EXECUTION COPY
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
CRANE CO.,
STC MERGER CO.
AND
SIGNAL TECHNOLOGY CORPORATION
DATED APRIL 16, 2003
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I THE OFFER AND THE MERGER...................................................................1
SECTION 1.01. The Offer..................................................................1
SECTION 1.02. Company Actions............................................................3
SECTION 1.03. Directors..................................................................4
SECTION 1.04. The Merger.................................................................5
SECTION 1.05. Effective Time; Closing....................................................6
SECTION 1.06. Effect of the Merger.......................................................6
SECTION 1.07. Certificate of Incorporation; By-laws......................................6
SECTION 1.08. Directors and Officers.....................................................6
ARTICLE II CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES....,...................................6
SECTION 2.01. Conversion Of Securities...................................................6
SECTION 2.02. Exchange of Certificates for Cash..........................................7
SECTION 2.03. Stock Transfer Books.......................................................9
SECTION 2.04. Stock Options..............................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY...........................................11
SECTION 3.01. Organization and Qualification; Subsidiaries..............................11
SECTION 3.02. Certificate of Incorporation and By-laws..................................11
SECTION 3.03. Capitalization............................................................11
SECTION 3.04. Authority Relative to this Agreement......................................12
SECTION 3.05. No Conflict; Required Filings and Consents................................13
SECTION 3.06. Permits; Compliance with Law..............................................13
SECTION 3.07. SEC Filings; Financial Statements.........................................14
SECTION 3.08. Absence of Certain Changes or Events......................................15
SECTION 3.09. Absence of Litigation.....................................................16
SECTION 3.10. Employee Benefit Plans....................................................16
SECTION 3.11. Labor Matters.............................................................17
SECTION 3.12. Real Property and Leases..................................................17
SECTION 3.13. Intellectual Property.....................................................17
SECTION 3.14. Taxes.....................................................................18
SECTION 3.15. Environmental Matters.....................................................19
SECTION 3.16. Material Contracts; Government Contracts..................................20
SECTION 3.17. Opinion of Financial Advisor..............................................23
SECTION 3.18. Vote Required.............................................................23
SECTION 3.19. Brokers; Fees and Expenses................................................23
SECTION 3.20. Customers.................................................................24
SECTION 3.21. Anti-Takeover Laws........................................................24
SECTION 3.22. Disclosure Documents......................................................24
SECTION 3.23. Certain Payments..........................................................25
-i-
Section Page
------- ----
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER...................................25
SECTION 4.01. Organization and Qualification............................................25
SECTION 4.02. Certificate of Incorporation and By-laws..................................26
SECTION 4.03. Authority Relative to this Agreement......................................26
SECTION 4.04. No Conflict; Required Filings and Consents................................26
SECTION 4.05. Absence of Litigation.....................................................27
SECTION 4.06. Brokers...................................................................27
SECTION 4.07. Funds.....................................................................27
SECTION 4.08. Disclosure Documents......................................................27
ARTICLE V CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME............................................28
SECTION 5.01. Conduct of Business by the Company Pending the Effective Time.............28
ARTICLE VI ADDITIONAL AGREEMENTS....................................................................30
SECTION 6.01. Company Stockholders' Meeting.............................................30
SECTION 6.02. Company Proxy Statement...................................................30
SECTION 6.03. Appropriate Action; Consents; Filings.....................................31
SECTION 6.04. Access to Information; Confidentiality....................................33
SECTION 6.05. No Solicitation of Competing Transactions.................................33
SECTION 6.06. Directors' and Officers' Insurance........................................35
SECTION 6.07. Notification of Certain Matters...........................................35
SECTION 6.08. Public Announcements......................................................36
SECTION 6.09. Bonus Plan................................................................36
SECTION 6.10. Stockholder Litigation....................................................37
SECTION 6.11. Termination of 401(k) Plan and Executive Deferred Compensation Plan.......37
SECTION 6.12. Additional Company SEC Reports; Financial Statements......................37
SECTION 6.13. Rights Agreement..........................................................37
SECTION 6.14. Limitation on Expenses....................................................38
ARTICLE VII CONDITIONS TO THE MERGER................................................................38
SECTION 7.01. Conditions to the Obligation of Each Party................................38
ARTICLE VIII TERMINATION; AMENDMENT; AND XXXXXX.....................................................38
SECTION 8.01. Termination...............................................................38
SECTION 8.02. Effects of Termination....................................................41
SECTION 8.03. Fees and Expenses.........................................................41
SECTION 8.04. Amendment.................................................................42
SECTION 8.05. Waiver....................................................................42
ARTICLE IX GENERAL PROVISIONS.......................................................................42
SECTION 9.01. Non-Survival of Representations, Warranties and Agreements................42
SECTION 9.02. Notices...................................................................42
-ii-
Section Page
------- ----
SECTION 9.03. Certain Definitions.......................................................43
SECTION 9.04. Severability..............................................................45
SECTION 9.05. Entire Agreement; Assignment..............................................45
SECTION 9.06. Parties in Interest.......................................................45
SECTION 9.07. Specific Performance......................................................45
SECTION 9.08. Governing Law; Exclusive Forum............................................45
SECTION 9.09. Consent to Jurisdiction and Venue.........................................45
SECTION 9.10. Headings..................................................................46
SECTION 9.11. Counterparts..............................................................46
-iii-
COMPANY DISCLOSURE SCHEDULE
---------------------------
Schedule No.
------------
2.04A Certain Company Options
2.04B Post-closing Option Payouts
3.01 Subsidiaries
3.03-1 Stock Options
3.03-2 Contractual Obligations with respect to Capital Stock
3.03-3 Liens on Capital Stock of Subsidiaries
3.05-1 No Conflicts
3.05-2 Required Filings and Consents
3.06-1 Company Authorizations
3.06-2 Company Permits
3.06-3 Conflicts with Law
3.06-4 Department of Defense Investigations
3.07 Amendments to Filed Documents
3.08 Changes or Events Since December 31, 2002
3.09 Litigation
3.10 Employee Benefit Plans
3.12-1 Real Property
3.12-2 Encumbrances on Assets
3.13-1 Company Intellectual Property Licenses
3.13-2 License or Use of Company Intellectual Property by Third Parties
3.14 Taxes
3.15 Environmental Matters
3.16-1 Material Contracts
3.16-2 Defaults Under Material Contracts
3.16-3 Material Contracts Not Provided to Parent
3.16-4 Government Contracts
3.16-5 Exceptions to Government Contracts
3.19 Actual Transaction Expenses
3.20 Customers
5.01 Conduct of Business Pending Merger
ANNEX
-----
A Conditions to the Offer
EXHIBIT
-------
1.07 Certificate of Incorporation of the Surviving Corporation
-iv-
INDEX OF DEFINED TERMS
----------------------
(Not Part of this Agreement)
----------------------------
Actual Transaction Expenses Section 3.19
affiliate Section 9.03(a)
Agreement Recitals
associate Section 9.03(b)
beneficial owner Section 9.03(c)
Blue Sky Laws Section 3.05(b)
business day Section 9.03(d)
Cap Section 8.03(b)
Certificate of Merger Section 1.05
Certificates Section 2.02(b)
Code Section 2.02(f)
Commencement Date Section 1.01(a)
Common Stock Recitals
Company Recitals
Company Disclosure Schedule Section 3.01
Company Intellectual Property Section 3.13
Company Material Adverse Effect Section 3.01
Company Options Section 2.04(a)
Company 2002 Balance Sheet Section 3.07(c)
Company Permits Section 3.06
Company Proxy Statement Section 3.22(b)
Company SEC Reports Section 3.07(a)
Company Stock Option Plans Section 2.04(a)
Company Stockholders' Meeting Section 6.01
Company Transaction Expenses Section 6.09
Competing Transaction Section 6.05
Confidentiality Agreement Section 6.04(a)
Continuing Directors Section 1.03(a)
control Section 9.03(e)
Current Offering Section 2.04(b)
DGCL Recitals
Dissenting Stockholder Section 2.01(e)
Dissenting Shares Section 2.01(e)
Effective Time Section 1.05
Employee Stock Purchase Plan Section 2.04(b)
Employment Contracts Section 3.10
Environmental Laws Section 3.15(a)
Environmental Permits Section 3.15(b)
ERISA Section 3.10
Exchange Act Section 1.01(a)
Exchange Agent Section 2.02(a)
I-1
Exchange Fund Section 2.02(a)
Expenses Section 8.03(b)
Government Section 3.16(c)
Government Contract Section 3.16(c)
Governmental Authority Section 9.03(f)
Hazardous Substances Section 3.15(a)
HSR Act Section 3.05(b)
Insured Parties Section 6.06(c)
Knowledge of the Company Section 9.03(g)
Laws Section 3.05(a)
Letter of Transmittal Section 1.01(d)
Material Contracts Section 3.16(a)
Merger Recitals
Merger Consideration Section 2.01(a)
Minimum Condition Annex A
Offer Recitals
Offer to Purchase Section 1.01(d)
Offer Documents Section 1.01(d)
Organizational Documents Section 3.02
Purchaser Recitals
Parent Recitals
Parent Material Adverse Effect Section 4.01
Per Share Amount Recitals
person Section 9.03(h)
Plans Section 3.10
Remaining Options Section 2.04(a)
Rights Agreement Section 6.13
Schedule 14D-9 Section 1.02(b)
Schedule TO Section 1.01(d)
SEC Section 1.01(c)
Shares Recitals
Special Purpose Entities Section 3.07(c)
Stock Incentive Plans Section 3.03
subsidiary/subsidiaries Section 9.03(i)
Subsidiary Section 3.01
Surviving Corporation Section 1.04
Tax Section 9.03(j)
Tender and Voting Agreement(s) Recitals
Termination Date Section 8.01(b)
Termination Fee Section 8.03(a)
Wachovia Securities Section 3.17
I-2
AGREEMENT AND PLAN OF MERGER, dated April 16, 2003 (this "Agreement"),
among Crane Co., a Delaware corporation ("Parent"), STC Merger Co., a Delaware
corporation and an indirect wholly owned subsidiary of Parent ("Purchaser"), and
Signal Technology Corporation, a Delaware corporation (the "Company").
WHEREAS, it is proposed that Purchaser will make a tender offer (as
such offer may be amended from time to time as permitted under this Agreement,
the "Offer") to purchase, on the terms of, and subject to the conditions set
forth on Annex A to, this Agreement, all of the issued and outstanding shares
(the "Shares") of the Company's common stock, par value $0.01 per share (the
"Common Stock"), for $13.25 per Share (such amount, or any other amount per
Share offered pursuant to the Offer in accordance with the terms of this
Agreement, being hereinafter referred to as the "Per Share Amount"), net to each
seller in cash;
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have each approved and declared advisable this Agreement, the Offer
and the merger (the "Merger") of Purchaser with and into the Company following
the consummation of the Offer, upon the terms and subject to the conditions of
this Agreement and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL");
WHEREAS, certain stockholders of the Company have each entered into a
Stockholder Tender and Voting Agreement (each, a "Tender and Voting Agreement"
and, collectively, the "Tender and Voting Agreements") with Parent and Purchaser
providing for, among other things, the agreement of such stockholders to tender
pursuant to the Offer or sell all Shares owned by them to Purchaser, and to vote
all Shares owned by them in favor of the Merger and this Agreement, subject to
the terms and conditions stated therein; and
WHEREAS, Parent, Purchaser and the Company desire to make certain
representations, warranties and agreements in connection with the Offer, the
Merger and the other transactions contemplated by this Agreement and to
prescribe various conditions to the Offer, the Merger and the other transactions
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, Parent,
Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
------------------------
SECTION 1.01. The Offer.
---------
(a) So long as this Agreement shall not have been terminated in
accordance with Article VIII hereof and none of the events or circumstances set
forth on Annex A hereto shall have occurred or be existing (unless, to the
extent permitted hereby, waived), as soon
as practicable after the date hereof (but in no event later than 10 days after
the date hereof), Parent shall cause Purchaser to, and Purchaser shall, commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) the Offer. The obligation of Purchaser to accept
for payment and pay for Shares tendered pursuant to the Offer shall be subject
only to the conditions set forth on Annex A hereto; provided, that Purchaser
may, in its sole discretion, increase the Per Share Amount and waive (to the
extent permissible) or make any other change to the terms and conditions of the
Offer, except that Purchaser shall not, without the prior written consent of the
Company: (i) waive or amend the Minimum Condition (as defined in Annex A
hereto); (ii) reduce the number of Shares sought to be purchased in the Offer;
(iii) reduce the Per Share Amount; (iv) modify or add to the conditions set
forth on Annex A hereto; (v) change the form of consideration payable in the
Offer; (vi) extend the expiration date of the Offer other than as permitted by
Section 1.01(c) hereof; or (vii) amend or alter any other term of the Offer in a
manner adverse to the holders of Shares. The date that the Offer is commenced in
accordance with this Section 1.01(a) is referred to herein as the "Commencement
Date."
(b) Subject to the terms and conditions of the Offer, Parent shall
cause Purchaser to, and Purchaser shall, accept for payment all Shares validly
tendered pursuant to the Offer (and not withdrawn) as soon as practicable after
Purchaser is permitted to do so under applicable Law (as defined in Section
3.05(a) hereof), and Parent shall cause Purchaser to pay for such Shares
promptly thereafter (and in any event in compliance with Rule 14e-1(c) under the
Exchange Act). Parent shall provide, or cause to be provided to Purchaser, on a
timely basis, the funds necessary to pay for any Shares that Purchaser accepts
or is obligated to accept for payment pursuant to the Offer.
(c) Subject to the terms and conditions hereof (including Annex A
hereto), the Offer shall expire at midnight, New York City time, on the date
that is twenty (20) business days after the Commencement Date; provided, that,
subject to the parties' rights to terminate this Agreement pursuant to Article
VIII hereof, (i) if, on any date as of which the Offer is otherwise scheduled to
expire, any condition(s) to the Offer has not been satisfied or waived,
Purchaser may, in its sole discretion, extend the Offer from time to time for
such period(s) of time as Purchaser reasonably determines to be necessary in
order to permit such condition(s) to be satisfied; (ii) if, on any date as of
which the Offer is otherwise scheduled to expire, any condition(s) to the Offer
has not been satisfied or waived, Purchaser shall, if the Company so demands in
writing at least two (2) business days prior to the otherwise scheduled
expiration date of the Offer, extend the Offer from time to time for up to such
period(s) of time thereafter as the Company reasonably determines to be
necessary in order to permit such condition(s) to be satisfied (but in no event
shall Purchaser be required to extend the Offer pursuant to this Section
1.01(c)(ii) for more than 35 days in the aggregate or, if earlier, beyond June
30, 2003 or to waive any condition(s) to the Offer); (iii) Purchaser shall
extend the Offer for any period of time that may be required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") applicable to the Offer; (iv) if, on any date as of which the Offer
is otherwise scheduled to expire, the Minimum Condition has been satisfied but
the sum of the number of Shares that have been validly tendered and not
withdrawn pursuant to the Offer plus the number of Shares owned by Purchaser or
Parent or any of their respective affiliates
-2-
represents less than ninety (90%) percent of the then outstanding Shares,
Purchaser may, from time to time, extend the Offer for up to an aggregate of
fifteen (15) business days thereafter; and (v) Purchaser may elect to provide
for a "subsequent offering period" in accordance with Rule 14d-11 under the
Exchange Act and in compliance with all other provisions of applicable
securities Laws for up to twenty (20) business days.
