<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
LIBERTY TECHNOLOGIES, INC.
(Name of Subject Company)
CRANE CO.
LTI MERGER, INC.
(Bidders)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
531281103
(CUSIP Number of Class of Securities)
---------------
AUGUSTUS I. DUPONT
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CONNECTICUT 06902
(203) 363-7300
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
---------------
with a copy to:
JANICE C. HARTMAN
KIRKPATRICK & LOCKHART LLP
1500 OLIVER BUILDING
PITTSBURGH, PENNSYLVANIA 15222
(412) 355-6500
---------------
CALCULATION OF FILING FEE
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$21,585,315.50 $4,317.06
* For purposes of calculating the filing fee only. This calculation
assumes the purchase of all of the shares of Common Stock, par value
$.01 per share (the "Shares") (and the associated Preferred Stock
Purchase Rights (the "Rights")), of the subject company, including
Shares issuable upon the exercise of options, at a price of $3.50 per
Share (and Right), net to the seller in cash, without interest thereon.
** The amount of the filing fee, calculated in accordance with Rule
0-11(d) of the Securities Exchange Act of 1934, as amended, is equal to
1/50th of one percent of the aggregate value of cash offered by the
bidders.
[ ] Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
Amount Previously Paid: Not applicable Filing Party: Not applicable
Form or Registration No.: Not applicable Date Filed: Not applicable
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<PAGE>
CUSIP NO. 14D-1 PAGE 1 OF 2
- -----------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Crane Co. (E.I.N.: 131952290)
- -----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- -----------------------------------------------------------------------------
3. SEC USE ONLY
- -----------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- -----------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- -----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- -----------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,979,705
- -----------------------------------------------------------------------------
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- -----------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
32.9%
- -----------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON HC and CO
- -----------------------------------------------------------------------------
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CUSIP NO. 14D-1 PAGE 2 OF 2
- -----------------------------------------------------------------------------
1. NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
LTI Merger, Inc.
- -----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ]
(b) [X]
- -----------------------------------------------------------------------------
3. SEC USE ONLY
- -----------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF
- -----------------------------------------------------------------------------
5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [ ]
- -----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Pennsylvania
- -----------------------------------------------------------------------------
7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,979,705
- -----------------------------------------------------------------------------
8. CHECK IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES [ ]
- -----------------------------------------------------------------------------
9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
32.9%
- -----------------------------------------------------------------------------
10. TYPE OF REPORTING PERSON CO
- -----------------------------------------------------------------------------
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Liberty Technologies, Inc., a
Pennsylvania corporation (the "Company"). The address of the Company's
principal executive offices is 555 North Lane, Lee Park, Conshohocken,
Pennsylvania 19428.
(b) This Tender Offer Statement on Schedule 14D-1 relates to the offer by
LTI Merger, Inc. (the "Purchaser"), a Pennsylvania corporation and a wholly
owned subsidiary of Crane Co., a Delaware corporation ("Crane"), to purchase
all outstanding shares of common stock, par value $.01 per share (the
"Shares"), of the Company, including the associated Preferred Stock Purchase
Rights issued pursuant to the Amended and Restated Rights Agreement, dated as
of October 6, 1997 (the "Rights Agreement"), between the Company and
StockTrans, Inc., as Rights Agent, at a price of $3.50 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 14, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any amendments or supplements thereto, constitute the "Offer").
Based on publicly available information, the number of Shares to be purchased
in the Offer is currently 5,013,233. The information set forth under
"Introduction" in the Offer to Purchase annexed hereto as Exhibit (a)(l) is
incorporated herein by reference.
(c) The information set forth in Section 6 "Price Range of Shares;
Dividends" in the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d); (f)-(g) This Statement is being filed by the Purchaser and Crane.
The information set forth in the Offer to Purchase under "Introduction," in
Section 9 "Certain Information Concerning the Purchaser and Crane" and in
Schedule I to the Offer to Purchase is incorporated herein by reference.
(e) During the last five years, neither the Purchaser, Crane nor any
persons controlling the Purchaser, nor, to the best knowledge of the
Purchaser or Crane, any of the persons listed on Schedule I to the Offer to
Purchase has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a)-(b) The information set forth under "Introduction," in Section 10
"Background of the Offer; Contacts with the Company," Section 8 "Certain
Information Concerning the Company" and in Section 9 "Certain Information
Concerning the Purchaser and Crane" in the Offer to Purchase is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth under "Introduction" and in Section 12
"Source and Amount of Funds" in the Offer to Purchase is incorporated herein
by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(d) The information set forth under "Introduction," and in Section 11
"Purpose of the Offer; The Merger Agreement; The Stock Option Agreement; The
Shareholder Agreements; Dissenters' Rights; Plans for the Company; The
Rights" in the Offer to Purchase is incorporated herein by reference.
(e)-(g) The information set forth in Section 11 "Purpose of the Offer; The
Merger Agreement; The Stock Option Agreement; The Shareholder Agreements;
Dissenters' Rights; Plans for the Company; The Rights" and in Section 7
"Effect of the Offer on the Market for the Shares; Nasdaq National Market
Listing; Margin Regulations; Exchange Act Registration" in the Offer to
Purchase is incorporated herein by reference.
4
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Crane may be deemed to beneficially own 1,979,705 Shares of the Company in
the aggregate. Pursuant to the terms of the Stock Option Agreement dated
August 11, 1998 between Crane and the Company (the "Stock Option Agreement"),
Crane has the right to acquire, in certain limited circumstances, 997,633
newly issued Shares from the Company. The Stock Option Agreement is attached
to this Schedule 14D-1 as Exhibit (c)(2) and is incorporated herein by
reference. Pursuant to the terms of the Shareholder Agreements dated August
11, 1998 between Crane and certain shareholders of the Company (the
"Shareholder Agreements"), Crane has the right to vote the 982,072 Shares
owned by such shareholders in certain circumstances, and also the right,
under certain limited circumstances, to acquire such Shares from the
shareholders. The form of the Shareholder Agreements is attached hereto as
Exhibit (c)(3) and is incorporated herein by reference. On a fully diluted
basis (based on 5,013,233 Shares outstanding as of August 11, 1998) the
1,979,705 Shares reported as beneficially owned by Crane herein represent
32.9% of the Shares.
(a)-(b) The information set forth in the Offer to Purchase under
"Introduction," in Section 9 "Certain Information Concerning the Purchaser
and Crane" and in Section 11 "Purpose of the Offer; The Merger Agreement; The
Stock Option Agreement; The Shareholder Agreements; Dissenters' Rights; Plans
for the Company; The Rights" is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS
WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in Section 12 "Source and Amount of Funds," and
Section 11 "Purpose of the Offer; The Merger Agreement; The Stock Option
Agreement; The Shareholder Agreements; Dissenters' Rights; Plans for the
Company; The Rights" in the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in Section 16 "Certain Fees and Expenses" in the
Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth under "Introduction" and in Section 11
"Purpose of the Offer; The Merger Agreement; The Stock Option Agreement; The
Shareholder Agreements; Dissenters' Rights; Plans for the Company; The
Rights" in the Offer to Purchase is incorporated herein by reference.
(b)-(c) The information set forth under "Introduction" and in Section 15
"Certain Legal Matters; Required Regulatory Approvals" in the Offer to
Purchase is incorporated herein by reference.
(d)-(e) Not applicable.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal, copies of which are attached hereto as Exhibits (a)(l) and
(a)(2), respectively, is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase, dated August 14, 1998.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
5
<PAGE>
(a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Text of Press Release issued by Crane Co. on August 12, 1998.
(a)(8) Summary Advertisement published on August 14, 1998.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated as of August 11, 1998 among
Crane Co., LTI Merger, Inc. and Liberty Technologies, Inc.
(c)(2) Stock Option Agreement, dated as of August 11, 1998, between
Liberty Technologies, Inc. and Crane Co.
(c)(3) Form of Shareholder Agreement between Crane Co. and certain
shareholders of Liberty Technologies, Inc.
(c)(4) First Amendment to Amended and Restated Rights Agreement dated
August 11, 1998 between Liberty Technologies, Inc. and
StockTrans, Inc., as Rights Agent.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
6
<PAGE>
SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is
true, complete and correct.
Dated: August 14, 1998
CRANE CO.
By: /s/ David S. Smith
-------------------------------
David S. Smith
Vice President-Finance and
Chief Financial
Officer
LTI MERGER, INC.
By: /s/ David S. Smith
-------------------------------
David S. Smith
Chief Executive Officer
7
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER PAGE
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<S> <C> <C>
(a)(1) Offer to Purchase, dated August 14, 1998.
(2) Letter of Transmittal.
(3) Notice of Guaranteed Delivery.
(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.
(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.
(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(7) Text of Press Release issued by Crane Co. on August 12, 1998.
(8) Summary Advertisement published on August 14, 1998.
(b) Not applicable.
(c)(1) Agreement and Plan of Merger, dated as of August 11, 1998 among Crane
Co., LTI Merger, Inc. and Liberty Technologies, Inc.
(2) Stock Option Agreement, dated as of August 11, 1998, between Liberty
Technologies, Inc. and Crane Co.
(3) Form of Shareholder Agreement between Crane Co. and certain
shareholders of Liberty Technologies, Inc.
(4) First Amendment to Amended and Restated Rights Agreement dated August
11, 1998 between Liberty Technologies, Inc. and StockTrans, Inc., as
Rights Agent.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
LIBERTY TECHNOLOGIES, INC.
AT
$3.50 NET PER SHARE
BY
LTI MERGER, INC.
A WHOLLY OWNED SUBSIDIARY
OF
CRANE CO.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND
THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN), IS FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND THE
MERGER AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE COMPANY'S SHAREHOLDERS.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SHARES REPRESENTING AT
LEAST A MAJORITY OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF COMMON STOCK OF
THE COMPANY ON A FULLY DILUTED BASIS BEING VALIDLY TENDERED PRIOR TO THE
EXPIRATION OF THE OFFER AND NOT PROPERLY WITHDRAWN. SEE SECTION 14.
---------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such
shareholder's Shares (as defined herein) either should (a) complete and sign
the Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it together
with the certificate(s) representing tendered Shares and any other required
documents to the Depositary or tender such Shares pursuant to the procedures
for book-entry transfer set forth in Section 3 or (b) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee
to effect such transaction. A shareholder whose Shares are registered in the
name of a broker, dealer, commercial bank, trust company or other nominee
must contact such broker, dealer, commercial bank, trust company or other
nominee if such shareholder desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available or who cannot comply
with the procedures for book-entry transfer on a timely basis may tender such
Shares by following the procedures for guaranteed delivery set forth in
Section 3.
Questions and requests for assistance may be directed to Beacon Hill
Partners, Inc. (the "Information Agent") at its address and telephone number
set forth on the back cover of this Offer to Purchase. Additional copies of
this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed
Delivery and other related materials may be obtained from the Information
Agent or from brokers, dealers, commercial banks and trust companies.
August 14, 1998
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
INTRODUCTION ............................................................................... 1
1. Terms of the Offer....................................................................... 2
2. Acceptance for Payment and Payment ...................................................... 3
3. Procedures for Accepting the Offer and Tendering Shares.................................. 4
4. Withdrawal Rights........................................................................ 7
5. Certain Tax Consequences................................................................. 8
6. Price Range of the Shares; Dividends..................................................... 8
7. Effect of the Offer on the Market for the Shares; Nasdaq National Market Listing; Margin
Regulations; Exchange Act Registration................................................... 9
8. Certain Information Concerning the Company............................................... 10
9. Certain Information Concerning the Purchaser and Crane................................... 11
10. Background of the Offer; Contacts with the Company...................................... 12
11. Purpose of the Offer; The Merger Agreement; The Stock Option Agreement; The Shareholder
Agreements; Dissenters' Rights; Plans for the Company; The Rights....................... 13
12. Source and Amount of Funds.............................................................. 31
13. Dividends and Distributions............................................................. 32
14. Certain Conditions of the Offer......................................................... 32
15. Certain Legal Matters; Required Regulatory Approvals.................................... 33
16. Certain Fees and Expenses .............................................................. 37
17. Miscellaneous .......................................................................... 38
Schedule I--Directors and Executive Officers of Crane and the Purchaser..................... I-1
Schedule II--Sections 1930(a) and 1571 through 1580 (Subchapter D of Chapter 15) of the
Pennsylvania Business Corporation Law.......................................... II-1
</TABLE>
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<PAGE>
To: All Holders of Shares of Common Stock of Liberty Technologies, Inc.:
INTRODUCTION
LTI Merger, Inc. (the "Purchaser"), a Pennsylvania corporation and a
wholly owned subsidiary of Crane Co., a Delaware corporation ("Crane"),
hereby offers to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares" or "Company Common Stock"), of Liberty
Technologies, Inc., a Pennsylvania corporation (the "Company"), and the
associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to
the Amended and Restated Rights Agreement, dated as of October 6, 1997,
between the Company and StockTrans, Inc., as Rights Agent (as amended, the
"Rights Agreement"), at a purchase price of $3.50 per Share (and associated
Right), net to the seller in cash, without interest thereon (the "Per Share
Amount"), upon the terms and subject to the conditions set forth in this
Offer to Purchase and in the related Letter of Transmittal (which together
constitute the "Offer"). Unless the context otherwise requires, all
references to Shares shall include the associated Rights.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer. The Purchaser will pay all charges and expenses of
First Chicago Trust Company of New York, as Depositary (the "Depositary"),
and Beacon Hill Partners, Inc., as Information Agent (the "Information
Agent"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND
THE MERGER (AS SUCH TERMS ARE DEFINED HEREIN), IS FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND THE
MERGER AND RECOMMENDS ACCEPTANCE OF THE OFFER BY THE COMPANY'S SHAREHOLDERS.
Legg Mason Wood Walker Incorporated ("Legg Mason"), the Company's
financial advisor, has delivered to the Board of Directors of the Company a
written opinion dated August 10, 1998 to the effect that, as of such date,
each of the consideration to be received by the holders of Shares pursuant to
the Offer and the Merger is fair to the Company's shareholders from a
financial point of view. A copy of such opinion is included with the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9"), which is being mailed to shareholders concurrently
herewith, and shareholders are urged to read the opinion in its entirety for
a description of the assumptions made, matters considered and limitations of
the review undertaken by Legg Mason.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, AT LEAST A MAJORITY OF
THE TOTAL NUMBER OF OUTSTANDING SHARES ON A FULLY DILUTED BASIS BEING VALIDLY
TENDERED PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION 1) AND NOT
PROPERLY WITHDRAWN (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO
CERTAIN OTHER TERMS AND CONDITIONS. THE OFFER WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS EXTENDED. SEE SECTIONS 1,
14, AND 15 BELOW.
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated as of August 11, 1998 (the "Merger Agreement"), among the Company, the
Purchaser and Crane pursuant to which, following the consummation of the
Offer and the satisfaction or waiver of certain conditions, the Purchaser
will be merged with and into the Company (the "Merger"), with the Company
continuing as the surviving corporation (the "Surviving Corporation"). In the
Merger, each outstanding Share (other than Shares held by Crane, the
Purchaser or any wholly owned subsidiary of Crane or Purchaser or held in the
treasury of the Company, which will be canceled with no payment being made
with respect thereto, and other than Shares, if any, held by shareholders who
object to the Merger and demand a right to receive payment of the fair value
of such shareholders' Shares in accordance with Pennsylvania law, unless such
right shall have been withdrawn or otherwise lost ("Dissenting Shares"))
will, by virtue of the Merger and without any action by the holder thereof,
be converted into the right to receive $3.50 in cash (the "Merger
1
<PAGE>
Consideration"), payable to the holder thereof, without interest thereon upon
the surrender of the certificate formerly representing such Share. In
conjunction with the Merger Agreement, Crane entered into a Stock Option
Agreement (the "Stock Option Agreement") with the Company pursuant to which
the Company has granted Crane an option to purchase up to 997,633 newly
issued shares (or, based on information supplied to the Purchaser by the
Company, approximately 19.9% of the outstanding Shares as of August 11, 1998)
of Company Common Stock, and Crane has entered into Shareholder Agreements
(the "Shareholder Agreements") with certain shareholders of the Company
(including certain directors and officers of the Company) holding in the
aggregate 982,072 Shares (or, based on information supplied to the Purchaser
by the Company, approximately 19.6% of the outstanding Shares as of August
11, 1998), pursuant to which such shareholders have, among other things,
agreed to tender their Shares pursuant to the Offer. The Merger Agreement,
the Stock Option Agreement and the Shareholder Agreements are more fully
described in Section 11 below. Certain U.S. federal income tax consequences
of the sale of Shares pursuant to the Offer and the Merger, as the case may
be, are described in Section 5 below.
