
Directors from taking and disclosing to its stockholders a
position with respect to a tender offer by a Potential Acquiror
pursuant to Rules 14d-9 and 14e-2(a) promulgated under the
Exchange Act or from making such disclosure to its stockholders
which, in the judgment of the Board of Directors based upon the
opinion of independent counsel, may be required under applicable
law; provided, however, that (i) the Company may furnish or cause
to be furnished information concerning the Company and its
businesses, properties or assets to a Potential Acquiror (on
terms, including confidentiality terms, substantially similar to
those set forth in the confidentiality letter dated August 8,
1995 between Parent and the Company), (ii) the Company may engage
in discussions or negotiations with a Potential Acquiror, (iii)
following receipt of a proposal or offer for an Acquisition
Transaction, the Company may take and disclose to its
stockholders a position contemplated by Rules 14d-9 and 14e-2(a)
under the Exchange Act or otherwise make disclosure to the
Company's stockholders and (iv) following receipt of a proposal
or offer for an Acquisition Transaction the Board of Directors
may withdraw or modify its recommendation referred to in
Section 3.03, but in each case referred to in the foregoing
clauses (i) through (iv) only to the extent that the Board of
Directors of the Company shall conclude in good faith on the
basis of advice from independent counsel that such action is
necessary or appropriate in order for such Board of Directors to
act in a manner which is consistent with its fiduciary
obligations under applicable law. The Company will immediately
cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore
with respect to any Acquisition Transaction. As used in this
Agreement, "Acquisition Transaction" means any merger,
consolidation or other business combination involving the Company
or any of its Significant Subsidiaries (as defined below) other
than LCT, or any acquisition in any manner of all or a
substantial portion of the equity of, or all or a substantial
portion of the assets of, the Company and its Subsidiaries taken
as a whole (without regard to LCT), whether for cash, securities
or any other consideration or combination thereof other than
pursuant to the transactions contemplated by this Agreement; and
"Significant Subsidiary" means any Subsidiary of the Company that
would constitute a Significant Subsidiary of the Company within
the meaning of Rule 1-02 of Regulation S-X of the SEC.
32
ARTICLE VI
ADDITIONAL AGREEMENTS
6.01 Access to Information; Confidentiality. (a) The
Company and its Subsidiaries shall, throughout the period from
the date hereof to the Effective Time, (i) provide Parent and its
Representatives with full access, upon reasonable prior notice
and during normal business hours, to all officers, employees,
agents and accountants of the Company and its Subsidiaries and
their respective assets, properties, books and records, but only
to the extent that such access does not unreasonably interfere
with the business and operations of the Company and its
Subsidiaries, and (ii) furnish promptly to such persons (x) a
copy of each report, statement, schedule and other document filed
or received by the Company or any of its Subsidiaries pursuant to
the requirements of federal or state securities laws or filed
with any other Governmental or Regulatory Authority, and (y) all
other information and data (including, without limitation, copies
of Contracts, Company Employee Benefit Plans or Parent Employee
Benefit Plans, as the case may be, and other books and records)
concerning the business and operations of the Company or Parent,
as the case may be, and its Subsidiaries as the other party or
any of such other persons reasonably may request. All such
access shall be limited to the extent necessary to comply with
restrictions of the United States applicable to any such
information. No investigation pursuant to this paragraph or
otherwise shall affect any representation or warranty contained
in this Agreement or any condition to the obligations of the
parties hereto.
(b) Each party will hold, and will use its best
efforts to cause its Representatives to hold, in strict
confidence, unless (i) compelled to disclose by judicial or
administrative process or by other requirements of applicable
Laws of Governmental or Regulatory Authorities (including,
without limitation, in connection with obtaining the necessary
approvals of this Agreement or the transactions contemplated
hereby of Governmental or Regulatory Authorities), or (ii)
disclosed in an action or proceeding brought by a party hereto in
pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other
party and its Subsidiaries furnished to it by such other party or
its Representatives in connection with this Agreement or the
transactions contemplated hereby, except to the extent that such
documents or information can be shown to have been (x) previously
known by the Company or Parent, as the case may be, or its
Representatives, (y) in the public domain (either prior to or
after the furnishing of such documents or information hereunder)
through no fault of the Company or Parent, as the case may be,
and its Representatives or (z) later acquired by the Company or
Parent, as the case may be, or its Representatives from another
source if the recipient is not aware that such source is under an
obligation to the Company or Parent, as the case may be, to keep
such documents and information confidential. In the event that
this Agreement is terminated without the transactions
contemplated hereby having been consummated, upon the request of
the Company or Parent, as the case may be, the other party will,
and will cause its Representatives to, promptly (and in no event
later than five (5) days after such request) redeliver or cause
to be redelivered all copies of documents and information
furnished by the Company or Parent, as the case may be, or its
Representatives to such party and its Representatives in
connection with this Agreement or the transactions contemplated
hereby and destroy or cause to be destroyed all notes, memoranda,
summaries, analyses, compilations and other writings related
thereto or based thereon prepared by the Company or Parent, as
the case may be, or its Representatives.
