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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) March 1, 1999
L-3 COMMUNICATIONS HOLDINGS, INC.
AND
L-3 COMMUNICATIONS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE
(State of incorporation)
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001-14141
333-46983
(Commission File Number)
13-3937434
13-3937436
(I.R.S. Employer Identification Number)
600 THIRD AVENUE, NEW YORK, NEW YORK 10016
(Address of Registrant's principal executive office)
212-697-1111
(Registrant's telephone number)
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ITEM 5. OTHER EVENTS
On March 1, 1999, L-3 Communications Corporation, a Delaware corporation
("L-3"), and Aydin Corporation, a Delaware corporation (the "Company"),
announced that they had entered into an Agreement and Plan of Merger, dated as
of March 1, 1999 (the "Merger Agreement") among the Company, L-3 and Angel
Acquisition Corporation ("Angel Acquisition"), a Delaware corporation and a
wholly-owned subsidiary of L-3 in turn a wholly-owned subsidiary of L-3
Communications Holdings, Inc. ("Holdings") a Delaware corporation, pursuant to
which Angel Acquisition would acquire all of the outstanding shares of common
stock, par value $1.00 per share (the "Shares") of the Company at a price of
$13.50 per Share in cash. Angel Acquisition will commence a tender offer (the
"Offer") for all of the Shares and, following completion of the Offer, upon the
terms and subject to the conditions set forth in the Merger Agreement, will
merge (the "Merger") with and into the Company with the Company surviving the
Merger and becoming a wholly-owned subsidiary of L-3. Pursuant to a tender
agreement (the "Tender Agreement"), stockholders of the Company representing
approximately 11.8% of the issued and outstanding Shares of the Company (the
"Stockholders") have contractually agreed, among other things, to tender their
Shares in the Offer and to vote in favor of the transactions contemplated by
the Merger Agreement. Consummation of the Offer is conditioned upon, among
other things, (i) there being validly tendered and not properly withdrawn prior
to the expiration of the Offer a number of Shares which, together with any
Shares owned by Holdings, L-3 or Angel Acquisition, or any controlled affiliate
thereof, constitutes at least a majority of the voting power (determined on a
fully-diluted basis), on the date of purchase, of all the securities of the
Company entitled to vote generally in the election of directors or in a merger
and (ii) the expiration or termination of all applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other
customary conditions.
The foregoing descriptions of the Merger Agreement and the Tender
Agreement and the transactions contemplated thereby do not purport to be
complete and are qualified in their entirety by reference to the Merger
Agreement and the Tender Agreement.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
Exhibit Number Title
- -------------- -----
2 Agreement and Plan of Merger dated as of March 1, 1999 among L-3
Communications Corporation, Angel Acquisition Corporation and
Aydin Corporation.
10.1 Tender Agreement dated as of March 1, 1999 among L-3
Communications Corporation, Steel Partners II, L.P., Sandera
Partners, L.P. and Newcastle Partners, L.P.
99 Press Release of L-3 Communications Corporation dated March 1,
1999.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
L-3 COMMUNICATIONS HOLDINGS, INC.
By: /s/ Christopher C. Cambria
------------------------------------------
Name: Christopher C. Cambria
Title: Vice President and General Counsel
L-3 COMMUNICATIONS CORPORATION
By: /s/ Christopher C. Cambria
------------------------------------------
Name: Christopher C. Cambria
Title: Vice President and General Counsel
Date: March 3, 1999
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Exhibit Index
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Exhibit Number Title
- -------------- -----
2 Agreement and Plan of Merger dated as of March 1, 1999 among L-3
Communications Corporation, Angel Acquisition Corporation and
Aydin Corporation.
10.1 Tender Agreement dated as of March 1, 1999 among L-3
Communications Corporation, Steel Partners II, L.P., Sandera
Partners, L.P. and Newcastle Partners, L.P.
99 Press Release of L-3 Communications Corporation dated March 1,
1999.
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CONFORMED COPY
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AGREEMENT AND PLAN OF MERGER
by and among
L-3 COMMUNICATIONS CORPORATION,
ANGEL ACQUISITION CORPORATION
and
AYDIN CORPORATION
March 1, 1999
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TABLE OF CONTENTS
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Page
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ARTICLE I
THE OFFER AND MERGER................................................ 1
Section 1.1 The Offer.............................................. 1
Section 1.2 Company Actions........................................ 3
Section 1.3 Directors.............................................. 4
Section 1.4 The Merger............................................. 5
Section 1.5 Effective Time......................................... 6
Section 1.6 Closing................................................ 6
Section 1.7 Directors and Officers of the Surviving Corporation.... 6
Section 1.8 Stockholders' Meeting.................................. 7
Section 1.9 Merger Without Meeting of Stockholders................. 7
ARTICLE II
CONVERSION OF SECURITIES............................................ 8
Section 2.1 Conversion of Capital Stock............................ 8
Section 2.2 Exchange of Certificates............................... 8
Section 2.3 Lost Certificates..................................... 10
Section 2.4 Dissenting Shares..................................... 10
Section 2.5. Company Option Plans.................................. 10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................... 11
Section 3.1 Organization.......................................... 11
Section 3.2 Capitalization........................................ 11
Section 3.3 Authorization; Validity of Agreement; Company Action.. 12
Section 3.4 Consents and Approvals; No Violations................. 13
Section 3.5 SEC Reports and Financial Statements.................. 13
Section 3.6 No Undisclosed Liabilities............................ 14
Section 3.7 Absence of Certain Changes............................ 14
Section 3.8 Employee Benefit Plans; ERISA......................... 15
Section 3.9 Litigation............................................ 16
Section 3.10 No Default; Compliance with Applicable Laws.......... 17
Section 3.11 Taxes................................................ 17
Section 3.12 Real Property........................................ 18
Section 3.13 Environmental Matters................................ 18
Section 3.14 Information in Schedule 14D-1........................ 19
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Section 3.15 State Takeover Laws................................... 19
Section 3.16 Voting Requirements................................... 19
Section 3.17 Year 2000............................................. 19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.......... 20
Section 4.1 Organization........................................... 20
Section 4.2 Authorization; Validity of Agreement; Necessary Action. 20
Section 4.3 Consents and Approvals; No Violations.................. 21
Section 4.4 Information in Proxy Statement; Schedule 14D-9......... 21
Section 4.5 Financing.............................................. 22
Section 4.6 Purchaser's Operations................................. 22
Section 4.7 No Recourse............................................ 22
ARTICLE V
COVENANTS .......................................................... 22
Section 5.1 Interim Operations of the Company..................... 22
Section 5.2 Approvals and Consents; Cooperation................... 25
Section 5.3 Access to Information................................. 26
Section 5.4 Employee Benefits..................................... 26
Section 5.5 No Solicitation....................................... 26
Section 5.6 Brokers or Finders.................................... 27
Section 5.7 Publicity............................................. 28
Section 5.8 Notification of Certain Matters....................... 28
Section 5.9 Directors' and Officers' Insurance and
Indemnification...................................... 28
Section 5.10 Stockholder Litigation................................ 30
Section 5.11 Further Assurances.................................... 30
Section 5.12 State Takeover Statutes............................... 30
Section 5.13 Stop Transfer Order................................... 30
ARTICLE VI
CONDITIONS.......................................................... 31
Section 6.1 Conditions to Each Party's Obligation To Effect
the Merger............................................. 31
ARTICLE VII
TERMINATION......................................................... 31
Section 7.1 Termination............................................ 31
Section 7.2 Effect of Termination.................................. 34
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Section 7.3 Termination Fee........................................ 34
ARTICLE VIII
MISCELLANEOUS....................................................... 34
Section 8.1 Amendment and Modification............................. 34
Section 8.2 Nonsurvival of Representations and Warranties.......... 35
Section 8.3 Notices................................................ 35
Section 8.4 Certain Definitions.................................... 36
Section 8.5 Interpretation......................................... 37
Section 8.6 Counterparts........................................... 37
Section 8.7 Entire Agreement; Third Party Beneficiaries............ 37
Section 8.8 Severability........................................... 37
Section 8.9 Governing Law.......................................... 37
Section 8.10 Jurisdiction.......................................... 37
Section 8.11 Assignment............................................ 38
Section 8.12 Guarantee............................................. 38
ANNEX A
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of March 1, 1999 (the
"Agreement"), by and among L-3 Communications Corporation, a Delaware
corporation ("Parent"), Angel Acquisition Corporation, a Delaware corporation
and a direct, wholly owned subsidiary of Parent (the "Purchaser"), and Aydin
Corporation, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, the Purchaser and the
Company each approved the acquisition of the Company on the terms and subject
to the conditions set forth herein;
WHEREAS, as a first step in the acquisition, the Company and Parent
each desire that Parent cause Purchaser to commence an offer (the "Offer") to
purchase all of the issued and outstanding shares of common stock, $1.00 par
value, of the Company (the "Shares"), on the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined
below) and the Board of Directors of the Company (the "Company Board") has
unanimously approved the Offer and has determined to recommend that the
Company's stockholders accept the Offer and tender their Shares pursuant
thereto;
WHEREAS, to complete the acquisition, the respective Boards of
Directors of Parent, Purchaser and the Company have approved the merger of
Purchaser with and into the Company, wherein each issued and outstanding Share
not owned directly or indirectly by Parent, Purchaser or the Company will be
converted into the right to receive the Merger Consideration (as defined below)
on the terms and subject to the conditions of this Agreement (the "Merger");
and
WHEREAS, the parties desire to make certain representations,
warranties and covenants in connection with the Merger and the Offer and also
to prescribe various conditions to the Merger and the Offer.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. (a) Subject to the terms and conditions of this
Agreement, as promptly as practicable (but in no event later than five business
days after the public announcement of the execution hereof), the Purchaser
shall commence (within the meaning of Rule 14d-2 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")) the Offer to purchase for cash
all of the issued and outstanding Shares, at a price of $13.50 per Share, net
to the seller in cash (such price, or such higher price per Share as may be
paid in the Offer, being referred to herein as the "Offer Price"). The Offer
shall be subject to there being validly tendered and not withdrawn prior to the
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expiration of the Offer, at least a majority of the Shares outstanding on a
fully diluted basis as of the expiration of the Offer (the "Minimum Condition")
and to the other conditions set forth in Annex A hereto (including the Minimum
Condition, herein referred to as the "Offer Conditions"). The Purchaser shall,
subject to the terms of this Agreement, including the prior satisfaction or
waiver (except that the Minimum Condition may not be waived without the consent
of the Company) of the Offer Conditions, accept for payment and pay for any
Shares tendered and not withdrawn pursuant to the Offer as soon as possible
after the expiration thereof. The Offer shall be made by means of an offer to
purchase (the "Offer to Purchase") containing the Offer terms set forth in this
Agreement. The Purchaser expressly reserves the right, in its sole discretion,
to waive any such condition and make any other changes in the terms and
conditions of the Offer not inconsistent with the provisions of this Agreement,
provided that, the Purchaser shall not amend or waive the Minimum Condition and
shall not decrease the Offer Price or decrease the number of Shares sought, or
amend any other condition of the Offer in any manner adverse to the holders of
the Shares without the prior written consent of the Company (such consent to be
authorized by the Company Board or a duly authorized committee thereof).
Notwithstanding the foregoing, the Purchaser shall, and Parent agrees to cause
the Purchaser to, extend the Offer at any time up to May 10, 1999 for one or
more periods of not more than 10 business days, or, if longer, for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer, if at the initial expiration date of the Offer, or any extension
thereof, any condition to the Offer (other than the Minimum Condition) is not
satisfied or waived. In addition, the Offer Price may be increased and the
Offer may be extended to the extent required by law in connection with such
increase in each case without the consent of the Company. Subject to the
foregoing, it is agreed that the Offer Conditions are for the benefit of the
Purchaser and may be asserted by the Purchaser regardless of the circumstances
giving rise to any such condition (including any action or inaction by the
Purchaser or Parent not inconsistent with the terms hereof) or, except with
respect to the Minimum Condition, may be waived by the Purchaser, in whole or
in part at any time and from time to time, in its sole discretion.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Parent and the Purchaser shall file with the Securities and Exchange
Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect
to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's stockholders, shall not 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, except that no
representation is made by Parent or the Purchaser with respect to information
supplied by the Company for inclusion in the Offer Documents. Each of Parent
and the Purchaser further agrees to take all steps necessary to cause the Offer
Documents to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.
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Each of Parent and the Purchaser, on the one hand, and the Company, on the
other hand, agrees promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have become false and
misleading in any material respect and the Purchaser further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the initial Schedule 14D-1
before it is filed with the SEC. In addition, Parent and the Purchaser agree to
provide the Company and its counsel in writing with any comments or other
communications that Parent, the Purchaser or their counsel may receive from
time to time from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments or other communications.
Section 1.2 Company Actions.