The Pennsylvania Business Corporation Law (the "PBCL") requires the
affirmative vote of holders of at least a majority of the votes cast by
holders of Shares to approve the Merger. As a result, if the Minimum
Condition and the other conditions to the Offer are satisfied and the Offer
is consummated, the Purchaser will own a sufficient number of Shares to
ensure that the Merger will be approved. Under the PBCL, if after
consummation of the Offer the Purchaser owns at least 80% of the Shares then
outstanding, the Purchaser will be able to cause the Merger to occur without
a vote of the Company's shareholders. If, however, after consummation of the
Offer, the Purchaser owns less than 80% of the then outstanding Shares, a
vote of the Company's shareholders will be required under the PBCL to approve
the Merger, and a significantly longer period of time will be required to
effect the Merger. See Section 11.
The Company has informed the Purchaser that, as of August 11, 1998, there
were 5,013,233 Shares issued and outstanding and 1,154,000 Shares reserved
for issuance upon the exercise of outstanding options to acquire Company
Common Stock ("Options") granted pursuant to the Company's 1992 Stock Option
Plan and 1988 Stock Option Plan.
No dissenters' rights are available in connection with the Offer; however,
shareholders will have dissenters' rights in connection with the Merger
regardless of whether the Merger is consummated with or without a vote of the
Company's shareholders. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS
MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the Purchaser will accept for payment and pay for
all Shares validly tendered on or prior to the Expiration Date (as defined
below) and not withdrawn in accordance with the procedures set forth in
Section 4, as soon as practicable after such Expiration Date; provided that,
if all of the conditions to the Offer are satisfied and more than 65% but
less than 80% of the outstanding shares of Company Common Stock on a fully
diluted basis (including shares of Company Common Stock issuable upon
exercise of outstanding Options) have been validly tendered and not withdrawn
in the Offer, the Purchaser reserves the right, in its sole discretion, to
extend the Offer from time to time for up to a maximum of ten additional
business days in the aggregate for all such extensions provided the Purchaser
agrees to waive the conditions set forth in paragraphs (c), (f) and (g) of
Section 14. The Offer shall remain open until 12:00 midnight, Eastern time,
on Friday, September 11, 1998 (the "Expiration Date"), unless the Purchaser
shall have extended the period of time for which the Offer is open, in which
event the term "Expiration Date" shall mean the latest time and date at which
the Offer, as so extended by the Purchaser, shall expire. If, at any
Expiration Date, the conditions to the Offer described in Section 14 hereof
shall not have been satisfied or waived, the Purchaser reserves the right
(but shall not be obligated) to extend the Offer from time to time by giving
oral or written notice to the Depositary. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer
and subject to the right of a tendering shareholder to withdraw such
shareholder's Shares. See Section 4.
2
<PAGE>
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), the Purchaser also expressly reserves the
right, in its sole discretion, at any time or from time to time, to (i)
terminate the Offer if any condition referred to in Section 14 has not been
satisfied by any Expiration Date and return all tendered Shares; (ii) waive
any condition; or (iii) except as set forth in the Merger Agreement,
otherwise amend the Offer in any respect, in each case, by giving oral or
written notice of such termination, waiver or amendment to the Depositary. In
the Merger Agreement, the Purchaser has agreed that, without the prior
written consent of the Company, it will not (i) decrease the price per Share
or change the form of consideration payable in the Offer, (ii) decrease the
number of Shares sought to be purchased in the Offer, (iii) impose additional
conditions to the Offer or (iv) amend any other term of the Offer in any
manner adverse to the holders of Shares.
Any such extension, termination or amendment will be followed as promptly
as practicable by public announcement thereof, and such announcement in the
case of an extension will be made no later than 9:00 a.m., Eastern time, on
the next business day after the previously scheduled Expiration Date. Without
limiting the manner in which the Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which require that material changes be promptly disseminated to
holders of Shares), the Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a release to the Dow Jones News Service. The rights reserved by the
Purchaser in the preceding paragraph are in addition to the Purchaser's
rights described in Section 14.
If the Purchaser makes a material change in the terms of the Offer, or if
it waives a material condition to the Offer, the Purchaser will extend the
Offer and disseminate additional tender offer materials to the extent
required by Rules 14d-4(c), 14d-6(d) and 14e-l under the Exchange Act. The
minimum period during which an offer must remain open following material
changes in the terms of the Offer, other than a change in price or a change
in percentage of securities sought, will depend upon the facts and
circumstances, including the materiality of the changes. In the Commission's
view, an offer should remain open for a minimum of five business days from
the date the material change is first published, sent or given to
shareholders, and, if material changes are made with respect to information
that approaches the significance of price and the percentage of securities
sought, a minimum of ten business days may be required to allow for adequate
dissemination and investor response. With respect to a change in price, a
minimum ten business day period from the date of such change is generally
required under applicable Commission rules and regulations to allow for
adequate dissemination to shareholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday or a U.S. federal
holiday and consists of the time period from 12:01 a.m. through 12:00
midnight, Eastern time.
As of the date of this Offer to Purchase, the Rights are evidenced by the
certificates representing Shares (each, a "Share Certificate") and do not
trade separately. Accordingly, by tendering a Share Certificate, a
shareholder is automatically tendering the associated Rights. If, however,
pursuant to the Rights Agreement or for any other reason, the Rights detach
and separate certificates representing Rights ("Rights Certificates") are
issued, shareholders will be required to tender one Right for each Share
tendered in order to effect a valid tender of such Share.
The Company has provided the Purchaser with the Company's shareholder
lists and security position listings for the purpose of disseminating the
Offer to holders of Shares. This Offer to Purchase, the related Letter of
Transmittal and other relevant materials will be mailed by the Purchaser to
record holders of Shares and will be furnished by the Purchaser to brokers,
dealers, commercial banks, trust companies and similar persons whose names,
or the names of whose nominees, appear on the shareholder lists or, if
applicable, who are listed as participants in a clearing agency's security
position listing, for subsequent transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of the Offer as so
extended or amended), the Purchaser will purchase, by accepting for payment,
and will pay for, all Shares validly tendered and not properly withdrawn (in
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<PAGE>
accordance with Section 4) prior to the Expiration Date as soon as
practicable after the Expiration Date. See Sections 1 and 14. In addition,
subject to applicable rules of the Commission, the Purchaser expressly
reserves the right to delay acceptance for payment of, or payment for, Shares
in order to comply with applicable law, including the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the regulations
thereunder (the "HSR Act"). See Section 15.
In all cases, payment for Shares purchased pursuant to the Offer will be
made only after timely receipt by the Depositary of (i) Share Certificates or
timely confirmation (a "Book-Entry Confirmation") of the book-entry transfer
of such Shares into the Depositary's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedures set forth in
Section 3; (ii) the appropriate Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined below) in connection with a
book-entry transfer; and (iii) any other documents required by the Letter of
Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares which are the subject of such
Book-Entry Confirmation that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Purchaser may
enforce such agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered and not withdrawn
as, if and when the Purchaser gives oral or written notice to the Depositary
of the Purchaser's acceptance of such Shares for payment pursuant to the
Offer. In all cases, upon the terms and subject to the conditions of the
Offer, payment for Shares purchased pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
agent for tendering shareholders for the purpose of receiving payment from
the Purchaser and transmitting payment to validly tendering shareholders.
UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE
PAID BY THE PURCHASER.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if Share Certificates are submitted representing more Shares than
are tendered, Share Certificates representing unpurchased or untendered
Shares will be returned, without expense to the tendering shareholder (or, in
the case of Shares delivered by book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility pursuant to the procedures set
forth in Section 3, such Shares will be credited to an account maintained
within such Book-Entry Transfer Facility), as promptly as practicable
following the expiration, termination or withdrawal of the Offer.
IF, PRIOR TO THE EXPIRATION DATE, THE PURCHASER SHALL INCREASE THE
CONSIDERATION OFFERED TO HOLDERS OF SHARES PURSUANT TO THE OFFER, SUCH
INCREASED CONSIDERATION SHALL BE PAID TO ALL HOLDERS OF SHARES THAT ARE
PURCHASED PURSUANT TO THE OFFER, WHETHER OR NOT SUCH SHARES WERE TENDERED
PRIOR TO SUCH INCREASE IN CONSIDERATION.
The Purchaser reserves the right, subject to the provisions of the Merger
Agreement, to assign, in whole or from time to time in part, to one or more
of Crane's subsidiaries or affiliates the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, but no such assignment
will relieve Crane of any liability under the Merger Agreement for any breach
of the Merger Agreement by any such assignee.
3. PROCEDURES FOR ACCEPTING THE OFFER AND TENDERING SHARES.
Valid Tender of Shares. Except as set forth below, in order for Shares to
be validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter
of Transmittal must be
4
<PAGE>
received by the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase on or prior to the Expiration Date and either
(i) Share Certificates representing tendered Shares must be received by the
Depositary or tendered pursuant to the procedure for book-entry transfer set
forth below and Book-Entry Confirmation must be received by the Depositary,
in each case on or prior to the Expiration Date, or (ii) the guaranteed
delivery procedures set forth below must be complied with.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, RIGHTS CERTIFICATES (IF
APPLICABLE), THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND SOLE RISK OF THE TENDERING SHAREHOLDER, AND DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will make a request to establish an
account with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two business days after the date of this Offer
to Purchase. Any financial institution that is a participant in the system of
the Book-Entry Transfer Facility may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account at the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures for the transfer. Although
delivery of Shares may be effected through book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility, the Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in connection
with a book-entry transfer, and any other required documents must, in any
case, be transmitted to and received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior
to the Expiration Date, or the guaranteed delivery procedure set forth below
must be complied with.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE
WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE
DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program (an "Eligible Institution"),
unless the Shares tendered thereby are tendered (i) by a registered holder of
Shares who has not completed either the box labeled "Special Payment
Instructions" or the box labeled "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. See
Instruction 1 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other
than the signer of the Letter of Transmittal, or if payment is to be made to,
or Share Certificates for unpurchased Shares are to be issued or returned to,
a person other than the registered holder, then the tendered Share
Certificates must be endorsed or accompanied by appropriate stock powers,
signed exactly as the name or names of the registered holder or holders
appear on the Share Certificates, with the signatures on the Share
Certificates or stock powers guaranteed by an Eligible Institution as
provided in the Letter of Transmittal. See Instructions 1 and 5 of the Letter
of Transmittal.
If the Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) must accompany each such delivery.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or time will not permit all required documents to reach the
Depositary on or prior to the Expiration Date or the procedures for
book-entry transfer cannot be completed on a timely basis, such Shares may
nevertheless be tendered if all of the following guaranteed delivery
procedures are duly complied with:
(i) such tender is made by or through an Eligible Institution;
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<PAGE>
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares, in proper form for transfer together with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal are received by the Depositary
within three Nasdaq National Market trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee by an Eligible Institution in the form set forth in such Notice of
Guaranteed Delivery and a representation that the shareholder on whose behalf
the tender is being made is deemed to own the Shares being tendered within
the meaning of Rule 14e-4 under the Exchange Act.
Notwithstanding any other provision hereof, payment for Shares accepted
for payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof),
together with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required by
the Letter of Transmittal. Accordingly, payment might not be made to all
tendering shareholders at the same time, and will depend upon when Share
Certificates are received by the Depositary or Book-Entry Confirmations of
such Shares are received into the Depositary's account at the Book-Entry
Transfer Facility.
Backup U.S. Federal Income Tax Withholding. Under the backup U.S. federal
income tax withholding laws applicable to certain shareholders (other than
certain exempt shareholders, including, among others, all corporations and
certain foreign individuals), the Depositary may be required to withhold 31%
of the amount of any payments made to such shareholders pursuant to the
Offer. To prevent backup U.S. federal income tax withholding, each such
shareholder must provide the Depositary with such shareholder's correct
taxpayer identification number and certify that such shareholder is not
subject to backup U.S. federal income tax withholding by completing the
Substitute Form W-9 included in the Letter of Transmittal. See Instruction 9
of the Letter of Transmittal.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of the Purchaser, and each of
them, as such shareholder's agents, attorneys-in-fact and proxies, with full
power of substitution, in the manner set forth in the Letter of Transmittal,
to the full extent of such shareholder's rights with respect to the Shares
tendered by such shareholder and accepted for payment by the Purchaser and
with respect to any and all other Shares and other securities or rights
issued or issuable in respect of such Shares on or after the date of this
Offer to Purchase. All such powers of attorney and proxies shall be
considered irrevocable and coupled with an interest in the tendered Shares.
Such appointment will be effective upon the acceptance for payment of such
Shares by the Purchaser in accordance with the terms of the Offer. Upon such
acceptance for payment, all other powers of attorney and proxies given by
such shareholder with respect to such Shares and such other securities or
rights prior to such payment will be revoked, without further action, and no
subsequent powers of attorney and proxies may be given by such shareholder
(and, if given, will not be deemed effective). The designees of the Purchaser
will, with respect to the Shares and such other securities and rights for
which such appointment is effective, be empowered to exercise all voting and
other rights of such shareholder as they in their sole discretion may deem
proper at any annual or special meeting of the Company's shareholders, or any
adjournment or postponement thereof, or by consent in lieu of any such
meeting or otherwise. In order for Shares to be deemed validly tendered,
immediately upon the acceptance for payment of such Shares, the Purchaser or
its designee must be able to exercise full voting rights with respect to such
Shares and other securities, including voting at any meeting of shareholders.
6
<PAGE>
Determination of Validity. All questions as to the form of documents and
the validity, eligibility (including time of receipt) and acceptance for
payment of any tender of Shares will be determined by the Purchaser, in its
sole discretion, whose determination shall be final and binding on all
parties. The Purchaser reserves the absolute right to reject any or all
tenders determined by it not to be in proper form or the acceptance of or
payment for which may, in the opinion of the Purchaser's counsel, be
unlawful. The Purchaser also reserves the absolute right to waive any of the
conditions of the Offer or any defect or irregularity in any tender of Shares
of any particular shareholder whether or not similar defects or
irregularities are waived in the case of other shareholders.
The Purchaser's interpretation of the terms and conditions of the Offer
will be final and binding. No tender of Shares will be deemed to have been
validly made until all defects and irregularities with respect to such tender
have been cured or waived by the Purchaser. None of Crane, the Purchaser or
any of their respective affiliates or assigns, the Depositary, the
Information Agent or any other person or entity will be under any duty to
give any notification of any defects or irregularities in tenders or incur
any liability for failure to give any such notification.
The Purchaser's acceptance for payment of Shares tendered pursuant to any
of the procedures described above will constitute a binding agreement between
the tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn at any time on or prior to the Expiration Date and, unless
theretofore accepted for payment as provided herein, may also be withdrawn at
any time after Monday, October 12, 1998.
If, for any reason whatsoever, acceptance for payment of any Shares
tendered pursuant to the Offer is delayed, or the Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer, then,
without prejudice to the Purchaser's rights set forth herein, the Depositary
may, nevertheless, on behalf of the Purchaser, retain tendered Shares and
such Shares may not be withdrawn except to the extent that the tendering
shareholder is entitled to and duly exercises withdrawal rights as described
in this Section 4. Any such delay will be by an extension of the Offer to the
extent required by law.
In order for a withdrawal to be effective, a written or facsimile
transmission notice of withdrawal must be timely received by the Depositary
at one of its addresses set forth on the back cover of this Offer to
Purchase. Any such notice of withdrawal must specify the name of the person
who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn, and (if Share Certificates have been tendered) the name of the
registered holder of the Shares as set forth in the Share Certificates, if
different from that of the person who tendered such Shares. If Share
Certificates have been delivered or otherwise identified to the Depositary,
then prior to the physical release of such Share Certificates, the tendering
shareholder must submit the serial numbers shown on the particular Share
Certificates evidencing the Shares to be withdrawn and the signature on the
notice of withdrawal must be guaranteed by an Eligible Institution, except in
the case of Shares tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedures for book-entry transfer
set forth in Section 3, the notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares, in which case a notice of withdrawal will be effective
if delivered to the Depositary by any method of delivery described in the
first sentence of this paragraph. Withdrawals of Shares may not be rescinded.
Any Shares properly withdrawn will be deemed not validly tendered for
purposes of the Offer, but may be tendered at any subsequent time prior to
the Expiration Date by following any of the procedures described in Section
3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination shall be final and binding. None of Crane,
the Purchaser or any of their respective affiliates or assigns, the
Depositary, the Information Agent or any other person or entity will be under
any duty to give any notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
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<PAGE>
5. CERTAIN TAX CONSEQUENCES
Sales of Shares pursuant to the Offer (and the receipt of cash by
shareholders of the Company pursuant to the Merger) will be taxable
transactions for U.S. federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be taxable transactions
under applicable state, local, foreign and other tax laws. For U.S. federal
income tax purposes, a tendering shareholder will generally recognize gain or
loss equal to the difference between the amount of cash received by the
shareholder pursuant to the Offer (or pursuant to the Merger) and the
aggregate tax basis in the Shares tendered by the shareholder and purchased
pursuant to the Offer (or canceled pursuant to the Merger). Gain or loss will
be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer (or canceled pursuant to the Merger).