6.02 Preparation of Proxy Statement. The Company
shall prepare and file with the SEC as soon as reasonably
practicable after the date hereof the Proxy Statement. Parent,
Sub and the Company shall cooperate with each other in the
preparation of the Proxy Statement and any other such documents
and any amendments or supplements thereto, and each shall notify
the other of the receipt of any comments of the SEC with respect
to the Proxy Statement and of any requests by the SEC or any
33
other person or entity for any amendments or supplements thereto
or for additional information, and shall provide to the other
promptly copies of all correspondence between Parent or the
Company, as the case may be, or any of its representatives with
respect to the Proxy Statement or any other such documents. Each
of the Company, Parent and Sub agrees to use its best efforts,
after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC, and to
cause the Proxy Statement to be mailed to the holders of Company
Common Stock entitled to vote at the meeting of the stockholders
of the Company at the earliest practicable time.
6.03 Approval of Stockholders.
(a) The Company shall, through its Board of Directors,
duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the
purpose of voting on the adoption of this Agreement (the "Company
Stockholders' Approval") as soon as reasonably practicable after
the date hereof. Subject to the exercise of fiduciary
obligations under applicable law as advised by independent
counsel, the Company shall, through its Board of Directors,
include in the Proxy Statement the recommendation of the Board of
Directors of the Company that the stockholders of the Company
adopt this Agreement, and shall use its best efforts to obtain
such adoption. At such meeting, Parent shall, and shall cause
its Subsidiaries to, cause all shares of Company Common Stock
then owned by Parent or any such Subsidiary to be voted in favor
of the adoption of this Agreement.
(b) Parent and the Company shall use their reasonable
best efforts to cause the Company Stockholders' Meeting to be
held as soon as practicable after the date hereof.
6.04 Auditor's Letters. The Company shall cause to be
delivered to Parent and Sub a letter of Xxxxxx Xxxxxxxx & Co.
L.L.P., the Company's independent auditors, dated the Closing
Date, substantially in the form and to the effect of Exhibit B
hereto.
6.05 Regulatory and Other Approvals. Subject to the
terms and conditions of this Agreement and without limiting the
provisions of Sections 6.02 and 6.03, each of the Company and
Parent will proceed diligently and in good faith and will use all
commercially reasonable efforts to do, or cause to be done, all
things necessary, proper or advisable to, as promptly as
practicable, (a) obtain all consents, approvals or actions of,
make all filings with and give all notices to Governmental or
Regulatory Authorities or any other public or private third
parties required of Parent, the Company or any of their
Subsidiaries to consummate the Merger and the other matters
contemplated hereby, and (b) provide such other information and
communications to such Governmental or Regulatory Authorities or
other public or private third parties as the other party or such
Governmental or Regulatory Authorities or other public or private
third parties may reasonably request in connection therewith. In
addition to and not in limitation of the foregoing, (i) each of
the parties will (x) take promptly all actions necessary to make
the filings required of Parent and the Company or their
affiliates under the HSR Act, (y) comply at the earliest
practicable date with any request for additional information
received by such party or its affiliates from the Federal Trade
Commission (the "FTC") or the Antitrust Division of the
Department of Justice (the "Antitrust Division") pursuant to the
HSR Act, and (z) cooperate with the other party in connection
with such party's filings under the HSR Act and in connection
with resolving any investigation or other inquiry concerning the
Merger or the other matters contemplated by this Agreement
commenced by either the FTC or the Antitrust Division or state
attorneys general.
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6.06 Company Stock Plans.
(a) The Company will use reasonable diligence and
timely efforts to cause vested stock options to be exercised
prior to the Closing;
(b) At the Effective Time, each unexercised option to
purchase shares of Company Common Stock (a "Company Stock
Option") under the Company Option Plans shall be deemed to
constitute an option to acquire, on the same terms and conditions
as were applicable under such Company Stock Option, a number of
shares of Parent Common Stock equal to the product (rounded up to
the nearest whole share) of (i) the Conversion Number and (ii)
the number of shares of the Company Common Stock issuable upon
exercise of the option immediately prior to the Effective Time;
and the option exercise price per share of Parent Common Stock at
which such option is exercisable shall be the amount (rounded
down to the nearest whole cent) obtained by dividing (iii) the
option exercise price per share of Company Common Stock at which
such option is exercisable immediately prior to the Effective
Time by (iv) the Conversion Number; provided, however, that,
the option price, the number of shares purchasable pursuant to
such option and the terms and conditions of exercise of such
option shall be determined in order to comply with Section
424(b) of the Code.