(d) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") and related letter of transmittal (the "Letter of
Transmittal") containing the relevant terms of this Agreement and the conditions
set forth on Annex A hereto. As soon as practicable on the Commencement Date,
Parent and Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, the "Schedule
TO") with respect to the Offer. The Schedule TO shall contain (included as an
exhibit) or shall incorporate by reference the Offer to Purchase, the Letter of
Transmittal, as well as all other information and exhibits required by
applicable Law (which Schedule TO, Offer to Purchase and related Letter of
Transmittal and such other information and exhibits, together with any
supplements or amendments thereto, are referred to herein collectively as the
"Offer Documents"). On the Commencement Date, Parent and Purchaser shall
disseminate the Offer Documents (other than the Schedule TO) to holders of
Shares. The Offer Documents shall comply in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder and
all other applicable Laws. Each of Parent, Purchaser and the Company shall
promptly correct or supplement any information provided by it in writing
specifically for inclusion in the Offer Documents that becomes false or
misleading in any material respect, and each of Parent and Purchaser shall take
all steps necessary to cause the Schedule TO, as so corrected or supplemented,
to be filed with the SEC, and the other Offer Documents, as so corrected or
supplemented, to be disseminated to holders of Shares, in each case as and to
the extent required by applicable Law. The Company and its counsel shall be
given a reasonable opportunity to review and timely comment upon the Offer
Documents prior to their being filed with the SEC. Parent and Purchaser shall
provide the Company and its counsel with any comments Parent, Purchaser or their
counsel may receive from the SEC or its staff with respect to the Offer
Documents promptly after receipt of such comments.
SECTION 1.02. Company Actions.
---------------
(a) Subject to Section 6.05 hereof, the Company hereby consents to
and approves the Offer. The Company hereby represents that its Board of
Directors, at a meeting duly called and held, adopted resolutions (i) approving
this Agreement and the transactions contemplated hereby, including the Offer,
the Merger and the Tender and Voting Agreements; (ii) declaring that this
Agreement is advisable; (iii) determining that the terms of the Offer and the
Merger are fair to, and in the best interests of, the Company and its
stockholders; (iv) recommending that the Company's stockholders accept the
Offer, tender their Shares pursuant to the Offer and approve and adopt this
Agreement and the Merger (if required by applicable Law); and (v) approving the
acquisition of Shares by Purchaser pursuant to the Offer and the other
transactions contemplated by this Agreement and the Tender and Voting
Agreements, including for purposes of Section 203 of the DGCL and Section 1 of
Chapter 110C of the Massachusetts General Laws.
-3-
(b) As soon as practicable on the Commencement Date, the Company
shall file with the SEC and (following or contemporaneously with the
dissemination of the Offer Documents (other than the Schedule TO)) disseminate
to the holders of Shares a Solicitation/Recommendation Statement on Schedule
14D-9 (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 shall comply in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder and
other applicable Laws and, subject to Section 6.05 hereof, shall contain the
recommendation of the Company's Board of Directors set forth in Section 1.02(a)
hereof. Each of Parent, Purchaser and the Company shall promptly correct or
supplement any information provided by it in writing specifically for inclusion
in the Schedule 14D-9 that becomes false or misleading in any material respect,
and the Company shall take all steps necessary to cause the Schedule 14D-9, as
so corrected or supplemented, to be filed with the SEC, and disseminated to
holders of Shares, in each case as and to the extent required by applicable Law.
Parent, Purchaser and their counsel shall be given a reasonable opportunity to
review and timely comment upon the Schedule 14D-9 prior to its being filed with
the SEC. The Company shall provide Parent, Purchaser and their counsel with any
comments the Company or its counsel may receive from the SEC or its staff with
respect to the Schedule 14D-9 promptly after receipt of such comments.
(c) In connection with the Offer, the Company will instruct its
transfer agent promptly to furnish to Purchaser a list, as of a recent date, of
the record holders of Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares, and recent
lists of security positions of Shares held in stock depositories. The Company
will furnish Purchaser with such additional information (including, but not
limited to, updated lists of holders of Shares and their addresses, mailing
labels and lists of security positions in electronic format, to the extent
available) and such other assistance as Parent or Purchaser or their agents may
reasonably request in communicating the Offer to the record and beneficial
holders of Shares. Subject to the requirements of applicable Law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Purchaser and Parent
and their agents shall, prior to the Effective Time (as defined in Section 1.05
hereof), hold in confidence the information contained in any such labels,
listings and files, will use such information only in connection with the Offer
and the Merger and, if this Agreement is terminated pursuant to Article VIII
hereof, shall deliver to the Company all copies of such information then in its
possession.
SECTION 1.03. Directors.
---------
(a) Subject to compliance with applicable Law, effective
immediately upon the payment by Purchaser for Shares pursuant to the Offer,
Parent shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of (i) the total number of directors on the Board of Directors of
the Company (determined after giving effect to the directors designated pursuant
to this sentence) and (ii) a fraction whose (x) numerator is the aggregate
number of Shares then beneficially owned by Parent and Purchaser and (y)
denominator is the total number of Shares then outstanding, and the Company
shall, upon the request of Parent, use its reasonable best efforts to cause
Parent's designees to be elected or appointed, including,
-4-
if necessary, increasing the number of directors and seeking the resignations of
one or more existing directors; provided, however, that, prior to the Effective
Time, the Board of Directors of the Company shall always have, subject to the
following sentence, at least two (2) directors who were directors of the Company
as of the date hereof, one of whom shall be Xxxxxx Xxxxxxx ("Continuing
Directors"). If, at any time prior to the Effective Time, there shall be only
one (1) Continuing Director serving as a director of the Company for any reason,
then the Company's Board of Directors shall cause an individual selected by the
remaining Continuing Director to be designated to serve on the Company's Board
of Directors (and such individual shall be deemed to be a Continuing Director
for all purposes under this Agreement), and if, at any time prior to the
Effective Time, no Continuing Director then remains, then the Company's Board of
Directors shall designate and cause two (2) individuals to serve on the
Company's Board of Directors who are not officers, employees or affiliates of
the Company, Parent or Purchaser and such individuals shall be deemed to be
Continuing Directors for all purposes under this Agreement.
(b) The Company's obligation to appoint Xxxxxx's designees to the
Board of Directors of the Company shall include its compliance with Section
14(f) of the Exchange Act and Rule 14f-1 thereunder, including mailing to the
Company's stockholders, at the same time as the mailing of the Schedule 14D-9,
an information statement containing the information required by such Section and
Rule. The Company shall promptly take all actions, and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under such Section and such Rule, in order to fulfill
its obligations under this Section 1.03 so long as Parent shall have provided to
the Company, on a timely basis, the information with respect to Parent and its
designees, officers, directors and affiliates required by such Section and such
Rule.
(c) Following any election or appointment of Xxxxxx's designees
pursuant to this Section 1.03 and prior to the Effective Time, the approval of a
majority of the Continuing Directors or, if there shall only be one (1), of the
Continuing Director, shall be required to authorize (and such authorization
shall constitute the authorization of the Company's Board of Directors and no
other action on the part of the Company, including any action of the Company's
Board of Directors, shall be required to authorize) (i) any amendment or
termination of this Agreement by the Company, (ii) any amendment of the
Company's Certificate of Incorporation or By-laws, (iii) any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or Purchaser, (iv) any exercise or waiver of any of the Company's
rights or remedies hereunder or (v) any other consent or action by the Company's
Board of Directors with regard to any substantive matter relating to this
Agreement or the Merger.
SECTION 1.04. The Merger. Upon the terms and subject to the conditions
set forth herein, and in accordance with the DGCL, at the Effective Time,
Purchaser (or another direct or indirect subsidiary of Parent) shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Purchaser shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
-5-
SECTION 1.05. Effective Time; Closing. As promptly as practicable after
the satisfaction of the conditions set forth in Article VII hereof, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as is required by, and executed in accordance with, the
relevant provisions of the DGCL. The term "Effective Time" means the date and
time of the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware (or such later time as may be agreed to by each of the
parties hereto and specified in the Certificate of Merger). Immediately prior to
the filing of the Certificate of Merger, a closing will be held at the offices
of Fish & Xxxxxxxxxx P.C. at 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000 (or at
such other date/time and place as the parties may agree).
SECTION 1.06. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of the DGCL.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
each of the Company and Purchaser shall vest in the Surviving Corporation, and
all debts, liabilities, obligations and duties of each of the Company and
Purchaser shall become the debts, liabilities, obligations and duties of the
Surviving Corporation.
SECTION 1.07. Certificate of Incorporation; By-laws.
-------------------------------------
(a) At the Effective Time, the Certificate of Incorporation of
Purchaser as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation and shall read
substantially as set forth on Exhibit 1.07 hereto.
(b) At the Effective Time, the By-laws of Purchaser as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation unless and until thereafter amended as provided by Law, the
Certificate of Incorporation of the Surviving Corporation and/or such By-laws.
SECTION 1.08. Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified and/or additional persons are selected.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
--------------------------------------------------
SECTION 2.01. Conversion Of Securities. At the Effective Time, by
virtue of the Merger and without any further action on the part of Purchaser,
Parent, the Company or the holders of any of the following securities:
-6-
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section 2.01(b)
hereof and other than Dissenting Shares (as defined in Section 2.01(e) hereof)),
shall be converted into the right to receive the Per Share Amount in cash,
without interest (the aggregate cash amount payable pursuant to this Section
2.01(a) being hereinafter referred to as the "Merger Consideration").
(b) Each share of Common Stock held in the treasury of the Company
and each Share owned by Parent or any direct or indirect wholly owned subsidiary
of Parent or of the Company immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof, and no payment shall
be made with respect thereto.
(c) Each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully-paid and nonassessable share of common stock of the Surviving
Corporation.
(d) The Shares outstanding immediately prior to the Effective Time
(other than Shares to be canceled pursuant to Section 2.01(b) hereof) shall no
longer be outstanding and shall automatically be canceled and shall cease to
exist, and each holder of a Certificate (as defined in Section 2.02(b) hereof)
shall cease to have any rights with respect thereto, except only the right to
receive, for each Share represented by such Certificate, a cash amount equal to
the Per Share Amount, without interest, or, if such holder is a Dissenting
Stockholder (as defined in Section 2.01(e) hereof), the rights, if any, afforded
to such holder under Section 262 of the DGCL.
(e) Notwithstanding anything in this Agreement to the contrary,
any Shares held by a person that shall have properly demanded and perfected a
right to receive payment of the fair value of such Shares (a "Dissenting
Stockholder") pursuant to Section 262 of the DGCL ("Dissenting Shares") shall
not be converted as described in Section 2.01(a) hereof, unless such holder
fails to comply with the provisions of Section 262 of the DGCL or withdraws or
otherwise loses its right to receive such fair value payment. If, after the
Effective Time, such Dissenting Stockholder fails to comply with the provisions
of Section 262 of the DGCL or withdraws or otherwise loses its right to receive
such fair value payment, such Dissenting Stockholder's Shares shall no longer be
considered Dissenting Shares for the purposes of this Agreement and shall
thereupon be deemed to have been converted into and become exchangeable for, at
the Effective Time, the right to receive for each such Share, in cash, the Per
Share Amount, without interest. The Company shall give Parent (i) prompt written
notice of any demands to receive payment of fair value of Shares received by the
Company and (ii) the opportunity to participate in and direct all negotiations
and proceedings with respect to such demands. The Company shall not, without the
prior written consent of Parent, make any payment with respect to, settle, offer
to settle or otherwise negotiate any such demands.
SECTION 2.02. Exchange of Certificates for Cash.
---------------------------------
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with The Bank of New York or such other
bank or trust company as
-7-
may be designated by Parent (the "Exchange Agent"), for the benefit of the
holders of Shares, for exchange in accordance with this Article II through the
Exchange Agent, the Merger Consideration (such Merger Consideration, together
with any interest earned thereon, being hereinafter referred to as the "Exchange
Fund") payable pursuant to Section 2.01 hereof in exchange for Shares. The
Exchange Agent shall, pursuant to irrevocable instructions given by Parent,
deliver the cash (excluding any interest earned thereon) out of the Exchange
Fund. All interest earned on the Exchange Fund shall be payable to Parent.
Except as contemplated by this Section 2.02(a), the Exchange Fund shall not be
used for any other purpose.
(b) Exchange Procedures. As promptly as practicable after the
Effective Time, Parent shall cause the Exchange Agent to mail to each holder of
a certificate or certificates which immediately prior to the Effective Time
represented Shares (the "Certificates"): (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to
such Shares shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall be in customary form); and (ii) instructions for
effecting the surrender of the Certificates in exchange for the appropriate
portion of the Merger Consideration. Upon surrender to the Exchange Agent of a
Certificate for cancellation, together with such letter of transmittal, duly
executed, and such other documents as may be required pursuant to such
instructions, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount in cash which such holder has the right to receive
pursuant to Section 2.01(a) hereof (after giving effect to any required Tax
withholdings) in respect of Shares formerly represented by such Certificate, and
the Certificate so surrendered shall forthwith be canceled. No interest will be
paid or will accrue on the amount payable upon the surrender of any Certificate.
In the event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company, the proper amount of cash may be paid to a
transferee if the Certificate representing such Shares 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, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive, upon such surrender, the appropriate portion of the Merger
Consideration in respect of Xxxxxx formerly represented thereby.
(c) No Further Rights in Common Stock. All cash paid upon
conversion of Shares in accordance with the terms hereof shall be deemed to have
been paid in full satisfaction of all rights pertaining to such Shares.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Shares outstanding immediately
prior to the Effective Time for one (1) year after the Effective Time shall be
delivered to Parent, upon demand, and any holders of such Shares who have not
theretofore complied with this Article II shall thereafter look only to Parent
for payment of any cash to which they are entitled. Any portion of the Exchange
Fund remaining unclaimed by such holders as of a date that is immediately prior
to such date as such amounts would otherwise escheat to or become the property
of any Governmental Authority (as defined in Section 9.03(f) hereof) shall, to
the
-8-
extent permitted by applicable Law, become the property of Parent, free and
clear of any claims or interest of any person previously entitled thereto.
(e) No Liability. Neither Parent, the Company nor the Surviving
Corporation shall be liable to any holder of Shares for any cash delivered to a
Governmental Authority pursuant to any abandoned property, escheat or similar
Law.
(f) Withholding Rights. Each of the Surviving Corporation, Parent
and the Exchange Agent shall be entitled to deduct and withhold from the cash
consideration otherwise payable pursuant to this Agreement to any holder of
Shares such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign Tax Law. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of such Shares in respect of
which such deduction and withholding were made.
SECTION 2.03. Stock Transfer Books. As of the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of Shares thereafter on the records of the Company or
the Surviving Corporation. From and after the Effective Time, the holders of
Certificates shall cease to have any rights with respect to Shares represented
thereby, except as otherwise provided herein or by Law. On or after the
Effective Time, any Certificates duly presented to the Exchange Agent or Parent
for any reason shall be converted into the amount of cash to which the holders
thereof are entitled pursuant to this Article II.
SECTION 2.04. Stock Options.