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(a) The Company hereby approves of and consents to the Offer and
represents that (i) the Company Board, at a meeting duly called and held, has,
subject to the terms and conditions set forth herein, unanimously (A)
determined this Agreement and the transactions contemplated hereby, including
the Offer and the Merger (collectively, the "Transactions") are fair to and in
the best interests of the holders of the Shares and approved the Transactions,
and (B) declared this Agreement and the Merger advisable and resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares thereunder to the Purchaser and approve and adopt this Agreement and the
Merger and (ii) PricewaterhouseCoopers Securities LLC (the "Financial Advisor")
has delivered to the Company Board its written opinion (or oral opinion to be
confirmed in writing) that the consideration to be received by holders of
Shares pursuant to the Offer and the Merger is fair from a financial point of
view. The Company has been authorized by the Financial Advisor to permit,
subject to prior review and consent by such Financial Advisor (such consent not
to be unreasonably withheld), the inclusion of such fairness opinion (or a
reference thereto) in the Offer Documents and in the Schedule 14D-9 referred to
below and the Proxy Statement referred to in Section 1.8. The Company hereby
consents to the inclusion in the Offer Documents of the recommendations of the
Company Board described in this Section 1.2(a). The Company represents that the
actions set forth in this Section 1.2(a) and all other actions it has taken in
connection therewith are, assuming that Parent and its affiliates do not own
any Shares, sufficient to render the relevant provisions of Section 203 of the
Delaware General Corporation Law (the "DGCL") inapplicable to the Offer, the
Merger and the Tender Agreements (as defined in Section 8.4(b)).
(b) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall contain the recommendation
referred to in clause (B) of Section 1.2(a) hereof, provided, that in the event
of a Superior Proposal (as defined in Section 5.5) prior to such filing, the
Company shall not be required to make such filing with such recommendations if
a majority of the Company Board determines in good faith, after receiving
advice from its financial advisor and outside counsel, that making such filing
would constitute a breach of the fiduciary duties of the Company Board under
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applicable law. The Schedule 14D-9 will comply in all material respects with
the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
stockholders, shall not 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, except that no representation is made by the Company
with respect to information supplied by Parent or the Purchaser in writing for
inclusion in the Offer Documents. The Company further agrees to take all steps
necessary to cause the Schedule 14D-9 to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required
by applicable federal securities laws. Each of the Company, on the one hand,
and Parent and the Purchaser, on the other hand, agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and to be disseminated to holders of
the Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given the opportunity to
review the initial Schedule 14D-9 before it is filed with the SEC. In addition,
the Company agrees to provide Parent, the Purchaser and their counsel in
writing with any comments or other communications that the Company or its
counsel may receive from time to time from the SEC or its staff with respect to
the Schedule 14D-9 promptly after the receipt of such comments or other
communications.
(c) In connection with the Offer, the Company will promptly furnish
or cause to be furnished to the Purchaser mailing labels, security position
listings and any available listing or computer file containing the names and
addresses of the record holders of the Shares as of a recent date, and shall
furnish the Purchaser with such information and assistance as the Purchaser or
its agents may reasonably request in communicating the Offer to the
stockholders of the Company. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company, deliver or cause to be delivered
to the Company all copies of such information then in its possession or the
possession of its agents or representatives.
Section 1.3 Directors.
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(a) Promptly upon the purchase of and payment for Shares by Parent
or any of its subsidiaries which represent at least a majority of the
outstanding Shares (on a fully diluted basis), and from time to time
thereafter, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Company Board as is
equal to the product of the total number of directors on such Board (giving
effect to the directors designated by Parent pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by the Purchaser, Parent and any of their affiliates bears to the total
number of Shares then outstanding (such number being the "Board Percentage").
The Company shall, upon request of the Purchaser, cause Purchaser's designees
to satisfy the Board Percentage, including
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without limitation increasing the size of the Company Board and securing
resignations of such number of its incumbent directors as is necessary to
enable Parent's designees to be so elected to the Company Board, and shall
cause Parent's designees to be so elected. Notwithstanding the foregoing, until
the Effective Time (as defined in Section 1.5 hereof), the Company shall retain
as members of the Company Board at least two directors who are directors of the
Company on the date hereof (the "Company Designees"); provided, that subsequent
to the purchase of and payment for Shares pursuant to the Offer, Parent shall
always have its designees represent at least a majority of the entire Company
Board. If at any time prior to the Effective Time there are less than two
Company Designees on the Company Board, Parent, Purchaser and the Company shall
either (i) use their reasonable efforts to appoint successors who are not
affiliated with Parent or the Purchaser or (ii) permit the resigning Company
Designee to appoint his or her successors in his or her reasonable discretion.
The Company will use its reasonable best efforts to cause persons designated by
Purchaser to constitute the same percentage as is on the Company Board of (i)
each Committee of the Company Board, (ii) each board of directors of each
Subsidiary of the Company and (iii) each committee of each such board, in each
case only to the extent permitted by law. The Company's obligations under this
Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder. Parent or the Purchaser will supply the Company
any information with respect to either of them and their nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1. Upon receipt
of such information from Parent or the Purchaser, the Company shall include in
the Schedule 14D-9 (as an annex or otherwise) the information required by
Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to be
elected to the Company Board.
(b) From and after the time, if any, that Parent's designees
constitute a majority of the Company Board, any amendment of this Agreement,
any termination of this Agreement by the Company, any extension of time for
performance of any of the obligations of Parent or the Purchaser hereunder, any
waiver of any condition or any of the Company's rights hereunder or other
action by the Company hereunder may be effected only by the action of a
majority of the directors of the Company then in office who either were
directors of the Company on the date hereof or are not affiliated with Parent
or the Purchaser, which action shall be deemed to constitute the action of the
full Company Board; provided, that if there shall be no such directors, such
actions may be effected by unanimous vote of the entire Company Board.
Section 1.4 The Merger. Subject to the terms and conditions of this
Agreement, and in accordance with the DGCL, at the Effective Time (as defined
in Section 1.5 hereof), the Company and the Purchaser shall consummate the
Merger pursuant to which (a) the Purchaser shall be merged with and into the
Company and the separate corporate existence of the Purchaser shall thereupon
cease, (b) the Company shall be the successor or surviving corporation in the
Merger (the "Surviving Corporation"). The Surviving Corporation shall possess
all the rights, privileges, powers and franchises and shall be subject to all
of the restrictions, disabilities, duties, debts and obligations of the Company
and the Purchaser, all as provided in the DGCL. At Parent's election (provided
that such election shall not adversely affect the ability of the Company to
consummate the transactions contemplated hereby, or cause a delay in the
transactions contemplated hereby, and provided, further, that the Company shall
not be deemed to have breached any of its representations or warranties herein
5
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if and to the extent such breach results from such election), the Merger may
alternatively be structured so that (i) the Company and/or its Subsidiaries are
merged with and into Parent, the Purchaser or any other direct or indirect
subsidiary of Parent or (ii) any direct or indirect subsidiary of Parent other
than Purchaser is merged with and into the Company. In the event of such an
election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election. Pursuant to the Merger, and
without any further action on the part of the Company and the Purchaser, (x)
the Certificate of Incorporation of the Purchaser, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation; provided, however, that Article FIRST of the Certificate
of Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "FIRST: The name of the corporation is L-3 Communications
Aydin Corporation." and, as so amended shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation, and (y) the By-laws of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation until thereafter amended as provided by law
and such By-laws. The Merger shall have the effects set forth in the DGCL.
Without limiting the generality of the foregoing and subject thereto, at the
Effective Time all the property, rights, privileges, immunities, powers and
franchises of the Company and the Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and the
Purchaser shall become the debts, liabilities and duties of the Surviving
Corporation.
Section 1.5 Effective Time. As soon as practicable after satisfaction
of the conditions in Article VI, Parent, the Purchaser and the Company will
cause a certificate of merger in the form required by the DGCL (the
"Certificate of Merger") to be executed and filed on the date of the Closing
(as defined in Section 1.6 hereof) (or on such other date as Parent and the
Company may agree) with the Secretary of State of the State of Delaware (the
"Secretary of State"). The Merger shall become effective on the date on which
the Certificate of Merger has been duly filed with the Secretary of State or
such time as is agreed upon by the parties and specified in the Certificate of
Merger, and such time is hereinafter referred to as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., on a date to be specified by the parties, which shall
be no later than the second business day after satisfaction or waiver of all of
the conditions set forth in Article VI hereof (the "Closing Date"), at the
offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New
York, unless another date or place is agreed to in writing by the parties
hereto. The parties realize that time is of the essence to the transactions
contemplated by this Agreement. Each of the parties thus undertakes to use its
reasonable best efforts, either alone or in cooperation with the other parties,
to ensure that the Merger occurs as soon as practicable following the date on
which the Purchaser consummates the Offer.
Section 1.7 Directors and Officers of the Surviving Corporation. The
directors and officers of the Purchaser at the Effective Time shall, from and
after the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been
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duly elected or appointed or qualified or until their earlier death, resignation
or removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-laws.
Section 1.8 Stockholders' Meeting.
----------------------
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a
special meeting of its stockholders (the "Special Meeting") as soon as
practicable following the acceptance for payment and purchase of Shares by
the Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the approval of the Merger and the adoption of this
Agreement;
(ii) prepare and file with the SEC under the Exchange
Act and the rules and regulations promulgated thereunder a preliminary
proxy or information statement relating to the Merger and this Agreement
and use its reasonable efforts to obtain and furnish the information
required to be included in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, to respond promptly to any comments
made by the SEC with respect to the preliminary proxy or information
statement and to have the Proxy Statement cleared by the SEC and cause a
definitive proxy or information statement (the "Proxy Statement") to be
mailed to its stockholders;
(iii) use its reasonable efforts to obtain the
necessary approvals of the Merger and this Agreement by its stockholders;
and
(iv) subject to the fiduciary obligations of the
Company Board under applicable law as advised by independent counsel,
include in the Proxy Statement the recommendation of the Company Board
that stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement and, subject to the approval of
the Financial Advisor, the written opinion of the Financial Advisor that
the consideration to be received by the stockholders of the Company
pursuant to the Offer and the Merger is fair from a financial point of
view.
(b) Parent agrees that it will vote, or cause to be voted, all of
the Shares then owned by it, the Purchaser or any of its other subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
Section 1.9 Merger Without Meeting of Stockholders. Notwithstanding
Section 1.8 hereof, in the event that Parent, the Purchaser or any other
subsidiary of Parent shall acquire, together with the Shares owned by Parent,
the Purchaser or any other subsidiary of Parent, at least 90% of the
outstanding shares of each class of capital stock of the Company, pursuant to
the Offer or otherwise,
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the parties hereto agree to take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of stockholders of the Company, in accordance with Section
253 of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
Shares or shares of common stock, par value $.01 per share, of the Purchaser
(the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and outstanding share of
Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation with the
result that the Surviving Corporation will be a wholly owned subsidiary of
Parent.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All
Shares that are owned by the Company as treasury stock and any Shares owned by
Parent, the Purchaser or any other wholly owned Subsidiary (as defined in
Section 8.4 hereof) of Parent shall be canceled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share (other
than Shares to be canceled in accordance with Section 2.1(b) and any Dissenting
Shares (if applicable and as defined in Section 2.4 hereof)), shall be
converted into and become the right to receive, the Offer Price, payable to the
holder thereof, without interest (the "Merger Consideration"), upon surrender
of the certificate formerly representing such Share in the manner provided in
Section 2.2, less any required withholding taxes. As of the Effective Time by
virtue of the Merger and without any action on the part of any holder, all such
Shares shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any such Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor upon the surrender of such
certificate in accordance with Section 2.2, or to perfect any appraisal rights
that such holder may have pursuant to Section 262 of the DGCL.
Section 2.2 Exchange of Certificates.
-------------------------
(a) Paying Agent. Parent shall designate a bank or trust company
reasonably acceptable to the Company to act as agent for the holders of Shares
in connection with the Merger (the "Paying Agent") to receive the funds to
which holders of Shares shall become entitled pursuant to Section 2.1(c). Such
funds shall be invested by the Paying Agent as directed by Parent or the
Surviving Corporation. Any net profit resulting from, or interest or income
produced by, such investments will be payable to the Surviving Corporation or
Parent, as Parent directs from time to time.
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(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, with the Company using its reasonable best efforts to cause
the paying Agent to do so within three business days thereafter, the Paying
Agent shall mail to each holder of record of a certificate or certificates,
which immediately prior to the Effective Time represented outstanding Shares
(the "Certificates"), whose Shares were converted pursuant to Section 2.1 into
the right to receive the Merger Consideration, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates to
the Paying Agent and shall be in such form and have such other provisions as
Parent and the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly completed and validly executed,
and such other documents as may be required pursuant to the instructions
thereto, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly represented
by such Certificate and the Certificate so surrendered shall forthwith be
canceled. If payment of the Merger Consideration is to be made to a person
other than the person in whose name the surrendered Certificate is registered,
it shall be a condition of payment that the Certificate so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such tax
either has been paid or is not applicable. Until surrendered as contemplated by
this Article II, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration
as contemplated by this Article II. No interest shall be paid or accrued for
the benefit of holders of the Certificates on the Merger Consideration payable
upon the surrender of the Certificates.
(c) Transfer Books; No Further Ownership Rights in Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of Shares on the
records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of Shares outstanding immediately prior to
the Effective Time shall cease to have any rights with respect to such Shares,
except as otherwise provided for herein or by applicable law. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following one
year after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the
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foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate has not been surrendered prior to the
expiration of the applicable statute of limitations after the Effective Time
(or immediately prior to such earlier date on which any Merger Consideration
payable to the holder of such Certificate representing Shares pursuant to this
Article II would otherwise escheat to or become the property of any
Governmental Entity (as hereinafter defined)), any such Merger Consideration in
respect of such Certificate will become the property of the Surviving
Corporation, free and clear of all claims or interest of any individual,
corporation, partnership, limited liability company, joint venture,
association, trust, unincorporated organization or other entity (a "Person")
previously entitled thereto.