(c) As soon as practicable after the Effective Time,
Parent shall deliver to the participants in the Company Option
Plans appropriate notices setting forth such participants' rights
pursuant thereto and the grants pursuant to the Company Option
Plans shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section after giving
effect to the Merger). Parent shall comply with the terms of the
Company Option Plans and ensure, to the extent required by, and
subject to the provisions of, the Company Option Plans, that the
Company Stock Options which qualified as qualified stock options
prior to the Effective Time continue to qualify as qualified
stock options after the Effective Time.
(d) Parent shall take all corporate action necessary
to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery under the Company Option Plans as
adjusted in accordance with this Section. As soon as practicable
after the Effective Time, Parent shall file a registration
statement on Form S-8 promulgated by the SEC under the Securities
Act (or any successor or other appropriate form) with respect to
the Parent Common Stock subject to such options and shall use its
best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for
so long as such options remain outstanding. With respect to
those individuals who subsequent to the Merger will be subject to
the reporting requirements under Section 16(a) of the Exchange
Act, where applicable, Parent shall administer the Company Option
Plans in a manner that complies with Rule 16b-3 promulgated under
the Exchange Act.
6.07 Directors' and Officers' Indemnification and
Insurance. (a) The Company, and from and after the Effective
Time Parent and the Surviving Corporation (each, an "Indemnifying
Party"), shall indemnify, defend and hold harmless each person
who is now, or has been at any time prior to the date hereof or
who becomes prior to the Effective Time, a director, officer,
employee or agent of the Company or any of its Subsidiaries (the
"Indemnified Parties") against (i) all losses, claims, damages,
costs and expenses (including attorneys' fees), liabilities,
judgments and settlement amounts that are paid or incurred in
connection with any claim, action, suit, proceeding or
investigation (whether civil, criminal, administrative or
investigative and whether asserted or claimed prior to, at or
after the Effective Time) that is based in whole or in part on,
or arises in whole or in part out of, the fact that such
Indemnified Party is or was a director, officer, employee or
agent of the Company or any of its Subsidiaries and relates to or
arises out of any action or omission occurring at or prior to the
Effective Time ("Indemnified Liabilities"), to the extent the
Company would have been permitted under applicable law to
35
indemnify its own directors, officers, employees or agents, as
the case may be, without giving effect to any limitations imposed
in Section 317(c) of the California Corporations Code, and (ii)
all Indemnified Liabilities based in substantial part on, or
arising in substantial part out of, or pertaining to this
Agreement or the transactions contemplated hereby, in each case
to the full extent a corporation is permitted, without giving
effect to any limitations imposed in Section 317(c) of the
California Corporations Code, under applicable law to indemnify
its own directors, officers, employees or agents, as the case may
be; provided that no Indemnifying Party shall be liable for any
settlement of any claim effected without its written consent,
which consent shall not be unreasonably withheld. Without
limiting the foregoing, in the event that any such claim, action,
suit, proceeding or investigation is brought against any
Indemnified Party (whether arising prior to or after the
Effective Time), (w) the Indemnifying Parties will pay expenses
in advance of the final disposition of any such claim, action
suit, proceeding or investigation to each Indemnified Party to
the full extent permitted by applicable law provided that the
person to whom expenses are advanced provides an undertaking to
repay such advance if it is ultimately determined that such
person is not entitled to indemnification; (x) the Indemnified
Parties shall retain counsel reasonably satisfactory to the
Indemnifying Parties; (y) the Indemnifying Parties shall pay all
reasonable fees and expenses of such counsel for the Indemnified
Parties (subject to the final sentence of this paragraph)
promptly as statements therefor are received; and (z) the
Indemnifying Parties shall use all commercially reasonable
efforts to assist in the vigorous defense of any such matter.
Any Indemnified Party wishing to claim indemnification under this
Section, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify the Indemnifying
Parties, but the failure so to notify an Indemnifying Party shall
not relieve it from any liability which it may have under this
paragraph except to the extent such failure irreparably
prejudices such party. The Indemnified Parties as a group may
retain only one law firm to represent them with respect to each
such matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties.