-------------
(a) The Company shall take all actions or cause all such actions
to be taken prior to the Commencement Date as are necessary to ensure that,
immediately prior to the Effective Time, all then outstanding options to
purchase Common Stock of the Company set forth on Schedule 3.03-1 of the Company
Disclosure Schedule (collectively, the "Company Options"), whether or not
exercisable, whether or not vested, and whether or not performance-based, under
the Company's 1992 Equity Incentive Stock Option Plan and 2001 Equity Incentive
Plan (collectively, the "Company Stock Option Plans") that are held by those
persons set forth on Schedule 2.04A of the Company Disclosure Schedule (as
defined in Section 3.01 hereof), shall be automatically converted into the right
to receive only an amount of cash (net of applicable withholding Taxes) equal to
(x) the difference, if any, between the Per Share Amount less the exercise price
per share of Common Stock payable upon exercise of such Company Options
multiplied by (y) the number of shares of Common Stock issuable thereunder upon
exercise immediately prior to the Effective Time. Additionally, the Company
shall take all actions or cause all such actions to be taken prior to the date
of the consummation of the Offer as are necessary to ensure that the holders of
at least 80% of the Company Options that are not held by those persons set forth
on said Schedule 2.04A (the "Remaining Options") shall be converted as set forth
above. The Company shall use its reasonable best efforts to ensure that as soon
as practicable and in any event prior to the Effective Time all of the Remaining
Options that were not converted
-9-
as set forth above on or before the date of the consummation of the Offer shall
be exercised or converted as set forth above.
The Company shall use its reasonable best efforts to obtain a signed
consent of each holder of outstanding Company Options to the conversion of such
Company Options as specified in this Section 2.04(a). Except with respect to
Company Options for which a signed consent is obtained in accordance with this
Section 2.04(a), and notwithstanding anything to the contrary in this Section
2.04(a), no payment shall be made to any holder of a Company Option that is to
be converted and terminated unless such holder delivers a signed waiver
acknowledging that all of his or her outstanding Company Options are converted
and terminated at the Effective Time and waiving all of his or her rights under
or with respect to those Company Options. The Company shall use its reasonable
best efforts to take all such actions or cause such actions to be taken such
that, as soon as practicable, all Company Options that have an exercise price
per share of Common Stock equal to or greater than the Per Share Amount shall be
converted and terminated as of the Effective Time.
Purchaser shall pay, or cause to be paid, the cash amounts payable
pursuant to this Section 2.04(a) in respect of Company Options at or shortly
(and in no event more than five (5) business days) after the Effective Time,
except that such payment with respect to the Company Options set forth on
Schedule 2.04B of the Company Disclosure Schedule shall be made from the
Exchange Fund on the 90th day following the Effective Time (unless such day is
not a business day, in which case payment shall be made on the next succeeding
business day). The Company shall not make, or agree to make, any payment of any
kind to any holder of a Company Option (except for the payments described in
this Section 2.04) without the prior written consent of Parent.
(b) Subject to Section 2.04(a) hereof, all Company Stock Option
Plans shall terminate as of the Effective Time and the provisions in any other
Company benefit plan providing for the issuance, transfer or grant of any
capital stock of the Company or any interest in respect of any capital stock of
the Company shall be deleted as of the Effective Time. The Company shall use its
reasonable best efforts to ensure that, immediately following the consummation
of the Offer, no holder of a Company Option or any participant in any Company
Stock Option Plan shall have any right thereunder to acquire any capital stock
of the Company, Parent or the Surviving Corporation.
(c) The Company shall take all actions necessary pursuant to the
terms of the Company's Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") in order to shorten the offering period under such Plan which
includes the Effective Time (the "Current Offering"), such that the Current
Offering shall terminate prior to the Effective Time. The purchase price for any
shares of Common Stock purchased under the Employee Stock Purchase Plan during
the Current Offering (as shortened in accordance with the preceding sentence)
shall be paid in cash.
-10-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01. Organization and Qualification; Subsidiaries. The Company
and each subsidiary of the Company (a "Subsidiary") is a corporation duly
organized, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation and has the requisite power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure(s) to be so organized, existing or in
good standing or to have such power and authority would not, individually or in
the aggregate, have a Company Material Adverse Effect (as defined below). The
Company and each Subsidiary is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary, except for any
failure(s) to be so qualified or licensed or in good standing that would not,
individually or in the aggregate, have a Company Material Adverse Effect. The
term "Company Material Adverse Effect" means any change or effect that is or is
reasonably likely to be materially adverse to the business, assets, results of
operations or financial condition of the Company and the Subsidiaries, taken as
a whole, or otherwise materially and adversely affects the ability of the
Company to consummate the Merger, except for such changes or effects that may
relate solely to the incurrence by the Company of the Company Transaction
Expenses and except for such changes or effects that are the result of general
economic conditions affecting the Company's industry generally. A true and
complete list of all the Subsidiaries, together with the jurisdiction of
incorporation of each Subsidiary and the percentage, if less than one hundred
(100%) percent, of the outstanding capital stock of each Subsidiary owned by the
Company, is set forth on Schedule 3.01 of the separate Disclosure Schedule
previously delivered by the Company to Parent (the "Company Disclosure
Schedule"). Except as set forth on said Schedule 3.01, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02. Certificate of Incorporation and By-laws. The Company has
heretofore furnished to Parent a complete and correct copy of each of the
Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Subsidiary
(collectively, the "Organizational Documents"). The Organizational Documents are
in full force and effect. Neither the Company nor any Subsidiary is in violation
of any provision of its Organizational Documents.
SECTION 3.03. Capitalization. The authorized capital stock of the
Company consists solely of 30,000,000 shares of Common Stock and 5,000,000
shares of preferred stock. As of the close of business on April 15, 2003, (a)
10,453,512 Shares were issued and outstanding, all of which were validly issued,
fully paid and nonassessable, (b) 455,713 shares of Common Stock were held in
the treasury of the Company, (c) no shares of Common Stock were held by any of
the Subsidiaries, (d) 2,774,912 shares of Common
-11-
Stock were reserved for future issuance pursuant to stock options granted and
outstanding pursuant to the Company Stock Option Plans, (e) 57,018 shares of
Common Stock were reserved and eligible for future issuance pursuant to the
Employee Stock Purchase Plan (the Employee Stock Purchase Plan, together with
the Company Stock Option Plans, being referred to hereinafter collectively as
the "Stock Incentive Plans") and (f) no shares of preferred stock were
outstanding. Since April 15, 2003, the Company has not issued any shares of its
capital stock, other than any shares of Common Stock issued upon the valid
exercise of Company Options in accordance with the terms thereof, or granted any
stock options. Set forth on Schedule 3.03-1 of the Company Disclosure Schedule
is a complete and accurate description of the grant date, number of shares of
Common Stock available under, strike or exercise price and holder of each
outstanding grant of options or any other rights to acquire shares of Common
Stock pursuant to the Company Stock Option Plans. Each grant of options or other
rights to acquire shares of Common Stock under any of the Company Stock Option
Plans is evidenced by a Stock Option Agreement. Each election to purchase shares
of Common Stock under the Company's Employee Stock Purchase Plan is evidenced by
an Enrollment Form. Except for the options and rights to purchase granted under
the Stock Incentive Plans as expressly set forth in this Section 3.03 and except
as set forth on Schedule 3.03-2 of the Company Disclosure Schedule, there are no
outstanding options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any Subsidiary or obligating the Company or any Subsidiary to
issue or sell any shares of capital stock of, or other equity interests in, the
Company or any Subsidiary. All shares of Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the agreements
pursuant to which they are issuable, will be duly authorized, validly issued,
fully paid and nonassessable. Except as set forth on Schedule 3.03-2 of the
Company Disclosure Schedule, there are no contractual or other obligations of
the Company or any Subsidiary to repurchase, redeem, otherwise acquire or pay
any amounts in connection with any Shares (outstanding or deemed outstanding) or
any capital stock of, or any other equity interests in, any Subsidiary. Each
outstanding share of capital stock of each Subsidiary is duly authorized,
validly issued, fully paid and nonassessable and, except as set forth on
Schedule 3.03-3 of the Company Disclosure Schedule, each such share is owned by
the Company and is free and clear of all security interests, liens, claims,
pledges, options, tag-along rights, rights of first refusal, agreements,
limitations on the Company's voting rights, charges and other encumbrances of
any nature whatsoever.
SECTION 3.04. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the Merger and the other
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the Merger and the other
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the Merger
(other than, with respect to the Merger, if required, the approval and adoption
of this Agreement by the holders of a majority of the then outstanding Shares
and the filing and recordation of appropriate merger documents as required by
the DGCL) and the other transactions contemplated hereby. This Agreement
-12-
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Xxxxxx and Purchaser,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
SECTION 3.05. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not: (i) conflict
with or violate the Organizational Documents of the Company or any Subsidiary;
(ii) conflict with or violate in any material respect any material U.S.
(federal, state or local) or foreign law, statute, rule, regulation, order,
judgment or decree (collectively, "Laws") applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound or affected; or (iii) except as set forth on Schedule 3.05-1 of the
Company Disclosure Schedule, require a consent, result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of the Company or any Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is otherwise bound or
affected, except for any such absence of consents, breaches, defaults or other
occurrences which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement, the consummation of the Offer, the
Merger and the other transactions contemplated hereby and compliance with the
provisions of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, except: (i) for applicable requirements, if any, of the
Exchange Act, the Nasdaq National Market, state securities or "blue sky" Laws
("Blue Sky Laws") and state takeover Laws, the pre-merger notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), the filing
and recordation of appropriate merger documents as required by the DGCL; (ii) as
set forth on Schedule 3.05-2 of the Company Disclosure Schedule; and (iii) where
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Offer, the Merger or any other transaction contemplated
hereby, or, individually or in the aggregate, have a Company Material Adverse
Effect.
SECTION 3.06. Permits; Compliance with Law. Except as set forth on
Schedule 3.06-1 of the Company Disclosure Schedule, the Company and each
Subsidiary is in possession of all franchises, grants, authorizations, licenses,
permits, easements, variances, exceptions, consents, certificates, approvals and
orders necessary for the Company and each Subsidiary to own, lease and operate
its properties or to carry on its business as it is now being conducted (the
"Company Permits"), and no suspension or
-13-
cancellation of any of the Company Permits is pending or, to the knowledge of
the Company, threatened, except where the failure to have, or the suspension or
cancellation of, any of the Company Permits would not, individually or in the
aggregate, have a Company Material Adverse Effect. Set forth on Schedule 3.06-2
of the Company Disclosure Schedule is a true and complete list of those Company
Permits, the loss or suspension of any of which would, individually or in the
aggregate, have a Company Material Adverse Effect. Except as set forth on
Schedule 3.06-3 of the Company Disclosure Schedule, neither the Company nor any
Subsidiary is in conflict with, or in default or violation of (i) any Laws,
including the Foreign Corrupt Practices Act and related regulations, applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or affected; (ii) any of the Company Permits;
or (iii) any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any Subsidiary is a party or by which the Company or any Subsidiary
or any property or asset of the Company or any Subsidiary is otherwise bound or
affected, except for any such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Company Material Adverse Effect. Except
as set forth on Schedule 3.06-4 of the Company Disclosure Schedule, since
January 1, 1998, neither the Company nor any Subsidiary has been the subject of
or otherwise involved in any investigation or enforcement action arising under
contracting regulations of the Department of Defense, and, to the knowledge of
the Company, no such investigation or action is threatened or contemplated.
SECTION 3.07. SEC Filings; Financial Statements.
---------------------------------
(a) The Company has timely filed all forms, reports and other
documents required to be filed by it with the SEC since December 31, 1998, and
has heretofore made available to Parent, in the form filed with the SEC and as
amended prior to the date hereof: (i) its Annual Reports on Form 10-K for the
fiscal years ended December 31, 2001 and 2002; (ii) all proxy statements
relating to the Company's meetings of stockholders (whether annual or special)
held since January 1, 2002; (iii) all other forms, reports and other
registration statements filed by the Company with the SEC since January 1, 2003
through the date hereof (the forms, reports and other documents referred to in
clauses (i), (ii) and (iii) above being referred to herein, collectively, as the
"Company SEC Reports"); and (iv) complete (i.e., unredacted) copies of each
exhibit to the Company SEC Reports filed with the SEC. The Company SEC Reports:
(x) were prepared in accordance with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and the rules and regulations thereunder, including, without limitation,
such requirements resulting from the Xxxxxxxx-Xxxxx Act of 2002, to the extent
applicable thereto; (y) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading; and (z)
did not at the time they were filed omit any documents required to be filed as
exhibits thereto. No Subsidiary is required to file any form, report or other
document with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any notes thereto) contained in the Company SEC Reports was prepared
in accordance with U.S.
-14-
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto), and each fairly presents the consolidated financial position, results
of operations and cash flows of the Company and the consolidated Subsidiaries as
at the respective dates thereof and for the respective periods indicated therein
in accordance with U.S. generally accepted accounting principles (subject, in
the case of unaudited statements, to normal and recurring year-end adjustments
which were not material in amount).
(c) Except as and to the extent set forth on the consolidated
balance sheet of the Company and the consolidated Subsidiaries as at December
31, 2002, including the notes thereto (the "Company 2002 Balance Sheet"),
neither the Company nor any Subsidiary has any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), except for
liabilities and obligations (i) incurred since December 31, 2002 which would
not, individually or in the aggregate, have a Company Material Adverse Effect;
or (ii) incurred pursuant to this Agreement. There are no Special Purpose
Entities (as defined below) owned directly or indirectly, in whole or in part,
by the Company or any of its affiliates or in or with respect to which the
Company or any of its affiliates have a direct or indirect business relationship
or interest of any kind, in whole or in part, including any equity interest, any
leasing relationship, any loan or other financing relationship, any other
contractual relationship or any other economic interest, relationship or
arrangement of any kind, where such relationship or interest is directly or
indirectly related to, or part of, the business or the assets owned by or the
liabilities of the Company. There are no guarantees by the Company, its
Subsidiaries or other affiliates of the liabilities of or with respect to any
Special Purpose Entities. "Special Purpose Entities" has the meaning given to
that term under U.S. accounting rules governing consolidation, including
proposed rules and interpretations of the Financial Accounting Standards Board,
such as those contained in guidance (as proposed or as finally adopted)
interpreting Statement of Financial Accounting Standard 94, Consolidation of all
Majority-Owned Subsidiaries and Accounting Research Bulletin No. 51,
Consolidated Financial Statements.
(d) The Company has heretofore furnished to Parent complete and
correct copies of all amendments and modifications that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect. A true and complete list of such amendments and modifications is set
forth on Schedule 3.07 of the Company Disclosure Schedule.
SECTION 3.08. Absence of Certain Changes or Events. Since December 31,
2002, except as contemplated by this Agreement or as set forth on Schedule 3.08
of the Company Disclosure Schedule, the Company and the Subsidiaries have
conducted their businesses in the ordinary course and in a manner consistent
with past practice, and there has not been (a) any event or events having a
Company Material Adverse Effect, (b) any change by the Company in its accounting
methods, principles or practices, (c) any revaluation by the Company of any
asset (including, without limitation, any writing down of the value of inventory
or writing off of notes or accounts receivable), other than in the ordinary
course of business consistent with past practice, (d) any entry by the Company
or any Subsidiary
-15-
into any commitment or transaction material to the Company and the Subsidiaries
taken as a whole, except in the ordinary course of business and consistent with
past practice, (e) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its securities, (f) any material damage,
destruction or loss to property, whether or not covered by insurance, (g) any
settlement or compromise of any material litigation, action or claim, or (h)
other than pursuant to the contracts and Plans expressly referred to in Section
3.10 hereof, any increase in, establishment or material amendment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers or key employees
of the Company or any Subsidiary, except for salary increases and benefit
accruals in the ordinary course of business consistent with past practice.