Section 2.3 Lost Certificates. If any Certificate is lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such Person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Paying Agent
will issue in exchange for such lost, stolen or destroyed Certificate the
Merger Consideration, in accordance with the provisions of this Agreement.
Section 2.4 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to receive payment
for such Dissenting Shares according to the DGCL. If, after the Effective Time,
such holder fails to perfect or withdraws or loses his right to exercise
dissenters' rights, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration,
without interest thereon.
Section 2.5. Company Option Plans. Parent and the Company shall take
all actions necessary to provide that, effective as of the Effective Time, (i)
each outstanding stock option to purchase Shares (collectively, "Options")
granted under the Company's 1996 Equity Incentive Plan, 1994 Incentive Stock
Option Plan, and 1984 Non-Qualified Stock Option Plan and those non-plan
options referenced in subsection 3.2(iv) of this Agreement, whether or not then
exercisable or vested, shall become fully exercisable and vested, (ii) each
Option that is then outstanding shall be canceled and (iii) in consideration of
such cancellation, and except to the extent that Parent or the Purchaser and
the holder of any such Option otherwise agree, the Company (or at Parent's
option, the Purchaser) shall pay to such holders of Options an amount in
respect thereof equal to the product of (A) the excess, if any, of the Merger
Consideration over the exercise price of each such Option and (B) the number of
Shares subject to such Option (such payment to be net of applicable withholding
taxes).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the Purchaser as
follows:
Section 3.1 Organization. Each of the Company and its Subsidiaries is
a corporation, partnership or other entity duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation or
organization and has all requisite corporate or other power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as now being conducted, except where the failure
to have such governmental approvals would not, either individually or in the
aggregate, have a "Company MAE" (as defined in Section 8.4(b). The Company and
each of its Subsidiaries is duly qualified or licensed to do business and in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not, either individually or in
the aggregate, have a Company MAE. The Company has delivered to Parent prior to
the execution of this Agreement complete and correct copies of its certificate
of incorporation and by-laws and has made available to Parent the certificate
of incorporation and by-laws (or comparable organizational documents) of each
of its Subsidiaries, in each case as amended to date. Neither the Company nor
any of its Subsidiaries is in violation of any material provision of its
Certificate of Incorporation or by-laws (or comparable organizational
documents). Exhibit 21 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 sets forth a complete list of the Company's
active Subsidiaries.
Section 3.2 Capitalization. (a) The authorized capital stock of the
Company consists of 7,500,000 Shares. As of the date hereof, (i) 5,220,936
Shares are issued and outstanding, (ii) 0 Shares are issued and held in the
treasury of the Company, (iii) 421,550 Shares are reserved for issuance upon
exercise of outstanding Options granted under the Company Option Plans (as
hereinafter defined) (iv) 11,000 Shares are reserved for issuance upon exercise
of certain individual stock options granted to employees and directors of the
Company, and (v) 200,000 Shares are reserved for issuance upon exercise of
outstanding warrants to purchase common stock. All the outstanding Shares are,
and all shares which may be issued pursuant to the exercise of outstanding
Options when issued in accordance with the respective terms thereof will be,
duly authorized, validly issued, fully paid and nonassessable. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except (a) as disclosed on
Schedule 3.2, (b) as set forth above, and (c) for the transactions contemplated
by this Agreement, as of the date hereof, (i) there are no shares of capital
stock of the Company authorized, issued or outstanding, (ii) there are no
existing options, warrants, calls, preemptive rights, subscriptions or other
rights, agreements, arrangements or commitments of any character, relating to
the issued or unissued capital stock of the Company or any of its Subsidiaries,
obligating the Company or any of its Subsidiaries to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or Voting
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Debt of, or other equity interest in, the Company or any of its Subsidiaries or
securities convertible into or exchangeable for such shares or equity
interests, or obligating the Company or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment, (iii) there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any Shares, or capital stock of the
Company or any subsidiary or affiliate of the Company or to provide funds to
make any investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary, other than those required in the ordinary course of
business of such subsidiaries, or any other entity and (iv) there are no equity
equivalents, interests in the ownership or earnings of the Company or other
similar rights.
(b) All the outstanding shares of capital stock of each Subsidiary
have been validly issued and are fully paid and nonassessable and, except as
disclosed on Schedule 3.2, are owned directly or indirectly by the Company free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in voting rights, charges or other encumbrances of any nature
whatsoever ("Liens"). Except as disclosed on Schedule 3.2, no entity in which
the Company owns, directly or indirectly, less than a 50% equity interest is,
individually or when taken together with all such other entities, material to
the business of the Company and its subsidiaries taken as a whole.
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries. None of the Company or its Subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of the Company, or any
of its Subsidiaries, respectively, as a result of the transactions contemplated
by this Agreement.
Section 3.3 Authorization; Validity of Agreement; Company Action. (a)
The Company has full corporate power and authority to execute and deliver this
Agreement and, subject, in the case of the Merger, to obtaining the necessary
approval of its stockholders, to consummate the transactions contemplated
hereby. The execution, delivery and performance by the Company of this
Agreement, and the consummation by it of the transactions contemplated hereby,
have been duly authorized by the Company Board and, except for those actions
obtaining the approval of the Merger from its stockholders as contemplated in
Section 1.8, no other corporate action on the part of the Company is necessary
to authorize the execution and delivery by the Company of this Agreement and
the consummation by it of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Company, and assuming due and valid
authorization, execution and delivery hereof by the Parent and the Purchaser),
is a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except that (i) such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
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(b) The Company Board has approved and taken all corporate action
required to be taken by the Company Board for the consummation of the
transactions contemplated by this Agreement, including the Transactions. The
Company Board has also approved the transactions contemplated by this
Agreement, including the Transactions, for the purposes of rendering the
provisions of Section 203 of the DGCL inapplicable to such transactions and the
Tender Agreements.
Section 3.4 Consents and Approvals; No Violations. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will not,
conflict with, breach or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries under, (i) the
certificate of incorporation or by-laws of the Company or the comparable
organizational documents of any of its Subsidiaries, (ii) except as disclosed
on Schedule 3.4, any loan or credit agreement, note, bond, mortgage, indenture,
lease or other contract, agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its Subsidiaries or their
respective properties or assets ("Contracts"), or (iii) subject to the
governmental filings and other matters referred to in the following sentence,
any judgment, order or decree ("Order"), or statute, law, ordinance, rule or
regulation ("Law") applicable to the Company or any of its Subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, breaches, violations, defaults, rights, losses
or Liens that, either individually or in the aggregate, would not have a
Company MAE or prevent or materially delay the consummation of the Offer or the
Merger. No Order, consent, approval, authorization or permit of, or
registration, declaration or filing with, any federal, state, local or foreign
government or any court, administrative or regulatory agency or commission or
other governmental authority, agency or instrumentality (a "Governmental
Entity") is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
hereby except for (1) the filing of a premerger notification and report form by
the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"); (2) the filing with the SEC of (A) the Proxy Statement
relating to the Special Meeting as contemplated by Section 1.8 hereof, (B) the
Schedule 14D-9, and (C) such reports under the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated hereby; (3)
the filing of the Certificate of Merger with the Secretary of State and
appropriate documents with the Pennsylvania Securities Commission required to
comply with an exemption from the Pennsylvania Takeover Disclosure Law; and (4)
such filings, consents, approvals, Orders or authorizations the failure of
which to be made or obtained would not, either individually or in the
aggregate, have a Company MAE or prevent or materially delay the consummation
of the Offer or the Merger.
Section 3.5 SEC Reports and Financial Statements. The Company has
filed with the SEC, and has heretofore made available to Parent true and
complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since December 31, 1996 under the Exchange
Act (as such documents have been amended since the time of their filing,
collectively,
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the "Company SEC Documents"), each of which (except to the extent revised or
superceded by a subsequently filed Company SEC Document) complied as to form in
all material respects with the requirements of the Exchange Act. As of their
respective dates or, if amended, as of the date of the last such amendment, the
Company SEC Documents, including, without limitation, any financial statements
or schedules included therein did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. None of the
Subsidiaries is required to file any forms, reports or other documents with the
SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements
of the Company (the "Company Financial Statements") included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997
(including the related notes thereto) (the "Company Form 10-K") and in the
quarterly reports on Form 10-Q for the three fiscal quarters occurring since
the Company Form 10-K have been prepared from, and are in accordance with, the
books and records of the Company and its consolidated subsidiaries, comply in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto and subject, in the case of
unaudited interim financial statements, to normal year end adjustments) and
fairly present the consolidated financial position and the consolidated results
of operations and cash flows of the Company and its consolidated Subsidiaries
as at the dates thereof or for the periods presented therein.
Section 3.6 No Undisclosed Liabilities. Except (a) as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Pre-Signing Company SEC Documents") or on Schedule 3.6 hereto,
and (b) for liabilities incurred in the ordinary course of business and
consistent with past practice since September 30, 1998 which would not, either
individually or in the aggregate, have a Company MAE, neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required by
GAAP to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto) and could, either individually or in
the aggregate, be reasonably expected to have a Company MAE.
Section 3.7 Absence of Certain Changes. Except as disclosed in the
Pre-Signing Company SEC Documents or on Schedule 3.7 hereto, since September
30, 1998, the Company and its Subsidiaries have conducted their respective
businesses in the ordinary course of business in a manner consistent with past
practice and there has not been (i) any changes in the financial condition,
results of operations, assets, business or operations of the Company or any of
its Subsidiaries that would reasonably likely materially delay or impair the
ability of the Company to effect the closing of the transactions contemplated
hereby or would reasonably be likely to cause a Company MAE, (ii) any
condition, event or occurrence, other than such conditions, events or
occurrences which, either individually or in the aggregate, have not had and
would not have a Company MAE, (iii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock or property) with
respect to the equity interests of the Company or of any of its Subsidiaries;
(iv) any
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change by the Company or any of its Subsidiaries in accounting principles or
methods, except insofar as may be required by a change in GAAP; (v) any split,
combination or reclassification of any of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for shares of the Company's capital
stock; (vi)any change by the Company or any of its Subsidiaries of any
actuarial or other assumption used to calculate funding obligations with
respect to any Company pension plans, or change in the manner in which
contributions to any Company pension plans are made or the basis on which such
contributions are determined; (vii) any damage, destruction or loss (whether or
not covered by insurance) with respect to any assets of the Company or any of
it Subsidiaries, either individually or in the aggregate, in excess of $1.0
million; (viii) any labor dispute or any labor union organizing activity, or
any actual or threatened strike, work stoppage, slowdown or lockout, or any
material change in its relationship with employees, customers, distributors or
suppliers; (ix) any revaluation by the Company of any of its material assets,
including but not limited to writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business; (x)
any entry by the Company or any of its Subsidiaries into any commitment or
transactions material to the Company and its Subsidiaries taken as a whole
other than in the ordinary course of business; (xi) receipt of any notice of
termination or the occurrence of a default or the breach of any material
Contract; and (xii) any other action which, if it had been taken after the date
hereof, would have required the consent of Parent under Section 5.1 hereof.
Section 3.8 Employee Benefit Plans; ERISA.
------------------------------
(a) Schedule 3.8 hereto sets forth a list of all employee benefit
plans, (including but not limited to plans described in section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")), or
severance, stock, bonus, option, profit sharing or change of control plans
maintained by the Company, any of its Subsidiaries or any trade or business,
whether or not incorporated (an "ERISA Affiliate"), which together with the
Company would be deemed a "single employer" within the meaning of section
4001(b)(15) of ERISA ("Benefit Plans") and all material employment and
severance agreements with employees of the Company ("Employee Agreements").
True and complete copies of all Employee Agreements have been delivered to
Parent by the Company.
(b) With respect to each Benefit Plan, the Company has delivered to
Parent a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable: (i) any
related trust agreement or other funding instrument; (ii) the most recent
determination letter, if applicable; (iii) any summary plan description and
other written communications (or a description of any oral communications) by
the Company or its Subsidiaries to their employees concerning the extent of the
benefits provided under a Benefit Plan; and (iv) for the two most recent years
(A) the Form 5500 and attached schedules, (B) audited financial statements, (C)
actuarial valuation reports and (D) attorney's response to an auditor's request
for information.
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(c) With respect to each Benefit Plan, except as otherwise
disclosed to Parent: (i) if intended to qualify under section 401(a) or 401(k)
of the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder (the "Code"), such plan has received a determination
letter from the Internal Revenue Service stating that it so qualifies and that
its trust is exempt from taxation under section 501(a) of the Code; (ii) such
plan has been administered in all material respects in accordance with its
terms and applicable law; (iii) no breaches of fiduciary duty have occurred
which might reasonably be expected to give rise to material liability on the
part of the Company; (iv) no disputes are pending, or, to the knowledge of the
Company, threatened that might reasonably be expected to give rise to material
liability on the part of the Company; (v) no prohibited transaction (within the
meaning of Section 406 of ERISA) or "reportable event" (as defined in
Section 4043 of ERISA) has occurred that might reasonably be expected to give
rise to material liability on the part of the Company; (vi) all contributions
required to be made to such plan as of the date hereof (taking into account any
extensions for the making of such contributions) have been made in full; and
(vii) for each Benefit Plan with respect to which a Form 5500 has been filed, no
material change has occurred with respect to the matters covered by the most
recent Form since the date thereof.