If tendered Shares are held by a tendering shareholder as capital assets,
gain or loss recognized by the tendering shareholder will be capital gain or
loss, which will be long-term capital gain or loss if the tendering
shareholder's holding period for the Shares exceeds one year. Long-term
capital gains recognized by a tendering individual shareholder will generally
be taxed at a maximum U.S. federal marginal tax rate of 20%, and long-term
capital gains recognized by a tendering corporate shareholder will be taxed
at a maximum U.S. federal marginal tax rate of 35%.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL
TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF ITS INDIVIDUAL CIRCUMSTANCES.
SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF
ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE
MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS
According to the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "Company Form 10-K"), the Shares are traded on the
Nasdaq Stock Market's National Market (the "Nasdaq National Market"). The
following table sets forth, for the periods indicated and according to
published sources, the reported high and low closing sale prices for the
Shares on the Nasdaq National Market. No dividends were paid on the Shares
during any of the periods presented.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1996
First Quarter ........................... $5.875 $4.375
Second Quarter .......................... 8.625 5.500
Third Quarter ........................... 6.000 3.250
Fourth Quarter .......................... 4.250 2.750
YEAR ENDED DECEMBER 31, 1997
First Quarter ........................... 4.125 2.625
Second Quarter .......................... 3.625 2.563
Third Quarter ........................... 4.188 2.625
Fourth Quarter .......................... 3.750 2.250
YEAR ENDED DECEMBER 31, 1998
First Quarter ........................... 3.500 2.063
Second Quarter .......................... 3.844 2.250
Third Quarter (through August 13, 1998) . 3.375 2.125
</TABLE>
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On August 11, 1998, the last full day of trading prior to the announcement
of the execution of the Merger Agreement, the reported closing sale price on
the Nasdaq National Market for the Shares was $2.50 per Share. On August 13,
1998, the last full day of trading prior to the commencement of the Offer,
the closing sale price per Share as reported on the Nasdaq National Market
was $3.375.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ NATIONAL MARKET
LISTING; MARGIN REGULATIONS; EXCHANGE ACT REGISTRATION
The purchase of Shares pursuant to the Offer will reduce the number of
Shares that might otherwise trade publicly and may reduce the number of
holders of Shares, which could adversely affect the liquidity and market
value of the remaining Shares held by shareholders other than the Purchaser.
The Purchaser cannot predict whether the reduction in the number of Shares
that might otherwise trade publicly would have an adverse or beneficial
effect on the market price for, or marketability of, the Shares or whether
such reduction would cause future market prices to be greater or less than
the Offer price.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer be eligible for quotation on the Nasdaq National Market.
If, as a result of the purchase of Shares pursuant to the Offer, the Shares
no longer meet the criteria for quotation on the Nasdaq National Market, the
market for the Shares could be adversely affected. According to the Nasdaq
National Market's published guidelines, in order for the Shares to be
eligible for continued quotation on the Nasdaq National Market, there must
continue to be, among other things, either (i) at least 750,000 publicly held
Shares, held by at least 400 round lot shareholders, with a market value of
at least $5,000,000, net tangible assets of at least $4,000,000 and at least
two registered and active market makers for the Shares, or (ii) at least
1,100,000 publicly held Shares, held by at least 400 round lot shareholders,
with a market value of at least $15,000,000, either (x) market capitalization
of at least $50,000,000 or (y) total assets and total revenue of $50,000,000
each for the most recently completed fiscal year or two of the last three
most recently completed fiscal years, and at least four registered and active
market makers for the Shares. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are
not considered as being publicly held for this purpose. If the Shares were no
longer eligible for quotation on the Nasdaq National Market, they may
nevertheless continue to be included in the Nasdaq SmallCap Market unless,
among other things, the number of publicly held Shares (excluding Shares held
by officers, directors and beneficial owners of more than 10% of the Shares)
was less than 100,000, or there were fewer than 300 round lot holders in
total. If the Shares are no longer eligible for inclusion in the Nasdaq
National Market or the Nasdaq SmallCap Market, the Shares might still be
quoted on the OTC Bulletin Board. The extent of the public market for the
Shares and availability of such quotations would, however, depend upon such
factors as the number of holders and/or the aggregate market value of the
publicly-held Shares at such time, the interest in maintaining a market in
the Shares on the part of securities firms, the possible termination of
registration of the Shares under the Exchange Act and other factors.
According to the Company, there were approximately 184 holders of record of
Shares as of August 12, 1998.
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"),
which has the effect, among other things, of allowing brokers to extend
credit on the collateral of the Shares for the purpose of buying, carrying or
trading in securities ("purpose loans"). Depending upon factors similar to
those described above with respect to listing and market quotations, the
Shares might no longer constitute "margin securities" for the purposes of the
Federal Reserve Board's margin regulations and, therefore, could no longer be
used as collateral for purpose loans made by brokers.
The Shares are currently registered under the Exchange Act. The purchase
of Shares pursuant to the Offer may result in the Shares becoming eligible
for deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares
are not listed on a national securities exchange and there are fewer than 300
record holders. The termination of the registration of the Shares under the
Exchange Act would substantially reduce the information
9
<PAGE>
required to be furnished by the Company to holders of the Shares and would
make certain provisions of the Exchange Act, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement in connection with shareholders' meetings, and the requirements of
Rule 13e-3 under the Exchange Act with respect to "going private"
transactions, no longer applicable to the Shares. Furthermore, "affiliates"
of the Company and persons holding "restricted securities" of the Company
could be deprived of the ability to dispose of the securities pursuant to
Rule 144 under the Securities Act of 1933, as amended. If registration of the
Shares under the Exchange Act were terminated, the Shares would no longer be
"margin securities" or eligible for Nasdaq quotation. The Purchaser intends
to seek to cause the Company to terminate the registration of the Shares as
soon after the consummation of the Offer or the Merger as the requirements
for termination of registration are met.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
Except as otherwise noted below, the information concerning the Company
contained in this Offer to Purchase, including financial information, has
been taken from or based upon publicly available documents and records on
file with the Commission and other public sources.
The Company is a Pennsylvania corporation whose principal executive
offices are located at 555 North Lane, Lee Park, Conshohocken, Pennsylvania
19428. Unless the context indicates otherwise, the term the "Company" also
refers to its consolidated subsidiaries.
The Company, founded in 1984, develops, manufactures, markets and sells
valve, motor, engine and compressor condition monitoring products and
provides related services to customers in nuclear power generation and
industrial process markets worldwide. The Company's services are designed to
reduce operating and maintenance costs and increase efficiency, reliability
and safety of plant operation. The Company has established certain strategic
technical and commercial alliances to advance its business objectives. The
Company has three key business segments to support its mission: (1)
performance and condition monitoring products, (2) RADView (TM) imaging
systems and (3) Liberty Technical Services.
The Company's performance and condition monitoring products provide
customers with the tools to prevent unplanned downtime, improve asset
utilization and increase plant safety. The Company's proprietary products
gather and interpret operating data of valves, engines, compressors, motors,
and certain motor-driven equipment. The products utilize sensors, instruments
and proprietary software that capture and log data for trending and analysis.
RADView imaging systems concentrates exclusively on the production and sale
of the Company's RADView Digital Radiography product line to customers in the
power, process and aerospace industries. Liberty Technical Services provides
comprehensive dynamic testing services primarily for customers in the power
industry. Dynamic testing services are provided for many plant components,
including valves, compressors, engines, motors and certain motor-driven
equipment. Special services include process safety management support, plant
inspection, computerized reporting and training.
Set forth below is a summary of certain consolidated financial information
with respect to the Company for its fiscal years ended December 31, 1997,
1996 and 1995 and the six months ended June 30, 1998 and 1997, excerpted from
financial statements presented in the Company Form 10-K, the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (the
"Company Form 10-Q") and other documents filed by the Company with the
Commission. More comprehensive financial information is included in such
reports (including management's discussion and analysis of results of
operations and financial condition) and other documents filed by the Company
with the Commission, and the financial information summary set forth below is
qualified in its entirety by reference to such reports and other documents,
which are incorporated herein by reference, as well as all the financial
information and related notes contained therein. The Company Form 10-K, the
Company Form 10-Q and such other documents may be examined and copies may be
obtained from the offices of the Commission in the manner set forth below.
10
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
---------------------------------------------------
1997 1996 1995 1998 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenue............................................ $22,630 $17,547 $21,842 $ 8,431 $11,953
Gross profit....................................... 10,281 8,934 9,857 2,663 5,954
Loss from continuing operations ................... (6,071) (4,536) (5,476) (3,482) (996)
Income tax benefit ................................ (2,311) 30 (1,263) (1,359) --
Minority interest in loss of joint venture ....... (134) (50) -- 121 105
Loss from continuing operations, net of tax ....... (3,626) (4,516) (4,213) (2,002) (891)
Income from discontinued operations, net of tax .. 88 -- -- -- 871
Gain on sale of discontinued operations, net of
tax............................................... 2,641 -- -- -- --
Net income (loss).................................. (897) (2,572) (2,642) (2,002) (20)
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30, 1998
------------------ ----------------
1997 1996 (UNAUDITED)
-------- --------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................ $ 9,816 $ 7,536 $ 6,747
Total assets............................... 18,434 23,658 15,007
Long-term debt (including current portion) 282 262 220
Shareholders' equity....................... 13,125 13,973 11,109
</TABLE>
The Company is subject to the information and reporting requirements of
the Exchange Act and is required to file reports and other information with
the Commission relating to its business, financial condition and other
matters. Information, as of particular dates, concerning the Company's
directors and officers, their remuneration, stock options granted to them,
the principal holders of the Shares, any material interests of such persons
in transactions with the Company and other matters is required to be
disclosed in proxy statements distributed to the Company's shareholders and
filed with the Commission. These reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the Commission located in Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and also should be available for inspection and
copying at prescribed rates at the following regional offices of the
Commission: Seven World Trade Center, New York, New York 10048; and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material
may also be obtained by mail, upon payment of the Commission's customary
fees, from the Commission's principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains an Internet web site at
http://www.sec.gov that contains reports, proxy statements and other
information.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND CRANE
The Purchaser. The Purchaser is a Pennsylvania corporation which was
organized in 1998. The principal offices of the Purchaser are located at 100
First Stamford Place, Stamford, Connecticut 06902. The Purchaser is a wholly
owned subsidiary of Crane. Until immediately prior to the time that the
Purchaser will purchase Shares pursuant to the Offer, it is not expected that
the Purchaser will have any significant assets or liabilities or engage in
activities other than the ownership of Shares and those activities incident
to the transactions contemplated by the Offer.
Crane. Crane is a Delaware corporation with its principal executive
offices located at 100 First Stamford Place, Stamford, Connecticut 06902.
Crane is a diversified manufacturer of engineered industrial products and the
largest American distributor of doors, windows and millwork. Founded in 1855,
Crane employs over 10,000 people in North America, Europe, Asia and
Australia.
Crane is subject to the information and reporting requirements of the
Exchange Act and is required to file reports and other information with the
Commission relating to its business, financial condition and other matters.
Information, as of particular dates, concerning Crane's directors and
officers, their remuneration, stock options granted to them, the principal
holders of Crane's securities, any material interests of such persons in
transactions with Crane and other matters is required to be disclosed in
proxy
11
<PAGE>
statements distributed to Crane's shareholders and filed with the Commission.
These reports, proxy statements and other information are available for
inspection and copies may be obtained in the same manner as set forth for the
Company in Section 8. Crane's Common Stock is listed on the New York Stock
Exchange (the "NYSE"), and reports, proxy statements and other information
concerning Crane are also available for inspection at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
The name, citizenship, business address, principal occupation or
employment and five-year employment history for each of the directors and
executive officers of Crane and the Purchaser are set forth in Schedule I
hereto.
No Ownership of Shares. Neither Crane nor the Purchaser, nor, to the
knowledge of Crane or the Purchaser, any of the persons listed in Schedule I
hereto, or any associate or majority-owned subsidiary of such persons,
beneficially owns any equity security of the Company, and neither Crane nor
the Purchaser, nor, to the knowledge of Crane or the Purchaser, any of the
other persons referred to above, has effected any transaction in any equity
security of the Company during the past 60 days.
Except as set forth in this Offer to Purchase, neither Crane nor the
Purchaser, nor, to the knowledge of Crane or the Purchaser, any of the
persons listed in Schedule I hereto has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, without limitation, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss or
the giving or withholding of proxies. Except as set forth in this Offer to
Purchase, neither Crane nor the Purchaser, nor, to the knowledge of Crane or
the Purchaser, any of the persons listed in Schedule I hereto has had any
transactions with the Company, or any of its executive officers, directors or
affiliates that would require reporting under the rules of the Commission.
No Civil Proceedings. During the past five years neither Crane nor the
Purchaser, nor, to the knowledge of Crane or the Purchaser, any of the
persons listed in Schedule I hereto has been a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting activities subject to, U.S.
federal or state securities laws, or finding any violation of such laws.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY
Crane initially began considering the possibility of acquiring the Company
in October 1997, after becoming aware of the filing of a shelf registration
statement covering the sale from time to time in market transactions of
Shares held by certain substantial shareholders of the Company. Also, in
mid-November the Company publicly reported that it faced certain liquidity
issues. Although these issues had been mitigated by receipt of the proceeds
from the sale of one of the Company's businesses, Crane believed that
liquidity ultimately could be a longer-term issue for the Company, creating a
possible opportunity for an acquisition by Crane. In late February, following
the Company's announcement of continuing operating losses in the fourth
quarter of 1997, Mr. R.S. Evans, Chairman and Chief Executive Officer of
Crane, contacted Mr. David P. Kollock, a financial advisor based in
Philadelphia, and asked him to explore the Company's possible interest in a
transaction with Crane with any contacts he had on the Company's Board of
Directors.
During late February and early March 1998, Mr. Kollock met separately with
Mr. Roland K. Bullard, II, a director of the Company, Messrs. Anthony Moffa
and Richard Tuft, non-management founders of the Company with substantial
holdings of Shares, and Mr. Richard Defieux, a director of the Company, each
of whom indicated interest in discussing a possible transaction with Crane.
On March 10, Messrs. Kollock and Evans met with Mr. Stephen Wells, a director
and substantial shareholder of the Company, who also expressed interest in a
possible transaction.
A Confidentiality Agreement was signed by Crane on March 18, 1998, and
management presentations to Crane by the Company and preliminary due
diligence by Crane occurred on March 19, 1998.
12
<PAGE>
During the remainder of March and early April, Crane made a number of
follow-up requests for data from the Company, and conducted a more detailed
review of the Company on April 2 and 3, 1998. During this period, Mr. Kollock
had a number of discussions with Mr. Wells concerning a possible transaction.
On May 5, 1998, Crane delivered a written indication of interest to the
Company to acquire the Company (excluding the Company's RADView business) at
a price of $4.25 per Share payable in shares of Crane Common Stock or $4.50
per Share payable in cash, subject to satisfactory due diligence, definitive
documentation and approval by the Boards of Directors of Crane and the
Company and the Company's shareholders, as well as the receipt of any
necessary governmental approvals. Crane subsequently was advised that the
Company had decided to explore other possible alternatives.
On May 12, 1998, the Company issued a press release reporting financial
results for the quarter ended March 31, 1998 that reflected decreased
revenues and earnings as compared to the first quarter of 1997. The press
release further stated that the Company's Board of Directors "is considering
strategic alternatives to enhance shareholder value, and that such
alternatives may include the sale or restructuring of all or part of the
Company."
On May 22, 1998, Mr. Evans advised Mr. Wells that he was withdrawing
Crane's May 5 proposal.
On June 8, 1998, the Company issued a press release reporting "a
restructuring of the Company in an effort to reduce operating expenses and to
provide additional focus to their key accounts and markets."
On June 25, 1998, Mr. Evans and Mr. Kollock met with Mr. Wells to explore
renewal of Crane's interest in a possible transaction with the Company. Mr.
Wells was advised that Crane would need to take a close look at the
then-current financial condition and operating performance of the Company in
considering whether to make a proposal.
During the period from June 29 through July 1, 1998, Crane conducted
additional due diligence with respect to the Company.
On July 13, 1998, Crane submitted a revised indication of interest at a
price of $3.25 per Share in cash, to be structured as a tender offer with an
80% minimum and a subsequent merger to acquire shares not purchased in the
tender offer, and otherwise with conditions substantially the same as Crane's
initial proposal. Following discussions with Mr. Wells subsequent to a
meeting of the Company's Board of Directors on July 16, 1998, Crane agreed
that it would increase its proposal to $3.50 per Share.
Between July 22, 1998 and August 10, 1998, Crane and the Company and their
respective professional advisors negotiated the Merger Agreement. On July 24,
1998, the Board of Directors of Crane approved the transaction and authorized
management to negotiate the Merger Agreement and all necessary ancillary
documentation.