SECTION 3.09. Absence of Litigation. Except as set forth on Schedule
3.09 of the Company Disclosure Schedule, there is no claim, action, proceeding,
compliance review or investigation pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary, or any property or asset of
the Company or any Subsidiary, before any court, arbitrator or Governmental
Authority which (a) individually or in the aggregate, would have a Company
Material Adverse Effect, or (b) seeks to delay or prevent the consummation of
the Offer, the Merger or the other transactions contemplated hereby. Except as
set forth on Schedule 3.09 of the Company Disclosure Schedule, neither the
Company nor any Subsidiary nor any property or asset of the Company or any
Subsidiary is subject to any order, writ, judgment, injunction, decree,
determination or award which would have, individually or in the aggregate, a
Company Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. Schedule 3.10 of the Company
Disclosure Schedule sets forth a true and complete list of (i) all the employee
benefit plans, programs and arrangements maintained for the benefit of any
current or former employee, officer or director of the Company or any
Subsidiary, as amended to date (the "Plans"), and (ii) all contracts and
agreements relating to employment which provide for annual compensation in
excess of $75,000, and all severance or change of control agreements, with any
of the directors, officers, consultants or employees of the Company or its
Subsidiaries (other than, in each case, any such contract or agreement that is
terminable at any time by the Company or a Subsidiary at will and without
penalty or other adverse consequence) (the "Employment Contracts"). Parent has
been furnished with a true and complete copy of each Plan, each material
document prepared in connection with each Plan and each Employment Contract.
Except as set forth on Schedule 3.10 of the Company Disclosure Schedule: (i)
none of the Plans is a multi-employer plan within the meaning of Section
4001(a)(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"); (ii) none of the Plans or Employment Contracts promises or provides
retiree medical or life insurance benefits to any person, except as required by
Part 6 of Title I of ERISA, Section 4980B of the Code or any similar state Law
relating to the continuation of health insurance coverage; (iii) each Plan
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service that it is so
qualified and
-16-
nothing has occurred since the date of such letter to affect the qualified
status of such Plan; (iv) none of the Plans or Employment Contracts promises or
provides severance benefits or benefits contingent upon a change in ownership or
control within the meaning of Section 280G of the Code; (v) each Plan has been
operated in all material respects in accordance with its terms and the
requirements of applicable Law; (vi) none of the Plans is subject to Title IV of
ERISA; (vii) neither the Company nor any Subsidiary has incurred any direct or
indirect liability under, arising out of, or by operation of, Title IV of ERISA
in connection with the termination of, or withdrawal from, any Plan or other
retirement plan or arrangement; and (viii) the Company and the Subsidiaries have
not incurred any liability under, and have complied in all respects with, the
Worker Adjustment Retraining Notification Act. Other than routine claims for
benefits under the Plans, no claim with respect to, or legal proceeding
involving, any Plan or a breach of any Employment Contract is pending or, to the
knowledge of the Company, threatened.
SECTION 3.11. Labor Matters. Neither the Company nor any Subsidiary is
a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or any Subsidiary, and, since
January 1, 1998, there has not occurred any strike, work stoppage or material
union organizing effort and no such action is threatened.
SECTION 3.12. Real Property and Leases.
------------------------
(a) Schedule 3.12-1 of the Company Disclosure Schedule sets forth a
true and complete list of all real property owned or leased by the Company or
any Subsidiary since January 1, 1998 and separately identifies that which is, or
was previously, owned and that which is, or was previously, leased. The Company
and the Subsidiaries have sufficient title or valid leasehold interests to or in
all of their properties and assets to conduct in all material respects their
respective businesses as currently conducted or as contemplated to be conducted
and, except as set forth on Schedule 3.12-2 of the Company Disclosure Schedule,
there are no material security interests or encumbrances on such owned
properties and assets.
(b) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of $100,000 during the period of the lease,
and all amendments and modifications thereto, are in full force and effect and
have not been modified or amended, and there exists no default under any such
lease by the Company, any Subsidiary, or by any other party thereto, nor any
event which with notice or lapse of time or both would constitute a default
thereunder by the Company, any Subsidiary, or by any other party thereto, which
would, individually or in the aggregate, have a Company Material Adverse Effect.
SECTION 3.13. Intellectual Property. The term "Company Intellectual
Property" means all trademarks, trademark rights, trade names, trade name
rights, patents, patent rights, industrial models, inventions, copyrights,
servicemarks, trade secrets, know-how, computer software programs and other
proprietary rights and information used or held for use in connection with the
businesses of the Company and the Subsidiaries as currently conducted, together
with all applications currently pending for any of the foregoing. Except
-17-
where the failure to so own or have would not have, individually or in the
aggregate, a Company Material Adverse Effect, the Company and the Subsidiaries
own or have legally enforceable rights to use all of the Company Intellectual
Property and, to the knowledge of the Company, there is no assertion or claim
(or basis therefor) challenging the validity of the Company's or any
Subsidiary's ownership of, or right to use, any Company Intellectual Property.
Except as set forth on Schedule 3.13-1 of the Company Disclosure Schedule, the
Company is not party to any license or other agreement pursuant to which it has
the right to use any Company Intellectual Property utilized in connection with
any product or process of the Company or any of its Subsidiaries. There are no
pending or, to the knowledge of the Company, threatened interferences,
re-examinations, oppositions or nullities involving any patents, patent rights
or applications therefor of the Company or any Subsidiary that, individually or
in the aggregate, would have a Company Material Adverse Effect. Substantially
all employees of the Company have executed confidentiality and invention
assignment agreements in the forms previously delivered to the Parent. There
have been no notices received by the Company from, or claims made by or, to the
knowledge of the Company, claims threatened in writing by, third parties
regarding actual or potential infringements of any third-party intellectual
property rights by the Company's products or processes. There are no
infringements by third parties of any Company Intellectual Property which,
individually or in the aggregate, would have a Company Material Adverse Effect.
Except as set forth on Schedule 3.13-2 of the Company Disclosure Schedule,
neither the Company nor any Subsidiary has licensed or otherwise permitted the
use by any third party of any Company Intellectual Property.
SECTION 3.14. Taxes. Except as set forth on Schedule 3.14 of the
Company Disclosure Schedule: (i) the Company and the Subsidiaries have filed all
federal, state, local and foreign Tax returns and reports required to be filed
by them and have paid all Taxes when and as due under applicable Law, other than
such payments as are being contested in good faith by appropriate proceedings,
as set forth on Schedule 3.14 of the Company Disclosure Schedule; (ii) neither
the Internal Revenue Service nor any other Taxing authority or agency, domestic
or foreign, is now asserting or, to the knowledge of the Company, threatening to
assert against the Company or any Subsidiary any deficiency or claim for
additional Taxes or interest thereon or penalties in connection therewith; (iii)
neither the Company nor any Subsidiary has granted any waiver of any statute of
limitations with respect to, or any extension of a period for the assessment of,
any federal, state, county, municipal or foreign income Tax; (iv) the accruals
and reserves for Taxes reflected in the Company 2002 Balance Sheet and the
Company's most recent quarterly financial statements are adequate to cover all
taxes accruable through the date thereof (including interest and penalties, if
any, thereon) in accordance with U.S. generally accepted accounting principles;
(v) neither the Company nor any Subsidiary has made an election under Section
341(f) of the Code; (vi) the Company and the Subsidiaries have withheld or
collected and paid over to the appropriate Governmental Authorities or are
properly holding for such payment all Taxes required by Law to be withheld or
collected; (vii) there are no liens for Taxes upon the assets of the Company or
the Subsidiaries, other than liens for Taxes that are being contested in good
faith by appropriate proceedings, as set forth on Schedule 3.14 of the Company
Disclosure Schedule, and liens for Taxes not yet due and payable; (viii) neither
the Company nor any of its Subsidiaries is party to or bound by (nor
-18-
will the Company or any of its Subsidiaries, prior to the Effective Time, become
a party to or become bound by) any Tax indemnity, Tax sharing or Tax allocation
agreement; (ix) except for the group of which the Company is presently a member,
the Company has never been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the Code, other than as a common parent
corporation, and none of the Subsidiaries of the Company has ever been a member
of an affiliated group of corporations, within the meaning of Section 1504 of
the Code, except where the Company was the common parent corporation of such
affiliated group; (x) the Company has not filed a consent pursuant to the
collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provisions of state, local, or foreign income Tax Law) or agreed
to have Section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign income Tax Law) apply to any disposition of any asset owned by
it; (xi) all material elections with respect to Taxes affecting the Company as
of the date of this Agreement are reflected on the Tax returns delivered to
Parent and no material election with respect to Taxes will be made after the
date of this Agreement without the written consent of Parent; (xii) none of the
assets of the Company is property which the Company is required to treat as
being owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code; (xiii) none of the assets of
the Company directly or indirectly secures any debt the interest on which is tax
exempt under Section 103(a) of the Code; (xiv) none of the assets of the Company
is "tax exempt use property" within the meaning of Section 168(h) of the Code;
(xv) the Company has not made, nor will it make, a deemed dividend election
under Treas. Reg. Section 1.1502-32(f)(2) or a consent dividend election under
Section 565 of the Code; (xvi) the Company has not participated in, nor will it
participate in, an international boycott within the meaning of Section 999 of
the Code; (xvii) the Company is not a party to any Employment Contract or Plan
that has resulted or would result, separately or in the aggregate, in the
payment of any "excess parachute payments" within the meaning of Section 280G of
the Code; (xviii) the Company is not, nor has it ever been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code;
(xix) the Company does not have, nor has it ever had, a permanent establishment
in any foreign country, as defined in any applicable Tax treaty or convention
between the United States of America and such foreign country; and (xx) the
Company is not a party to any joint venture, partnership or other arrangement or
contract which could be treated as a partnership for federal income Tax
purposes.
SECTION 3.15. Environmental Matters.
---------------------
(a) For purposes of this Agreement, the following terms shall have
the following meanings: (i) "Hazardous Substances" means (A) those substances
defined in or regulated under any of the following U.S. federal statutes and/or
their state or foreign counterparts, as each may be amended from time to time,
and all regulations thereunder: the Hazardous Materials Transportation Act, the
Resource Conservation and Recovery Act, the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Water Act, the Safe Drinking
Water Act, the Toxic Substances Control Act, the Marine Protection, Research and
Sanctuaries Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and
Rodenticide Act, the Occupational Health and Safety Act and the Clean Air Act;
(B) petroleum and petroleum products including crude oil and any fractions
thereof; (C) natural
-19-
gas, synthetic gas, and any mixtures thereof; (D) radon; (E) asbestos; (F) any
other pollutant or contaminant; and (G) any substance with respect to which a
federal, state or local agency requires environmental investigation, monitoring,
reporting or remediation; and (ii) "Environmental Laws" means any U.S. federal,
state or local or foreign Law, including, without limitation, any code or rule
of common law, relating to (A) releases or threatened releases of Hazardous
Substances or materials containing Hazardous Substances; (B) the manufacture,
handling, transport, use, treatment, storage or disposal of or exposure to
Hazardous Substances or materials containing Hazardous Substances; or (C)
otherwise relating to pollution of the environment or the protection of natural
resources or human health.
(b) Except as set forth on Schedule 3.15 of the Company Disclosure
Schedule or as would not, individually or in the aggregate, have a Company
Material Adverse Effect: (i) neither the Company nor any of its Subsidiaries has
violated or is in violation of any Environmental Law; (ii) there is and has been
no release, threatened release, contamination, disposal, spilling, dumping,
incineration, discharge, storage, treatment or handling of any Hazardous
Substance, at, on, under or from any of the properties owned or leased by the
Company or any of its Subsidiaries (including, without limitation, soils and
surface and ground waters); (iii) neither the Company nor any of its
Subsidiaries is liable for any contamination, release or threatened release of
Hazardous Substances at any location off of the properties and facilities owned
or operated by the Company or any Subsidiary; (iv) neither the Company nor any
Subsidiary is liable with respect to any claims that have been or may be
asserted under any Environmental Law; (v) each of the Company and its
Subsidiaries has all permits, licenses and other authorizations and has made all
registrations, notifications, reports and submissions required under any
Environmental Law ("Environmental Permits"); (vi) each of the Company and its
Subsidiaries has been and is in compliance with its Environmental Permits; (vii)
there are no pending or, to the knowledge of the Company, threatened claims
against the Company or any Subsidiary arising under or relating to any
Environmental Law or Hazardous Substance; (viii) neither the Company nor any of
its Subsidiaries is subject to or has entered into any order, consent, decree or
other agreement under or relating to any Environmental Law or Hazardous
Substance; and (ix) neither the Company nor any of its Subsidiaries has entered
into any written or unwritten agreement pursuant to which the Company or any of
the Subsidiaries is obligated to assume, indemnify, defend, hold harmless,
release or perform any liabilities, claims or obligations arising under or
related to any Environmental Law or Hazardous Substance.
SECTION 3.16. Material Contracts; Government Contracts.
----------------------------------------
(a) Subsections (i) through (viii) of Schedule 3.16-1 of the Company
Disclosure Schedule set forth a true and complete list of all of the following
contracts and agreements (including, without limitation, oral and informal
arrangements) to which the Company or any Subsidiary is a party (each of such
contracts and agreements, and each other contract or agreement of the Company or
any Subsidiary that would have been required to be set forth on Schedule 3.16-1
of the Company Disclosure Schedule, had such contract or agreement been entered
into prior to the date of this Agreement, collectively, the "Material
Contracts"):
-20-
(i) each contract and agreement (other than any routine
purchase orders or pricing quotes made in the ordinary course of
business involving less than $100,000 individually) for the purchase of
inventory, spare parts, other materials or personal property with any
supplier or for the furnishing of services to the Company or any
Subsidiary under the terms of which the Company or any Subsidiary: (A)
paid or otherwise gave consideration of more than $100,000 in the
aggregate during the calendar year ended December 31, 2002; (B) is
likely to pay or otherwise give consideration of more than $100,000 in
the aggregate during the calendar year ending December 31, 2003; (C) is
likely to pay or otherwise give consideration of more than $100,000 in
the aggregate over the remaining term of the contract or agreement; or
(D) cannot be canceled by the Company or such Subsidiary on thirty (30)
or fewer days' notice without penalty or payment of less than $25,000;
(ii) each customer contract and agreement (other than any
routine purchase orders, pricing quotes with open acceptance or tender
bids made in the ordinary course of business involving less than
$100,000 individually) to which the Company or any Subsidiary is a
party which: (A) involved consideration of more than $250,000 in the
aggregate during the calendar year ended December 31, 2002; (B) is
likely to involve consideration of more than $250,000 in the aggregate
during the calendar year ending December 31, 2003; (C) is likely to
involve consideration of more than $250,000 in the aggregate over the
remaining term of the contract or agreement; or (D) cannot be canceled
by the Company or such Subsidiary on thirty (30) or fewer days' notice
without penalty or payment of less than $50,000;
(iii) all management contracts and contracts (or similar
arrangements) with independent contractors or consultants to which the
Company or any Subsidiary is a party and which: (A) involved
consideration of more than $100,000 in the aggregate during the
calendar year ended December 31, 2002; (B) are likely to involve
consideration of more than $100,000 in the aggregate during the
calendar year ending December 31, 2003; (C) are likely to involve
consideration of more than $100,000 in the aggregate over the remaining
term of the contract or agreement; or (D) cannot be canceled by the
Company or such Subsidiary on thirty (30) or fewer days' notice without
penalty or payment of less than $25,000;
(iv) all contracts and agreements (excluding routine
checking account overdraft agreements involving xxxxx cash amounts)
under which the Company or any Subsidiary has created, incurred,
assumed, agreed to indemnify against or guaranteed (or may so create,
incur, assume, agree to indemnify against or guarantee) indebtedness
involving an amount in excess of $250,000 in any individual case or
$500,000 in the aggregate or under which the Company or any Subsidiary
has granted or incurred (or may grant or incur) a security interest or
lien on any of their respective assets, whether tangible or
intangible, to secure indebtedness of an amount in excess of $250,000
in any individual case or $500,000 in the aggregate or under which the
Company or any Subsidiary has agreed to indemnify against or guarantee
obligations (other than indebtedness) involving an amount in excess of
$250,000 in any individual case or $500,000 in the aggregate;
-21-
(v) all contracts and agreements that limit the ability of
the Company or and Subsidiary or, after the Effective Time, would
limit the ability of Parent or any of its affiliates, to compete in
any line of business or with any person or in any geographic area or
during any period of time, or to solicit any customer or client;
(vi) all contracts and agreements between or among the
Company or any Subsidiary, on the one hand, and any affiliate (as
defined in Section 9.03(a) hereof) or associate (as defined in Section
9.03(b) hereof) of the Company, including, without limitation, present
and former officers or directors of the Company or any Subsidiary or
any of their respective associates, on the other hand, including,
without limitation, any agreement to indemnify, advance expenses
and/or defend any of the foregoing in respect of any matter;
(vii) all contracts and agreements to which the Company or
any Subsidiary is a party under which it has agreed to supply products
to a customer at specified prices, whether directly or through a
specific distributor, manufacturer's representative or dealer, which
contract involves products or sales of at least $500,000 and extends
for one year or more; and
(viii) each other contract and agreement (A) the breach of
which would have a Company Material Adverse Effect or (B) that would be
deemed to be material pursuant to Item 601 of Regulation S-K under the
Securities Act and the Exchange Act.