(b) Parent and the Surviving Corporation shall, until
the first anniversary of the Effective Time, cause coverage to be
continued under, to the extent available, on commercially
reasonable terms, the policies of directors' and officers'
liability insurance maintained by the Company and its
Subsidiaries as of the date hereof with respect to claims arising
from facts or events within the coverage of such policies that
occurred on or prior to the Effective Time; provided that in no
event shall Parent or the Surviving Corporation be obligated to
expend in order to maintain or procure insurance coverage
pursuant to this paragraph any amount per annum in excess of one
hundred percent (100%) of the aggregate premiums paid by the
Company and its Subsidiaries in 1995 (on an annualized basis) for
such purpose; Parent and Surviving Corporation may, in lieu of
continuing such current policies or coverage, cause comparable
coverage to be provided under another policy or policies so long
as the material terms or coverage thereof are no less
advantageous than such existing policies.
(c) The provisions of this Section are intended to be
for the benefit of, and shall be enforceable by, each Indemnified
Party and each party entitled to insurance coverage under
paragraph (b) above, respectively, and his or her heirs and legal
representatives, and shall be in addition to any other rights an
Indemnified Party may have under the certificate or articles of
incorporation or bylaws of the Surviving Corporation or any of
its Subsidiaries, under the CGCL or otherwise.
(d) In the event the Company, Parent or the Surviving
Corporation or any of their respective successors or assigns (i)
consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors
and assigns of the Company, Parent or the Surviving Corporation,
as the case may be, or at Parent's option, Parent, shall assume
the obligations set forth in paragraphs (a) and (b) of this
Section.
36
6.08 Expenses. Except as set forth in Section 8.02,
whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
cost or expense.
6.09 Brokers or Finders. Each of Parent and the
Company represents, as to itself and its affiliates, that no
agent, broker, investment banker, financial advisor or other firm
or person is or will be entitled to any broker's or finder's fee
or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement except X.X.
Xxxxxxx & Sons, Inc., whose fees and expenses will be paid by the
Company in accordance with the Company's agreement with such
firm, and each of Parent and the Company shall indemnify and hold
the other harmless from and against any and all claims,
liabilities or obligations with respect to any other such fee or
commission or expenses related thereto asserted by any person on
the basis of any act or statement alleged to have been made by
such party or its affiliate.
6.10 Standstill. Parent agrees that until the
expiration of three years from the date of termination of this
Agreement, without the prior written consent of the Company, it
will not (a) in any manner acquire, agree to acquire or make any
proposal to acquire, directly or indirectly (i) a substantial
portion of the assets of the Company and its Subsidiaries taken
as a whole or (ii) five percent (5%) or more of the issued and
outstanding shares of Company Common Stock, (b) make or in any
way participate, directly or indirectly, in any "solicitation" of
"proxies" (as such terms are used in the proxy rules of the SEC)
to vote, or seek to advise or influence any person with respect
to the voting of, any voting securities of the Company or any of
its Subsidiaries or (c) form, join or in any way participate in a
"group" (within the meaning of Section 13(d) of the Exchange Act)
with respect to any voting securities of the Company or any of
its Subsidiaries.
6.11 Notice and Cure. Each of Parent and the Company
will notify the other in writing of, and contemporaneously will
provide the other with true and complete copies of any and all
information or documents relating to, and will use all
commercially reasonable efforts to cure before the Closing, any
event, transaction or circumstance, as soon as practical after it
becomes known to such party, occurring after the date of this
Agreement that causes or will cause any covenant or agreement of
Parent or the Company, as the case may be, under this Agreement
to be breached or that renders or will render untrue any
representation or warranty of Parent or the Company, as the case
may be, contained in this Agreement as if the same were made on
or as of the date of such event, transaction or circumstance.
Each of Parent and the Company also will notify the other in
writing of, and will use all commercially reasonable efforts to
cure, before the Closing, any violation or breach, as soon as
practical after it becomes known to such party, of any
representation, warranty, covenant or agreement made by Parent or
the Company, as the case may be, in this Agreement, whether
occurring or arising prior to, on or after the date of this
Agreement. No notice given pursuant to this Section shall have
any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of
determining satisfaction of any condition contained herein.
6.12 Fulfillment of Conditions. Subject to the terms
and conditions of this Agreement, each of Parent and the Company
will take or cause to be taken all commercially reasonable steps
necessary or desirable and proceed diligently and in good faith
to satisfy each condition to the other's obligations contained in
this Agreement and to consummate and make effective the
transactions contemplated by this Agreement, and neither Parent
nor the Company will, nor will it permit any of its Subsidiaries
to, take or fail to take any action that could be reasonably
expected to result in the nonfulfillment of any such condition.