On August 10, 1998, the Board of Directors of the Company authorized
representatives of the Company to execute the Merger Agreement and the Stock
Option Agreement. The Merger Agreement and the Stock Option Agreement,
together with the Shareholder Agreements, were executed on August 11, 1998
and the transaction was publicly announced on the morning of August 12, 1998.
Other than as set forth above, there have not been any contacts,
negotiations or transactions between Crane or the Purchaser, or their
respective subsidiaries, or, to the best knowledge of Crane or the Purchaser,
any of the persons listed in Schedule I hereto, on the one hand, and the
Company or its executive officers, directors or affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors, or a sale or other
transfer of a material amount of assets.
11. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCK OPTION AGREEMENT;
THE SHAREHOLDER AGREEMENTS; DISSENTERS' RIGHTS; PLANS FOR THE COMPANY;
THE RIGHTS
Purpose. The purpose of the Offer and the Merger is to acquire control of,
and the entire equity interest in, the Company.
The Merger Agreement. Following is a summary of the Merger Agreement, a
copy of which has been filed as an exhibit to the Schedule 14D-1 filed by the
Purchaser with the Commission in connection
13
<PAGE>
with the Offer. Such summary is qualified in its entirety by reference to the
Merger Agreement. The Merger Agreement should be read in its entirety for a
more complete description of the matters summarized below. Defined terms used
below and not defined herein have the respective meanings assigned to those
terms in the Merger Agreement.
The Merger Agreement provides that, without the prior written consent of
the Company, the Purchaser may not (i) decrease the amount offered per Share
or change the form of consideration payable in the Offer, (ii) decrease the
number of Shares sought to be purchased in the Offer, (iii) impose additional
conditions to the Offer, or (iv) amend any other term of the Offer in any
manner adverse to the holders of Shares. If at any Expiration Date, any of
the conditions to the Offer are not satisfied or waived by the Purchaser, the
Purchaser may extend the Offer from time to time. Subject to the terms of the
Offer and the Merger Agreement and the satisfaction of all the conditions to
the Offer as of any Expiration Date, the Purchaser will accept for payment
and pay for all Shares validly tendered and not withdrawn pursuant to the
Offer as soon as practicable after such Expiration Date of the Offer,
provided that, if all of the conditions to the Offer are satisfied and more
than 65% but less than 80% of the outstanding shares of Company Common Stock
on a fully diluted basis (including shares of Company Common Stock issuable
upon exercise of outstanding Options) have been validly tendered and not
withdrawn in the Offer, the Purchaser will have the right, in its sole
discretion, to extend the Offer from time to time for up to a maximum of ten
additional business days in the aggregate, provided the Purchaser agrees to
waive the conditions set forth in paragraphs (c), (f) and (g) of Section 14
hereof.
The Company has represented to Crane in the Merger Agreement that the
Board of Directors of the Company (the "Company Board"), at a meeting duly
called and held, has (i) determined that each of the transactions
contemplated by the Merger Agreement, including each of the Offer and the
Merger, is fair to and in the best interests of the Company and its
shareholders, (ii) approved the Offer, the Merger, the Stock Option Agreement
and the Shareholder Agreements, (iii) recommended acceptance of the Offer and
approval of the Merger Agreement by the Company's shareholders, and (iv)
taken all other action necessary to render Section 2538 and Subchapter F of
Chapter 25 of the PBCL and the Rights inapplicable to the Offer and the
Merger. Such recommendation and approval may be withdrawn, modified or
amended only to the extent permitted by the Merger Agreement. The Company
further represented that, prior to the execution of the Merger Agreement,
Legg Mason delivered to the Company Board its written opinion that the
consideration to be received by the holders of Shares pursuant to the Offer
and the Merger is fair to the Company's shareholders from a financial point
of view.
The Merger Agreement provides that Crane, upon the payment by the
Purchaser for Shares pursuant to the Offer representing at least such number
of Shares as shall satisfy the Minimum Condition, and from time to time
thereafter, is 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 the Company Board (determined after giving
effect to the directors so elected pursuant to this provision) multiplied by
the percentage that the aggregate number of Shares beneficially owned by
Crane or its affiliates bears to the total number of Shares then outstanding.
The Company shall, upon request of Crane, promptly take all actions (but
specifically excluding the calling of a shareholders' meeting) necessary to
cause Crane's designees to be so elected, including, if necessary, amending
the By-laws of the Company (to the extent permitted to be amended by the
Board of Directors) and seeking the resignations of one or more existing
directors; provided, however, that prior to the time the Merger becomes
effective (the "Effective Time"), the Company Board shall always have not
less than two members who were directors of the Company on the date of the
Merger Agreement ("Current Directors") and, in Crane's sole discretion, up to
five Current Directors. If the number of Current Directors is reduced prior
to the Effective Time below the number of Current Directors so specified by
Crane due to the death or resignation of one or more of the Current
Directors, then the remaining director or directors who is or are Current
Directors shall be entitled to designate by majority action of the remaining
Current Directors or action of the sole remaining Current Director, one or
more persons, as the case may be, that has not been designated by, and is not
an Affiliate of, Crane to fill such vacancy or vacancies and who shall be
deemed to be Current Directors for all purposes of the Merger Agreement.
Following the election or appointment of Crane's designees and prior to the
Effective Time, any amendment or termination of the Merger Agreement by the
Company, any extension by the Company of the time for the performance of
14
<PAGE>
any of the obligations or other acts of Crane or the Purchaser or waiver of
any of the Company's rights thereunder, will require the concurrence of a
majority of the directors of the Company then in office who are Current
Directors (or in the case where there are two or fewer directors who are
Current Directors, the concurrence of one director who is a Current
Director).
The Merger. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the Surviving Corporation.
The Second Amended and Restated Articles of Incorporation of the Company,
in the form attached to the Merger Agreement as Exhibit 1, will be the
articles of incorporation of the Surviving Corporation, until thereafter
changed or amended as provided therein or by applicable law. The By-Laws of
the Company in effect at the Effective Time will be the by-laws of the
Surviving Corporation until thereafter changed or amended as provided therein
or by applicable law.
Subject to applicable law, the officers and directors of the Purchaser
immediately prior to the Effective Time will be the officers and directors,
respectively, of the Surviving Corporation and will hold office until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified.
By virtue of the Merger and without any action on the part of the holders
thereof, at the Effective Time, each Share issued and outstanding immediately
prior to the Effective Time (other than (i) any Shares held by Crane, the
Purchaser, any wholly owned subsidiary of Crane or the Purchaser, or held in
the treasury of the Company, which Shares, by virtue of the Merger and
without any action on the part of the holder thereof, will be canceled and
retired and will cease to exist with no payment being made with respect
thereto and (ii) Dissenting Shares) will be canceled and retired and will be
converted into the right to receive the Merger Consideration in cash, payable
to the holder thereof, without interest thereon, upon surrender of the
certificate formerly representing such Share. At the Effective Time, each
share of common stock of the Purchaser issued and outstanding immediately
prior to the Effective Time will, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one
validly issued, fully paid and non-assessable share of common stock of the
Surviving Corporation.
The Merger Agreement provides that, prior to the Effective Time, the
Company will take all actions necessary to cause (i) each unexpired and
unexercised Option that has an exercise price less than the Per Share Amount
to be automatically converted at the Effective Time into an amount equal to
the difference between the Per Share Amount and the exercise price of the
Option, multiplied by the number of shares of Company Common Stock issuable
immediately prior to the Effective Time upon exercise of the Option (without
regard to vesting periods or restrictions on exercisability) and (ii) each
unexpired and unexercised Option that has an exercise price equal to or
greater than the Per Share Amount to be canceled so that no Option shall have
any force or effect on or after the Effective Time.
The Company has agreed pursuant to the Merger Agreement that, if required
by applicable law in order to consummate the Merger, as soon as practicable
following the acceptance for payment and payment for Shares by the Purchaser
pursuant to the Offer, it will (i) convene a special meeting of its
shareholders for the purpose of considering and taking action upon the Merger
Agreement; (ii) prepare and file with the Commission a preliminary proxy
statement relating to the Merger Agreement, and use its reasonable efforts
(x) to obtain and furnish the information required to be included by the
Commission therein and to cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its shareholders and (y) to obtain the necessary
approvals of the Merger and the Merger Agreement by its shareholders; and
(iii) subject to certain provisions of the Merger Agreement, include in the
Proxy Statement the recommendation of the Company Board that shareholders of
the Company vote in favor of the approval of the Merger and the Merger
Agreement. Crane has agreed in the Merger Agreement that (x) it will vote, or
cause to be voted, all of the Shares then owned by it, the Purchaser or any
of its other subsidiaries in favor of approval of the Merger and the Merger
Agreement and, (y) following consummation of the Offer, it shall use its best
efforts to cause the Company to take the actions described in clauses (i),
(ii) and (iii) of this paragraph, if such actions are required by applicable
law to consummate the Merger.
15
<PAGE>
Representations and Warranties of the Company. The Merger Agreement
contains customary representations and warranties with respect to the
Company, including, among other things, (i) with respect to the organization,
corporate powers and qualifications of the Company and each of its
subsidiaries; (ii) with respect to the capitalization of the Company and its
subsidiaries; (iii) that the execution and delivery of the Merger Agreement
and the Stock Option Agreement by the Company and the consummation by the
Company of the transactions contemplated thereby have been duly and validly
authorized and approved by the Company Board and that no other corporate
proceedings on the part of the Company are necessary to authorize or approve
the Merger Agreement or the Stock Option Agreement or to consummate the
transactions contemplated thereby (other than, with respect to the Merger,
the approval of the Merger by the affirmative vote of the holders of at least
a majority of the votes cast by holders of Shares entitled to vote thereon,
to the extent required by applicable law); (iv) with respect to the absence
of conflicts, violations or breaches resulting from the execution and
delivery of the Merger Agreement or the Stock Option Agreement or
consummation of the transactions contemplated thereby, of any provision of
the Amended and Restated Articles of Incorporation or the By-laws of the
Company, under any note, bond, mortgage, indenture, lease, contract,
agreement, instrument or obligation to which the Company or any of its
subsidiaries is a party or by which their assets are bound, or of any permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their assets; (v) with respect to required consents,
approvals, orders or authorizations of, or registration, declaration or
filing with, any Governmental Authority (as defined below) by or with respect
to the Company or any of its subsidiaries in connection with the execution
and delivery of the Merger Agreement or the Stock Option Agreement or the
consummation of the transactions contemplated thereby; (vi) with respect to
the accuracy of the documents filed by the Company with the Commission; (vii)
with respect to the Company's financial statements and its financial
condition; (viii) with respect to indebtedness, indemnification obligations
and liabilities of the Company and its subsidiaries; (ix) with respect to the
absence of certain changes or events since June 30, 1998, including that
there has been no Material Adverse Effect (as defined below) with respect to
the Company and its subsidiaries taken as a whole; (x) with respect to
certain tax matters regarding the Company and its subsidiaries; (xi) with
respect to the absence of certain transactions between the Company and any of
its affiliates and the absence of certain payments by the Company or any of
its affiliates; (xii) with respect to Required Authorizations (as defined
below) that must be given or obtained in connection with the Merger Agreement
or the Stock Option Agreement; (xiii) with respect to the absence of certain
litigation with respect to the Company; (xiv) with respect to compliance by
the Company and its subsidiaries with applicable laws and regulations; (xv)
with respect to contracts to which the Company or any of its subsidiaries is
a party; (xvi) with respect to real property leases to which the Company or
any of its subsidiaries is party; (xvii) with respect to personal property
owned or leased by the Company or any of its subsidiaries; (xviii) with
respect to patents, trademarks and other intellectual property of the Company
and its subsidiaries; (xix) with respect to environmental matters affecting
the Company or any of its subsidiaries or their respective properties; (xx)
with respect to products and services liabilities of the Company and its
subsidiaries; (xxi) with respect to insurance maintained by the Company and
its subsidiaries; (xxii) with respect to employment and related agreements to
which the Company or any of its subsidiaries is a party; (xxiii) with respect
to certain labor matters; (xxiv) with respect to the Company's employee
benefit plans; (xxv) with respect to the absence of discussions or
negotiations regarding any Acquisition Proposal involving the Company; (xxvi)
with respect to the accuracy and completeness of the information supplied by
the Company in connection with the Offer and the Proxy Statement; (xxvii)
with respect to the vote of shareholders of the Company required to approve
the Merger; (xxviii) with respect to certain provisions of the PBCL or other
state takeover statutes being inapplicable to the transactions contemplated
by the Merger Agreement, the Stock Option Agreement and the Shareholder
Agreements; (xxix) with respect to certain amendments made to the Rights
Agreement in conjunction with the Merger Agreement, the Stock Option
Agreement and the Shareholder Agreements; and (xxx) with respect to the
absence of brokerage or finders fees or commissions payable in connection
with the Merger Agreement and the transactions contemplated thereby (other
than with respect to fees payable to Legg Mason); and (xxxi) the accuracy and
completeness of representations and warranties made by the Company in the
Merger Agreement and related documents.
16
<PAGE>
For purposes of the Merger Agreement, "Governmental Authority" means any
nation or government, any state, province or other political subdivision
thereof, and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of a government with jurisdiction over
the matter in question.
For purposes of the Merger Agreement, "Material Adverse Effect" means a
material adverse effect on the business, assets (including intangible
assets), condition (financial or otherwise), or results of operations of the
Company and its subsidiaries taken as a whole; provided, however, that for
purposes of the Merger Agreement, (a) a decline in the market price of the
Company Common Stock shall not, in and of itself, constitute a Material
Adverse Effect and (b) operating losses shall not constitute a Material
Adverse Effect unless such operating losses exceed $1,000,000 in any
consecutive four week period from and after June 30, 1998 and, provided
further, that such operating losses shall be determined on the basis of
accounting and financial management practices consistent with the Company's
past practices.
For purposes of the Merger Agreement, "Required Authorizations" shall
mean, with respect to any person, (i) all consents, authorizations, approvals
or other orders or actions of, or filings or registrations with, any federal,
state, local or foreign governmental authority or agency and (ii) all
notices, permits, approvals, consents, qualifications, waivers or other
actions of third parties under any lease, note, mortgage, indenture,
agreement or other instrument (or, in the case of the Company, under any
Contract, Employment Agreement or any Governmental Approval) or under any
other third-party franchise, license or permit, other than any such consents,
authorizations, approvals, permits, qualifications, waivers, orders,
registrations, filings, applications or other actions, the absence of which
would not reasonably be expected to have a Material Adverse Effect with
respect to such person and its subsidiaries, taken as a whole.
Representations and Warranties of Crane and the Purchaser. The Merger
Agreement contains customary representations and warranties by Crane and the
Purchaser, including, among other things, (i) with respect to the
organization, corporate powers and qualifications of Crane and the Purchaser;
(ii) that each of Crane and the Purchaser has the necessary corporate power
and authority to execute and deliver the Merger Agreement and to consummate
the transactions contemplated thereby; (iii) with respect to the absence of
conflict between the terms and provisions of the Merger Agreement and the
transactions contemplated thereby with any laws, regulations, agreements,
contracts or other instruments and obligations; (iv) the accuracy and
completeness of information supplied by Crane or the Purchaser for inclusion
in the Schedule 14D-9 or the Proxy Statement; and (v) with respect to the
ownership by Crane or Purchaser of Company Common Stock.