(d) Except as disclosed on Schedule 3.8, no Benefit Plan is a
"multiemployer pension plan," as defined in section 3(37) of ERISA, nor is any
Benefit Plan a plan described in section 4063(a) of ERISA.
(e) Except as disclosed on Schedule 3.8, no liability under Title IV
of ERISA has been incurred by the Company or any ERISA Affiliate that has
not been satisfied in full, and no condition exists that presents a material
risk to the Company or any ERISA Affiliate of incurring a material liability
under such Title. No Benefit Plan has incurred an accumulated funding
deficiency, as defined in section 302 of ERISA or section 312 of the Code,
whether or not waived.
(f) With respect to each Benefit Plan that is a "welfare plan" (as
defined in section 3(1) of ERISA), no such plan provides medical or death
benefits with respect to current or former employees of the Company or any of
its Subsidiaries beyond their termination of employment (other than to the
extent required by applicable law).
(g) Except as set forth in Section 2.5 or as disclosed on Schedule
3.8, no Benefit Plan exists that would result in the payment to any present or
former employee of the Company or any of its Subsidiaries of any money or other
property or accelerate or provide any other rights or benefits to any present
or former employee of the Company or its Subsidiaries as a result of the
transactions contemplated by this Agreement, whether or not such payment would
constitute a parachute payment within the meaning of Code section 280G.
Section 3.9 Litigation. Except as disclosed in the Pre-Signing Company
SEC Documents with reasonable specificity or on Schedule 3.9 hereto, there is
no suit, action, claim, investigation or proceeding ("Litigation Matters")
pending or, to the knowledge of the Company, threatened against the Company or
any of its Subsidiaries or any of their properties or assets, (i) except for
such Litigation Matters as would not, either individually or in the aggregate,
have a
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Company MAE or (ii) which seeks to delay or prevent the consummation of the
transactions contemplated hereby. Except as disclosed on Schedule 3.9, neither
the Company nor any of its Subsidiaries nor any of their respective properties
is or are subject to any order, writ, judgment, injunction, decree,
determination or award ("Orders") except for Orders which have not had and
would not have, either individually or in the aggregate, a Company MAE or
prevent or materially delay the consummation of the transactions contemplated
hereby.
Section 3.10 No Default; Compliance with Applicable Laws. Except as
set forth on Schedule 3.10 hereto, the business of the Company and each of its
Subsidiaries is not in conflict with, or in default or violation of, any term,
condition or provision of (i) its respective certificate of incorporation or
bylaws or similar organizational documents, (ii) any Contract or (iii) any
federal, state, local or foreign statute, Law, Order, concession, grant,
franchise, permit or license or other governmental authorization or approval
applicable to the Company or any of its Subsidiaries, excluding from the
foregoing clauses (ii) and (iii), defaults or violations which would not,
either individually or in the aggregate, have a Company MAE. The Company and
its Subsidiaries have all permits, licenses, authorizations, exemptions,
orders, consents, approvals and franchises from governmental and regulatory
agencies required to conduct their respective businesses as now being
conducted, except for such permits, licenses, authorizations, exemptions,
orders, consents, approvals and franchises the absence of which would not,
either individually or in the aggregate, have a Company MAE.
Section 3.11 Taxes. (a) The Company and its Subsidiaries have (i) duly
and timely filed (or there has been filed on their behalf) with the appropriate
governmental authorities all Tax Returns (as defined in Section 3.11(e))
required to be filed by them on or prior to the date hereof, other than those
Tax Returns the failure of which to file would not, either individually or in
the aggregate, have a Company MAE, and such Tax Returns are true, correct and
complete in all material respects, and (ii) duly and timely paid in full or
made provision in accordance with generally accepted accounting principles (or
there has been paid or provision has been made on their behalf) for the payment
of all Taxes (as defined in Section 3.11(e)) shown to be due on such Tax
Returns.
(b) Except as set forth on Schedule 3.11 hereto, there are no
ongoing federal, state, local or foreign audits or examinations of any Tax
Return of the Company or its Subsidiaries.
(c) Except as set forth on Schedule 3.11 hereto, there are no
outstanding requests, agreements, consents or waivers to extend the statutory
period of limitations applicable to the assessment of any Taxes or deficiencies
against the Company or any of its Subsidiaries, and no power of attorney
granted by either the Company or any of its Subsidiaries with respect to any
Taxes is currently in force.
(d) Except as set forth on Schedule 3.11, neither the Company nor
any of its Subsidiaries is a party to any agreement providing for the
allocation or sharing of Taxes.
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(e) "Taxes" shall mean any and all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, license, net worth, payroll, franchise,
transfer and recording taxes, fees and charges, imposed by the United States
Internal Revenue Service or any taxing authority (domestic or foreign),
including, without limitation, any state, county, local or foreign government
or any subdivision or taxing agency thereof (including a United States
possession), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any taxing authority or jurisdiction (domestic or
foreign) with respect to Taxes.
Section 3.12 Real Property. Except as disclosed on Schedule 3.12, the
Company and the Subsidiaries, as the case may be, have good and marketable
title or valid leasehold rights to all real property purported to be owned by
them or used in the conduct of their respective businesses as currently
conducted free and clear of all Liens with only such exceptions as, either
individually or in the aggregate, would not have a Company MAE.
Section 3.13 Environmental Matters. (a) Except as set forth in the
Company SEC Documents or in Schedule 3.13:
(i) the Company has not received any written
communication from any person or entity (including any Governmental
Entity) stating or alleging that it may be a potentially responsible party
under Environmental Law (as defined in Section 3.13(b)) with respect to
any actual or alleged environmental contamination; neither the Company
nor, to the Company's knowledge, any Governmental Entity is conducting or
has conducted any environmental remediation or environmental investigation
which could reasonably be expected to result in liability for the Company
under Environmental Law; and the Company has not received any request for
information under Environmental Law from any Governmental Entity with
respect to any actual or alleged environmental contamination, except, in
each case, for communications, environmental remediation and
investigations and requests for information which would not, either
individually or in the aggregate, have a Company MAE;
(ii) none of the soil or groundwater beneath the real
property now or formerly (to the Company's knowledge) owned or operated by
the Company or its Subsidiaries contains any Hazardous Substance (as
defined by Environmental Law) in quantities or concentrations requiring
investigation or remediation pursuant to Environmental Law, except where
the presence of any such Hazardous Substance would not, either
individually or in the aggregate, have a Company MAE.
(iii) the Company has not received any written
communication from any person or entity (including any Governmental
Entity) stating or alleging that the Company
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may have violated any Environmental Law, or that the Company has caused or
contributed to any environmental contamination that has caused any
property damage or personal injury under Environmental Law, except, in
each case, for statements and allegations of violations and statements and
allegations of responsibility for property damage and personal injury
which would not, either individually or in the aggregate, have a Company
MAE; and
(iv) all underground storage tanks ("UST's") on
property currently owned by the Company comply with applicable
Environmental Law, except for UST's which would not, either individually
or in the aggregate, have a Company MAE.
(b) For purposes of this Section 3.13, "Environmental Law" means
all applicable state, federal and local laws, regulations and rules, including
common law, judgments, decrees and orders relating to pollution, the
preservation of the environment, and the release of materials into the
environment.
Section 3.14 Information in Schedule 14D-1. None of the information
supplied or to be supplied by the Company specifically for inclusion in the
Schedule 14D-1, at the time such document is first published, sent or given, at
the date it is first mailed to the Company's stockholders, will 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.
Section 3.15 State Takeover Laws. The Company has taken all action to
exempt the transactions contemplated by this Agreement from all applicable
"moratorium," "control share," "fair price," "business combination," or other
anti-takeover laws and regulations of the State of Delaware and, subject to the
last sentence of this Section 3.15, the State of Pennsylvania. The Pennsylvania
Takeover Disclosure Law (the "PTDL") also purports to be applicable to the
transactions contemplated by this Agreement since the Company has its principal
place of business and substantial assets located in Pennsylvania. To qualify
for an exemption under the PTDL, the Purchaser shall be required to make a
Section 8(a) filing with the Pennsylvania Securities Commission and pay the
appropriate filing fee in accordance with the PDTL.
Section 3.16 Voting Requirements. The affirmative vote of the holders
of a majority of the voting power of all outstanding Shares, voting as a single
class, at the Special Meeting to adopt this Agreement is the only vote of the
holders of any class or series of the Company's capital stock necessary to
approve and adopt this Agreement and the transactions contemplated hereby in
order to effect the Merger.
Section 3.17 Year 2000. All the computer-based systems of the Company
and its Subsidiaries, including its information data bases, accounting systems
and data processing systems, will not be materially adversely affected by, and
will continue to operate in the same manner as such systems currently operate
notwithstanding Year 2000, except where the failure to so operate would not,
either individually or in the aggregate, have a Company MAE. None of the
Intellectual Property
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or, other assets of the Company and its Subsidiaries used in their current
products will be materially adversely affected by, and each thereof will
continue to operate in the same manner as it currently operates,
notwithstanding Year 2000, except where the failure to so operate would not,
either individually or in the aggregate, have a Company MAE. Notwithstanding
the foregoing, the Company does not represent and warrant that the databases
and systems of its material suppliers will continue to operate in the same
manner as it currently operates notwithstanding Year 2000. As used herein, the
term "Year 2000" means the occurrence of or calculation involving the Year 2000
A.D., or other calendar dates occurring after December 31, 1999.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant
to the Company as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
or other power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority, and governmental approvals would not
be reasonably expected to have a material adverse effect on the business,
operations, assets, condition (financial or otherwise) or results of operations
of Parent and its Subsidiaries, taken as a whole, or on the ability of Parent
and Purchaser to perform their respective obligations under this Agreement (any
such effect, a "Parent MAE"). Parent and the Purchaser are duly qualified or
licensed to do business and in good standing in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not,
either individually or in the aggregate, have a Parent MAE.
Section 4.2 Authorization; Validity of Agreement; Necessary Action.
Each of Parent and the Purchaser has full corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and the
Purchaser of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by their Boards of Directors and
no corporate action on the part of Parent and the Purchaser is necessary to
authorize the execution and delivery by Parent and the Purchaser of this
Agreement and the consummation by them of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Parent and the
Purchaser, as the case may be, and, assuming due and valid authorization,
execution and delivery hereof by the Company, is a valid and binding obligation
of each of Parent and the Purchaser, as the case may be, enforceable against
them in accordance with its respective terms, except that (i) such enforcement
may be subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other
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similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 4.3 Consents and Approvals; No Violations. The execution and
delivery of this Agreement does not, and the consummation of the transactions
contemplated thereby and compliance with the provisions thereof will not, (i)
conflict with or result in any breach of any provision of the respective
certificate of incorporation or bylaws or similar organizational documents of
Parent, any of its subsidiaries or the Purchaser, (ii) require on the part of
Parent or the Purchaser any filing with, or permit, authorization, consent or
approval of, any Governmental Entity, except as set forth below and except
where the failure to obtain such permits, authorizations, consents or approvals
or to make such filings would not have a material adverse effect on Parent and
its Subsidiaries taken as a whole, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument or obligation to which
Parent, any of its Subsidiaries or the Purchaser is a party or by which any of
them or any of their properties or assets may be bound or (iv) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any of its Subsidiaries or the Purchaser or any of their properties or
assets, excluding from the foregoing clauses (iii) or (iv) such violations,
breaches or defaults which would not, either individually or in the aggregate,
have a material adverse effect on Parent, its Subsidiaries or the Purchaser
taken as a whole and will not materially impair the ability of Parent or the
Purchaser to consummate the transactions contemplated hereby. No consent,
approval, Order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent or any
of its Subsidiaries in connection with the execution and delivery of this
Agreement by Parent and Purchaser or the consummation by Parent and Purchaser
of the transactions contemplated hereby, except for (1) the filing of a
premerger notification and report form by Parent under the HSR Act; (2) the
filing with the SEC of (A) the Schedule 14D-1 and (B) such reports under the
Exchange Act as may be required in connection with this Agreement and the
transactions contemplated hereby; (3) the filing of the Certificate of Merger
with the Secretary of State and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business and
such filings with Governmental Entities to satisfy the applicable requirements
of state securities or corporate or "blue sky" laws; (4) such other filings and
consents as may be required under any Environmental Law pertaining to any
notification, disclosure or required approval necessitated by the Merger or the
transactions contemplated by this Agreement; and (5) such consents, approvals,
Orders or authorizations the failure of which to be made or obtained would not,
either individually or in the aggregate, have a material adverse effect on
Parent and its Subsidiaries taken as a whole.
Section 4.4 Information in Proxy Statement; Schedule 14D-9. None of
the information supplied by Parent or the Purchaser for inclusion in the Proxy
Statement will, at the date mailed to stockholders and at the time of the
meeting of stockholders to be held in connection with the Merger, or for
inclusion in the Schedule 14D-9 will, at the time first sent or given to the
Company's stockholders contain any untrue statement of a material fact or omit
to state any material
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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.
Section 4.5 Financing. Either Parent or the Purchaser has sufficient
funds available (through cash on hand and existing credit arrangements or
otherwise) to purchase all of the Shares to be purchased in the Offer and to
pay all fees and expenses related to the transactions permitted by this
Agreement.
Section 4.6 Purchaser's Operations. The Purchaser has not engaged in
any business activities or conducted any operations other than in connection
with the transactions contemplated hereby.