(b) Except as set forth on Schedule 3.16-2 of the Company Disclosure
Schedule, each Material Contract is (assuming the due authorization, execution
and delivery by, and the validity and binding nature of the Contract against,
the parties thereto other than the Company (or any Subsidiary)) a legal, valid
and binding agreement of the Company or the Subsidiary, as the case may be, and
none of the Company, any Subsidiary or any other party thereto is in material
default under any Material Contract; neither the Company nor any Subsidiary is
in receipt of any notice of default under any Material Contract; and none of the
Company or any of the Subsidiaries anticipates any termination or change to, or
receipt of a proposal with respect to, any of the Material Contracts as a result
of the Offer, the Merger or otherwise. Except as set forth on Schedule 3.16-3 of
the Company Disclosure Schedule, the Company has furnished Parent with true and
complete copies of all Material Contracts, together with all amendments, waivers
or other changes thereto.
(c) For purposes of this Section 3.16, (i) the term "Government"
shall mean any entity within the U.S. federal government and (ii) the term
"Government Contract" shall mean any Government prime contract, cooperative
research and development agreement, "other transaction", or any subcontract at
any tier under a Government prime contract, or any basic ordering agreement,
letter contract, purchase order or delivery order of any kind, including without
limitation, as to all of the foregoing, all amendments, modifications and
options thereunder or relating thereto.
-22-
(d) Schedule 3.16-4 of the Company Disclosure Schedule sets forth a
true and complete list of: (i) all Government Contracts currently in force
between the Company and the Government or any prime contractor or subcontractor;
(ii) all outstanding quotations, bids and proposals submitted by the Company,
which the Company believes are still subject to acceptance, to the Government or
any prime contractor or subcontractor; and (iii) any Government Contract that by
its terms remains subject to audit.
(e) Except as set forth on Schedule 3.09 or Schedule 3.16-5 of the
Company Disclosure Schedule, with respect to the Government Contracts, there is
no pending or, to the knowledge of the Company, threatened, (i) civil fraud or
criminal action, proceeding or investigation by any Governmental Authority, (ii)
suspension or debarment action or proceeding against the Company or any
Subsidiary, (iii) request by the Government for a contract price adjustment
based on a claimed disallowance by the Government in excess of $1 million, (iv)
dispute between the Company or any of its Subsidiaries and the Government which
has resulted in a government contracting officer's determination and finding
final decision where the amount in controversy exceeds, or is reasonably
expected to exceed, $500,000 or (v) claim or equitable adjustment by the Company
or any of its Subsidiaries against the Government in excess of $500,000.
SECTION 3.17. Opinion of Financial Advisor. The Company's Board of
Directors has received the opinion of Wachovia Securities, Inc. ("Wachovia
Securities"), on or prior to the date of this Agreement, to the effect that, as
of the date of such opinion, the Per Share Amount to be received by the holders
of the Shares pursuant to the Offer and the Merger is fair to such holders, from
a financial point of view, and such opinion has not been withdrawn or modified.
A true copy of such opinion has been, or will promptly after receipt thereof by
the Company be, delivered to Parent.
SECTION 3.18. Vote Required. The affirmative vote of the holders of a
majority of Shares outstanding as of the record date for the Company
Stockholders' Meeting, required under the DGCL, is the only vote of the holders
of any class or series of capital stock of the Company necessary to approve the
Merger and this Agreement.
SECTION 3.19. Brokers; Fees and Expenses. No broker, finder, investment
banker or other person (other than Wachovia Securities and Xxxxxxx & Co., Inc.)
is entitled to or will be paid any brokerage, finder's or similar fee or
commission in connection with the Offer or the Merger based upon arrangements
made by or on behalf of the Company or any Subsidiary. The Company has
heretofore furnished to Parent complete and correct copies of all agreements
between the Company and Wachovia Securities pursuant to which such firm would be
entitled to any payment relating to the Offer and the Merger. The maximum Actual
Transaction Expenses shall be as set forth on Schedule 3.19 of the Company
Disclosure Schedule. The term "Actual Transaction Expenses" means all costs,
expenses and fees of the Company (including, without limitation, all fees and
expenses of counsel, financial advisors, accountants, attorneys and other
experts and consultants to the Company and its affiliates, and all printing and
advertising expenses) actually incurred or accrued by it or on its behalf since
January 1, 2003 in connection with the Offer, the Merger and the other
transactions contemplated hereby; provided, however, that such term shall not
include
-23-
reasonable legal fees and expenses incurred in connection with any threatened or
actual litigation involving the Company with respect to any of the transactions
contemplated hereby and/or reasonable professional fees and expenses incurred
with respect to a Competing Transaction.
SECTION 3.20. Customers. Schedule 3.20 of the Company Disclosure
Schedule sets forth the ten (10) largest customers of the Company, each ranked
by revenue, for fiscal year 2002. Except as set forth on Schedule 3.20 of the
Company Disclosure Schedule, no customer named on said Schedule 3.20 has
canceled, otherwise terminated or materially curtailed or, to the knowledge of
the Company, threatened to cancel, otherwise terminate or materially curtail its
relationship with the Company.
SECTION 3.21. Anti-Takeover Laws. The Company has taken all actions
required to be taken by it in order to except this Agreement, the Tender and
Voting Agreements, and the transactions contemplated hereby from application of
the provisions of Section 203 of the DGCL and Section 1 of Chapter 110C of the
Massachusetts General Laws, and, accordingly, neither Section 203 of the DGCL
nor Section 1 of Chapter 110C of the Massachusetts General Laws applies to the
Offer, the Merger or any of the other transactions contemplated hereby,
including the Tender and Voting Agreements. To the Company's knowledge, no other
anti-takeover Laws or regulations enacted under state or federal Laws of the
United States apply to this Agreement or any of the transactions contemplated
hereby.
SECTION 3.22. Disclosure Documents.
--------------------
(a) None of the Schedule 14D-9 nor any of the information supplied
by the Company in writing specifically for inclusion in the Offer Documents
will, at the respective times the Schedule 14D-9 or the Offer Documents are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, 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 were made, not misleading. The Schedule 14D-9, when filed with the SEC, and
when first published, sent or given to stockholders, will comply as to form in
all material respects with the applicable requirements of the Exchange Act and
the rules and regulations thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to any information supplied by
Parent or Purchaser or any of their respective representatives specifically for
inclusion in the Schedule 14D-9 (including any amendments or supplements
thereto).
(b) The proxy or information statement relating to any meeting of
the Company's stockholders that may be required to be held in connection with
the Merger (as it may be amended from time to time, the "Company Proxy
Statement") will not, when filed with the SEC, at the date mailed to the
Company's stockholders or at the time of such meeting of stockholders to be held
in connection with the Merger, 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 or necessary to correct any statement in any
earlier communication
-24-
with respect to any solicitation of proxies or otherwise. The Company Proxy
Statement will, when filed with the SEC by the Company, comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Purchaser or any of their respective representatives specifically for inclusion
in the Company Proxy Statement.
SECTION 3.23. Certain Payments. Neither the Company nor any Subsidiary
nor, to the knowledge of the Company, any director, officer, agent or employee
of the Company or any Subsidiary (when acting in such capacity or otherwise on
behalf of the Company or any Subsidiary) nor any other person acting for or on
behalf of the Company or any Subsidiary (when so acting) has, directly or
indirectly, (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback or other payment to any person or Governmental Authority,
regardless of form, whether in money, property or services (other than
immaterial promotional gifts made in the ordinary course of business) (i) to
obtain favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, (iii) to obtain special concessions or for
special concessions already obtained, for or in respect of the Company, any
Subsidiary or any affiliate of the Company or any Subsidiary or (iv) in
violation of any federal, state, local or foreign Law; or (b) established or
maintained any fund or asset that has not been recorded in the books and records
of the Company or any Subsidiary.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
AND PURCHASER
-------------
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01. Organization and Qualification. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction of its incorporation and has the requisite
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure(s) to be so
organized, existing or in good standing or to have such power and authority
would not, individually or in the aggregate, have a Parent Material Adverse
Effect (as defined below). Each of Parent and Purchaser is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary, except for any failure(s) to be so qualified or licensed or
in good standing that would not, individually or in the aggregate, have a Parent
Material Adverse Effect. The term "Parent Material Adverse Effect" means any
change or effect that is or is reasonably likely to be materially adverse to the
business, assets, results of operations or financial condition of Parent and its
subsidiaries, taken as a whole, or otherwise materially and adversely affects
the ability of the Parent and the Purchaser to consummate the transactions
contemplated hereby.
-25-
SECTION 4.02. Certificate of Incorporation and By-laws. Parent has
heretofore furnished to the Company complete and correct copies of the
Certificates of Incorporation and By-laws, each as amended to date, of Parent
and Purchaser. Such Certificates of Incorporation and By-laws are in full force
and effect. Neither Parent nor Purchaser is in violation of any provision of its
Certificate of Incorporation or By-laws.
SECTION 4.03. Authority Relative to this Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Offer, the Merger and the other transactions contemplated hereby. The execution
and delivery of this Agreement by Xxxxxx and Purchaser and the consummation by
Parent and Purchaser of the Offer and the Merger and the other transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Parent or
Purchaser are necessary to authorize this Agreement or to consummate the Offer,
the Merger and the other transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by Parent and Purchaser and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and
Purchaser enforceable against each of Parent and Purchaser in accordance with
its terms.
SECTION 4.04. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not: (i) conflict with or violate the Certificate of Incorporation or
By-laws of Parent or Purchaser; (ii) conflict with or violate in any material
respect any material Law applicable to Parent or Purchaser or by which any
property or asset of either of them is bound or affected; or (iii) require a
consent, result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of
Parent or Purchaser pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Purchaser is a party or by which Parent or Purchaser or any
property or asset of either of them is otherwise bound or affected, except for
any such absence of consents, breaches, defaults or other occurrences which
would not, individually or in the aggregate, have a Parent Material Adverse
Effect.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement, the consummation of the
Offer, the Merger and the other transactions contemplated hereby and compliance
with the provisions of this Agreement by Parent and Purchaser will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except: (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
Laws, the HSR Act, the filing and recordation of appropriate merger documents as
required by the DGCL and the rules of the New York Stock Exchange; and (ii)
where failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or
-26-
notifications, would not prevent or materially delay consummation of the Offer,
the Merger or any other transaction contemplated hereby, or, individually or in
the aggregate, have a Parent Material Adverse Effect.
SECTION 4.05. Absence of Litigation. There is no claim, action,
proceeding or investigation pending or, to the knowledge of the Parent,
threatened against the Parent before any court, arbitrator or Governmental
Authority, which seeks to delay or prevent the consummation of the Offer, the
Merger or any of the other transactions contemplated hereby.
SECTION 4.06. Brokers. No broker, finder, investment banker or other
person (other than JPMorgan) is entitled to any brokerage or finder's fee or
commission in connection with the Offer or the Merger based upon arrangements
made by or on behalf of Parent or Purchaser.
SECTION 4.07. Funds. Parent or Purchaser has, or will have prior to the
consummation of the Offer, sufficient funds available to consummate the purchase
of all Shares and to pay all related payments, fees and expenses pursuant to the
Offer and this Agreement, in each case in accordance with the terms and
conditions of the Offer and this Agreement.
SECTION 4.08. Disclosure Documents.
--------------------
(a) None of the Offer Documents or the information supplied by
Parent or Purchaser in writing specifically for inclusion in the Schedule 14D-9
will, at the respective times the Offer Documents or the Schedule 14D-9 are
filed with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(b) None of the information supplied by Parent or Purchaser in
writing specifically for inclusion or incorporation by reference in the Company
Proxy Statement, if required, will, when filed with the SEC, at the date mailed
to the Company's stockholders and at the time of the meeting, if any, of the
Company's stockholders to be held in connection with the Merger, 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. If at any
time prior to the Effective Time any event or circumstance relating to Parent or
any of its subsidiaries, or their respective officers or directors, is
discovered by Parent that should be set forth in an amendment or a supplement to
the Company Proxy Statement, Parent shall promptly inform the Company.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to any information supplied by the Company or any of its
representatives in writing specifically for inclusion in any of the
aforementioned documents or in the Offer Documents.