Certain Covenants. The Merger Agreement obligates the Company, from the
date of the Merger Agreement until the consummation of the Offer, to conduct
its (and its subsidiaries') operations only in the ordinary and usual course
of business consistent with past practice and to use its reasonable efforts
to preserve intact their business organizations, to keep available the
services of their present officers and key employees and to preserve the
goodwill of those having business relationships with them. The Merger
Agreement also contains specific covenants as to certain activities of the
Company prior to the consummation of the Offer, which provide that the
Company will (and will cause its subsidiaries to):
(i) preserve and maintain its corporate existence and all of its rights,
privileges and franchises reasonably necessary or desirable in the normal
conduct of its business, except to the extent contemplated by any
transactions specifically permitted by the Merger Agreement;
(ii) not acquire any stock or other interest in, nor (except in the
ordinary course of business) purchase any assets of, any corporation,
partnership, association or other business organization or entity or any
division thereof (except any stock or assets distributed to the Company or
any of its subsidiaries as part of any bankruptcy or other creditor
settlement or pursuant to a plan of reorganization), nor agree to do any
of the foregoing;
(iii) not sell, lease, assign, transfer or otherwise dispose of any of
its assets (including, without limitation, patents, trade secrets or
licenses), nor suffer to exist or create any Lien on any of its assets,
except as permitted by the Merger Agreement or in the ordinary course of
business and except that the Company and each of its subsidiaries may sell
or otherwise dispose of any assets which are obsolete;
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(iv) not incur any indebtedness, other than as a result of borrowings or
drawdowns, the issuance of letters of credit for the account of the
Company and the incurrence of interest, letter of credit reimbursement
obligations and other obligations under the terms of the Silicon Valley
Bank Loan , which indebtedness shall be incurred only for working capital
purposes;
(v) not (x) alter, amend or repeal any provision of the Amended and
Restated Articles of Incorporation of the Company or Bylaws of the Company
or the certificate of incorporation or by-laws of any subsidiary of the
Company, (y) change the number of its directors (other than as a result of
the death, retirement or resignation of a director), (z) form or acquire
any subsidiaries not existing as of the date of the Merger Agreement, (xx)
enter into, modify or terminate any contracts, real property leases or
personal property leases or agree to do so, (yy) enter into, modify or
terminate any employment agreement or hire any personnel other than
temporary personnel not eligible to participate in any benefit plans or
programs of the Company, or (zz) declare, pay, commit to or incur any
obligation of any kind for the payment of any bonus, additional salary or
compensation or retirement, termination, welfare or severance benefits or
change in control benefits payable or to become payable to any of its
employees or such other persons, except for such matters as are required
pursuant to the terms of any existing employment agreement or benefit
plan;
(vi) maintain its books, accounts and records in the usual, ordinary and
regular manner and in material compliance with all applicable laws;
(vii) pay and discharge all taxes imposed upon it or upon its income or
profits, or upon any property belonging to it, prior to the date on which
penalties attach thereto, except to the extent that the Company is
currently contesting, in good faith and by proper proceedings, the payment
of such taxes and the Company maintains appropriate reserves with respect
thereto;
(viii) not settle any tax claim against the Company or any of its
subsidiaries or any litigation (net of applicable insurance proceeds) in
excess of $10,000;
(ix) meet in all material respects its obligations under all contracts,
real property leases and personal property leases and not become in
default thereunder;
(x) maintain in all material respects its business and assets in good
repair, order and condition, reasonable wear and tear excepted, and
maintain insurance upon such business and assets at least comparable in
amount and kind to that in effect on the date hereof;
(xi) maintain in all material respects its present relationships and
goodwill with suppliers, brokers, manufacturers, representatives,
distributors, customers and others having business relations with it
(provided that it may pursue overdue accounts and otherwise exercise
lawful remedies in its customary fashion);
(xii) not declare, set aside, make or pay any dividends or other
distributions with respect to its capital stock, including, without
limitation, in the case of the Company, the Company Common Stock, or
purchase or redeem any shares of its capital stock, including, without
limitation, in the case of the Company, the Company Common Stock, or agree
to take any such action;
(xiii) not authorize or make any single capital expenditure in excess of
$5,000 or make any capital expenditure if the aggregate of the amount of
such capital expenditure together with the amounts of all other capital
expenditures since the date of the Merger Agreement shall exceed $25,000;
(xiv) not violate any law or regulation applicable to it nor violate any
order, injunction or decree applicable to the conduct of its business;
(xv) not increase the number of shares authorized or issued and
outstanding of its capital stock, including, without limitation, in the
case of the Company, the Company Common Stock, nor grant or make any
pledge, option, warrant, call, commitment, right or agreement of any
character relating to its capital stock, including, without limitation, in
the case of the Company, the Company Common Stock, nor issue or sell any
shares of its capital stock, including, without limitation, in the case of
the
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Company, the Company Common Stock, or securities convertible into such
capital stock, or any bonds, promissory notes, debentures or other
corporate securities or become obligated so to sell or issue any such
securities or obligations, except, in any case, issuance of shares of the
Company Common Stock (i) pursuant to the exercise of outstanding options,
warrants or other rights or (ii) pursuant to the Stock Option Agreement;
(xvi) not make any change to its accounting methods, principles or
practices, except as may be required by generally accepted accounting
principles;
(xvii) not expend any money pursuant to, or incur expenses related to
performance under, the Development Contract with Norwegian Oil Companies,
Saga Petroleum ASA, Phillips Petroleum Co., Statoil and Norsk Hydro
Produksjon in excess of $100,000 in the aggregate;
(xviii) not waive any right of substantial value or cancel any debt owed
to the Company or any subsidiary or claim against any person or entity;
and
(xix) not authorize, or commit or agree to take, any of the foregoing
actions;
provided, however, that if the Company requests in writing that Crane consent
to the taking of any affirmative action on the part of the Company the taking
of which would require such consent pursuant to this section of the Merger
Agreement and the failure to grant such consent within four business days of
receipt by Crane of such request is the sole cause of the occurrence of a
Material Adverse Effect, then such Material Adverse Effect shall not be an
Event for purposes of Section 14 of this Offer to Purchase nor shall Crane be
permitted to terminate the Merger Agreement solely due to the occurrence of
such Material Adverse Effect.
The Merger Agreement also provides that the Company will not, and will not
permit any of its subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of its representations and
warranties set forth in the Merger Agreement that are qualified as to
materiality becoming untrue, (ii) any of its representations and warranties
that are not so qualified becoming untrue in any material respect or (iii)
subject to certain of the Company's rights under the Merger Agreement, any of
the conditions to the Merger set forth in the Merger Agreement that are
within the Company's control not being satisfied.
Advice of Changes. The Merger Agreement provides that the Company shall
promptly advise Crane orally and in writing of (i) any representation or
warranty made by it contained in the Merger Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect, (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under the Merger Agreement or (iii) any
change or event having, or which could reasonably be expected to have, a
Material Adverse Effect on the Company and its subsidiaries taken as a whole
or on the truth of its representations and warranties or the ability of the
conditions to the Merger set forth in the Merger Agreement to be satisfied.
Upon such notification, Crane and Purchaser shall have the option either to
terminate the Merger Agreement or to waive any right to consider any of the
foregoing in connection with a determination as to whether any of the Events
specified in subparagraphs (c), (f) or (g) of Section 14 of this Offer to
Purchase has occurred.
No Solicitation. The Merger Agreement provides that the Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its directors, officers or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by
it or any of its subsidiaries to, directly or indirectly through another
person, (i) solicit or initiate (including by way of furnishing information),
or take any other action to facilitate, any inquiries or the making of any
proposal that constitutes any Acquisition Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal; provided, however, that if, at any time prior to the acceptance for
payment of shares of Company Common Stock pursuant to the Offer, the Board of
Directors of the Company determines in good faith, based on the advice of
outside counsel, that it is required to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the
Company may, in response to an Acquisition Proposal that was not solicited by
it, and
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subject to compliance with Section 5.02(c) of the Merger Agreement described
below (regarding informing Crane of the existence and terms of such
Acquisition Proposal), (x) furnish information with respect to the Company
and its subsidiaries to any person pursuant to a customary confidentiality
agreement (as determined by the Company after consultation with its outside
counsel) and (y) participate in negotiations regarding such Acquisition
Proposal. For purposes of the Merger Agreement, "Acquisition Proposal" means
any inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of 20% or more of the assets of the Company
and its subsidiaries or 20% or more of any class of equity securities of the
Company or any of its subsidiaries, any tender offer or exchange offer that
if consummated would result in any person beneficially owning 20% or more of
any class of equity securities of the Company or any of its subsidiaries, or
any merger, consolidation, business combination, share exchange,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its subsidiaries, other than the transactions
contemplated by the Merger Agreement.
The Merger Agreement provides that, except as expressly permitted by the
terms of the preceding paragraph, neither the Board of Directors of the
Company nor any committee thereof shall (i) (unless, prior to the acceptance
for payment of shares of Company Common Stock pursuant to the Offer, it
determines in good faith, based upon the advice of outside counsel, that it
is required to do so in order to comply with its fiduciary duties to the
Company's shareholders under applicable law) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Crane, the approval or
recommendation by such Board of Directors or such committee of the Offer
(including by amendment of the Schedule 14D-9), the Merger or the Merger
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal or (iii) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that prior
to the acceptance for payment of Shares pursuant to the Offer the Company
receives a Superior Proposal (as defined below), the Board of Directors of
the Company may, if it determines in good faith, based on the advice of
outside counsel, that it is required to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, (x)
withdraw or modify its approval or recommendation of the Offer, the Merger or
the Merger Agreement or (y) approve or recommend such Superior Proposal and
terminate the Merger Agreement (and concurrently with or after such
termination, if it so chooses, cause the Company to enter into an Acquisition
Agreement with respect to any Superior Proposal) but only at a time that is
after the third business day following Crane's receipt of written notice from
the Company advising Crane that the Board of Directors of the Company has
received a Superior Proposal, specifying the terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal.
For purposes of the Merger Agreement, a "Superior Proposal" means any
proposal or offer made by a third party to acquire, directly or indirectly,
for consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock then outstanding
or a substantial portion of the assets of the Company and its subsidiaries
and otherwise on terms which the Board of Directors of the Company determines
in its good faith judgment, based upon the advice of its financial advisors,
to be more favorable to the Company's shareholders than the Offer and the
Merger and for which financing is either not a contingency, or, if a
contingency, is then committed and available.
In addition to the obligations of the Company set forth in the two
immediately preceding paragraphs, the Company is to as promptly as
practicable advise Crane of any Acquisition Proposal, the material terms and
conditions of such Acquisition Proposal and the identity of the person making
such request or Acquisition Proposal. The Company will keep Crane reasonably
informed of the status and details (including amendments) of any such
Acquisition Proposal.
None of the foregoing provisions of the Merger Agreement shall prohibit
the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's shareholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
fiduciary duties to the Company's shareholders under applicable law;
provided, however, that neither the Company nor its Board of Directors nor
any committee thereof shall,
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except as permitted by such provisions, withdraw or modify, or propose
publicly to withdraw or modify, its position with respect to this Agreement
or the Offer or the Merger or approve or recommend, or propose publicly to
approve or recommend, an Acquisition Proposal.
Access to Information. The Merger Agreement provides that, until the
earlier of the termination of the Merger Agreement and the Effective Time,
the Company will give Crane and the Purchaser and their representatives
reasonable access, during normal business hours, to the offices and other
facilities and to the books and records of the Company and its subsidiaries.
Required Authorizations. The Merger Agreement provides that Crane, the
Purchaser and, subject to the provisions of the Merger Agreement discussed
under the heading "No Solicitation", above ("Section 5.02"), the Company,
shall each, and subject to Section 5.02, the Company shall cause each of its
subsidiaries to, as promptly as practicable, take all reasonable actions
necessary to obtain all Required Authorizations (if any) required to be given
or obtained by it, respectively, to permit Crane and the Purchaser, on the
one hand, and the Company, on the other, to consummate the transactions
contemplated by the Merger Agreement and the Stock Option Agreement and to
realize the respective benefits to each party contemplated thereby; provided
that Crane shall not be required to take any action to comply with any legal
requirement or agree to the imposition of any order of any Governmental
Authority that would (i) prohibit or restrict the ownership or operation by
Crane of any portion of the business or assets of Crane or the Company (or
any of their respective subsidiaries), (ii) compel Crane or the Company (or
any of their respective subsidiaries) to dispose of or hold separate any
portion of its or the Company's business or assets, or (iii) impose any
limitation on the ability of Crane or the Company or any of their respective
affiliates or subsidiaries to own or operate the business and operations of
the Company and its subsidiaries, and provided further that the Company and
its subsidiaries are not to incur fees and expenses in excess of $25,000 in
the aggregate in order to obtain certain such Required Authorizations without
the prior written consent of Crane.
Crane, the Purchaser and, subject to Section 5.02, the Company, are to
each cooperate with the others in filing in a timely manner any applications,
requests, reports, registrations or other documents, including, without
limitation, all reports and documents required to be filed by or under the
Exchange Act (including, without limitation, the Offer documents, the
Schedule 14D-9 and the Proxy Statement), with any Governmental Authority
having jurisdiction with respect to the transactions contemplated by the
Merger Agreement and in consulting with and seeking favorable action from any
Governmental Authority.
Subject to Section 5.02, the Company is to, and is to cause each of its
subsidiaries to, take all reasonable action necessary to obtain all approvals
or consents of any person needed in order that certain contracts continue in
full force and effect under the same terms and conditions currently in effect
following consummation of the transactions contemplated by the Merger
Agreement; provided, however, that the receipt of any approval or consent
under any contracts pursuant to the requirement stated in this paragraph is
not a condition precedent to the obligations of Crane or Purchaser under the
Merger Agreement.
Subject to Section 5.02, the Company and its Board of Directors are to (i)
take all reasonable action necessary to ensure that no state takeover statute
or similar statute or regulation in effect on the date of the Merger
Agreement is or becomes applicable to the Offer, the Merger, the Merger
Agreement, the Stock Option Agreement, the Shareholder Agreements or any of
the other transactions contemplated by the Merger Agreement and (ii) if any
such state takeover statute or similar statute or regulation becomes
applicable to the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement, the Shareholder Agreements or any other transaction contemplated
by the Merger Agreement, take all reasonable action necessary to ensure that
the Offer, the Merger, the Stock Option Agreement, the Shareholder Agreements
and the other transactions contemplated by the Merger Agreement may be
consummated as promptly as practicable on the terms contemplated by the
Merger Agreement and otherwise to minimize the effect of such statute or
regulation on the Merger and the other transactions contemplated by the
Merger Agreement.
Financial Statements of the Company. As soon as practicable but in any
event within 30 days after the end of each calendar month commencing with
July 1998, through the consummation of the Offer or earlier termination of
the Merger Agreement in accordance with its terms, the Company is to deliver
to
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Crane unaudited consolidated balance sheets of the Company and its
subsidiaries as at the end of such calendar month and as at the end of the
comparative month of the preceding year, together with unaudited summaries of
consolidated earnings of the Company and its subsidiaries for such calendar
month and the comparative calendar month of the preceding year. As soon as
practicable but in any event within 30 days after the end of each fiscal
quarter of the Company, commencing with June 30, 1998, and within 60 days
after the end of the fiscal year ended December 31, 1998, as the case may be,
through the consummation of the Offer or earlier termination of the Merger
Agreement, the Company is to deliver to Crane unaudited consolidated and
consolidating balance sheets of the Company and its subsidiaries as at the
end of such fiscal quarter and as at the end of the comparative fiscal
quarter of the preceding year, together with the related unaudited statements
of consolidated income and cash flows for the fiscal quarters then ended.
Employee Matters. The Merger Agreement includes Crane's agreement (a) that
on and after the consummation of the Offer and until the date that is 18
months after the Effective Time, Crane shall cause the Company, and, on and
after the Effective Time, the Surviving Corporation, to honor the severance
policy of the Company and the employment agreements that are identified in
the Company Disclosure Schedule, (b) to give the employees of the Company
full credit for purposes of eligibility and vesting under any employee
benefit plans or arrangements maintained by Crane, the Company or any
subsidiary of Crane for such employees' service with the Company or any of
its subsidiaries to the same extent recognized by the Company immediately
prior to the consummation of the Offer, (c) to waive all limitations as to
pre-existing conditions, exclusions or waiting periods with respect to
participation and coverage requirements applicable to the Company employees
under any welfare benefit plans that such employees may be eligible to
participate in after the consummation of the Offer and (d) to provide
employees of the Company, and, after the Effective Time, the Surviving
Corporation, with employee benefits comparable to those provided by Crane (or
any of its subsidiaries) to similarly situated employees of Crane (or any of
its subsidiaries).
Rights Agreement. The Merger Agreement provides that the Board of
Directors of the Company will take all further action reasonably requested in
writing by Crane (including redeeming the Rights immediately prior to the
Effective Time or amending the Rights Agreement) in order to render the
Rights inapplicable to the Offer, the Merger and the other transactions
contemplated by the Merger Agreement.
Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that for six years after the Effective Time, Crane shall, or shall
cause the Company to, indemnify, defend and hold harmless any person who is,
or has been at any time prior to the date of the Merger Agreement, or who
becomes prior to the Effective Time, a director or an officer (an
"Indemnified Person") of the Company or any of its subsidiaries against all
losses, claims, damages, liabilities, costs and expenses (including
attorneys' fees and expenses), judgments, fines, losses 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 Indemnified
Person is or was a director or an officer of the Company or any of its
subsidiaries or is or was serving at the request of the Company or any of its
subsidiaries as a director or an officer of another corporation, partnership,
joint venture, trust or other enterprise; or (ii) the Merger 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 prior to, at or after the Effective Time, to the full
extent permitted under the PBCL, the Amended and Restated Articles of
Incorporation of the Company and the Company's By-laws; provided, however,
that neither Crane nor the Company shall be required to indemnify any
Indemnified Person in connection with any proceeding (or portion thereof)
involving any Claim initiated by such Indemnified Person unless the
initiation of such proceeding (or portion thereof) was authorized by the
Board of Directors of Crane or unless such proceeding is brought by an
Indemnified Person to enforce rights to indemnification under the Merger
Agreement. If any Indemnified Person becomes involved in any Claim, after the
consummation of the Offer, Crane shall, or shall cause the Company to,
periodically advance to such Indemnified Person its legal and other expenses
(including the cost of any investigation and preparation incurred in
connection therewith), subject to the providing by such Indemnified Person of
an undertaking to reimburse all amounts so advanced in the case of a final
nonappealable determination by a court of competent jurisdiction that such
Indemnified Person is not entitled to be indemnified therefor.