Section 4.7 No Recourse. Each of Parent and the Purchaser agrees, to
the fullest extent permitted by law (except with respect to claims of fraud),
that none of the Company, its Subsidiaries or any of their respective
directors, officers, employees, stockholders, affiliates, agents or
representatives shall have any liability or responsibility whatsoever to Parent
or the Purchaser on any basis (including without limitation in contract, tort
or otherwise) based upon any information provided or made available, or
statements made, to Parent or the Purchaser prior to the execution of this
Agreement.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company covenants
and agrees that, except (i) as permitted by this Agreement, (ii) as indicated
on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date
hereof, and prior to the time the directors of the Purchaser have been elected
to, and shall constitute a majority of, the Company Board pursuant to Section
1.3 (the "Appointment Date"):
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course of business in a manner
consistent with past practice (including payment of accounts payable,
collection of accounts receivable and inventory purchases) and in compliance
with applicable laws and the Company and its Subsidiaries shall each use its
reasonable best efforts to (i) preserve substantially intact the business
organization and assets of the Company and its Subsidiaries, (ii) keep
available the services of the present key officers, employees and consultants
of the Company and its Subsidiaries, (iii) preserve the present relationships
of the Company and its Subsidiaries with customers, suppliers and other persons
with which the Company or any of its Subsidiaries has significant business
relations, and (iv) maintain net cash of the Company and its Subsidiaries of at
least $10 million (without giving effect to any transaction-related fees and
expenses of the Financial Advisor, financial printers and outside counsel not
exceeding $1.35 million in the aggregate) as of the close of business on the
date of the expiration of the Offer;
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(b) the Company will not, directly or indirectly, (i) sell,
transfer or pledge or agree to sell, transfer or pledge any Shares or capital
stock of any of its Subsidiaries beneficially owned by it, either directly or
indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar
organizational documents; or (iii) split, combine or reclassify the outstanding
Shares or any outstanding capital stock of any of the Subsidiaries of the
Company;
(c) except as disclosed on Schedule 5.1(c), neither the Company nor
any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any
additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or its Subsidiaries, or
other ownership interest (including stock appreciation rights and phantom
stock), other than shares of Common Stock reserved for issuance on the date
hereof upon the exercise of outstanding Options; (iii) transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber any material assets,
whether tangible or intangible, other than sales of products in the ordinary
and usual course of business and consistent with past practice; (iv) incur or
modify any indebtedness or other material liability or issue any debt
securities; or (v) redeem, purchase or otherwise acquire directly or indirectly
any of its capital stock or rights in respect thereof;
(d) except as disclosed on Schedule 5.1(d), neither the Company nor
any of its Subsidiaries shall modify, amend or terminate any of its Contracts
or waive, release or assign any material rights or claims, except in the
ordinary course of business and consistent with past practice;
(e) neither the Company nor any of its Subsidiaries shall permit
any material insurance policy naming it as a beneficiary or a loss payable
payee to be canceled or terminated except that any such policy may be replaced
with a policy with coverage and on terms and conditions no less favorable to
the Company and its Subsidiaries;
(f) neither the Company nor any of its Subsidiaries shall
(i)acquire (by merger, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership or other business organization or
division thereof or any material assets, assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the material obligations of any other person, other than
guarantees of obligations of wholly-owned Subsidiaries of the Company in the
ordinary course of business; (ii) make any loans, advances or capital
contributions to, or investments in, any other person, other than to wholly
owned Subsidiaries of the Company in the ordinary course of business and
consistent with past practice; (iii) make any bid or proposal, or enter into or
amend in any material respect any contract or agreement other than in ordinary
course of business consistent with past practice, which in any event would
either (a) involve aggregate consideration under such bid, proposal, contract
or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an
amount of which the Company would expect such bid, proposal or renewal to
result in a loss thereunder to the Company, (iv) authorize any single capital
expenditure which is in excess of $250,000 or capital expenditures which are,
in the aggregate, in excess of $1.0 million for the Company and its
Subsidiaries taken as a whole, (v) enter into any
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transaction, contract or commitment with any affiliate of the Company; or (vi)
enter into any material commitment or transaction with respect to any of the
foregoing (including, but not limited to, any borrowing, capital expenditure or
purchase, sale or lease of assets);
(g) neither the Company nor any of its Subsidiaries shall change
any of the accounting methods used by it unless required by GAAP;
(h) neither the Company nor any of its Subsidiaries will adopt a
plan of complete or partial liquidation, dissolution, merger, consolidation,
restructuring, recapitalization or other reorganization of the Company or any
of its Subsidiaries (other than the Merger);
(i) except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the date of
this Agreement and disclosed to Parent, increase the compensation or fringe
benefits of any of its directors, officers or employees, except for increases
in salary or wages of employees of the Company or its Subsidiaries who are not
officers of the Company in the ordinary course of business in accordance with
past practice, or grant any retention, severance or termination pay not
currently required to be paid under existing severance plans to or enter into
any employment, consulting or severance agreement or arrangement with any
present or former director, officer or other employee of the Company or any of
its Subsidiaries, or establish, adopt enter into or amend or terminate any
collective bargaining agreement or Company Plan, including, but not limited to,
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 directors, officers or employers;
(j) make or change any Tax election, make or change any method or
accounting with respect to Taxes, file any amended Tax Return or settle or
compromise any material Tax liability;
(k) settle or compromise any pending or threatened suit, action or
claim against the Company or any Subsidiary for an aggregate amount in excess
of $50,000 or which is material or which relates to the transactions
contemplated hereby;
(l) make any change in the key management structure of the Company
or any of its Subsidiaries, including, without limitation, the hiring of
additional officers or the termination of existing officers;
(m) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent of
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business in accordance with the terms of such obligation or liability
and consistent with past practice of liabilities reflected or reserved against
in the financial statements of the Company or incurred in the ordinary course
of business and consistent with past practice;
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(n) neither the Company nor any of its Subsidiaries will take, or
agree to commit to take, any action that would make any representation or
warranty of the Company contained herein inaccurate in any material respect at,
or as of any time prior to, the Effective Time (except for representations made
as of a specific date); or
(o) neither the Company nor any of its Subsidiaries will authorize
or enter into an agreement to do any of the foregoing.
Section 5.2 Approvals and Consents; Cooperation. (a) The parties
hereto shall use their reasonable best efforts, and cooperate with each other,
to obtain all governmental and third party authorizations, approvals, consents
or waivers required in order to consummate the Offer and the Merger. Each of
the parties hereto agrees to use its reasonable best efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable to consummate the Offer and the Merger. The Company further
agrees to use its reasonable best efforts to seek to obtain, in connection with
Parent and without cost to the Company, Parent, or the Purchaser, any consent
of a third party on Schedule 3.4 required to avoid a default or breach of any
such contract resulting from this Agreement, the Offer or the Merger.
(b) The Company and the Parent shall take all reasonable actions necessary
to file as soon as practicable notifications under the HSR Act and to respond
as promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as soon as practicable
to all inquiries and requests received from any Governmental Entity in
connection with antitrust matters. Notwithstanding anything to the contrary
herein (including the other provisions of this Section 5.2), Parent, the
Purchaser and its affiliates shall not be required to divest, or agree to any
restrictions with respect to, any of its businesses or assets or the businesses
or assets to be acquired in connection with the transactions contemplated
hereby. Nothing herein shall prevent the Purchaser, on not more than one
occasion, from withdrawing a notification under the HSR Act if the Purchaser
intends to refile such notification thereafter in accordance with the terms
hereof.
(c) In furtherance and not in limitation of the covenants of the parties
contained in Sections 5.2(a) and 5.2(b), if any administrative or judicial
action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement, each of Parent and the Company shall cooperate
in all respects with each other and use its respective reasonable best efforts
to contest and resist any such action or proceeding and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order,
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions contemplated
by this Agreement.
(d) If any objections are asserted with respect to the transactions
contemplated hereby or if any suit is instituted by any Governmental Entity or
any private party challenging any of the transactions contemplated hereby as
violative of any regulatory law, each of Parent and the Company shall use its
reasonable best efforts to resolve any such objections or challenge as such
Governmental
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Entity or private party may have to such transactions under such regulatory law
so as to permit consummation of the transactions contemplated by this
Agreement.
Section 5.3 Access to Information. Upon reasonable notice, the Company
shall (and shall cause its respective Subsidiaries to) afford to the officers,
employees, accountants, counsel, financing sources and other representatives of
the Parent, access, during normal business hours during the period prior to the
Effective Time, to all their respective officers, employees, agents,
properties, offices, plants and other facilities and books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal or
state securities laws and (b) all other information concerning its business,
financial condition, properties and personnel as Parent may reasonably request.
Unless otherwise required by law and until the Appointment Date, Parent will
hold any such information which is nonpublic in confidence in accordance with
the provisions of the Confidentiality Agreement between the Company and Parent,
dated October 8, 1998 (the "Parent Confidentiality Agreement").
Section 5.4 Employee Benefits.
------------------
The Parent shall, or shall cause the Surviving Corporation to,
until at least December 31, 1999, maintain employee benefit plans, programs and
arrangements (other than stock-based plans) which are, in the aggregate, for
the employees who were active full-time employees of the Company or any
Subsidiary immediately prior to the Effective Time and continue to be active
full-time employees of the Purchaser, the Surviving Corporation, any Subsidiary
or any other affiliate of the Purchaser, no less favorable than those provided
by the Company and any Subsidiary immediately prior to the Effective Time. From
and after the Effective Time, for purposes of determining eligibility, vesting
and entitlement to vacation and severance and other benefits for employees
actively employed full-time by the Company or any Subsidiary immediately prior
to the Effective Time and who continue in the employ of the Company following
the Effective Time under any compensation, severance, welfare, pension,
benefit, savings or other Plan of the Parent or any of its Subsidiaries in
which active full-time employees of the Company and any Subsidiary become
eligible to participate (whether pursuant to this Section 5.4 or otherwise),
service with the Company or any Subsidiary (whether before or after the
Effective Time) shall be credited as if such service had been rendered to the
Parent or such Subsidiary (except to the extent necessary to prevent
duplication of benefits). Parent will, and will cause the Surviving Corporation
to, observe all employment, severance agreements or arrangements which provide
for the acceleration of benefits to employees of the Company upon a change of
control, plans or policies of the Company and its Subsidiaries, copies of which
have been made available to Parent pursuant to Section 3.8, in accordance with
their terms.
Section 5.5 No Solicitation. The Company, its Subsidiaries, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any
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acquisition or exchange of all or any material portion of the assets of, or any
equity interest in, the Company or any of its Subsidiaries or any business
combination with the Company or any of its Subsidiaries. Neither the Company,
any of its Subsidiaries or affiliates nor their respective officers, directors,
employees, representatives or agents, shall directly or indirectly, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent, any of its affiliates or representatives) concerning any
merger, consolidation, tender offer, exchange offer, sale of all or
substantially all of the Company's direct and indirect assets, sale of shares
of capital stock or similar business combination transactions involving the
Company or any Subsidiary or principal operating or business unit of the
Company (an "Acquisition Proposal"); provided, however, that if, at any time
prior to the purchase of Shares by Purchaser in the Offer, the Company Board by
majority vote determines in good faith, after receiving advice from its
financial advisor and outside counsel, that failing to take such action would
constitute a breach of the fiduciary duties of the Company Board under
applicable law, the Company may, in response to a bona fide written Acquisition
Proposal which did not result from a breach of this Section 5.5 and which the
Board determines in good faith is superior to the Offer (any such bona fide
written Acquisition Proposal being referred to as a "Superior Proposal"), (i)
furnish information or provide access with respect to the Company and each of
its Subsidiaries to such Person pursuant to a customary confidentiality
agreement (as determined by the Company after consultation with its outside
counsel) and (ii) participate in discussions and negotiations regarding such
Acquisition Proposal. The Company Board agrees that it will keep the Parent
informed, on a current basis, of the status and terms of any such proposals. In
the event that prior to the completion of the Offer, the Company Board
determines in good faith, after the Company has received a Superior Proposal
and receipt of formal advice from its financial advisor and outside counsel,
that failing to take such action would constitute a breach of its fiduciary
duties under applicable law, the Company Board may withdraw or modify its
approval or recommendation of the Offer, the Merger or this Agreement, approve
or recommend a Superior Proposal or terminate this Agreement in accordance with
Section 7.1(c)(i), provided that prior to any such action, the Company shall
(i) have given Parent at least two business days notice of the effectiveness of
such action, and (ii) simultaneously with such action, pay to Parent the fee
referred to in Section 7.3 hereof. Furthermore, nothing contained in this
Section 5.5 shall prohibit the Company or the Company Board from taking and
disclosing to the Company's stockholders a position with respect to a tender or
exchange offer by a third party pursuant to Rules l4d-9 and l4e-2(a)
promulgated under the Exchange Act or from making such disclosure to the
Company's stockholders or otherwise which, in the judgment of the Company Board
with the advice of independent legal counsel, is required under applicable law
(in accordance with Section 7.1(c)(i)) or rules of any stock exchange. The
Company agrees not to release any third party from, or waive any provisions of,
(i) any standstill agreement to which the Company is a party (other than for
the limited purpose of discussions and negotiations permitted by this
Section 5.5) and (ii) any confidentiality agreement to which the Company is a
party.