-27-
ARTICLE V
CONDUCT OF BUSINESS PENDING THE EFFECTIVE TIME
----------------------------------------------
SECTION 5.01. Conduct of Business by the Company Pending the Effective
Time. The Company covenants and agrees that, between the date of this Agreement
and the earlier of the termination of this Agreement pursuant to Article VIII
hereof or the Effective Time, except as set forth on Schedule 5.01 of the
Company Disclosure Schedule or unless Parent shall (in its sole discretion)
otherwise agree in writing, the businesses of the Company and the Subsidiaries
shall be conducted only in, and the Company and the Subsidiaries shall not take
any action except in, the ordinary course of business and in a manner consistent
with past practice; and the Company shall use its reasonable best efforts to
preserve substantially intact its business organization, to keep available the
services of the current officers, employees and consultants of the Company and
the Subsidiaries and to preserve the current relationships of the Company and
the Subsidiaries with customers, suppliers and other persons with which the
Company or any Subsidiary has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or as
expressly set forth on Schedule 5.01 of the Company Disclosure Schedule, neither
the Company nor any of the Subsidiaries shall, between the date of this
Agreement and the earlier of the termination of this Agreement pursuant to
Article VIII hereof or the Effective Time, directly or indirectly, do, propose
or commit to do, or authorize any of the following, without the prior written
consent of Parent:
(a) amend, repeal or otherwise change the Company's or any
of its Subsidiary's Organizational Documents;
(b) issue, sell, pledge, dispose of, grant or encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, any Shares or any shares of capital stock of any class of the
Company or the Subsidiaries, or any options, warrants, convertible
securities or other rights of any kind to acquire any Shares or shares
of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any
Subsidiary (except, subject to Section 2.04(a) hereof, for the issuance
of shares of Common Stock pursuant to the exercise, in accordance with
their respective terms, of employee stock options or other awards
outstanding on the date hereof as set forth on Schedule 3.03-1 of the
Company Disclosure Schedule);
(c) transfer, lease, license, sell, mortgage, pledge,
dispose of or encumber any assets of the Company or any Subsidiary,
except for sales of finished goods, invoicing under cost-plus
contracts and invoicing for the achievement of milestones under
contracts, each in the ordinary course of business and in a manner
consistent with past practice;
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that a wholly-owned
Subsidiary may declare and pay a dividend to its parent;
-28-
(e) reclassify, combine, split or subdivide, or redeem,
purchase or otherwise acquire, directly or indirectly, any of its
capital stock;
(f) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of capital stock or assets) (A) any
corporation, partnership, other business organization or any division
thereof or (B) any assets outside the ordinary course of business; (ii)
incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person, or make any
loans or advances, except in the ordinary course of business to vendors
and/or employees and consistent with past practice; (iii) enter into
any Material Contract, other than in the ordinary course of business,
consistent with past practice; (iv) authorize any single capital
expenditure in excess of $50,000 or capital expenditures, in the
aggregate, in excess of $250,000 for the Company and the Subsidiaries
taken as a whole; or (v) enter into or amend in any material respect
any Material Contract or any contract, agreement, commitment or
arrangement with respect to any matter set forth in this subsection
(f);
(g) increase (except salary increases in the ordinary course
of business and consistent with past practice) the compensation payable
or to become payable to its officers or employees generally or to any
employee with an annual salary in excess of $90,000, or grant any
bonus, severance, change of control or termination pay or material
benefits to, or enter into any employment or severance agreement with,
any director, officer or other employee of the Company or any
Subsidiary, or establish, adopt, enter into, terminate or amend any
collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
director, officer or employee;
(h) take any action, other than reasonable and usual actions
in the ordinary course of business and consistent with past practice,
with respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable
and collection of accounts receivable);
(i) pay, discharge or otherwise satisfy any claim, liability
or obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business and consistent with past practice, of
liabilities as reflected or reserved against in the Company 2002
Balance Sheet, or subsequently incurred in the ordinary course of
business and consistent with past practice;
(j) fail to comply in all material respects with all
applicable Laws;
(k) fail to pay and discharge any Taxes on the Company (or
any of its Subsidiaries) or against any of its properties or assets
before the same shall become
-29-
delinquent and before penalties accrue thereon, except to the extent
and so long as the same are being contested in good faith and by
appropriate proceedings;
(l) fail to perform any of its material obligations under
any of the Material Contracts or terminate any of the Material
Contracts; or
(m) settle or compromise any material claim or litigation.
ARTICLE VI
ADDITIONAL AGREEMENTS
---------------------
SECTION 6.01. Company Stockholders' Meeting. If approval of this
Agreement and the Merger by the stockholders of the Company is required by the
DGCL in order to effect the Merger, the Company shall duly give notice of,
convene and hold a special meeting of its stockholders (the "Company
Stockholders' Meeting") for the purpose of voting upon this Agreement, the
Merger and any related matters as soon as possible following consummation of the
Offer. The Company will, through its Board of Directors, recommend (and continue
to recommend) to its stockholders their approval and adoption of this Agreement
and approval of the Merger until and unless the Board of Directors of the
Company shall withdraw its approval or recommendation of this Agreement or the
Merger, if and to the extent permitted by, and in accordance with, Section 6.05
hereof. The obligations of the Company contained in the first sentence of this
Section 6.01 shall apply and remain in full force and effect regardless of
whether the Company shall have withdrawn its approval or recommendation of this
Agreement or the Merger or taken any other actions described in Section 6.05
hereof.
SECTION 6.02. Company Proxy Statement.
-----------------------
(a) Following consummation of the Offer, if holding of the Company
Stockholders' Meeting is required by Law in order to effect the Merger, the
Company will, as promptly as practicable following consummation of the Offer but
in any event within fifteen (15) days thereafter, file a preliminary Company
Proxy Statement with the SEC and will use reasonable efforts to respond to any
comments of the SEC or its staff and to cause the definitive Company Proxy
Statement promptly to be mailed to the Company's stockholders. The Company will
notify Parent promptly of the receipt of, and will respond promptly to, any
comments from the SEC or its staff and any request by the SEC or its staff for
amendments or supplements to the Company Proxy Statement or for additional
information, and will supply Parent with copies of all correspondence between
the Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Company Proxy Statement or the
Merger. The Company shall give Parent an opportunity to review and comment on
any correspondence with the SEC or its staff or any proposed materials to be
included in the Company Proxy Statement prior to transmission to the SEC or its
staff and shall not transmit any such materials to which Parent reasonably
objects. If at any time prior to the approval of this Agreement by the Company's
stockholders there shall occur any event that is required to be set forth in an
amendment or supplement to the Company Proxy Statement, the Company will
promptly
-30-
notify Parent thereof and prepare and mail to its stockholders such amendment or
supplement. Parent shall furnish to the Company such information concerning
itself and Purchaser for inclusion in the Company Proxy Statement as may
reasonably be requested by the Company and required to be included in the
Company Proxy Statement under applicable Law. The Company shall include in the
definitive Company Proxy Statement the recommendation set forth in Section
1.02(a) hereof and shall use all reasonable efforts to solicit, if so requested
by Parent, from holders of Common Stock proxies in favor of the Merger and this
Agreement and take all other actions reasonably necessary or, in the reasonable
opinion of Purchaser, advisable to secure the approval of the Company's
stockholders required by the DGCL in order to effect the Merger.
(b) Notwithstanding the foregoing, if the number of Shares owned by
Parent, Purchaser and any other affiliate of Parent collectively, immediately
following consummation of the Offer, shall constitute at least ninety (90%)
percent of the outstanding Shares, and so long as all other conditions to the
Company's obligations set forth in Article VII shall have been satisfied, the
parties shall take all necessary and appropriate action to cause the Merger to
become effective as soon as possible after such acquisition, without the
approval of the other stockholders of the Company, in accordance with Section
253 of the DGCL. Parent agrees to cause all Shares purchased pursuant to the
Offer, and any other Shares owned by Purchaser, Parent or any affiliate of
Parent or with respect to which Parent then has the right to vote, to be voted
in favor of the approval and adoption of this Agreement and the approval of the
Merger.
SECTION 6.03. Appropriate Action; Consents; Filings.
-------------------------------------
(a) The Company and Parent shall use their respective reasonable
best efforts to: (i) take, or cause to be taken, all appropriate action, and do,
or cause to be done, all things necessary, proper or advisable under applicable
Law or otherwise to consummate and make effective the Offer, the Merger and the
other transactions contemplated hereby as promptly as practicable; (ii) obtain
in a timely manner from Governmental Authorities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Parent or the Company or any of their respective subsidiaries in
connection with the authorization, execution and delivery of this Agreement and
the consummation of the Offer, the Merger and the other transactions
contemplated hereby; and (iii) as promptly as practicable make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement, the Offer, the Merger or the other transactions contemplated
hereby that are required under (A) the Exchange Act, and any other applicable
federal securities or Blue Sky Laws, (B) the HSR Act and any related
governmental request(s) thereunder and (C) any other applicable Law; provided,
that Parent and the Company shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such documents
to the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith. Each of the Company and Parent shall furnish to each other all
information required from it for any application or other filing to be made
pursuant to any applicable Law (including all information required to be
included in the Company Proxy Statement) in connection with the transactions
contemplated by this Agreement.
-31-
(b) Without limiting the generality of its undertakings pursuant to
Section 6.03(a) hereof, each party shall (i) use its commercially best efforts
to prevent the entry, in a judicial or administrative proceeding brought under
any antitrust Law by any Governmental Authority with jurisdiction over
enforcement of any applicable antitrust Laws or any other party, of any
permanent or preliminary injunction or other order that would make consummation
of the Offer, the Merger or any other transaction contemplated hereby in
accordance with the terms of this Agreement unlawful or would prevent or delay
it and (ii) take promptly, in the event that such an injunction or order has
been issued in such a proceeding, all steps necessary to take an appeal of such
injunction or order; provided, however, that Parent and Purchaser, together,
shall not be required to undertake more than one such appeal.
(c) Notwithstanding anything to the contrary in this Section 6.03 or
elsewhere in this Agreement, the parties agree that, in response to any action
taken or threatened to be taken by any court or Governmental Authority, Parent
shall not be required to (i) take any action or agree to the imposition of any
order or judgment that would compel Parent or the Company (or any of their
respective subsidiaries) to sell, license or otherwise dispose of, hold separate
or otherwise divest itself of any portion of its respective business, operations
or assets in order to consummate the Offer, the Merger or any other transaction
contemplated hereby or (ii) impose any material limitation(s) on Parent's
ability to own or operate any of the businesses and operations of the Company
and its Subsidiaries.
(d) (i) Each of Parent and the Company shall give (or shall cause
its respective subsidiaries to give) any notices to third parties, and use, and
cause its respective subsidiaries to use, their reasonable best efforts to
obtain any third-party consents or waivers, (A) necessary, proper or advisable
to consummate the transactions contemplated in this Agreement, (B) disclosed or
required to be disclosed in the Company Disclosure Schedule or (C) required to
prevent a Company Material Adverse Effect from occurring prior to or after the
Effective Time or a Parent Material Adverse Effect from occurring after the
Effective Time; provided, however, that, without the prior written consent of
Parent, the Company and its Subsidiaries shall not incur fees and expenses in
excess of $100,000 in the aggregate in order to obtain, and/or in seeking to
obtain, any such third-party consents or waivers.
(ii) In the event that either Parent or the Company shall fail
to obtain any third-party consent or waiver described in subsection (d)(i)
above, it shall use its reasonable best efforts, and shall take any such actions
reasonably requested by the other party, to minimize any adverse effect upon the
Company and Parent, their respective subsidiaries, and their respective
businesses resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent or waiver.
(e) From the date of this Agreement until the Effective Time or the
earlier termination of this Agreement pursuant to Article VIII hereof, each
party shall promptly notify the other party in writing of any pending or
threatened action, proceeding or investigation by any Governmental Authority or
any other person known to it (i) challenging or seeking material damages in
connection with the Offer, the Merger or any
-32-
other transaction contemplated hereby; or (ii) seeking to delay, restrain or
prohibit the consummation of the Offer, the Merger or any other transaction
contemplated hereby or otherwise limit the right of Parent or Parent's
subsidiaries to own or operate all or any portion of the businesses or assets of
the Company or its Subsidiaries, which in either case is reasonably likely to
have, individually or in the aggregate, a Company Material Adverse Effect prior
to or after the Effective Time, or a Parent Material Adverse Effect after the
Effective Time.
SECTION 6.04. Access to Information; Confidentiality.
--------------------------------------
(a) From the date hereof to the earlier of the termination of this
Agreement pursuant to Article VIII hereof and the Effective Time, upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which the Company is subject (from which the Company shall use its
reasonable best efforts to be released), the Company will provide to Parent (and
its representatives) full access to all information and documents which Parent
may reasonably request regarding the financial condition, business, assets,
liabilities, employees and other aspects of the Company, other than information
and documents that in the opinion of the Company's counsel may not be disclosed
under applicable Law. Parent shall keep such information confidential in
accordance with the terms of the confidentiality agreement, dated June 11, 2002
(the "Confidentiality Agreement"), between Parent and Wachovia Securities.
(b) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty or any condition to the obligations of the parties
hereto contained in this Agreement.
SECTION 6.05. No Solicitation of Competing Transactions. Neither the
Company nor any Subsidiary shall, directly or indirectly, through any officer or
director or any agent acting at the Company's authorization or direction,
initiate, solicit or knowingly encourage (including by way of furnishing
non-public information or assistance), or take any other action knowingly to
facilitate, any inquiries about or the making of any proposal that the Company
enter into any Competing Transaction (as defined below), or enter into, maintain
or have discussions or negotiate with any person in furtherance of such
inquiries or to obtain or seek to obtain a Competing Transaction, or agree to,
recommend or endorse any Competing Transaction or withdraw or modify, or propose
publicly to withdraw or modify, its recommendation set forth in Section 1.02(a)
hereof, or authorize or permit any person to take any such action, and the
Company shall notify Parent orally (within one (1) business day) and in writing
(as promptly as practicable) after receipt by any officer or director of the
Company or any Subsidiary or any investment banker, financial advisor, agent or
attorney retained by the Company or any Subsidiary, of any inquiry concerning,
or proposal for, a Competing Transaction, or of any request for non-public
information relating to the Company or any of its Subsidiaries either in
connection with such an inquiry or proposal or when such request for non-public
information could reasonably be expected to lead to such a proposal; provided,
however, that nothing contained in this Section 6.05 or any other provision
hereof shall prohibit the Board of Directors of the Company from, (i) at any
time prior to the acceptance for payment by Purchaser of the Shares, furnishing
information to, or entering into discussions or negotiations with, any person
that makes an unsolicited, bona
-33-
fide proposal for a Competing Transaction if, and only to the extent that, (A)
the Board of Directors of the Company, after consultation with independent legal
counsel (who may be the Company's regularly engaged independent legal counsel),
determines in good faith that failure to take such action would constitute a
breach of the fiduciary duties of such directors to the Company's stockholders
under applicable Law, and, solely with respect to entering into such discussions
or negotiations, the Board of Directors of the Company determines in good faith,
based on the advice of its financial advisor, that such Competing Transaction is
reasonably likely to be more favorable to the Company's stockholders, from a
financial point of view, than the Offer and the Merger and (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person, the Company (x) provides at least two (2) business days'
prior written notice to Parent to the effect that it is furnishing information
to, or entering into discussions or negotiations with, such person and provides
in such notice, in reasonable detail, the identity of the person making such
proposal and the terms and conditions of such proposal, (y) provides Parent with
all information to be provided to such person which Parent has not previously
been provided, and (z) receives from such person an executed confidentiality
agreement in reasonably customary form and having terms no less favorable to the
Company than those contained in the Confidentiality Agreement; (ii) complying
with Rule 14e-2 (and any associated obligation under Rule 14D-9) promulgated
under the Exchange Act with regard to a third-party tender or exchange offer;
provided, however, that the Board of Directors of the Company shall not
recommend acceptance of such tender or exchange offer unless, in the good faith
judgment of the Board of Directors of the Company, after consultation with
independent legal counsel who may be the Company's regularly engaged independent
legal counsel, failure to recommend such acceptance would constitute a breach of
its fiduciary duties to the Company's stockholders under applicable Law; (iii)
referring any third party to this Section 6.05 or making a copy of this Section
6.05 available to any third party; or (iv) at any time prior to the acceptance
for payment by Purchaser of the Shares, failing to make or withdrawing or
modifying its recommendation referred to in Section 1.02(a) hereof following the
making of an unsolicited, bona fide proposal relating to a Competing Transaction
if the Board of Directors of the Company, after consultation with independent
legal counsel (who may be the Company's regularly engaged independent legal
counsel) determines in good faith that failure to take such action would
constitute a breach of the fiduciary duties of such directors to the Company's
stockholders under applicable Law and the Board of Directors of the Company
determines in good faith, based on the advice of its financial advisor, that
such Competing Transaction is reasonably likely to be more favorable to the
Company's stockholders, from a financial point of view, than the Offer and the
Merger. The Company agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which the Company
is a party. For purposes of this Agreement, the term "Competing Transaction"
shall mean: (i) any merger, consolidation, liquidation, share exchange, business
combination, recapitalization or other similar transaction involving the Company
or any Subsidiary; (ii) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition of 15% or more of the assets or capital stock of the Company
and the Subsidiaries, taken as a whole, in a single transaction or series of
transactions; (iii) any tender offer or exchange offer for 15% or more of the
Shares (other than by the Company or any affiliate thereof) or the filing of a
registration statement under the Securities Act in connection therewith; (iv)
any person having acquired beneficial ownership or the right to
-34-
acquire beneficial ownership of, or any "group" (as such term is defined under
Section 13(d) of the Exchange Act and the rules and regulations promulgated
thereunder) having been formed which beneficially owns, or has the right to
acquire beneficial ownership of, 15% or more of the Shares or any other class of
capital stock of the Company; or (v) any public announcement of a proposal, plan
or intention to do any of the foregoing or any agreement to engage in any of the
foregoing. For a Competing Transaction to be more favorable to the Company's
stockholders, it must be a bona fide proposal made by a third party to acquire,
for consideration consisting solely of cash and/or equity securities, more than
fifty (50%) percent of the voting power of the outstanding Shares or all, or
substantially all, of the assets of the Company and for which financing, to the
extent required, is then committed or which, in the good faith, reasonable
judgment of the Board of Directors of the Company, is capable of being obtained
by such third party.