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The Merger Agreement also provides that Crane or the Company 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 Time; provided, however, that Crane may substitute therefor
policies of substantially similar coverage (including pursuant to Crane's own
policy) and amounts containing terms no less advantageous to such former
directors or officers; provided further that, subject to the preceding
proviso, if the existing D&O Insurance expires or is canceled during such
period, Crane or the Surviving Corporation shall use their best efforts to
obtain substantially similar D&O Insurance; and provided further that neither
Crane nor the Surviving Corporation shall be required to pay an annual
premium for D&O Insurance in excess of 200% of the last annual premium paid
prior to the date of the Merger Agreement, but in such case shall purchase as
much coverage as possible for such amount.
Public Announcement. The Merger Agreement provides that Crane and the
Company will consult with each other before issuing, and provide each other
the opportunity to review, comment upon and concur with, any press release or
other public statements with respect to the transactions contemplated by the
Merger Agreement, including the Offer and the Merger, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or
by obligations pursuant to any listing agreement with any national securities
exchange.
Shareholder Litigation. The Merger Agreement provides that the Company
shall give Crane the opportunity to participate, at no expense to the
Company, in the defense or settlement of any shareholder litigation against
the Company and its directors relating to the transactions contemplated by
the Merger Agreement. No such settlement is to be agreed to without Crane's
consent; provided, however, that if a failure to so consent is the sole cause
of the occurrence of a Material Adverse Effect, then such Material Adverse
Effect shall not be an Event for purposes of Section 14 of this Offer to
Purchase nor shall Crane be permitted to terminate the Merger Agreement
solely due to the occurrence of such Material Adverse Effect.
Conditions to Consummation of the Merger. Pursuant to the Merger
Agreement, the respective obligations of Crane, the Purchaser and the Company
to consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following conditions: (i) the shareholders of
the Company shall have duly approved the transactions contemplated by the
Merger Agreement, if required by applicable law; (ii) any waiting period (and
any extension thereof) under the HSR Act applicable to the Merger shall have
expired or terminated; (iii) no judgment, decree, statute, law, ordinance,
rule, regulation, temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated, enforced or issued
by any court of competent jurisdiction or other Governmental Authority or
other legal restraint or prohibition preventing the consummation of the
Merger shall be in effect; provided, however, that each of the parties shall
have used all reasonable efforts to prevent the entry of any such restraints
and to appeal as promptly as possible any such restraints that may be
entered; and (iv) the Purchaser shall have accepted for payment and paid for
Shares pursuant to the terms and conditions of the Offer.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, notwithstanding approval thereof by the shareholders of
the Company: (i) by the mutual written consent of Crane and the Company; (ii)
by either Crane or the Company:
(a) if the Offer is terminated or withdrawn pursuant to its terms without
any Shares being purchased thereunder; provided, however, that neither
Crane nor the Company may so terminate the Merger Agreement if such party
shall have materially breached the Merger Agreement;
(b) if the Offer has not been consummated on or before October, 31, 1998;
or
(c) if any Governmental Authority shall have issued an order, decree,
ruling or injunction or taken any other action permanently enjoining,
restraining or otherwise prohibiting acceptance for payment of Shares
pursuant to the Offer or the consummation of the Merger and such order,
decree, ruling, injunction or other action shall have become final and
nonappealable;
(iii) by the Company if Crane or the Purchaser shall not have accepted for
payment and paid for shares of Company Common Stock pursuant to the Offer in
violation of the terms hereof and of the Merger Agreement; provided, however,
that the Company may not so terminate the Merger Agreement if the Company
shall have materially breached the Merger Agreement;
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(iv) by the Company in accordance with Section 5.02 prior to the
acceptance for payment of Shares pursuant to the Offer; provided that it has
complied with all provisions of that Section;
(v) by Crane prior to the purchase of Shares pursuant to the Offer if (i)
the Board of Directors of the Company or any committee thereof shall have
withdrawn or modified in a manner adverse to Crane its approval or
recommendation of the Offer (including by amendment of the Schedule 14D-9),
the Merger or the Merger Agreement, or approved or recommended any Superior
Proposal or (ii) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions; or
(vi) by Crane or the Purchaser pursuant to Section 5.01(c) of the Merger
Agreement (regarding advice of certain changes).
In the event of any such termination of the Merger Agreement by either the
Company or Crane, the Merger Agreement shall forthwith become void and have
no effect, without any liability or obligation on the part of Crane, the
Purchaser or the Company, except as to certain provisions and to the extent
that such termination results from the willful and material breach by a party
of any of its representations, warranties, covenants or agreements set forth
in the Merger Agreement.
The Merger Agreement may be amended by the parties at any time before or
after the Company Shareholder Approval; provided, however, that after any
such approval, there shall not be made any amendment that by law requires
further approval by the shareholders of the Company without the further
approval of such shareholders. The Merger Agreement may not be amended except
by an instrument in writing signed on behalf of each of the parties.
At any time prior to the Effective Time, a party may (a) extend the time
for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and warranties of
the other parties contained in the Merger Agreement or in any document
delivered pursuant to the Merger Agreement or (c) with certain exceptions,
waive compliance by the other parties with any of the agreements or
conditions contained in the Merger Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any
party to the Merger Agreement to assert any of its rights under the Merger
Agreement or otherwise shall not constitute a waiver of such rights.
A termination of the Merger Agreement, an amendment of the Merger
Agreement or an extension or waiver by any party to the Merger Agreement
shall, in order to be effective, require action by its Board of Directors or,
with respect to any amendment to the Merger Agreement, to the extent
permitted by applicable law, a duly authorized committee of its Board of
Directors.
Fees and Expenses. Except as provided below, all fees and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby are to be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
The Company is to reimburse Crane for out-of-pocket expenses incurred by
Crane relating to the transactions contemplated by the Merger Agreement prior
to termination (including, but not limited to, fees and expenses of Crane's
counsel, accountants and financial advisors), if (i) the Merger Agreement
shall have been terminated pursuant to the provisions of the Merger Agreement
described in paragraphs (iv) or (v) under the heading "Termination" above,
(ii) the Company enters into an Acquisition Agreement with a party other than
Crane or any of its affiliates within one year of the date of such
termination and (iii) the transaction contemplated by such Acquisition
Agreement is consummated within 18 months of the date of such termination.
Such reimbursement is to be paid in same-day funds within one business day
after the consummation of the transaction contemplated by any such
Acquisition Agreement.
The Stock Option Agreement. Following is a brief summary of the Stock
Option Agreement, a copy of which has been filed as an exhibit to the
Schedule 14D-1 filed by the Purchaser with the Commission in connection with
the Offer. Such summary is qualified in its entirety by reference to the
Stock Option Agreement.
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Pursuant to the Stock Option Agreement, Crane has the irrevocable right
(the "Stock Option"), under certain circumstances, to acquire from the
Company up to 997,633 shares of Company Common Stock (the "Option Shares"),
or approximately 19.9% of the outstanding Company Common Stock on the date of
the Merger Agreement, including the associated Rights, at a price of $2.75
per share. The exercise price is payable in cash. The Stock Option Agreement
could have the effect of making an acquisition of the Company by a third
party more costly because of the need to acquire in any such transaction the
Option Shares issued under the Stock Option Agreement.
The Stock Option may be exercised by Crane, in whole or in part, at any
time or from time to time after the termination of the Merger Agreement
pursuant to the provisions of the Merger Agreement described in clause (iv)
or clause (v) under the heading "Termination", above (an "Exercise Event").
The Stock Option shall terminate upon the earlier of (i) the consummation of
the Offer, (ii) the termination of the Merger Agreement pursuant to its terms
(other than a termination following an Exercise Event), or (iii) 365 days
following any termination of the Merger Agreement following an Exercise Event
(or, if at the expiration of such 365-day period, the Stock Option cannot be
exercised by reason of any applicable judgment, decree, order, law,
regulation or waiting period, 15 days after such impediment to exercise shall
have been removed or such waiting period has expired).
If, at any time during the period after the occurrence of an Exercise
Event and before termination of the Stock Option, Crane sends to the Company
a notice indicating Crane's election to exercise its rights to receive the
cash value of any Stock Option, then the Company is to pay to Crane, in
exchange for the cancellation of the Stock Option with respect to such number
of Option Shares as Crane specifies in such notice, an amount in cash equal
to such number of Option Shares multiplied by the difference between (i) the
average closing price per share of Company Common Stock for the 10 trading
days commencing on the 12th trading day immediately preceding the date of the
notice and (ii) the per share exercise price of the Stock Option.
In the event of any change in Company Common Stock or in the number of
outstanding shares of Company Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction or any other change in the corporate or capital structure of the
Company, the type and number of shares or securities to be issued upon
exercise of the Stock Option shall be adjusted appropriately and proper
provision shall be made in agreements governing such transaction, so that
Crane shall receive upon exercise of the Stock Option the number and class of
shares or other securities or property that Crane would have received in
respect of the Option Shares if the Stock Option had been exercised
immediately prior to such event or the record date therefor.
The Stock Option Agreement further provides that at any time and from time
to time after payment for and delivery of the Option Shares upon exercise of
the Stock Option, Crane may make a written request for registration of all or
part of its Option Shares under and in accordance with the provisions of the
Securities Act of 1933, as amended. Such registration may be, at Crane's
option, a shelf registration or a registration involving an underwritten
offering.
The Shareholder Agreements. Following is a summary of the Shareholder
Agreements, the form of which has been filed as an exhibit to the Schedule
14D-1 filed by the Purchaser with the Commission in connection with the
Offer. Such summary is qualified in its entirety by reference to the full
text of the form of Shareholder Agreement.
Pursuant to the Shareholder Agreements, each of Atalanta Selective Fund
Number Six Limited Partnership, Stephen A. Wells Profit Sharing Plan, Stephen
A. Wells, Wells Resources, Inc., Dan Kirkland Wells Foundation, R. Nim Evatt,
Robert L. Leon, Susan Leon and Roland K. Bullard, II (each, a "Shareholder")
has agreed, among other things, that, (i) until the earlier of the date on
which the Offer is terminated or withdrawn or the date on which the Merger
Agreement is terminated in accordance with its terms, the Shareholder will
tender, and not withdraw, his Shares pursuant to the Offer, and (ii) until
the earlier of the Effective Time, the date on which the Merger Agreement is
terminated in accordance with its terms or the purchase of all of the Shares
owned by such Shareholder pursuant to the Offer (the earliest of such dates
being the "Expiration Date"), the Shareholder will vote, or grant his consent
with respect to, all of his shares of Company Common Stock (x) in favor of
the approval of the Merger Agreement and the Merger and any other transaction
contemplated by the Merger Agreement or the
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Stock Option Agreement, as such Merger Agreement or Stock Option Agreement
may be modified or amended from time to time, and (y) against any action,
omission or agreement which would impede or interfere with, or have the
effect of discouraging, the Merger, including, without limitation, any
Acquisition Proposal other than the Merger.
At the request of Crane, each Shareholder will execute, in accordance with
the provisions of the PBCL, and deliver to Crane an irrevocable proxy and
irrevocably appoint Crane or its designees his attorney and proxy to vote or
give consent with respect to all of his shares of Company Common Stock for
the purposes set forth above. Any such proxy will terminate on the Expiration
Date.
Each Shareholder Agreement contains the agreement of the Shareholder that,
among other things, he will: (a) until the date that is six months after the
Expiration Date, not, and will not agree to, sell, transfer, pledge,
hypothecate, encumber, assign, tender or otherwise dispose of any of his
shares of Company Common Stock other than pursuant to the Merger Agreement,
unless and until such transferee executes and delivers to Crane a joinder to
the Shareholder Agreement pursuant to which such transferee shall agree that,
for all purposes of the Shareholder Agreement, (i) such transferee shall be
deemed to be the Shareholder thereunder and (ii) all shares of the Company
Common Stock transferred to such transferee pursuant to this provision shall
be deemed to be "Shares" under the Shareholder Agreement; (b) other than as
contemplated by the Shareholder Agreement, until the Expiration Date, not
grant any powers of attorney or proxies or consents in respect of any of his
shares of Company Common Stock, deposit any of his shares of Company Common
Stock into a voting trust, enter into a voting agreement with respect to any
of his shares of Company Common Stock or otherwise restrict the ability of
the holder of any of his shares of Company Common Stock freely to exercise
all voting rights with respect thereto; and (c) until the Expiration Date,
not initiate, solicit or encourage, directly or indirectly, any inquiries or
the making or implementation of any Acquisition Proposal or engage in any
negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Acquisition Proposal,
or otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal.
Pursuant to each Shareholder Agreement, Crane has the irrevocable right
(the "Shareholder Stock Option"), at any time or from time to time if the
Company enters into an Acquisition Agreement with a party other than Crane or
any of its affiliates within six months after the Expiration Date, to acquire
from each Shareholder all or any portion of the shares of Company Common
Stock owned by each Shareholder, including the associated Rights, at a price
of $3.50 per share. The exercise price is payable in cash.
In the event (a) of any stock dividend, stock split, merger,
recapitalization, reclassification, combination, exchange of shares or the
like of the capital stock of the Company on, or affecting the shares to be
issued upon exercise of the Shareholder Stock Option or (b) that the
Shareholder shall become the beneficial owner of any additional shares of
Company Common Stock or other securities entitling the holder thereof to vote
or give consent with respect to the matters set forth in the Shareholder
Agreement, then such additional shares of Company Common Stock and other
securities shall become shares subject to the Shareholder Stock Option and
the terms of the Shareholder Agreement shall otherwise apply to the shares of
capital stock or other instruments or documents held by the Shareholder
immediately following the effectiveness of the events described in clause (a)
or the Shareholder becoming the beneficial owner thereof as described in
clause (b), as though, in either case, they were shares subject to the
Shareholder Agreement.
Each Shareholder Agreement contains the Shareholder's representations and
warranties relating to, among other things, (a) the execution, delivery and
enforceability of his Shareholder Agreement, (b) the ownership of his shares
of Company Common Stock, and (c) the absence of encumbrances on his shares of
Company Common Stock.
Dissenters' Rights. No dissenters' rights are available in connection with
the Offer. However, if the Merger is consummated, shareholders who fully
comply with the statutory dissenters' procedures set forth in the PBCL, the
relevant portions of which are attached to this Offer to Purchase as Schedule
II, will be entitled to receive cash for the fair value of their Shares as
determined pursuant to the procedures
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presented by the PBCL. Merely voting against the Merger Agreement will not
perfect a shareholders' dissenters' rights. Shareholders are urged to review
carefully the dissenting shareholders' rights provisions of the PBCL, a
description of which is provided below and the full text of which is attached
to this Offer to Purchase as Schedule II and incorporated herein by
reference. SHAREHOLDERS WHO FAIL TO COMPLY STRICTLY WITH THE APPLICABLE
PROCEDURES WILL FORFEIT THEIR DISSENTERS' RIGHTS IN CONNECTION WITH THE
MERGER. See Schedule II to this Offer to Purchase.
Sections 1571 through 1580 of the PBCL ("Subchapter D") and Section
1930(a) of the PBCL, copies of which are included in Schedule II attached to
this Offer to Purchase, entitle any holder of record of Shares who objects to
the Merger, in lieu of receiving the consideration for such Shares provided
under the Merger Agreement, to demand in writing that he be paid in cash the
fair value of his Shares. Section 1572 of the PBCL defines "fair value" as
"[t]he fair value of shares immediately before the effectuation of the
corporate action to which the dissenter objects, taking into account all
relevant factors, but excluding any appreciation or depreciation in
anticipation of the corporate action."
Before the vote of the shareholders is taken on the Merger, the dissenting
shareholder must deliver to the Company a written notice of intention to
demand that he be paid the fair value of his Shares if the Merger is
effected. Such written notice must be sent to the Secretary of the Company at
Lee Park, Suite 6000, 555 North Lane, Conshohocken, Pennsylvania 19428. A
vote against the Merger is not sufficient to satisfy the requirement of
delivering a written notice to the Company. In addition, the shareholder must
not effect any change in the beneficial ownership of his Shares from the date
of filing the notice with the Company through the consummation of the Merger,
and Shares for which payment of fair value is sought must not be voted in
favor of the Merger. Failure by a dissenting shareholder to comply with any
of the foregoing will result in his forfeiture of any right to demand payment
of fair value for his Shares.