Section 5.6 Brokers or Finders. (a) The Company represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except
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PricewaterhouseCoopers Securities LLC, whose fees and expenses will be paid by
the Company in accordance with the Company's agreement with such firm dated
August 20, 1998; and the Company agrees to indemnify and hold Parent and the
Purchaser harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliates.
(b) Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any brokers' or finders' fee or
any other commission or similar fee in connection with any of the transactions
contemplated by this Agreement, and Parent agrees to indemnify and hold the
Company harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliates.
Section 5.7 Publicity. So long as this Agreement is in effect, neither
the Company nor Parent shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or the
other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by any listing agreement with
a national securities exchange.
Section 5.8 Notification of Certain Matters. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence, or non-occurrence of any event the occurrence, or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (ii) any material failure of the Company or Parent,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
that the delivery of any notice pursuant to this Section 5.8 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 5.9 Directors' and Officers' Insurance and Indemnification.
(a) From and after the consummation of the Offer through the sixth anniversary
of the date the Effective Time occurs, Parent shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless any person who is
now, or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer or director (the "Indemnified Party") of the
Company and its Subsidiaries against all losses, claims, damages, liabilities,
costs and expenses (including reasonable attorneys' fees and expenses),
judgments, fines, and amounts paid in settlement in connection with any actual
or threatened action, suit, claim, proceeding or investigation (each a "Claim")
to the extent that any such Claim is based on, or arises out of, (i) the fact
that such person is or was a director, officer, employee or agent of the
Company or any Subsidiaries or is or was serving at the request of the Company
or any of its Subsidiaries as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (ii)
this Agreement, or any of the transactions contemplated hereby, in each case to
the extent that any such Claim pertains to any matter or fact arising,
existing, or occurring prior to or at the Effective Time, regardless of whether
such Claim is asserted or claimed
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prior to, at or after the Effective Time, to the full extent permitted under
Delaware law or the Company's Certificate of Incorporation, By-laws or
indemnification agreements in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any action or
suit. Without limiting the foregoing, in the event any Indemnified Party
becomes involved in any capacity in any Claim, then from and after consummation
of the Offer, the Company (or the Surviving Corporation if after the Effective
Time) shall, periodically advance to such Indemnified Party its legal and other
expenses (including the cost of any investigation and preparation incurred in
connection therewith), subject to the provision by such Indemnified Party of an
undertaking to reimburse the amounts so advanced in the event of a final
nonappealable determination by a court of competent jurisdiction that such
Indemnified Party is not entitled thereto. No Indemnified Party may settle any
such claim without the prior approval of Parent or the Surviving Corporation
(such consent not to be unreasonably withheld). In the event that any claim,
action, suit, proceeding or investigation is brought against more than one
Indemnified Party (whether arising before or after the Effective Time), the
Indemnified Parties as a group shall retain one counsel (plus appropriate local
counsel) reasonably satisfactory to Parent or the Surviving Corporation.
(b) Parent and the Company agree that all rights to indemnification
and all limitations of liability existing in favor of the Indemnified Party as
provided in the Company's Certificate of Incorporation and By-laws as in effect
as of the date hereof shall survive the Merger and shall continue in full force
and effect, without any amendment thereto, for a period of six years from the
Effective Time to the extent such rights are consistent with the DGCL; provided
that, in the event any claim or claims are asserted or made within such six
year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims; provided
further, that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under
Delaware law, the Company's Certificate of Incorporation or By-laws or such
agreements, as the case may be, shall be made by independent legal counsel
selected by the Indemnified Party and reasonably acceptable to Parent; and
provided further, that nothing in this Section 5.9 shall impair any rights or
obligations of any present or former directors or officers of the Company.
(c) In the event Parent or the Purchaser or any of their successors
or assigns (i) consolidates with or merges into any other person and shall not
be the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, and in each such case, to the extent necessary
to effectuate the purposes of this Section 5.9, proper provision shall be made
so that the successors and assigns of Parent and the Purchaser assume the
obligations set forth in this Section 5.9 and none of the actions described in
clauses (i) or (ii) shall be taken until such provision is made.
(d) Parent or the Surviving Corporation shall maintain the
Company's existing directors' and officers' liability insurance policy ("D&O
Insurance") for a period of not less than six years after the Effective Date;
provided, that (i) Parent may substitute therefor policies of substantially
similar coverage and amounts containing terms no less advantageous to such
former directors or officers; (ii) if the existing D&O Insurance expires or is
canceled during such period, Parent or the
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Surviving Corporation will use their reasonable best efforts to obtain
substantially similar D&O Insurance, (iii) in no event shall Parent or the
Surviving Corporation be required to expend more than an amount per year in
excess of 175% of current annual premiums paid by the Company (which the
Company represents and warrants to be not more than $156,000) to maintain or
procure insurance coverage pursuant hereto; (iv) if the annual premiums of such
insurance coverage would exceed 175% of current annual premiums, Parent or the
Surviving Corporation shall obtain a policy with the greatest coverage
available for a cost not exceeding 175% of current annual premiums.
Section 5.10 Stockholder Litigation. (a) Each of the Company and
Parent will give the other the reasonable opportunity to participate in the
defense of any stockholder litigation against the Company, Parent or Purchaser,
as applicable, or their respective directors relating to the transactions
contemplated by this Agreement. The Company agrees that it will not settle any
litigation currently pending, or commenced after the date hereof, against the
Company or any of its directors by any stockholder of the Company relating to
the Offer or this Agreement, without prior written consent of Parent, which
shall not be unreasonably withheld.
(b) Except as permitted by Section 5.5 of this Agreement, the
Company will not voluntarily cooperate with any third party which has sought or
may hereafter seek to restrain or prohibit or otherwise oppose the Offer or the
Merger.
Section 5.11 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
hereto shall take or cause to be taken all such necessary action, including,
without limitation, the execution and delivery of such further instruments and
documents as may be reasonably requested by the other party for such purposes
or otherwise to consummate and make effective the transactions contemplated
hereby.
Section 5.12 State Takeover Statutes. During the term of this
Agreement, except as permitted by Section 5.5, the Company Board shall not
repeal or otherwise alter the resolutions of the Company Board that render
Section 203 of the DGCL (or any similar provision) inapplicable to the Offer,
the Merger, this Agreement, the Tender Agreement, the other transactions
contemplated hereby and thereby.
Section 5.13 Stop Transfer Order. If requested by Parent, the Company
will instruct the Company's transfer agent that, there is a stop transfer order
with respect to all of the Shares covered by the Tender Agreement and that the
Tender Agreement places limits on the transfer of such Shares.
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ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been approved
and adopted by the requisite vote of the holders of Shares, if required by the
DGCL, in order to consummate the Merger;
(b) Statutes; Consents. No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any foreign or domestic
Governmental Entity or authority of competent jurisdiction which prohibits the
consummation of the Merger and all foreign or domestic governmental consents,
orders and approvals required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and shall be in
effect at the Effective Time;
(c) Injunctions. There shall be no order or injunction (whether
temporary, preliminary or permanent) of a foreign or United States federal or
state court or other governmental authority of competent jurisdiction in effect
precluding, restraining, enjoining or prohibiting consummation of the Merger,
which order or injunction is final and nonappealable;
(d) HSR Act. The applicable time period under the HSR Act shall
have expired or been terminated; and
(e) Consummation of Offer. Parent, Purchaser or their affiliates
shall have purchased Shares pursuant to the Offer.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
(a) By the mutual consent of the Board of Directors of Parent and
the Company Board.
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(b) By either of the Company Board or the Board of Directors of
Parent:
(i) if Parent or the Purchaser shall have terminated
the Offer or if Shares shall not have been purchased pursuant to the Offer
on or prior to May 10, 1999; provided, however, that in the event of a
delay in the Purchaser's purchase of the Shares pursuant to the Offer
resulting from an inquiry for additional materials made by a Governmental
Entity relating to the HSR Act or Federal antitrust laws, the right to
terminate this Agreement under this Section 7(b)(i) shall be extended
until June 23, 1999; provided, further, that the right to terminate this
Agreement under this Section 7.1(b)(i) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or the Purchaser, as the
case may be, to purchase Shares pursuant to the Offer on or prior to such
date; or
(ii) if any Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties
hereto shall use their reasonable best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and nonappealable and, with
respect to any court or governmental body located outside the United
States, such order, decree, ruling or other action would, either
individually or in the aggregate, have a Company MAE or a material adverse
effect on the business, operations, assets, condition (financial or
otherwise) or results of operations of Parent and its Subsidiaries taken
as a whole;
(c) By the Company Board:
(i) if, prior to the purchase of Shares pursuant to the Offer, the
Company Board shall have (A) received a bona fide offer which the Company
Board determines in good faith is a Superior Proposal, and (B) determined
in good faith, as a result of such Superior Proposal, based on the formal
advice of outside counsel to the Company, that the failure to terminate
this Agreement would violate its fiduciary duties to the Company's
stockholders under applicable law (provided that such termination under
this clause (c) shall not be effective until the Company has made payment
of the fee required simultaneous with such termination pursuant to
Section 7.3 hereof); or
(ii) if, prior to the purchase of Shares pursuant to
the Offer, Parent or the Purchaser breaches or fails in any material
respect to perform or comply with any of its material covenants and
agreements contained herein or breaches its representations and warranties
in any material respect, and such breach is not cured within fifteen (15)
business days of written notice; or
(iii) if Parent or the Purchaser shall have terminated
the Offer, or the Offer shall have expired, without Parent or the
Purchaser, as the case may be, purchasing any
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Shares pursuant thereto; provided that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(iii) if the Company is in
material breach of this Agreement; or
(iv) if Purchaser shall have failed to commence
the Offer on or prior to five business days following the date of the
initial public announcement of the Offer; provided, that the Company may
not terminate this Agreement pursuant to this Section 7.1(c)(iv) if the
Company is in material breach of this Agreement.
(d) By the Board of Directors of Parent:
(i) if Purchaser shall have failed to commence the
Offer on or prior to five business days following the date of the initial
public announcement of the Offer; provided that Parent may not terminate
this Agreement pursuant to this Section 7.1(d)(i) if Parent is in material
breach of this Agreement;
(ii) if, prior to the purchase of Shares pursuant to
the Offer, the Company Board shall have withdrawn, or modified or changed
in a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer, this Agreement or the Merger or shall have
recommended an Acquisition Proposal or shall have executed an agreement in
principle (or similar agreement) or definitive agreement relating to an
Acquisition Proposal or similar business combination with a person or
entity other than Parent, the Purchaser or their affiliates (or the
Company Board resolves to do any of the foregoing);
(iii) if following any negotiations by the Company
with any person (other than Parent or Purchaser) of an Acquisition
Proposal, there shall have been a breach of any covenant or agreement on
the part of the Company contained in this Agreement such that the
conditions set forth in clause (b) of Annex A would not be satisfied;
(iv) if, prior to the purchase of Shares pursuant to
the Offer, the Company breaches or fails in any material respect to
perform or comply with any of its material covenants and agreements
contained herein or breaches its representations and warranties in any
material respect, and such breach is not cured within fifteen (15)
business days of written notice; or
(v) the Minimum Condition shall not have been
satisfied by the expiration date of the Offer and on or prior to such date
(A) any person (other than Parent or Purchaser) shall have made and not
withdrawn a bona fide proposal or public announcement or communication to
the Company with respect to an Acquisition Proposal or (B) any person
(including the Company or any of its affiliates or Subsidiaries), other
than Parent, the Purchaser or any of their affiliates shall have become
the beneficial owner of more than 25% of the Shares.
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Section 7.2 Effect of Termination. In the event of the termination of
this Agreement as provided in Section 7.1, written notice thereof shall
forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void (except Section 7.3), and there shall be no
liability on the part of Parent or the Company except for fraud or for willful
breach of this Agreement.
Section 7.3 Termination Fee. In the event that the Company Board
terminates this Agreement pursuant to Section 7.1(c)(i) or the Board of
Directors of Parent terminates this Agreement pursuant to Section 7.1(d)(ii) or
(v) the Company shall concurrently (or on the following business day if
termination is by Parent) pay to Parent a termination fee of $3.0 million.
In the event that (x) the Company terminates this Agreement pursuant to
Section 7.1(b)(i) at a time when Parent had a right to terminate this Agreement
pursuant to Section 7.1(d)(iii) or Parent terminates this Agreement pursuant to
Section 7.1(d)(iii) and (y) the Company or any of its Subsidiaries enters into
an agreement with respect to a Third Party Acquisition (defined below) (an
"Acquisition Agreement") within 12 months of termination, the Company shall pay
Parent $3.0 million simultaneously with the signing of the Acquisition
Agreement.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, tender offer or otherwise
by any person or group of persons acting in concert other than Parent,
Purchaser or any affiliate thereof (at a price greater than $13.50 per Share in
the case of an acquisition by an person or group of persons with whom or which
the Company did not have direct or indirect (through affiliates or otherwise)
discussions prior to the termination of the Merger Agreement) (a "Third
Party"); (ii) the acquisition by a Third Party of 35% or more of the assets of
the Company and its Subsidiaries, taken as a whole, in one transaction or a
related series of transactions; (iii) the acquisition by a Third Party or more
than 35% of the outstanding Shares, in one transaction or a related series of
transactions; (iv) the adoption by the Company of a plan of complete
liquidation or the declaration or payment of an extraordinary dividend; or (v)
the repurchase by the Company or any of its Subsidiaries of 50% or more of the
outstanding Shares.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action
taken by their respective Boards of Directors, at any time prior to the Closing
Date with respect to any of the terms contained herein; provided, however, that
after the approval of this Agreement by the stockholders of the Company, no
such amendment, modification or supplement
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shall reduce or change the Merger Consideration or change the timing of the
payment of such Merger Consideration.