SECTION 6.06. Directors' and Officers' Insurance.
----------------------------------
(a) The Surviving Corporation shall use its reasonable best efforts
to maintain in effect for six (6) years from the Effective Time, if available,
either (i) directors' and officers' liability insurance covering only those
persons who are currently covered by the Company's directors' and officers'
liability insurance policy on terms comparable to those applicable to the then
current directors and officers of Parent; or (ii) the current directors' and
officers' liability insurance policies maintained by the Company with respect to
matters occurring prior to the Effective Time; provided, however, that in no
event shall the Surviving Corporation be required to expend pursuant to this
Section 6.06(a) more than an amount per year equal to 200% of current annual
premiums paid by the Company for such insurance coverage (i.e., the current
annual premium paid by the Company is $240,000).
(b) This Section 6.06 shall survive the consummation of the Merger,
is intended to benefit the Surviving Corporation and the directors and officers
of the Company in office at the Effective Time (the "Insured Parties"), shall be
binding on all successors and assigns of the Surviving Corporation, and shall be
enforceable by the Insured Parties.
(c) The parties hereto hereby acknowledge that, as of the date
hereof, the Company has entered into six-year indemnification agreements with
each of the Company's current officers and directors. Subject to the following
sentence, such indemnification agreements and the provisions of this Section
6.06 shall constitute the only legal and contractual provisions, at the
Effective Time, providing indemnification or directors' and officers' liability
insurance for any of the former or present officers, directors, employees or
agents of the Company, except only as may otherwise be specifically required
under the DGCL. Parent has guaranteed the obligations of the Company under such
indemnification agreements, subject to the occurrence of, and following, the
Effective Time and subject to the limitations contained therein.
SECTION 6.07. Notification of Certain Matters. From and after the date
of this Agreement until the Effective Time or the earlier termination of this
Agreement pursuant to Article VIII hereof, each party hereto shall promptly
notify the other party hereto of (a) the occurrence, or non-occurrence, of any
event the occurrence, or non-occurrence, of which would be likely to cause: (i)
any representation or warranty made in this Agreement by
-35-
such party, or any information furnished in the Company Disclosure Schedule by
such party, as the case may be, to be inaccurate either at the time such
representation or warranty was made, or such information is furnished, or at the
time of the occurrence or non-occurrence of such event; or (ii) any failure by
such party to comply with or satisfy any condition to the obligations of such
party to effect the Offer, the Merger and the other transactions contemplated by
this Agreement, or (b) the failure of the Company or Parent, as the case may be,
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it pursuant to this Agreement which would be likely to
result in any of the conditions to the obligations of any party to effect the
Offer, the Merger and the other transactions contemplated by this Agreement not
to be satisfied; provided, however, that the delivery of any notice pursuant to
this Section 6.07 shall not be deemed to be an amendment of this Agreement or
any schedule of the Company Disclosure Schedule and shall not cure any breach of
any representation or warranty requiring disclosure of such matter on the date
of this Agreement. No delivery of any notice pursuant to this Section 6.07 shall
limit or affect the remedies available hereunder to the party receiving such
notice.
SECTION 6.08. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statement with respect to this Agreement, the Offer, the Merger and the
other transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by Law or any listing agreement with the New York Stock
Exchange, the Nasdaq National Market or any other national securities exchange
to which Parent or the Company may be a party. The parties have agreed on the
text of a joint press release by which Parent and the Company will announce the
execution of this Agreement.
SECTION 6.09. Bonus Plan. With respect to the Company's Management
Bonus and Profit Sharing Plan, the determination of whether the performance
targets have been met thereunder for the Company's fiscal year ending December
31, 2003 shall be made based on the actual performance results as of the end of
such fiscal year; provided, however, that the impact of the Company Transaction
Expenses (as defined below) shall be disregarded for purposes of determining
whether such targets have been met; and provided, further, that in determining
whether such targets have been met, the corporate expenses actually incurred or
accrued by the Company through the Effective Time shall be annualized in
determining the costs and expenses for the full 2003 fiscal year, whether or not
actual costs and expenses were higher or lower. As used herein, the term
"Company Transaction Expenses" means all reasonable and documented costs,
expenses and fees incurred by the Company (including, without limitation, all
fees and expenses of counsel, financial advisors, accountants, attorneys and
other experts and consultants to the Company and its affiliates, and all
printing and advertising expenses) actually incurred or accrued by it since
January 1, 2003 or on its behalf in connection with the Offer, the Merger or any
other transaction contemplated hereby, and shall specifically include any
severance, change of control or similar payments made by the Company to any of
its officers and employees directly as a result of the transactions contemplated
hereby.
-36-
SECTION 6.10. Stockholder Litigation. The Company shall use its
reasonable best efforts to defend any stockholder litigations or claims against
the Company and its directors (and/or officers) relating to the Offer, the
Merger or any of the other transactions contemplated by this Agreement
(including any derivative claims) and shall give Parent the opportunity to
participate, at Parent's expense, in, and shall actively cooperate with Parent
in, the defense or (subject to Section 5.01(m) hereof) settlement of any such
litigations or claims.
SECTION 6.11. Termination of 401(k) Plan and Executive Deferred
Compensation Plan. The Company shall take all such actions required so that,
prior to the Effective Time, each of the Company's 401(k) Profit Sharing Plan
and the Signal Technology Executive Deferred Compensation Plan is terminated
without any further material monetary liability or obligation thereunder.
SECTION 6.12. Additional Company SEC Reports; Financial Statements.
From and after the date of this Agreement until the Effective Time: (i) the
Company shall timely file all forms, reports and documents required to be filed
by it with the SEC; (ii) each of such forms shall be prepared in accordance with
the requirements of the Securities Act and the Exchange Act, as the case may be,
and the rules and regulations thereunder; (iii) each of such forms will not at
the time it is filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
are made, not misleading; and (iv) each of such forms will not at the time it is
filed omit any documents required to be filed as exhibits thereto. Each of the
consolidated financial statements (including, in each case, the notes thereto)
contained in the SEC reports referred to in the previous sentence shall be
prepared in accordance with U.S. generally accepted accounting principles
applied on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each will fairly present the consolidated
financial position, results of operations and cash flows of the Company and its
Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein in accordance with U.S. generally accepted accounting
principles (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which are not expected by the Company to be
material in amount).
SECTION 6.13. Rights Agreement. On or as soon as practicable following
the date hereof (and prior to the commencement of the Offer), the Company shall
amend the Rights Agreement, dated as of January 26, 1999, between the Company
and Bank Boston, N.A., as Rights Agent (the "Rights Agreement"), (i) to render
the Rights Agreement inapplicable to this Agreement, the Tender and Voting
Agreements, the Offer, the Merger and the other transactions contemplated hereby
and thereby and (ii) to ensure that (x) neither Parent nor Purchaser is an
Acquiring Person (as defined in the Rights Agreement) pursuant to the Rights
Agreement and (y) a Share Acquisition Date, Distribution Date or Triggering
Event (in each case, as defined in the Rights Agreement) does not occur by
reason of the execution of this Agreement or the Tender and Voting Agreements,
or the commencement or consummation of the Offer, the Merger or the other
transactions contemplated by this Agreement or the Tender and Voting Agreements.
The Company may not further amend, or
-37-
invoke the provisions of, the Rights Agreement unless this Agreement shall have
been terminated in accordance with the provisions of Section 8.01 hereof.
SECTION 6.14. Limitation on Expenses. The Company shall not incur
Actual Transaction Expenses in excess of the amount set forth on Schedule 3.19
of the Company Disclosure Schedule, without the prior written consent of Parent.
ARTICLE VII
CONDITIONS TO THE MERGER
------------------------
SECTION 7.01. Conditions to the Obligation of Each Party. The
obligation of each of the Company, Parent and Purchaser to consummate the Merger
is subject to the satisfaction of each of the following conditions:
(a) if required by applicable Law, this Agreement and the
Merger contemplated hereby shall have been approved and adopted by the
requisite affirmative vote at a meeting or the written consent of the
stockholders of the Company in accordance with the DGCL;
(b) Purchaser shall have purchased Shares pursuant to the
Offer; and
(c) no order, stay, decree, judgment or injunction shall
have been entered, issued or enforced by any Governmental Authority or
court of competent jurisdiction and remain in effect that prohibits
consummation of the Merger, and there shall not be any action taken,
or any statute, rule, regulation or order enacted, entered, enforced
or deemed applicable to the Merger that makes the consummation of the
Merger illegal or prohibits the Merger.
ARTICLE VIII
TERMINATION; AMENDMENT; AND WAIVER
----------------------------------
SECTION 8.01. Termination. This Agreement may be terminated and the
Offer and the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of this Agreement and the
transactions contemplated hereby by the stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards
of Directors of each of Parent, Purchaser and the Company; or
(b) by either Parent, Purchaser or the Company if either (i)
the Offer shall not have been consummated on or before June 30, 2003
(the "Termination Date"); provided, however, that the right to
terminate this Agreement under this Section 8.01(b)(i) shall not be
available to any party whose failure to fulfill any of its obligations
under this Agreement has been the cause of, or resulted in, the failure
of
-38-
the consummation of the Offer to occur on or before such Termination
Date; provided, further, that, if a Request for Additional Information
is received from a Governmental Authority pursuant to the HSR Act,
such Termination Date shall be extended up to the 90th day following
acknowledgment by such Governmental Authority that Parent and the
Company have complied with such Request, but in any event not later
than August 29, 2003; and, provided, further, that if there shall be
instituted or pending, at any scheduled expiration date of the Offer,
any suit, action or proceeding by any person (and not a Governmental
Authority) that would give rise to the failure of a condition set
forth in subsection (a) of Annex A hereto, the parties hereto shall
reasonably and mutually seek to agree to any appropriate extension of
the Termination Date; (ii) there shall be any Law that makes
consummation of the Merger illegal or otherwise prohibited or if any
court of competent jurisdiction or other Governmental Authority shall
have issued an order, judgment, decree, ruling, injunction or taken
any other action restraining, enjoining or otherwise prohibiting or
materially altering the terms of the Offer or the Merger and such
order, judgment, decree, ruling, injunction or other action shall have
become final and nonappealable (any such order, judgment, decree,
ruling, injunction or action shall be deemed final and nonappealable
if Parent or Purchaser is exercising its right to terminate under this
Section 8.01(b)(ii) and Parent or Purchaser has unsuccessfully
appealed the same on at least one (1) occasion), except that no party
may terminate pursuant to this Section 8.01(b)(ii) unless such party
shall have complied with its obligations under Section 6.03(a) and (b)
hereof, subject to the terms of Section 6.03(c) hereof, and Section
6.10 hereof, as applicable; or (iii) the Offer expires pursuant to its
terms without the acceptance for payment of Shares thereunder;
provided, however, that neither Parent, Purchaser nor the Company has
the right to terminate this Agreement pursuant to this Section
8.01(b)(iii) if the failure of the acceptance for payment of Shares
pursuant to the Offer to occur is attributable to the failure of such
party to perform any of the covenants contained in this Agreement
required to be performed by it at or prior to the acceptance for
payment of Shares pursuant to the Offer; or
(c) by Parent, if (i) the Company's Board of Directors shall
have withdrawn, modified, or changed its approval or recommendation in
respect of this Agreement, the Merger or the Offer in a manner adverse
to the Merger or the Offer, or adverse to Parent or Purchaser, (ii) the
Company's Board of Directors shall have recommended any Competing
Transaction, (iii) the Company shall have violated or breached in any
material respect any of its obligations under Section 6.05 hereof or
(iv) the Board of Directors of the Company shall have resolved to take
any of the foregoing actions; or
(d) by the Company, at any time prior to the acceptance for
payment of Shares pursuant to the Offer, if the Board of Directors of
the Company, after its compliance with its obligations under Section
6.05 hereof, shall have recommended or resolved to recommend to the
stockholders of the Company a proposal for a Competing Transaction
under circumstances where a majority of such directors reasonably
determines in good faith (i) after consultation with independent legal
counsel, that failure to accept such proposal would constitute a breach
of the
-39-
fiduciary duties of such directors to the Company's stockholders under
applicable Law and (ii) based on the advice of its financial advisor,
that such Competing Transaction is reasonably likely to be more
favorable to the Company's stockholders, from a financial point of
view, than the Offer and the Merger; provided, that any termination of
this Agreement by the Company pursuant to this Section 8.01(d) shall
not be effective unless and until (A) the Board of Directors of the
Company has provided Parent with written notice that the Company
intends to enter into a binding written agreement in respect of such
Competing Transaction, (B) the Company shall have attached thereto the
most current, written version of such Competing Transaction, (C)
Parent does not make, within three (3) days after receipt of the
Company's written notice, an offer that the Board of Directors of the
Company (which shall be obligated to timely review in good faith any
such revised or new offer) shall have determined in good faith (after
consultation with its aforementioned outside legal and financial
advisors) is at least as favorable to the stockholders of the Company
as such Competing Transaction and (D) the Company has made payment of
the full Termination Fee required by Section 8.03(a) hereof as a
condition to its ability to terminate under this subsection (d);
provided, further, that the parties hereto acknowledge and agree that,
notwithstanding any other provision of this Agreement, a Competing
Transaction may not be deemed to be more favorable to the Company's
stockholders unless it is a bona fide proposal made by a third party
to acquire, for consideration consisting solely of cash and/or equity
securities, more than fifty (50%) percent of the voting power of the
outstanding Shares or all, or substantially all, of the assets of the
Company and for which financing, to the extent required, is then
committed or which, in the good faith, reasonable judgment of the
Board of Directors of the Company, is capable of being obtained by
such third party; or
(e) by the Company, at any time prior to the acceptance for
payment of Shares pursuant to the Offer, in the event of a breach by
Parent or Purchaser of any representation, warranty or material
agreement contained herein, which breach is incapable of being cured
or, with respect to a breach that is curable, has not been cured within
twenty (20) business days after the giving of written notice thereof to
Parent or Purchaser, as applicable, except in any case under this
subsection (e) for such breaches which are not reasonably likely to
affect adversely Parent's or Purchaser's ability to complete the Offer
or the Merger subject to the terms and conditions of this Agreement; or
(f) by Parent, at any time prior to the acceptance for
payment of Shares pursuant to the Offer, in the event of a breach by
the Company of any representation, warranty or material agreement
contained herein such that such breach would give rise to the failure
of a condition set forth in subsections (f) or (g) (after giving
effect to the cure provisions contained therein) of Annex A hereto
after the giving of written notice thereof to the Company; or
(g) by the Company, if Parent or Purchaser shall have failed
to commence the Offer in accordance with the first sentence of Section
1.01(a) hereof.