A record holder of Shares held in whole or in part for the benefit of
another person may assert dissenters' rights as to fewer than all of the
Shares registered in his name only if he dissents with respect to all the
Shares beneficially owned by any one person and discloses the name and
address of the person or persons on whose behalf he dissents. A beneficial
owner of Shares who is not the record holder may assert dissenters' rights
with respect to Shares held on his behalf if he submits to the Company the
written consent of the record holder not later than the time of assertion of
dissenters' rights. A beneficial owner may not dissent with respect to fewer
than all of the Shares owned by him, whether or not such Shares are
registered in his name.
If the Merger is approved, the Company shall mail to all dissenters who
gave due notice of their intention to demand payment of fair value and who
refrained from voting in favor of the Merger, a notice stating where and when
a demand for payment should be sent and certificates for Shares deposited in
order to obtain payment. The notice shall be accompanied by a copy of
Subchapter D and a form for demanding payment. The time set for the receipt
of demands and the deposit of certificates shall not be less than 30 days
from the mailing of the notice. Failure by a shareholder to demand payment or
deposit certificates pursuant to such notice will cause such shareholder to
lose all right to have a court determine the fair value of his Shares. If the
Merger has not been effected within 60 days after the date set for demanding
payment and depositing certificates, the Company shall return any
certificates that have been deposited. The Company, however, may at any later
time send a new notice regarding demand for payment and deposit of
certificates with like effect.
Promptly after the consummation of the Merger or upon timely receipt of
demand for payment if the Merger has already been effected, the Company shall
remit to dissenters who have made timely demand and deposited their
certificates the amount the Company estimates to be the fair value of their
Shares or give written notice that no remittance will be made under Section
1577 of the PBCL. Such remittance or notice shall be accompanied by (i) the
closing balance sheet and statement of income of the Company for a fiscal
year ending not more than 16 months prior to the date of remittance or notice
together with the latest available interim financial statements, (ii) a
statement of the Company's estimate of the fair value of the Shares, and
(iii) a notice of the right of the dissenting shareholder to demand payment
or
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supplemental payment, as the case may be, accompanied by a copy of Subchapter
D. If the Company does not remit the amount of its estimate of the fair value
of the Shares, it shall return all certificates that have been deposited and
may make a notation thereon that a demand for payment has been made.
If Shares with respect to which notation has been so made shall be
transferred, each new certificate issued therefor shall bear a similar
notation, together with the name of the original dissenting holder or owner
of such Shares. A transferee of such Shares shall not acquire by such
transfer any rights in the Company other than those that the original
dissenter had after making demand for payment of fair value for such Shares.
If a dissenting shareholder believes that the amount estimated or paid by
the Company for his Shares is less than the fair value, the shareholder may
send to the Company his own estimate of the fair value which shall be deemed
a demand for payment of the amount of the deficiency. If the dissenter does
not file his own estimate of fair value within 30 days after the mailing by
the Company of its remittance or estimate of fair value, the dissenter shall
be entitled to no more than the amount remitted to him or estimated by the
Company.
Within 60 days after the latest of (i) the consummation of the Merger,
(ii) timely receipt of any demands for payment or (iii) timely receipt of any
shareholder estimates of fair value, if any demands for payment remain
unsettled, the Company may file in court an application for relief requesting
that the fair value of the Shares be determined by the court. Each dissenter
whose demand has not been settled shall be made a party to the proceeding and
shall be entitled to recover the amount by which the fair value of his Shares
is found to exceed the amount, if any, previously remitted, plus interest. If
the Company fails to file an application within the 60-day period, any
dissenter who has not settled his claim may do so in the name of the Company
within 30 days after the expiration of this 60-day period. If no dissenter
files an application within such 30-day period, each dissenter entitled to
file an application shall be paid no more than the Company's estimate of the
fair value of his Shares and may bring an action to recover any amount not
previously remitted.
The costs and expenses of any valuation proceedings, including the
reasonable compensation and expenses of any appraiser appointed by the court,
shall be determined by the court and assessed against the Company except that
any part of such costs and expenses may be apportioned and assessed as the
court deems appropriate against all or some of the dissenters whose action in
demanding supplemental payment is found by the court to be dilatory,
obdurate, arbitrary, vexatious or in bad faith. The court may also assess the
fees and expenses of counsel and experts for any or all of the dissenters
against the Company if the Company fails to comply substantially with
Subchapter D or acts in bad faith or in a dilatory, obdurate, arbitrary or
vexatious manner. The court can also assess any such fees or expenses
incurred by the Company against a dissenter if such dissenter is found to
have acted in bad faith or in a dilatory, obdurate, arbitrary or vexatious
manner. If the court finds that the services of counsel for any dissenter
were of substantial benefit to the other dissenters and should not be
assessed against the Company, it may award to such counsel reasonable fees to
be paid out of the amounts awarded to the dissenters who were benefited.
Section 1712 of the PBCL provides that a director of a Pennsylvania
corporation stands in a fiduciary relation to such corporation and must
perform his duties as a director in good faith, in a manner he reasonably
believes to be in the best interests of the corporation and with such care,
including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances. Section 1105 of the PBCL
provides in substance that a shareholder of a Pennsylvania corporation shall
not have any right to obtain, in the absence of fraud or fundamental
unfairness, an injunction against the Merger, nor any right to claim the
right to valuation and payment of the fair value of his Shares because of the
Merger, except that he may dissent and claim such payment if and to the
extent provided in Subchapter D of the PBCL, described above. Absent fraud or
fundamental unfairness, such dissenters' rights are the exclusive remedy of
such shareholders. However, the United States Court of Appeals, Third
Circuit, interpreting the predecessor statute to Section 1105 of the PBCL in
Herskowitz v. NutriSystem, Inc., concluded that dissenters' rights coexist
with common law causes of action, such as rescission or money damages, in the
context of an action for breach of fiduciary duty or misrepresentation in a
cash-out
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merger. Shareholders should be aware that due to the enactment of the PBCL in
1988 it is unclear whether the decision in Herskowitz remains applicable to
dissenters' rights. IN VIEW OF THE COMPLEXITIES OF THESE PROVISIONS OF
PENNSYLVANIA LAW, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING FROM THE MERGER
SHOULD CONSULT THEIR OWN LEGAL COUNSEL.
SEE SCHEDULE II ATTACHED HERETO FOR A REPRODUCTION OF THE TEXT OF THE
RELEVANT SECTIONS OF THE PBCL.
Plans for the Company. If Crane acquires control of the Company, its first
priority will be to restore profitability to the Company. The Company's
product lines share common technologies and customers with two of Crane's
business units--Crane Nuclear and Dynalco Controls--and the integration of
the Company's operations into these two businesses could offer significant
synergies. The RADView business of the Company does not align with any
current Crane operation, however, and Crane will be evaluating that business
and the available strategic alternatives for it. Crane intends to continue
its review of the Company and its subsidiaries and their respective assets,
businesses, corporate structure, capitalization, operations, properties,
policies, management and personnel. If Crane acquires control of the Company,
Crane will determine what actions or changes, if any, would be desirable in
light of the circumstances which then exist, and reserves the right to effect
such actions or changes. Crane's decisions could be affected by information
hereafter obtained, changes in general economic or market conditions or in
the business of the Company or its subsidiaries, actions by the Company or
its subsidiaries and other factors.
Except as described in this Offer to Purchase, none of the Purchaser,
Crane nor, to the best knowledge of the Purchaser and Crane, any of the
persons listed on Schedule I, has any present plans or proposals that would
relate to or would result in (i) an extraordinary corporate transaction, such
as a merger, reorganization or liquidation, involving the Company or any of
its subsidiaries, (ii) a sale or transfer of a material amount of assets of
the Company or any of its subsidiaries, (iii) any change in the present
Company Board or management of the Company, (iv) any material change in the
present capitalization or dividend policy of the Company, (v) any material
change in the Company's corporate structure or business, (vi) causing a class
of securities of the Company to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association or (vii) a
class of equity securities of the Company becoming eligible for termination
of registration pursuant to Section 12(g) (4) of the Exchange Act.
The Rights. The following discussion is derived from the description of
the Rights Agreement and the Rights included as part of an exhibit to the
Company's Current Report on Form 8-K dated October 6, 1997 and is qualified
in its entirety by reference to such exhibit.
Under the Rights Agreement, each Share carries with it one Right. Each
Right entitles the registered holder to purchase from the Company a unit
consisting of one one-thousandth of a share (a "Unit") of Series A Junior
Participating Preferred Stock of the Company at a purchase price of $48.00
per Unit, subject to adjustment.
The Rights Agreement provides that the Rights will separate from the
Company Common Stock and the "Distribution Date" will occur (i) upon the
earlier of (x) 10 business days following a public announcement (the date of
such announcement being the "Stock Acquisition Date") that a person or group
of affiliated or associated persons (other than the Company, any subsidiary
of the Company or any employee benefit plan of the Company or such
subsidiary) (an "Acquiring Person") has acquired, obtained the right to
acquire, or otherwise obtained beneficial ownership of 15% or more of the
then outstanding shares of Company Common Stock, and (y) 10 business days
following the commencement of a tender offer or exchange offer that would
result in an Acquiring Person owning 15% or more of the then outstanding
shares of Company Common Stock, or (ii) such later date as may be determined
by action of a majority of the independent members of the Board of Directors
(such determination to be made prior to such time as any person becomes an
Acquiring Person pursuant to (x) or (y) above). The Rights Agreement exempts
from its definition of Acquiring Person any person that acquires, obtains the
right to acquire, or otherwise obtains beneficial ownership of 15% or more of
the then outstanding shares of Company Common Stock without any intention of
changing or influencing control of the Company
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provided that such person, as promptly as practicable, divests himself or
itself of a sufficient number of shares of Company Common Stock so that such
person would no longer own 15% or more of the outstanding shares of Company
Common Stock. Until the Distribution Date, (i) the Rights will be evidenced
by Company Common Stock certificates, (ii) new Company Common Stock
certificates issued after the Record Date (also including shares distributed
from the Company's treasury) will contain a notation incorporating the Rights
Agreement by reference and (iii) the surrender for transfer of any
certificates representing outstanding Company Common Stock will also
constitute the transfer of the Rights associated with the Company Common
Stock represented by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.
As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close
of business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.
In the event that (i) the Company is the surviving corporation in a merger
with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes the beneficial owner of 15% or more of the
then outstanding shares of Company Common Stock, (iii) an Acquiring Person
engages in one or more "self-dealing" transactions as set forth in the Rights
Agreement, or (iv) during such times as there is an Acquiring Person, an
event occurs which results in such Acquiring Person's ownership interest
being increased by more than 1% (e.g., by means of a reverse stock split or
recapitalization), then, in each such case, each holder of a Right will
thereafter have the right to receive upon exercise Units (or, in certain
circumstances, Company Common Stock, cash, property or other securities of
the Company) having a current market value equal to two times the exercise
price of the Right. The exercise price is the purchase price multiplied by
the number of Units issuable upon exercise of a Right prior to the events
described in this paragraph. Notwithstanding any of the foregoing, following
the occurrence of any of the events set forth in this paragraph, all Rights
that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person will be null and void.
In the event that, at any time following the Stock Acquisition Date, (i)
the Company is acquired in a merger or other business combination transaction
and the Company is not the surviving corporation (other than a merger
described in the preceding paragraph), (ii) any person consolidates or merges
with the Company and all or part of the Company Common Stock is converted or
exchanged for securities, cash or property of any other Person or (iii) 50%
or more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as
described above) shall thereafter have the right to receive, upon exercise,
common stock of the Acquiring Person having a current market value equal to
two times the exercise price of the Right.
The Rights Agreement exempts certain shareholders from triggering the
distribution of the Rights ("Exempt Person") unless they, individually or
together with their affiliates or associates, increase their beneficial
ownership of outstanding Company Common Stock. These shareholders consist of
Edison Venture Fund, L.P., and their affiliates and associates. The Rights
Agreement also designates L. Mark Newman, Larry D. Hornbeck, Don V. Ingram,
Stephen F. Smith, Stephen A. Wells, Walter Epstein, Energy Consolidation,
Inc., Atalanta Investment Company and Atalanta Selective Fund Number Six
Limited Partnership as Exempt Persons, so long as those parties and their
affiliates and associates are in compliance with the Standstill Agreement
between the Company and certain of the aforementioned individuals and
entities dated August 18, 1997.
At any time until (i) ten business days following the Stock Acquisition
Date or (ii) such later date as a majority of the independent members of the
Board of Directors shall determine (such determination to be made prior to
the date specified in (i) above), a majority of the independent directors may
redeem the Rights in whole, but not in part, at a price of $.001 per Right
(subject to adjustment in certain events) (the "Redemption Price"), payable,
at the election of such majority of the independent directors in cash or
shares of Company Common Stock. Immediately upon the action of a majority of
the independent directors ordering the redemption of the Rights, the Rights
will terminate and the only right of the holders of Rights will be to receive
the Redemption Price.
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Until a Right is exercised, the holder thereof, as such, will have no
rights as a shareholder of the Company, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to shareholders or to the Company, shareholders may,
depending upon the circumstances, recognize taxable income in the event that
the Rights become exercisable for Units of Preferred Stock (or other
consideration).
Any of the provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption
shall be made at such time as the Rights are not redeemable.
On August 10, 1998, the Company Board approved (and on August 11, 1998,
the Company executed) an amendment to the Rights Agreement to provide that
notwithstanding anything contained in the Rights Agreement to the contrary,
(x) until the termination of the Merger Agreement in accordance with its
terms, Crane (including each affiliate and associate of Crane) shall be an
Exempt Person, and (y) no Distribution Date, Stock Acquisition Date or
Triggering Event (as defined in the Rights Agreement) will be deemed to have
occurred, neither Crane nor any affiliate or associate of Crane will be
deemed to have become an Acquiring Person and no holder of Rights will be
entitled to exercise any Rights under or be entitled to any rights pursuant
to the Rights Agreement by reason of (i) the approval, execution, delivery or
effectiveness of the Merger Agreement, the Stock Option Agreement or the
Shareholder Agreements, or (ii) the consummation of any of the transactions
contemplated by any of the foregoing agreements or the taking of any action
by any party to any of the foregoing agreements or any affiliate or associate
thereof to facilitate the consummation of any such transactions. The Rights
Agreement was also amended to (i) provide that the Rights Agreement shall not
be amended or supplemented in any manner until the termination of the Merger
Agreement in accordance with its terms without the prior written consent of
Crane and (ii) to change the Expiration Date of the Rights Agreement to the
earlier to occur of (x) the close of business on the tenth anniversary of the
Rights Agreement and (y) the Effective Time.
Based on publicly available information, the Purchaser believes that, as
of the date of this Offer, the Rights were not exercisable, Rights
Certificates have not been issued and the Rights were evidenced by the Share
Certificates.
The foregoing summary of the Rights Agreement does not purport to be
complete and is qualified in its entirety by reference to the text of the
Rights Agreement filed as an exhibit to the Company's Current Report on Form
8-K dated October 6, 1997 filed with the Commission and any subsequent
amendments to the Rights Agreement as filed with the Commission. Copies of
these documents may be obtained in the manner set forth in Section 8, above.
Shareholders are required to tender one Right for each Share tendered in
order to effect a valid tender of such Share. If the Distribution Date does
not occur prior to the Expiration Date, a tender of Shares will automatically
constitute a tender of the associated Rights. See Section 1.
12. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by Purchaser to consummate the Offer
and the Merger and to pay related fees and expenses is estimated to be
approximately $19,000,000. Crane will ensure that the Purchaser has
sufficient funds to acquire all the outstanding Shares pursuant to the Offer
and the Merger. Crane plans to provide such funds from its cash accounts.
13. DIVIDENDS AND DISTRIBUTIONS
If, on or after the date of this Offer to Purchase, the Company should (i)
split, combine or otherwise change the Shares or its capitalization, (ii)
issue or sell any additional securities of the Company or otherwise cause an
increase in the number of outstanding securities of the Company or (iii)
acquire
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currently outstanding Shares or otherwise cause a reduction in the number of
outstanding Shares, then, without prejudice to the Purchaser's rights under
Sections 1 and 14, the Purchaser, in its sole discretion, may make such
adjustments as it deems appropriate in the purchase price and other terms of
the Offer, including, without limitation, the amount and type of securities
offered to be purchased.