Section 8.2 Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time.
Section 8.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such
as Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
L-3 Communications Corporation
600 Third Avenue
New York, New York 10016
Attention: Christopher C. Cambria, Esq.
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: William E. Curbow, Esq.
and
(b) if to the Company, to:
Aydin Corporation
47 Friends Lane
Newtown, PA 18940
Telephone No.: (215) 497-8288
Telecopy No.: (215) 497-8124
Attention: James Henderson, President
with copies to:
Warren Lichtenstein
Steel Partners
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150 East 52nd Street, 21st Floor
New York, New York 10022
Telephone No.: (212) 813-1500
Telecopy No.: (212) 813-2198; and
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
Telephone No.: (212) 753-7200
Telecopy No.: (212) 735-1787
Attention: Steven Wolosky, Esq.
Section 8.4 Certain Definitions. For purposes of this Agreement:
(a) An "affiliate" of any Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such first Person;
(b) a "Company MAE" means any fact, circumstance, condition or effect
which is (i) materially adverse to the business, operations, assets, condition
(financial or otherwise) or results of operations of the Company and its
Subsidiaries, taken as a whole, other than any change, circumstance or effect
relating to the economy or securities markets in general or the industries in
which the Company operates and not specifically relating to the Company, or
(ii) materially adverse to the ability of the Company to perform any of its
material obligations under this Agreement. A "Company MAE" will be deemed to
exist if net cash of the Company and its Subsidiaries is less than $10 million
(without giving effect to any transaction-related fees and expenses of the
Financial Advisor, financial printers and outside counsel not exceeding $1.35
million in the aggregate) as of the close of business on the date of the
expiration of the Offer. Notwithstanding the foregoing, no "Company MAE" will
be deemed to exist solely by reason of the liabilities referred to in
Schedule 3.6 or Schedule 3.7 (excluding in each case any references to
Schedule 3.9 contained therein).
(c) "Knowledge" of any Person which is not an individual means the
knowledge of any of such Person's executive officers and directors after
reasonable inquiry.
(d) "Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(e) a "Subsidiary" of any Person means another Person, an amount of
the voting securities, other voting ownership or voting partnership interests
of which is sufficient to elect at least a majority of its Board of Directors
or other governing body (or, if there are no such voting interests, 50% or more
of the equity interests of which) is owned directly or indirectly by such first
Person.
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(f) "Tender Agreement" shall mean that certain agreement entered into
by Parent, Purchaser and Steel Partners II, L.P., Sandera Partners, L.P., and
Newcastle Partners, L.P. (collectively, the "Shareholders") regarding, among
other things, the voting of Shares held by the Shareholders.
Section 8.5 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including"
are used in this Agreement they shall be deemed to be followed by the words
"without limitation". The phrase "made available" in this Agreement shall mean
that the information referred to has been made available if requested by the
party to whom such information is to be made available.
Section 8.6 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
Section 8.7 Entire Agreement; Third Party Beneficiaries. This
Agreement and the Parent Confidentiality Agreement (including the documents and
the instruments referred to herein and therein): (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 4.7 and 5.9, are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.8 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.9 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.10 Jurisdiction. Any legal action or proceeding with respect
to this Agreement or any matters arising out of or in connection with this
Agreement or otherwise, and any action for enforcement of any judgement in
respect thereof shall be brought exclusively in the State of New York or of the
United States of America for the Southern District of New York and, by
execution and delivery of this Agreement, the Company, Parent and the Purchaser
each hereby accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and
appellate courts thereof. The Company, Parent and the Purchaser irrevocably
consent to service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage
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prepaid, or by recognized international express carrier or delivery service, to
the Company, Parent or the Purchaser at their respective addresses referred to
in Section 8.3 hereof. The Company hereby designates Olshan Grundman Frome
Rosenzweig & Wolosky LLP as its representative agent for the service of
process, and service upon the Company shall be deemed to be effective upon
service of Olshan Grundman Frome Rosenzweig & Wolosky LLP. Subsequent to the
Effective Time, the Company may designate another corporate agent or law firm
reasonably acceptable to Parent and located in New York, New York, as successor
agent. The Company, Parent and the Purchaser each hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement or otherwise brought in the courts referred to above and hereby
further irrevocably waives and agrees, to the extent permitted by applicable
law, not to plead or claim in any such court that any such action or proceeding
brought in any such court has been brought in an inconvenient forum. Nothing
herein shall affect the right of any party hereto to serve process in any other
manner permitted by law.
Section 8.11 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.
Section 8.12 Guarantee. Parent guarantees performance by the Purchaser
of the obligations of Purchaser hereunder.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
AYDIN CORPORATION
By:/s/ Warren Lichtenstein
---------------------------------------
Name: Warren Lichtenstein
Title: Chairman
L-3 COMMUNICATIONS CORPORATION
By:/s/ Christopher C. Cambria
---------------------------------------
Name: Christopher C. Cambria
Title: Vice President & General Counsel
ANGEL ACQUISITION CORPORATION
By:/s/ Christopher C. Cambria
---------------------------------------
Name: Christopher C. Cambria
Title: President & Secretary
<PAGE>
ANNEX A
-------
CONDITIONS TO THE OFFER
-----------------------
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) the Purchaser's rights to extend and amend the Offer
at any time in its sole discretion (subject to the provisions of the
Agreement), the 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) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer if (i) the Minimum Condition has not been satisfied, (ii)
any applicable waiting period under the HSR Act has not expired or terminated
prior to the expiration of the Offer, or (iii) at any time on or after March 1,
1999 and before the time of acceptance of Shares for payment pursuant to the
Offer, any of the following events shall occur:
(a) there shall have been any action or proceeding taken or
instituted and pending, or any statute, rule, regulation, judgment, order or
injunction promulgated, entered, enforced, enacted, issued or deemed applicable
to the Offer or the Merger, or any other action taken, proposed or threatened,
by any domestic or foreign federal or state governmental regulatory or
administrative agency or authority or court or legislative body or commission
which does or could reasonably be expected to (l) prohibit or impose any
material limitations on, Parent's or the Purchaser's ownership or operation of
all or a material portion of the Company's or its Subsidiaries' businesses or
assets compelling Parent, Purchaser or any of their affiliates to dispose of or
hold separate all or any material portion of the business or assets of the
Company or any of its Subsidiaries or Parent, or any of its affiliates, as a
result of the transactions contemplated by the Offer or the Merger Agreement,
(2) prohibit or make illegal the acceptance for payment, payment for or
purchase of Shares or the consummation of the Offer or the Merger, (3) result
in a material delay in or restrict the ability of the Purchaser, or render the
Purchaser unable, to accept for payment, pay for or purchase some or all of the
Shares, or (4) impose material limitations on the ability of the Purchaser or
Parent effectively to acquire or exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased
by it on all matters properly presented to the Company's stockholders, provided
that Parent shall have used all reasonable efforts to cause any such judgment,
order or injunction to be vacated or lifted; provided further that the
condition specified in this paragraph (a) shall not be deemed to exist by
reason of any court proceeding pending on the date hereof and known to the
Purchaser or Parent, unless in the reasonable judgement of the Purchaser there
is any material adverse development in any such proceeding after the date
hereof, or before the date hereof if not known to the Purchaser or Parent on
the date hereof, which would result in any of the consequences referred to in
clauses (1) through (4) above;
(b) the representations and warranties of the Company set forth
in the Agreement shall not be true and correct in any respect as of the date of
consummation of the Offer as though made on or as of such date or the Company
shall have breached or failed in any material
40
<PAGE>
respect to perform or comply with any obligation, agreement or covenant
required by the Agreement to be performed or complied with by it except, in
each case, those representations and warranties that address matters only as of
a particular date which are true and correct as of such date;
(c) the Agreement shall have been terminated in accordance with
its terms;
(d) (i) the Company Board shall have withdrawn, or modified or
changed in a manner adverse to Parent or the Purchaser (including by amendment
of the Schedule 14D-9) its recommendation of the Offer, the Agreement, or the
Merger, or recommended another proposal or offer, or shall have resolved to do
any of the foregoing or (ii) any such corporation, partnership, person or other
entity or group shall have entered into a definitive agreement or an agreement
in principle with the Company with respect to a tender offer or exchange offer
for any Shares or a merger, consolidation or other business combination with or
involving the Company or any of its Subsidiaries;
(e) there shall have occurred any fact that had or could
reasonably be expected to result in a Company MAE;
(f) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on any national securities
exchange or in the over-the counter market in the United States, (ii) a decline
of at least 25% in either the Dow Jones Average of Industrial Stocks or the
Standard & Poor's 500 index from the date hereof, (iii) any material adverse
change or any existing or threatened condition, event or development involving
a prospective material adverse change in United States or other material
international currency exchange rates or a suspension of, or limitation on, the
markets therefor, (iv) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (v) any limitation
(whether or not mandatory) by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, on, or any other event
that, in the reasonable judgment of the Purchaser, could reasonably be expected
to materially adversely affect the extension of credit by banks or other
lending institutions, (vi) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly involving the
United States (except for any such event involving Iraq or Bosnia) or
materially adversely affecting (or materially delaying) the consummation of the
Offer or (vii) in the case of any of the foregoing existing at the time of
commencement of the Offer, a material acceleration or worsening thereof; or
(g) any applicable waiting periods under any material foreign
statutes or regulations shall not have expired or been terminated, or any
material approval, permit, authorization or consent of any domestic or foreign
governmental, administrative, or regulatory agency (federal, state, local,
provincial or otherwise) shall not have been obtained on terms satisfactory to
the Parent in its reasonable discretion;
which in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by Purchaser or any of its
41
<PAGE>
affiliates other than a breach of the Merger Agreement) giving rise to any such
condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of the Purchaser
and Parent and may be waived by Parent or the Purchaser, in whole or in part at
any time and from time to time in the sole discretion of Parent or the
Purchaser. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
42
<PAGE>
List of Schedules
Schedule 3.2 - Capitalization
Schedule 3.4 - Required Consents and Approvals
Schedule 3.5 - SEC Reports and Financial Statements
Schedule 3.6 - Liabilities
Schedule 3.7 - Absence of Changes
Schedule 3.8 - Employee Benefit Plans
Schedule 3.9 - Litigation
Schedule 3.10 - Defaults and Non-Compliance with Laws
Schedule 3.11 - Taxes
Schedule 3.12 - Real Property
Schedule 3.13 - Environmental Matters
Schedule 5.1(c) - Interim Operations
43
<PAGE>
TENDER AGREEMENT
TENDER AGREEMENT (this "Agreement"), dated as of March 1, 1999, among
L-3 Communications Corporation, a Delaware corporation ("Parent"), and the
other parties set forth on the signature page hereof (collectively, the
"Stockholders").
RECITALS
Concurrently herewith, Parent, Angel Acquisition Corp., a Delaware
corporation and a direct, wholly owned subsidiary of Parent ("Sub"), and Aydin
Corporation, a Delaware corporation (the "Company"), are entering into an
Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"; capitalized terms used but not defined herein shall have the
meanings set forth in the Merger Agreement), pursuant to which Sub agrees to
make an offer (the "Offer") for all outstanding shares of common stock, par
value $1.00 per share (the "Common Stock"), of the Company, at a price of
$13.50 per share (the "Offer Price"), net in cash, to be followed by a merger
(the "Merger") of Sub with and into the Company.
As a condition to their willingness to enter into the Merger Agreement
and make the Offer, Parent and Sub have required that the Stockholders agree,
and the Stockholders have agreed, among other things, to tender the number of
shares of Common Stock of each Stockholder set forth on Annex A hereto,
together with any additional shares when and if they are acquired (such shares,
and any additional shares when and if they are acquired, being referred to
herein as the "Shares") pursuant to the Offer and not withdraw any Shares
therefrom on the terms and conditions provided for herein.
The Board of Directors of the Company has exempted this Agreement, the
Merger Agreement and the transactions contemplated hereby and thereby so as to
render inapplicable Section 203 of the Delaware General Corporation Law
("DGCL") to the transactions contemplated hereby and thereby.
AGREEMENT
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. Agreement to Tender. The Stockholders hereby agree to validly
tender (or cause the record owner to validly tender) all of their Shares
pursuant to and in accordance with the terms of the Offer and not withdraw any
Shares therefrom.
2. Voting of Shares. Each Stockholder hereby agrees to (a) vote the
Shares in favor of the approval of the Merger Agreement; (b) vote the Shares
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or
<PAGE>
warranty or any other obligation or agreement of the Company under the Merger
Agreement; and (c) vote the Shares against any action or agreement (other than
the Merger Agreement or the transactions contemplated thereby) that would
impede, interfere with, delay, postpone or attempt to discourage the Merger or
the Offer. Each Stockholder shall not hereafter purport to vote (or execute a
consent with respect to) such Shares (other than in accordance with the
requirements of this Section 2) or grant any other proxy or power of attorney
with respect to any Shares, deposit any Shares into a voting trust or enter
into any agreement (other than this Agreement), arrangement or understanding
with any person, directly or indirectly, to vote, grant any proxy or give
instructions with respect to the voting of such Shares.