37
ARTICLE VII
CONDITIONS
7.01 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect
the Merger is subject to the fulfillment, at or prior to the
Closing, of each of the following conditions:
(a) Stockholder Approval. This Agreement shall have
been adopted by the requisite vote of the stockholders of the
Company under the CGCL and the Company's Articles of
Incorporation. This Agreement shall have been adopted by the
requisite vote of Parent as the sole stockholder of Sub.
(b) Exon-Xxxxxx Amendment. Parent shall have received
written notice from CFIUS of its determination pursuant to the
Exon-Xxxxxx Amendment not to undertake an investigation of the
transactions contemplated by this Agreement.
(c) HSR Act. Any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the
HSR Act shall have expired or been terminated.
(d) No Injunctions or Restraints. No court of
competent jurisdiction or other competent Governmental or
Regulatory Authority shall have enacted, issued, promulgated,
enforced or entered any Law or Order (whether temporary,
preliminary or permanent) which is then in effect and has the
effect of making illegal or otherwise restricting, preventing or
prohibiting consummation of the Merger or the other transactions
contemplated by this Agreement.
(e) Governmental and Regulatory Consents and
Approvals. Other than the filing provided for by Section 1.02,
all consents, approvals and actions of, filings with and notices
to any Governmental or Regulatory Authority or any other public
or private third parties required of Parent, the Company or any
of their Subsidiaries to consummate the Merger and the other
matters contemplated hereby, the failure of which to be obtained
or taken could be reasonably expected to have a material adverse
effect on Parent and its Subsidiaries or the Surviving
Corporation and its Subsidiaries, in each case taken as a whole,
or on the ability of Parent and the Company to consummate the
transactions contemplated hereby shall have been obtained, all in
form and substance reasonably satisfactory to Parent and the
Company and no such consent, approval or action shall contain any
term or condition which could be reasonably expected to result in
a material diminution of the benefits of the Merger to Parent or
to the stockholders of the Company.
(f) LCT Disposition. The Company shall have disposed
(or shall concurrently with the Closing dispose) of its interest
in LCT or the Company shall have effected (or shall concurrently
with the Closing effect) the spin-off of its interest in LCT to
the Company's shareholders.
7.02 Conditions to Obligation of Parent and Sub to
Effect the Merger. The obligation of Parent and Sub to effect
the Merger is further subject to the fulfillment, at or prior to
the Closing, of each of the following additional conditions (all
or any of which may be waived in whole or in part by Parent and
Sub in their sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by the Company in this
Agreement and including those contained in the Company's
Disclosure Letter shall be true and correct as of the Closing
Date as though the Closing Date was substituted for the date of
this Agreement throughout such representations and warranties,
in all respects material to the validity and enforceability of
this Agreement and to the Company and its Subsidiaries taken as a
38
whole, except as affected by the transactions contemplated by
this Agreement, and the Company shall have delivered to Parent a
certificate, dated the Closing Date and executed on behalf of the
Company by its Chairman of the Board, President or any Vice
President, to such effect.
(b) Performance of Obligations. The Company shall
have performed and complied with, in all material respects, each
agreement, covenant and obligation required by this Agreement to
be so performed or complied with by the Company at or prior to
the Closing, and the Company shall have delivered to Parent a
certificate, dated the Closing Date and executed on behalf of the
Company by its Chairman of the Board, President or any Vice
President, to such effect.
(c) Orders and Laws. There shall not have been
issued, enacted, promulgated or deemed applicable to Parent, the
Surviving Corporation, any of their respective Subsidiaries or
the transactions contemplated by this Agreement any Order or Law
of any Governmental or Regulatory Authority which is then in
effect and which could be reasonably expected to result in a
material diminution of the benefits of the Merger to Parent, and
there shall not be pending or threatened on the Closing Date any
action, suit or proceeding in, before or by any Governmental or
Regulatory Authority which could be reasonably expected to result
in any such issuance, enactment, promulgation or deemed
applicability of any such Order or Law or of any Order or Law
referred to in Section 7.01(e).
(d) Governmental and Regulatory Consents and
Approvals. Other than the filing provided for by Section 1.02,
all consents, approvals and actions of, filings with and notices
to any Governmental or Regulatory Authority, the failure of which
to be obtained or taken could be reasonably expected to have a
material adverse effect on Parent and its Subsidiaries or the
Surviving Corporation and its Subsidiaries, in each case taken as
a whole, or on the ability of Parent and the Company to
consummate the transactions contemplated hereby shall have been
obtained.