-40-
SECTION 8.02. Effects of Termination. Except as provided in Sections
6.04, 6.08 and 9.01 hereof, in the event of the termination of this Agreement
pursuant to, and in accordance with, Section 8.01 hereof, this Agreement shall
forthwith become void, there shall be no liability under this Agreement on the
part of Parent, Purchaser or the Company or any of their respective officers or
directors and all rights and obligations of any party hereto shall cease,
subject to the sole and exclusive remedies of Parent and Purchaser set forth in
Section 8.03 hereof; provided, that nothing herein shall relieve any party from
liability for any willful breach hereof. The payment of the Termination Fee and
Expenses under Section 8.03(a) hereof by the Company following a termination
pursuant to Section 8.01(c) or 8.01(d) hereof shall constitute liquidated
damages in consideration of the time and opportunity and related costs of Parent
and Purchaser and, upon receipt of such Termination Fee and Expenses, Parent and
Purchaser shall have no further recourse at law or in equity against the Company
in respect of this Agreement or any breach hereof other than as provided in this
Section 8.02.
SECTION 8.03. Fees and Expenses.
-----------------
(a) The Company shall pay Parent a cash fee of $4,500,000 (the
"Termination Fee") plus Expenses (as hereinafter defined) upon the termination
of this Agreement pursuant to Section 8.01(c) or 8.01(d) hereof.
(b) As used herein, the term "Expenses" means all reasonable and
documented out-of-pocket expenses (excluding any wages or salaries of any of
Parent's or Purchaser's or any of their affiliates' employees and any
transportation expenses associated with means of transportation owned by Parent
or any of its affiliates) and fees incurred by Parent and/or Purchaser prior to
the termination of this Agreement (including, without limitation, all fees and
expenses of counsel, financial advisors, accountants, environmental and other
experts and consultants to Parent, and its affiliates and all printing and
advertising expenses) actually incurred or accrued by either of them or on their
behalf in connection with the Offer, the Merger or any other transaction
contemplated hereby; provided, however, that Expenses shall not exceed $500,000
(the "Cap").
(c) Any Termination Fee and Expenses required to be paid pursuant to
this Section 8.03 shall be paid as promptly as practicable but not, subject to
Section 8.01(d)(D) hereof, later than five (5) business days after the
termination giving rise to the Termination Fee and shall be paid by wire
transfer of immediately available funds to an account designated by Parent.
(d) Except as otherwise provided in this Section 8.03, all costs and
expenses incurred in connection with this Agreement and the Offer, the Merger or
any other transaction contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Offer, the Merger or any other transaction
contemplated hereby is consummated.
(e) In the event that the Company shall fail to pay the Termination
Fee and/or Expenses when due, the term "Expenses" shall be deemed to include,
irrespective of the Cap, the costs and expenses actually incurred or accrued by
Parent and its affiliates
-41-
(including, without limitation, fees and expenses of counsel) in connection with
the collection of such Termination Fee and Expenses, and the Company shall pay
interest on such unpaid Termination Fee and/or Expenses, commencing on the date
that such Termination Fee and/or Expenses became due, at a rate equal to the
rate of interest publicly announced by Fleet Bank, from time to time, in the
City of Boston, at such Bank's Base Rate plus two (2%) percent; provided,
however, that the costs of collection reimbursable under this subsection (e)
shall not exceed $250,000.
SECTION 8.04. Amendment. Subject to Section 1.03(c) hereof, this
Agreement may be amended by the parties hereto by action taken by or on behalf
of their respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the transactions contemplated hereby by the stockholders of the Company, if
required, no amendment may be made which would reduce the Per Share Amount or
change the type of consideration into which each Share shall be converted upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.05. Waiver. Subject to Section 1.03(c) hereof, at any time
prior to the Effective Time, any party hereto may, to the extent permitted by
applicable Law, (a) extend the time for the performance of any obligation or
other act of any other party hereto, (b) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
------------------
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement and
any certificates delivered pursuant hereto by any persons shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to Section
8.01 hereof, as the case may be, except that the agreements set forth in
Articles I and II and Section 6.06 hereof shall survive the Effective Time in
accordance with their respective terms, and those agreements set forth in
Sections 6.08, 8.02 and 8.03 hereof and in this Article IX shall survive the
termination of this Agreement indefinitely.
SECTION 9.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a later
notice given in accordance with this Section 9.02):
-42-
if to Parent or Purchaser:
Corporate Secretary
Crane Co.
000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxxxxxx & Xxxxxxxx LLP
Xxxxx X. Xxxxxx Building
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
if to the Company:
Xxxxxx Xxxxxxx
Signal Technology Corporation
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxx X. Xxxxxxx, Esq.
Fish & Xxxxxxxxxx P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
SECTION 9.03. Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" of a specified person means a person who,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such specified person;
(b) "associate" shall have the meaning ascribed thereto
under Rule 405 promulgated under the Securities Act;
(c) "beneficial owner", with respect to any shares of
capital stock, means a person who shall be deemed to be the beneficial
owner of such shares (i) which such person or any of its affiliates or
associates beneficially owns, directly or
-43-
indirectly; (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding; or (iii)
which are beneficially owned, directly or indirectly, by any other
persons with whom such person or any of its affiliates or associates
or any person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding for the
purpose of acquiring, holding, voting or disposing of any such shares;
(d) "business day" means any day on which the principal
offices of the SEC in Washington, DC are open to accept filings, or, in
the case of determining a date when any payment is due, any day on
which banks are not required or authorized to close in the City of
Boston, Massachusetts;
(e) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(f) "Governmental Authority" means any United States
(federal, state or local) or foreign government, or governmental,
regulatory or administrative authority, agency, instrumentality or
commission;
(g) "knowledge of the Company" means the knowledge of any of
the individuals listed under the heading "Senior Management" in the
Company's 2002 Annual Report to Stockholders, after their making
reasonable inquiries of appropriate persons within the Company;
(h) "person" means a natural person, corporation,
partnership, limited partnership, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity;
(i) "subsidiary" or "subsidiaries" of any person means any
corporation, partnership, joint venture or other legal entity of which
such person (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock
or other equity interests, the holders of which are generally entitled
to vote for the election of the board of directors or other governing
body of such corporation or other legal entity; and
(j) "Tax" means any U.S. federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative minimum,
add-on minimum, sales, use, transfer, registration, value added,
excise, natural resources, severance, stamp, occupation, premium,
windfall profit, environmental, customs, duties, real property,
-44-
personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or
levy, of any kind whatsoever, including any interest, penalties, or
additions to tax in respect of the foregoing.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced under applicable
Law, or public policy, all other terms and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger and the other transactions contemplated hereby are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in order that the Offer, the Merger and the other transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
SECTION 9.05. Entire Agreement; Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof.
This Agreement shall not be assigned by operation of law or otherwise, except
that Parent and Purchaser may assign and/or delegate all or any of their rights
and obligations hereunder to any affiliate of Parent so long as no such
assignment or delegation shall relieve the assigning or delegating party of its
obligations hereunder if such assignee or delegee does not perform such
obligations.
SECTION 9.06. Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of the parties hereto and their respective
successors and permitted assigns, and nothing in this Agreement, express or
implied, is intended to or shall confer upon any other person any right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement, other
than Section 6.06(a) hereof (which is intended to be for the benefit of the
persons covered thereby and may be enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.08. Governing Law; Exclusive Forum. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in any Delaware State or federal court sitting
in the City of Wilmington.
SECTION 9.09. Consent to Jurisdiction and Venue.
---------------------------------
(a) EACH OF PARENT, THE COMPANY AND PURCHASER HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE COURTS
OF THE STATE OF DELAWARE AND TO THE
-45-
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
DELAWARE, FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT AND EACH OF PARENT, THE COMPANY AND
PURCHASER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH
ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED EXCLUSIVELY IN ANY
DELAWARE STATE OR FEDERAL COURT SITTING IN THE CITY OF WILMINGTON.
EACH OF PARENT, THE COMPANY AND PURCHASER HEREBY IRREVOCABLY WAIVES
ANY OBJECTION THAT SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF VENUE IN SUCH ACTION OR PROCEEDING IN SUCH FORUM AND ANY OBJECTION
TO SUCH FORUM ON THE BASIS OF IT BEING AN INCONVENIENT FORUM. EACH OF
PARENT, THE COMPANY AND PURCHASER AGREES THAT A FINAL JUDGMENT IN ANY
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW.
(b) EACH OF PARENT, THE COMPANY AND PURCHASER IRREVOCABLY
CONSENTS TO ANY SERVICE OF A SUMMONS AND COMPLAINT AND ANY OTHER
PROCESS IN ANY OTHER ACTION OR PROCEEDING RELATING TO THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT, ON BEHALF OF ITSELF OR ITS PROPERTY, BY
THE PERSONAL DELIVERY OF COPIES OF SUCH PROCESS TO SUCH PARTY. NOTHING
IN THIS SECTION 9.09 SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 9.10. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.11. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-46-
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
executive officers thereunto duly authorized.
CRANE CO.
Attest:
/s/ Xxxxxxxx X. xxXxxx By: /s/ Xxxx X. Xxxx
---------------------- -----------------------------------
Title: Secretary Name: Xxxx X. Fast
Title: President and Chief Executive Officer
STC MERGER CO.
Attest:
/s/ Xxxxxxxx X. xxXxxx By: /s/ Xxxx X. Xxxx
---------------------- -----------------------------------
Title: Secretary Name: Xxxx X. Fast
Title: President and Chief Executive Officer
SIGNAL TECHNOLOGY CORPORATION
Attest:
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxxx Xxxxxxx
---------------------- -----------------------------------
Title: Secretary Xxxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
-47-
ANNEX A
to
Agreement and Plan of Merger
Conditions to the Offer
-----------------------
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) promulgated under the Exchange
Act, pay for any Shares tendered pursuant to the Offer if (i) there shall not
have been validly tendered and not withdrawn prior to the expiration of the
Offer that number of Shares which, when added to Shares, if any, previously
acquired by Purchaser or Parent or any of their respective affiliates,
represents a majority of the then total issued and outstanding Shares (assuming,
for this purpose, the exercise of all options to purchase Shares which are then
or which will be within six (6) months thereafter vested and exercisable) (the
"Minimum Condition"), (ii) any applicable waiting period (and any extension(s)
thereof) under the HSR Act shall not have expired or been terminated prior to
the expiration of the Offer or (iii) at any time on or after the date of the
Merger Agreement and prior to any acceptance for payment or payment for any
Shares pursuant to the Offer, any one or more of the following events shall have
occurred:
(a) there shall be instituted or be pending by any person or
Governmental Authority any suit, action or proceeding,
that is reasonably likely to prevail, (i) challenging or
seeking to restrain or prohibit the making or
consummation of the Offer or the Merger or to
substantially deprive Parent of any of its anticipated
benefits of the Merger, (ii) seeking to prohibit or
materially limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries
of a material portion of the business, operations or
assets of the Company or Parent and/or its subsidiaries
or to compel the Company or Parent to dispose of or hold
separate any material portion of the business or assets
of the Company or Parent and/or its subsidiaries as a
result of the Offer or the Merger, or (iii) seeking to
impose material limitations on the ability of Parent or
Purchaser to acquire or exercise full rights of ownership
of Shares, including, without limitation, the right to
vote such Shares on all matters properly presented to the
stockholders of the Company;
(b) any statute, rule, regulation, judgment, order or
injunction shall be enacted, entered, enforced,
promulgated or deemed applicable to the Offer and/or the
Merger, or any other action shall be taken by any
Governmental Authority or court, other than the
application to the Offer or the Merger of applicable
waiting periods under the HSR Act, that is reasonably
likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iii) of
subsection (a) above;
(c) there shall have occurred a Company Material Adverse
Effect;
A-1
(d) (i) the Company's Board of Directors shall have
withdrawn, modified, or changed its approval or
recommendation in respect of the Merger Agreement, the
Merger or the Offer in a manner adverse to the Merger or
the Offer, or adverse to Parent or Purchaser, (ii) the
Company's Board of Directors shall have recommended any
Competing Transaction, (iii) the Company shall have
violated or breached in any material respect any of its
obligations under Section 6.05 of the Merger Agreement,
or (iv) the Board of Directors of the Company shall have
resolved to take any of the foregoing actions;
(e) the Company, Purchaser and Parent shall have agreed in
writing to terminate the Offer, or the Merger Agreement
shall have been terminated in accordance with its terms;
(f) any of the representations and warranties of the Company
set forth in the Merger Agreement shall not be true and
correct (without regard to any materiality qualifications
or references to Company Material Adverse Effect
contained in any specific representation or warranty) as
if such representations and warranties were made at the
time of any such determination, except to the extent such
representations and warranties expressly relate to an
earlier date (in which case as of such date); provided,
that the condition contained in this subsection (f) shall
be deemed not to have been triggered so long as the
failure of all such representations and warranties so to
be true and correct would not have a Company Material
Adverse Effect or prevent or materially delay the
consummation of the Offer;
(g) the Company shall have failed to perform in any material
respect any of its obligations required to be performed
by it under the Merger Agreement at or prior to
consummation of the Offer, which failure to perform is
incapable of being cured or, with respect to a failure
that is curable, has not been cured within twenty (20)
business days after the giving of written notice thereof
by Parent to the Company; provided, that any material
breach of Section 6.05 of the Merger Agreement shall be
covered by subsection (d) above and not this subsection
(g); provided, further, that with respect to any breach
by the Company of the provisions of Section 2.04(a)
(other than the first sentence thereof, which has no cure
period) of the Merger Agreement, the Company shall be
afforded up to thirty (30) business days to cure such
breach; or
(h) there shall have occurred, and continued to exist, (x) a
declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (y) a
commencement of a war, armed hostilities or other
national or international calamity involving the United
States or, in the case of any of the foregoing
occurrences existing on or at the time of the
commencement of the Offer, a material worsening or
acceleration thereof, or (z) a material limitation
(whether or not mandatory) by any
A-2
Governmental Authority on the extension of credit by
banks or other lending institutions, which in the case of
clauses (x), (y) or (z) prevents Parent from borrowing
money pursuant to its credit facilities in effect on the
date hereof.
The foregoing conditions (including those set forth in clauses (i) and
(ii) of the initial paragraph hereof) are for the sole benefit of Parent and
Purchaser and may be asserted by Parent or Purchaser regardless of the
circumstances giving rise to any such conditions and may be waived by Parent or
Purchaser, by express and specific action to that effect, in whole or in part,
at any time and from time to time in their sole discretion, in each case,
subject to any applicable provisions of the Merger Agreement. The failure by
Parent or Purchaser at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an
ongoing right, which may be asserted at any time and from time to time.
Capitalized terms used herein but not defined herein shall have the
meanings given them in the Merger Agreement, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex A is
attached.
A-3