3. Representations and Warranties.
3.1 Representations and Warranties of Parent. Parent hereby represents
and warrants to the Stockholders as follows:
(a) Due Authorization. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of Parent,
and no other corporate proceedings on the part of Parent are necessary to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by
Parent and constitutes a valid and binding agreement of Parent,
enforceable against Parent in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors'
rights generally and (ii) is subject to general principles of equity.
(b) No Conflicts. Except for (i) filings under the HSR Act,
if applicable, (ii) the applicable requirements of the Exchange Act and
the Securities Act, (iii) the applicable requirements of state securities,
takeover or blue sky laws and (iv) such notifications, filings,
authorizing actions, orders and approvals as may be required under other
laws, no filing with, and no permit, authorization, consent or approval of
any state, federal, foreign public body or authority is necessary for the
execution of this Agreement by Parent.
(c) Good Standing. Parent is a corporation duly organized,
validly existing and in good standing under the laws of Delaware and has
all requisite corporate power and authority to execute and deliver this
Agreement.
3.2 Representations and Warranties of Stockholders. Each Stockholder,
individually and solely as to itself hereby represents and warrants to Parent
as follows:
(a) Ownership of Shares. Each Stockholder is the record or
beneficial owner of the Shares set forth opposite its name on Annex A
hereto and has the power to vote and dispose of such Shares. To each
Stockholder's knowledge, such Shares are validly issued, fully paid and
nonassessable, with no personal liability attaching to the ownership
thereof. Each Stockholder has good title to the Shares, free and clear of
any
2
<PAGE>
agreements, liens, adverse claims or encumbrances whatsoever with respect
to the ownership of or the right to vote such Shares.
(b) Power; Binding Agreement. Each Stockholder has the
legal capacity, power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance
of this Agreement by each Stockholder will not violate any other agreement
to which such Stockholder is a party including, without limitation, any
voting agreement, stockholders agreement or voting trust. This Agreement
has been duly and validly authorized, executed and delivered by each
Stockholder and constitutes a valid and binding agreement of each
Stockholder, enforceable against each Stockholder in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(c) No Conflicts. Except for (i) filings under the HSR Act,
if applicable, (ii) the applicable requirements of the Exchange Act and
the Securities Act, (iii) the applicable requirements of state securities,
takeover or blue sky laws and (iv) such notifications, filings,
authorizing actions, orders and approvals as may be required under other
laws, (A) no filing with, and no permit, authorization, consent or
approval of, any state, federal or foreign public body or authority is
necessary for the execution of this Agreement by each Stockholder and the
consummation by each Stockholder of the transactions contemplated hereby
and (B) neither the execution and delivery of this Agreement by each
Stockholder nor the consummation by each Stockholder of the transactions
contemplated hereby nor compliance by each Stockholder with any of the
provisions hereof shall (1) conflict with or result in any breach of any
provision of the certificate of incorporation, by-laws, trust or
charitable instruments (or similar documents) of such Stockholder, (2)
result in a violation or breach of, or constitute (with or without notice
or lapse of time or both) a default (or give rise to any third party right
of termination, cancellation, material modification or acceleration) under
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation
to which such Stockholder is a party or by which they or any of their
properties or assets may be bound or (3) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to such
Stockholder or any of his or its properties or assets, except in the case
of (2) or (3) for violations, breaches or defaults which would not in the
aggregate materially impair the ability of such Stockholder to perform its
obligations hereunder.
3
<PAGE>
4. Certain Covenants of Stockholder. Each Stockholder hereby covenants
and agrees, individually and solely, as to itself as follows:
4.1 No Solicitation. No Stockholder nor any employee, representative
or agent of any Stockholder shall, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent and Sub, any affiliate or associate of Parent and Sub or any
designees of Parent or Sub) concerning any merger, sale of all or any material
portion of the assets, sale of shares of capital stock or similar transactions
(including an exchange of stock or assets) involving the Company or any
subsidiary or division of the Company. If any Stockholder, or any employee,
representative or agent of any Stockholder, receives an inquiry or proposal
with respect to the sale of Shares, then such Stockholder shall promptly inform
Parent of the terms and conditions, if any, of such inquiry or proposal and the
identity of the person making it. Each Stockholder shall, and shall cause his
or its employees, representatives and agents to, immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing.
4.2 Restriction on Transfer and NonInterference. Each Stockholder
hereby agrees, while this Agreement is in effect, and except as contemplated
hereby, not to (a) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any Shares; provided that any Stockholder
may transfer Shares to any other Stockholder; provided further that as a
condition to such transfer, such other Stockholder agrees in writing on terms
reasonably acceptable to Parent to become a party to, and agrees to be bound
by, to the same extent as the transferring Stockholder, the terms of this
Agreement or (b) take any action that would make any representation or warranty
of such Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing or its obligations
under this Agreement.
4.3 Legending of Certificates; Nominees Shares. If requested by
Parent, the Stockholders agree to submit to Parent contemporaneously with or
promptly following execution of this Agreement all certificates representing
their Shares so that Parent may note thereon a legend referring to the rights
granted to it by this Agreement. If any of the Shares beneficially owned by the
Stockholders are held of record by a brokerage firm in "street name" or in the
name of any other nominee (a "Nominee," and, as to such Shares, "Nominee
Shares"), the Stockholders agree that, upon written notice by Parent requesting
it, the Stockholders will within five days of the giving of such notice execute
and deliver to Parent a limited power of attorney in such form as shall be
reasonably satisfactory to Parent solely to enable Parent to require the
Nominee to (i) enter into an agreement to the same effect as Section 2 hereof
with respect to the Nominee Shares held by such Nominee, (ii) tender such
Nominee Shares in the Offer pursuant to Section 1 hereof and (iii) submit to
Parent the certificates representing such Nominee Shares for notation of the
above-referenced legend thereon.
4.4 Stop Transfer Order. In furtherance of this Agreement,
concurrently herewith, the Stockholders shall and hereby do authorize the
Company's counsel to notify the Company's transfer agent that, except as
permitted pursuant to Section 4.2 of this Agreement,
4
<PAGE>
there is a stop transfer order with respect to all of the Shares (and that this
Agreement places limits on the transfer of such Shares).
5. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further action as may be necessary
or desirable to consummate the transactions contemplated by this Agreement.
6. Adjustments to Prevent Dilution. In the event of a stock dividend
or distribution, or any change in the Company's Common Stock by reason of any
stock dividend, split-up, reclassification, recapitalization, combination or
the exchange of shares, the term "Shares" shall be deemed to refer to and
include the Shares as well as all such stock dividends and distributions and
any shares into which or for which any or all of the Shares may be changed or
exchanged. In such event, the definitions of "Set Amount" and "Initial Amount"
shall be proportionally adjusted.
7. Miscellaneous.
7.1 Entire Agreement; Assignment. This Agreement (i) constitutes the
entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof and (ii)
shall not be assigned by operation of law or otherwise, provided that Parent
may assign its rights and obligations hereunder to any direct or indirect
wholly owned parent company or subsidiary of Parent, but no such assignment
shall relieve Parent of its obligations hereunder if such assignee does not
perform such obligations.
7.2 Amendments. This Agreement may not be modified, amended, altered
or supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto.
7.3 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 received if so given) by hand delivery, telegram,
telex or telecopy, or by mail (registered or certified mail, postage prepaid,
return receipt requested) or by any courier service, such as Federal Express,
providing proof of delivery. All communications hereunder shall be delivered to
the respective parties at the following addresses:
If to the Stockholders: c/o Steel Partners II, L.P.
150 East 52nd Street
21st Floor
New York, New York 10022
Attention: Warren G. Lichtenstein
copy to: Olshan Grundman Frome Rosenzweig & Wolosky,
LLP
505 Park Avenue
New York, New York 10022
5
<PAGE>
Attention: Steven Wolosky, Esq.
If to Parent: L-3 Communications Corporation
600 Third Avenue
New York, New York 10016
Attention: Christopher Cambria, Esq.
copy to: Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: William E. Curbow, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
7.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York.
7.5 Termination. This Agreement shall terminate on the earlier of (i)
the Effective Time or (ii) the termination of the Merger Agreement in
accordance with its terms.
7.6 Waiver of Dissenter's and Appraisal Rights. The Stockholders agree
that they will not exercise any rights to dissent from the Merger or request
appraisal rights of their Shares pursuant to Section 262 of the DGCL or any
other similar provisions of law in connection with the transactions
contemplated hereby.
7.7 Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore, each of
the parties hereto agrees that in the event of any such breach the aggrieved
party shall be entitled to the remedy of specific performance of such covenants
and agreements and injunctive and other equitable relief in addition to any
other remedy to which it may be entitled, at law or in equity.
7.8 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall be deemed to be an original, and all
of which shall constitute one and the same agreement.
7.9 Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
7.10 Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under
6
<PAGE>
applicable law but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
7.11 Duty of Directors. Nothing contained in Section 4.1 shall limit
the right of any officer, director, employee or representative of a Stockholder
who is a director of the Company from exercising his or her fiduciary
responsibility as a director, consistent with the terms of the Merger
Agreement.
7
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on behalf
of each of the parties hereto, all as of the date first above written.
L-3 COMMUNICATIONS CORPORATION
By: /s/ Christopher C. Cambria
--------------------------------------------------
Name: Christopher C. Cambria
Title: Vice President and General Counsel
STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C., General Partner
By: /s/ Warren G. Lichtenstein
--------------------------------------------------
Warren G. Lichtenstein, Chief Executive Officer
SANDERA PARTNERS, L.P.
By: Sandera Capital Management L.P., General Partner
By: Sandera Capital L.L.C., General Partner
By: /s/ Mark E. Schwarz
--------------------------------------------------
Mark E. Schwarz, Vice President and Managing Member
NEWCASTLE PARTNERS, L.P.
By: /s/ Mark E. Schwarz
--------------------------------------------------
Mark E. Schwarz, General Partner
8
<PAGE>
ANNEX A
Number of Shares
Name of Common Stock
- ---- ---------------
Steel Partners II, L.P. 492,600
Sandera Partners, L.P. 125,000
Newcastle Partners, L.P. 3,100
9
<PAGE>
L-3 COMMUNICATIONS AGREES TO ACQUIRE AYDIN CORPORATION
New York --(BUSINESS WIRE)-- March 1, 1999 -- L-3 Communications (NYSE: LLL)
today announced that it has signed a definitive agreement to acquire Aydin
Corporation (NYSE:AYD). Under the terms of the agreement, L-3 Communications
will purchase all of the outstanding common stock of Aydin for $13.50 per share
in cash. The total value of the transaction is approximately $72.3 million,
before reductions for cash on hand of approximately $11.3 million at the end of
February and planned asset sales. The transaction is expected to be accretive
to planned asset sales. The transaction is expected to be accretive to L-3
Communications earnings in 1999 and is expected to close in the first half of
1999.
Headquartered in Horsham, Pennsylvania, Aydin is a leader in
technologically advanced telemetry, communications and other electronic products
and systems for military, space, government and commercial customers.
"Aydin broadens the marketplace for our existing telemetry and
instrumentation and communications businesses," said Frank C. Lanza, chairman
and chief executive officer of L- 3 Communications. "This business extends our
participation into flight test instrumentation for a number of programs,
including the Joint Strike Fighter (JSF) for the U.S. Navy, Marine Corps and Air
Force and the United Kingdom Royal Navy."
"Aydin's communications business gives us entry into a larger
international customer base for our earth stations, gateways and fixed wireless
loop products," continued Mr. Lanza. The company also provides both domestic and
international customers with terminals for intelligence satellite systems and a
variety of communications products, including transponders and multiplexers.
"In 1998, Aydin extensively restructured its operations to focus on its
core businesses," said Mr. Lanza. "Aydin's management divested certain non-core
operations and took other actions that resulted in a return to profitability
from operations in the fourth quarter before unusual charges and a one-time
gain. As part of L-3 Communications, we believe opportunities remain for
additional improvements in profitability due to further efficiencies in
operations, synergies and corporate consolidation."
Under the acquisition agreement, a tender offer will be commenced by a
wholly owned subsidiary of L-3 Communications. The transaction is subject to the
receipt of a majority of Aydin's shares outstanding in the tender offer,
regulatory approvals and other customary closing condtions.
<PAGE>
2
L-3 Communications is a leading merchant supplier of secure communication
systems and products, microwave components, avionics and ocean systems and
telemetry, instrumentation, space and wireless products. Its customers include
the Department of Defense, selected U.S. government intelligence agencies,
aerospace and defense prime contractors, foreign governments and commercial
telecommunications and cellular customers.
Safe Harbor Statement under the Private Securities Litigation Reform Act
of 1995: Except for historical information contained herein, the matters set
forth in this news release are forward- looking statements. The forward-looking
statements set forth above involve a number of risks and uncertainties that
could cause actual results to differ materially from any such statement,
including the risks and uncertainities discussed in the company's Safe Harbor
Compliance Statement for Forward-looking Statements included in the company's
final prospectus, dated february 4, 1999, which discussion is incorporated
herein by this reference.
CONTACT: Cynthia Swain
VICE PRESIDENT, CORPORATE COMMUNICATONS
L-3 Communications
212-697-1111
or
Morgen-Walke Associates
Gordon McCoun, Jeffrey Zack
Media Contact: Richard Dukas
212-850-5600