(e) Contractual Consents. The Company and its
Subsidiaries shall have received all consents (or in lieu thereof
waivers) from parties to each Contract disclosed pursuant to
Section 3.04(b).
(f) Opinion of Counsel. Parent and Sub shall have
received the opinion of Nida & Xxxxxxx, counsel to the Company,
dated the Closing Date, in form and substance reasonably
satisfactory to Parent.
(g) Auditors' Letter. Parent and Sub shall have
received the letters of Xxxxxx Xxxxxxxx & Co. L.L.P., the
Company's independent auditors, to be delivered in accordance
with Section 6.04.
(h) Dissenting Shares. The aggregate number of
Dissenting Shares shall not exceed 9.99% of the total number of
shares of Company Common Stock outstanding on the Closing Date.
(i) Proceedings. All proceedings to be taken on the
part of the Company in connection with the transactions
contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to Parent,
and Parent shall have received copies of all such documents and
other evidences as Parent may reasonably request in order to
establish the consummation of such transactions and the taking of
all proceedings in connection therewith.
(j) Certain Options. The options held by Directors of
the Company shall have been exercised or canceled.
7.03 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger
is further subject to the fulfillment, at or prior to the
39
Closing, of each of the following additional conditions (all or
any of which may be waived in whole or in part by the Company in
its sole discretion):
(a) Representations and Warranties. Each of the
representations and warranties made by Parent and Sub in this
Agreement shall be true and correct as of the Closing Date as
though made on and as of the Closing Date or, in the case of
representations and warranties made as of a specified date
earlier than the Closing Date, on and as of such earlier date, in
all respects material to the validity and enforceability of this
Agreement and to Parent its Subsidiaries taken as a whole, and
Parent and Sub shall each have delivered to the Company a
certificate, dated the Closing Date and executed on behalf of
Parent by its Chairman of the Board, President or any Vice
President and on behalf of Sub by its Chairman of the Board,
President or any Vice President, to such effect.
(b) Performance of Obligations. Parent and Sub shall
have performed and complied with, in all material respects, each
agreement, covenant and obligation required by this Agreement to
be so performed or complied with by Parent or Sub at or prior to
the Closing, and Parent and Sub shall each have delivered to the
Company a certificate, dated the Closing Date and executed on
behalf of Parent by its Chairman of the Board, President or any
Vice President and on behalf of Sub by its Chairman of the Board,
President or any Vice President, to such effect.
(c) Opinion of Counsel. The Company shall have
received the opinion of Xxx Xxxxxxxx, Esq., counsel to Parent and
Sub, dated the Closing Date, substantially in form and substance
reasonably satisfactory to the Company.
(d) Financial Advisor Opinion. The letter from X.X.
Xxxxxxx & Sons, Inc. referred to in Section 3.20 shall not have
been withdrawn.
(e) Proceedings. All proceedings to be taken on the
part of Parent and Sub in connection with the transactions
contemplated by this Agreement and all documents incident thereto
shall be reasonably satisfactory in form and substance to the
Company, and the Company shall have received copies of all such
documents and other evidences as the Company may reasonably
request in order to establish the consummation of such
transactions and the taking of all proceedings in connection
therewith.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.01 Termination. This Agreement may be terminated,
and the transactions contemplated hereby may be abandoned, at any
time prior to the Effective Time, whether prior to or after the
Company Stockholders' Approval:
(a) by mutual written agreement of the parties hereto
duly authorized by action taken by or on behalf of their
respective Boards of Directors;
(b) by either the Company or Parent upon notification
to the non-terminating party by the terminating party:
(i) at any time after March 29, 1996
if the Merger shall not have been consummated on
or prior to such date and such failure to
consummate the Merger is not caused by a breach
of this Agreement by the terminating party;
40
(ii) if the Company Stockholders'
Approval shall not be obtained by reason of the
failure to obtain the requisite vote upon a
motion to so approve at a meeting of such
stockholders, or any adjournment thereof, called
therefor;
(iii) if any Governmental or Regulatory
Authority, the taking of action by which is a
condition to the obligations of either the
Company or Parent to consummate the transactions
contemplated hereby, shall have determined not to
take such action and all appeals of such
determination shall have been taken and have been
unsuccessful;
(iv) if there has been a material
breach of any representation, warranty, covenant
or agreement on the part of the non-terminating
party set forth in this Agreement which breach
has not been cured within ten (10) business days
following receipt by the non-terminating party of
notice of such breach from the terminating party
or assurance of such cure reasonably satisfactory
to the terminating party shall not have been
given by or on behalf of the non-terminating
party within such ten (10) business day period;
or
(v) if any court of competent
jurisdiction or other competent Governmental or
Regulatory Authority shall have issued an Order
making illegal or otherwise restricting,
preventing or prohibiting the Merger and such
Order shall have become final and nonappealable;
(c) by either the Company or Parent if the Company or
its stockholders receive a proposal or offer for an Acquisition
Transaction in connection with which the Board of Directors of
the Company exercises the right specified in clause (iv) of
Section 5.02; or
(d) by either the Company or Parent if the condition
specified in Section 7.03(d) shall not be either satisfied or
waived.
8.02 Effect of Termination.
(a) If this Agreement is validly terminated by either
the Company or Parent pursuant to Section 8.01, this Agreement
will forthwith become null and void and there will be no
liability or obligation on the part of either the Company or
Parent (or any of their respective Representatives or
affiliates), except (i) that the provisions of Sections 6.01(b),
6.08, 6.09 and 6.10 will continue to apply following any such
termination, provided, however, that the provisions of Section
6.10 shall not apply following a termination pursuant to Section
8.01(c), (ii) that nothing contained herein shall relieve any
party hereto from liability for breach of its representations,
warranties, covenants or agreements contained in this Agreement
and (iii) as provided in paragraph (b) below.
(b) In the event that (i) either Parent or the Company
terminates this Agreement pursuant to Section 8.01(b)(iv), (c),
or (d); or (ii) either Parent or the Company terminates this
Agreement pursuant to Section 8.01(b)(ii) following a failure of
the stockholders of the Company to approve this Agreement (unless
in any case described in clauses (i) or (ii) due to a breach of
this Agreement by Parent) and, before the Company Stockholders'
Meeting there shall have been (A) a Trigger Event (as defined
below) or (B) a proposal or offer for an Acquisition Transaction
which at the time of the Company Stockholders' Meeting shall not
have been (I) rejected by the Company and (II) withdrawn by the
Potential Acquiror, then the Company shall, within ten (10)
business days after receipt of a request from Parent, pay to
41
Parent in cash (x) a termination fee of five percent (5%) of the
amount equal to the product of the Conversion Amount and the
number of outstanding shares of Company Common Stock as provided
in Section 3.02(a) and (y) an amount equal to all documented out-
of-pocket expenses and fees incurred by Parent in connection with
this Agreement and the transactions contemplated hereby
(including, without limitation, fees and expenses payable to all
banks, investment banking firms and other financial institutions
and persons and their respective agents and counsel for acting as
Parent's financial advisor with respect to, or arranging or
committing to provide or providing any financing for, the
Merger), provided that in no event shall the amount of such
reimbursable fees and expenses exceed $250,000 in the aggregate.
A "Trigger Event" shall have occurred if (i) any person acquires
securities representing beneficial ownership (within the meaning
of Rule 13d-3 under the Exchange Act) of ten percent (10%) or
more, in addition to shares presently held by such person, or
commences a tender or exchange offer following which the offeror
and its affiliates would beneficially own securities representing
twenty-five percent (25%) or more, of the voting power of the
Company.
(c) In the event the condition specified in Section
7.01(f) shall not be either satisfied or waived by the close of
business on March 29, 1996, the Company shall pay to Parent the
termination fee provided for in the foregoing Section 8.02(b)
without regard to whether or not any Trigger Event or proposal or
offer shall have occurred.
8.03 Amendment. This Agreement may be amended,
supplemented or modified by action taken by or on behalf of the
respective Boards of Directors of the parties hereto at any time
prior to the Effective Time, whether prior to or after adoption
of this Agreement at the Company Stockholders' Meeting, but after
such adoption and approval only to the extent permitted by
applicable law. No such amendment, supplement or modification
shall be effective unless set forth in a written instrument duly
executed by or on behalf of each party hereto.
8.04 Waiver. At any time prior to the Effective Time
any party hereto, by action taken by or on behalf of its Board of
Directors, may to the extent permitted by applicable law
(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 hereto contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any of the
covenants, agreements or conditions of the other parties hereto
contained herein. No such extension or waiver shall be effective
unless set forth in a written instrument duly executed by or on
behalf of the party extending the time of performance or waiving
any such inaccuracy or non-compliance. No waiver by any party of
any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the
same or any other term or condition of this Agreement on any
future occasion.
ARTICLE IX
GENERAL PROVISIONS
9.01 Non-Survival of Representations, Warranties,
Covenants and Agreements. The representations, warranties,
covenants and agreements contained in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive
the Merger but shall terminate at the Effective Time, except for
the agreements contained in Article II and in Sections 6.01(b),
6.06, 6.07, 6.08 and 6.09, which shall survive the Effective
Time.
9.02 Knowledge. With respect to any representations
or warranties contained herein which are made to the knowledge of
the Company or Parent or any of their respective Subsidiaries, as
the case may be, the knowledge of the officers and directors of
the Company or Parent, as the case may be, and of the officers
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and directors of its respective Subsidiaries, shall be imputed to
the Company or Parent, as the case may be, and such Subsidiaries.
9.03 Notices. All notices, requests and other
communications hereunder must be in writing and will be deemed to
have been duly given only if delivered personally or by facsimile
transmission or mailed (first class postage prepaid) to the
parties at the following addresses or facsimile numbers:
If to Parent or Sub, to:
Logicon, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile No.: 000-000-0000
Attn: Xxx Xxxxxxxx, Esq.
If to the Company, to:
Geodynamics Corporation
00000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: 000-000-0000
Attn: President
with a copy to:
Nida & Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxx Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No.: 000-000-0000
Attn: Xxxxxx X. Xxxx, Esq.
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section,
be deemed given upon delivery, (ii) if delivered by facsimile
transmission to the facsimile number as provided in this Section,
be deemed given upon receipt, and (iii) if delivered by mail in
the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received
by any other person to whom a copy of such notice, request or
other communication is to be delivered pursuant to this Section).
Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that
party by giving notice specifying such change to the other
parties hereto.
9.04 Entire Agreement. This Agreement supersedes all
prior discussions and agreements among the parties hereto with
respect to the subject matter hereof, including, without
limitation, that certain confidentiality agreement between the
Company and Parent dated August 8, 1995, and contains the sole
and entire agreement among the parties hereto with respect to the
subject matter hereof.
9.05 Public Announcements. Except as otherwise
required by law or the rules of any applicable securities
exchange or national market system, so long as this Agreement is
in effect, Parent and the Company will not, and will not permit
any of their respective Representatives to, issue or cause the
publication of any press release or make any other public
announcement with respect to the transactions contemplated by
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this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld. Parent and the
Company will cooperate with each other in the development and
distribution of all press releases and other public announcements
with respect to this Agreement and the transactions contemplated
hereby, and will furnish the other with drafts of any such
releases and announcements as far in advance as practicable.
9.06 No Third Party Beneficiary. The terms and
provisions of this Agreement are intended solely for the benefit
of each party hereto and their respective successors or permitted
assigns, and except as provided in Sections 6.06, 6.07 and 6.08
(which are intended to be for the benefit of the persons entitled
to therein, and may be enforced by any of such persons), it is
not the intention of the parties to confer third-party
beneficiary rights upon any other person.
9.07 No Assignment; Binding Effect. Neither this
Agreement nor any right, interest or obligation hereunder may be
assigned by any party hereto without the prior written consent of
the other parties hereto and any attempt to do so will be void,
except that Sub may assign any or all of its rights, interests
and obligations hereunder to another direct or indirect wholly-
owned Subsidiary of Parent, provided that any such Subsidiary
agrees in writing to be bound by all of the terms, conditions and
provisions contained herein. Subject to the preceding sentence,
this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors
and assigns.
9.08 Headings. The headings used in this Agreement
have been inserted for convenience of reference only and do not
define or limit the provisions hereof.
9.09 Invalid Provisions. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under
any present or future law, and if the rights or obligations of
any party hereto under this Agreement will not be materially and
adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as
if such illegal, invalid or unenforceable provision had never
comprised a part hereof, (iii) the remaining provisions of this
Agreement will remain in full force and effect and will not be
affected by the illegal, invalid or unenforceable provision or by
its severance herefrom and (iv) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as
a part of this Agreement a legal, valid and enforceable provision
as similar in terms to such illegal, invalid or unenforceable
provision as may be possible.
9.10 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
California applicable to a contract executed and performed in
such State, without giving effect to the conflicts of laws
principles thereof.
9.11 Counterparts. This Agreement may be executed in
any number of counterparts, each of which will be deemed an
original, but all of which together will constitute one and the
same instrument.
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IN WITNESS WHEREOF, each party hereto has caused this
Agreement to be signed by its officer thereunto duly authorized
as of the date first above written.
Attest: LOGICON, INC.
/s/ E. Xxxxxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
Secretary Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
Attest: LIN, INC.
/s/ E. Xxxxxxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
Secretary Name: Xxxx X. Xxxxxxxx
Title: Chief Executive Officer
Attest: GEODYNAMICS CORPORATION
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
Chief Financial Officer Name: Xxxxx X. Xxxxxx
Title: Chief Executive Officer
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