If, on or after the date of this Offer to Purchase, the Company should
declare or pay any dividend on the Shares or make any distribution
(including, without limitation, the issuance of additional Shares pursuant to
a stock dividend or stock split, the issuance of other securities or the
issuance of rights for the purchase of any securities) with respect to the
Shares that is payable or distributable to shareholders of record on a date
prior to the transfer to the name of the Purchaser or its nominee or
transferee on the Company's stock transfer records of the Shares purchased
pursuant to the Offer, then, without prejudice to the Purchaser's rights
under Sections 1 and 14, (i) the Per Share Amount payable by the Purchaser
pursuant to the Offer will be reduced by the amount of any such cash dividend
or cash distribution, and (ii) any such non-cash dividend, distribution or
right to be received by the tendering shareholders will be received and held
by such tendering shareholders for the account of the Purchaser and will be
required to be promptly remitted and transferred by each such tendering
shareholder to the Depositary for the account of the Purchaser, accompanied
by appropriate documentation of transfer. Pending such remittance and subject
to applicable law, the Purchaser will be entitled to all rights and
privileges as owner of any such non-cash dividend, distribution or right and
may withhold the entire purchase price or deduct from the purchase price the
amount of value thereof, as determined by the Purchaser in its sole
discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) promulgated under the
Exchange Act, pay for any tendered Shares and may terminate or, subject to
the terms of the Merger Agreement, amend the Offer, if (i) there shall not be
validly tendered and not properly withdrawn prior to the Expiration Date for
the Offer that number of Shares which satisfies the Minimum Condition, (ii)
any applicable waiting period (and any extensions thereof) under the HSR Act
shall not have expired or been terminated prior to the Expiration Date, or
(iii) at any time prior to the time of acceptance for payment or payment for
any Shares, any of the following events (each, an "Event") shall occur:
(a) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to the Offer,
by any Governmental Authority, directly or indirectly, (i) challenging the
acquisition by Crane or the Purchaser of any shares of capital stock of
the Company or the Surviving Corporation, seeking to restrain or prohibit
the consummation of the Offer or the Merger or any of the other
transactions contemplated by the Merger Agreement or seeking to obtain
from the Company or Crane any damages that are material in relation to the
Company and its subsidiaries taken as a whole or Crane and its
subsidiaries taken as a whole, as applicable, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Crane or any of their
respective subsidiaries of all or any material portion of the business or
assets of the Company, Crane or any of their respective subsidiaries, or
to compel the Company, Crane or any of their respective subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of the Company, Crane or any of their respective subsidiaries, as a
result of the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement, (iii) seeking to impose limitations
on the ability of Crane to acquire or hold, or exercise full rights of
ownership of, any shares of capital stock of the Company or the Surviving
Corporation, (iv) seeking to prohibit Crane or any of its subsidiaries
from effectively controlling in any material respect the business or
operations of the Company or its subsidiaries or (v) which otherwise would
reasonably be expected to have a Material Adverse Effect on the Company or
Crane; or
(b) there shall be pending or threatened any action or proceeding by any
Governmental Authority seeking, or that is reasonably likely to result,
directly or indirectly, in, any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above or by any third party for which
there is a substantial likelihood of resulting in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
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(c) there shall have occurred any Material Adverse Effect with respect to
the Company and its subsidiaries taken as a whole; or
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified (including by amendment to the Schedule
14D-9) in a manner adverse to Crane or the Purchaser its approval or
recommendation of the Offer or the Merger Agreement, or approved or
recommended any Superior Proposal, (ii) the Company shall have entered
into an Acquisition Agreement with a party other than Crane on any of its
affiliates, or (iii) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing; or
(e) the Company and the Purchaser and Crane shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the
Merger Agreement shall have been terminated in accordance with its terms;
or
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct (without regard to any
materiality qualifications or references to Material Adverse Effect
contained in any specific representation or warranty), as if such
representations and warranties were made at the time of such determination
except to the extent such representations and warranties expressly relate
to an earlier date (in which case as of such date); provided that this
paragraph (f) shall be deemed satisfied so long as the failure of all such
representations and warranties to be true and correct would not (i) have a
Material Adverse Effect on the Company, (ii) prevent or materially delay
the consummation of the Offer, (iii) materially increase the cost of the
Offer to the Purchaser or (iv) have a material adverse effect on the
benefits to Crane of the transactions contemplated by the Merger
Agreement; or
(g) the Company shall have failed to perform in all material respects all
obligations required to be performed by it under the Merger Agreement; or
(h) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
New York Stock Exchange or on the Nasdaq National Market, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war,
armed hostilities or other national or international crises involving the
United States or a material limitation (whether or not mandatory) by any
governmental Entity on the extension of credit by banks or other lending
institutions, or (iv) with respect to any of the foregoing in effect on
the date of the Merger Agreement, a material worsening or acceleration
thereof.
The foregoing conditions (including those set forth in clauses (i) and
(ii) of the initial paragraph) are for the benefit of Crane and the Purchaser
and may be asserted by Crane or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by Crane or the
Purchaser in whole or in part at any time and from time to time in their
reasonable discretion, in each case, subject to the terms of the Merger
Agreement. The failure by Crane or the Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at any
time and from time to time.
15. CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS
General. Except as set forth below, neither the Purchaser nor Crane is
aware of any licenses or other regulatory permits that appear to be material
to the business of the Company and its subsidiaries, taken as a whole, that
might be adversely affected by the Purchaser's acquisition of Shares (and the
indirect acquisition of the stock of the Company's subsidiaries) as
contemplated herein, or of any filings, approvals or other actions by or with
any domestic (U.S. federal or state), foreign or supranational governmental
authority or administrative or regulatory agency that would be required prior
to the acquisition of Shares (or the indirect acquisition of the stock of the
Company's subsidiaries) by the Purchaser pursuant to the Offer as
contemplated herein. Should any such approval or other action be required, it
is the Purchaser's present intention to seek such approval or action.
However, the Purchaser does not presently intend to delay the purchase of
Shares tendered pursuant to the Offer pending the receipt of any such
approval or the taking of any such action (subject to the Purchaser's right
to delay or
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decline to purchase Shares if any of the conditions in Section 14 shall not
have been satisfied). There can be no assurance that any such approval or
other action, if needed, would be obtained without substantial conditions or
that adverse consequences might not result to the business of the Company,
Crane or the Purchaser or that certain parts of the businesses of the
Company, Crane or the Purchaser might not have to be disposed of or held
separate or other substantial conditions complied with in order to obtain
such approval or other action or in the event that such approval was not
obtained or such other action was not taken, any of which could cause the
Purchaser to elect to terminate the Offer without the purchase of the Shares
hereunder. The Purchaser's obligation under the Offer to accept for payment
and pay for Shares is subject to certain conditions, including conditions
relating to the legal matters discussed in this Section 15. See Section 14.
State Takeover Statutes. Various states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, shareholders, executive offices or places of business in such
states. In Edgar v.Mite Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining shareholders, provided
that such laws were applicable only under certain conditions.
The Pennsylvania Takeover Disclosure Law (the "PTDL") purports to regulate
certain attempts to acquire a corporation which (1) is organized under the
laws of Pennsylvania or (2) has its principal place of business and
substantial assets located in Pennsylvania. The PTDL requires, among other
things, that the offeror, 20 days prior to any takeover offer, file a
registration statement for the takeover offer with the Pennsylvania
Securities Commission and publicly disclose the offering price of the
proposed offer. However, in Crane Co. v. Lam, 509 F.Supp. 782 (E.D. Pa.
1981), the District Court preliminarily enjoined, on grounds arising under
the United States Constitution, enforcement of at least the portion of the
PTDL involving the pre-offer waiting period thereunder.
Chapter 25 of the PBCL contains other provisions relating generally to
takeovers and acquisitions of certain publicly owned Pennsylvania
corporations such as the Company that have a class or series of shares
entitled to vote generally in the election of directors registered under the
Exchange Act (a "registered corporation"). The following discussion is a
general and highly abbreviated summary of certain features of such chapter,
is not intended to be complete or to completely address potentially
applicable exceptions or exemptions, and is qualified in its entirety by
reference to the full text of Chapter 25 of the PBCL.
In addition to other provisions not applicable to the Offer or the Merger,
Subchapter D of Chapter 25 of the PBCL ("Subchapter D") includes provisions
requiring approval of a merger of a registered corporation with an
"interested shareholder" by the affirmative vote of the shareholders entitled
to cast at least a majority of the votes that all shareholders other than the
interested shareholder are entitled to cast with respect to the transaction
without counting the votes of the interested shareholder. This disinterested
shareholder approval requirement is not applicable to a transaction (i)
approved by a vote of the board of directors, without counting the votes of
directors who are directors or officers of, or who have a material equity
interest in, the interested shareholder, (ii) in which the consideration to
be received by shareholders is not less than the highest amount paid by the
interested shareholder in acquiring his shares, or (iii) effected without
submitting the proposed merger to a vote of shareholders as permitted in
Section 1924(b)(1)(ii) of the PBCL. The requirements of Subchapter D do not
apply to the Merger because, among other things, the Offer and the Merger
have been approved by the Board of Directors of the Company.
Subchapter E of Chapter 25 of the PBCL ("Subchapter E"), among other
things, governs "control transactions" (defined generally as a transaction in
which a person acquires at least 20% of the voting power of a corporation
involving a "registered corporation" and provides that the shareholders of
such
34
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corporation are entitled to demand that they be paid the fair value of their
shares. Pursuant to Subchapter E, the minimum value the shareholders can
receive may not be less than the highest price paid per share by the control
person within the 90-day period ending on and including the date of the
control transaction. The Amended and Restated Articles of Incorporation
specifically provide that Subchapter E does not apply to the Company.
Subchapter F purports to prohibit under certain circumstances a
"registered corporation" from engaging in a "Business Combination" with an
"Interested Shareholder" for a period of five years following the date such
person became an "Interested Shareholder" unless: (i) before such person
became an Interested Shareholder, the board of directors of the corporation
approved either the Business Combination or the transaction in which the
Interested Shareholder became an Interested Shareholder; (ii) the Business
Combination is approved by a majority vote of the corporation's voting
shares, other than shares held by the Interested Shareholder, no earlier than
three months after the Interested Shareholder became, and provided that at
the time of such vote the Interested Shareholder is, the beneficial owner of
shares entitled to cast at least 80% of the votes that all shareholders would
be entitled to cast in an election of directors of the corporation, and the
Business Combination satisfies the "fair price" criteria (generally, the
higher of (a) the highest price per share paid by the Interested Shareholder
at a time when the Interested Shareholder was the beneficial owner of a least
five percent of the voting power of the corporation and (b) the market value
per share on the announcement date with respect to the Business Combination
or on the Interested Shareholder's acquisition date, whichever is higher,
plus, in any case, interest and less the value of any distributions on the
shares); (iii) the Business Combination is approved by all of the holders of
the corporation's outstanding common shares; (iv) the Business Combination is
approved by a majority vote of the corporation's voting shares, other than
shares held by the Interested Shareholder, no earlier than five years after
the Interested Shareholder became an Interested Shareholder; or (v) the
Business Combination is approved by a majority vote of the corporation's
voting shares no earlier than five years after the Interested Shareholder
became an Interested Shareholder and the Business Combination satisfies the
"fair price" criteria described above. Subchapter F does not apply to the
Merger because, among other things, the Board of Directors of the Company has
approved the Merger.
Subchapter G of Chapter 25 of the PBCL ("Subchapter G"), relating to
"control-share acquisitions," prevents under certain circumstances the owner
of a control-share block of shares of a registered corporation from voting
such shares unless a majority of the "disinterested" shares approve such
voting rights. Failure to obtain such approval may result in a forced sale by
the control-share owner of the control-share block to the corporation at a
possible loss. The Amended and Restated Articles of Incorporation
specifically provide that Subchapter G does not apply to the Company.
Subchapter H of Chapter 25 of the PBCL ("Subchapter H"), relating to
disgorgement by certain controlling shareholders of a registered corporation,
provides that under certain circumstances any profit realized by a
controlling person from the disposition of shares of the corporation to any
person (including to the corporation under Subchapter G or otherwise) will be
recoverable by the corporation. The Amended and Restated Articles of
Incorporation specifically provide that Subchapter H does not apply to the
Company.
Subchapter I of Chapter 25 of the PBCL ("Subchapter I") entitles "eligible
employees" of a registered corporation to a lump sum payment of severance
compensation under certain circumstances if the employee is terminated, other
than for willful misconduct, within two years after voting rights lost as a
result of a control-share acquisition are restored by a vote of disinterested
shareholders ("Control-Share Approval") or, in the event the termination was
accomplished pursuant to an agreement, arrangement or understanding with the
acquiring person, within 90 days prior to Control-Share Approval. Subchapter
J of Chapter 25 of the PBCL ("Subchapter J") provides protection against
termination or impairment under certain circumstances of "covered labor
contracts" of a registered corporation as a result of a "business
combination" transaction if the business operation to which the covered labor
contract relates was owned by the registered corporation at the time voting
rights are restored by shareholder vote after a control-share acquisition.
Subchapters I and J apply only in the event of a "control-share acquisition"
specified in Subchapter G. The Amended and Restated Articles of Incorporation
specifically provide that Subchapter G does not apply to the Company.
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<PAGE>
Section 2504 of the PBCL provides that the applicability of Chapter 25 of
the PBCL to a registered corporation having a class or series of shares
entitled to vote generally in the election of directors registered under the
Exchange Act or otherwise satisfying the definition of a registered
corporation under Section 2502(l) of the PBCL shall terminate immediately
upon the termination of the status of the corporation as a registered
corporation. Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after consummation
of the Merger as the requirements for termination of registration of the
Shares are met.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or
have substantial assets, shareholders, principal executive offices or
principal places of business, or whose business operations otherwise have
substantial economic effects, in such states. Neither Purchaser nor Crane has
currently complied with any state takeover statute or regulation. Purchaser
reserves the right to challenge the applicability or validity of any state
law purportedly applicable to the Offer or the Merger and nothing in this
Offer to Purchase or any action taken in connection with the Offer or the
Merger is intended as a waiver of such right. If it is asserted that any
state takeover statute is applicable to the Offer or the Merger and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, Purchaser might be required to file
certain information with, or to receive approvals from, the relevant state
authorities, and Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the
Offer or the Merger. In such case, Purchaser may not be obligated to accept
for payment or pay for any Shares tendered pursuant to the Offer.
Should any person seek to apply any state takeover law, Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court
proceedings. In the event it is asserted that one or more state takeover laws
are applicable, and an appropriate court does not determine that such law is,
or such laws are, inapplicable or invalid as applied to the Offer or Merger,
Purchaser might be required to file certain information with, or receive
approvals from, the relevant state authorities. In addition, if enjoined,
Purchaser might be unable to accept for payment any Shares tendered pursuant
to the Offer, or be delayed in consummating the Offer. In such case,
Purchaser may not be obligated to accept for payment any Shares tendered.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws as described above. The Purchaser does not believe that any
such takeover statutes are applicable to the Offer or the Merger and has not
attempted to comply with any such state takeover statutes in connection
therewith. The Purchaser reserves the right to challenge the validity or
applicability of any state law allegedly applicable to the Offer or the
Merger and nothing in this Offer to Purchase nor any action taken in
connection herewith is intended as a waiver of that right.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder, certain acquisition transactions may not be consummated unless
certain information has been furnished to the Antitrust Division and the
Federal Trade Commission (the "FTC") and certain waiting period requirements
have been satisfied. The acquisition of Shares pursuant to the Offer is
subject to such requirements. See the Introduction and Section 14.
Crane expects to file on August 17, 1998 with the FTC and the Antitrust
Division a Premerger Notification and Report Form in connection with the
purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act
applicable to the Offer, the purchase of Shares pursuant to the Offer may not
be consummated until the expiration of a 15 calendar-day waiting period
following the filing by Crane and notification to the Company of such filing.
Accordingly, it is expected that the waiting period under the HSR Act
applicable to the Offer will expire at 11:59 p.m., Eastern time, on September
1, 1998, unless early termination of the waiting period is granted or the FTC
or the Antitrust Division extends the waiting period by requesting additional
information or documentary material from Crane. If either the FTC or the
Antitrust Division were to request additional information or documentary
material from Crane, the waiting period would expire at 11:59 p.m., Eastern
time, on the tenth calendar day after the date of substantial compliance by
Crane with such request. Thereafter, the waiting period could be extended by
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<PAGE>
court order or by consent of Crane. If the acquisition of Shares is delayed
pursuant to a request by the FTC or the Antitrust Division for additional
information or documentary material pursuant to the HSR Act, the Offer may,
but need not, be extended and in any event the purchase of and payment for
Shares will be deferred until ten days after the request is substantially
complied with, unless the waiting period is sooner terminated by the FTC and
the Antitrust Division. Only one extension of such waiting period pursuant to
a request for additional information is authorized by the HSR Act and the
rules promulgated thereunder, except by court order or by consent of Crane.
Any such extension of the waiting period will not give rise to any withdrawal
rights not otherwise provided for by applicable law. See Section 4. Although
the Company is required to file certain information and documentary material
with the Antitrust Division and the FTC in connection with the Offer, neither
the Company's failure to make such filings nor a request from the Antitrust
Division or the FTC for additional information or documentary material made
to the Company will extend the waiting period.
The FTC and the Antitrust Division frequently scrutinize the legality
under the antitrust laws of transactions such as the proposed acquisition of
Shares by the Purchaser pursuant to the Offer. At any time before or after
the purchase by the Purchaser of Shares pursuant to the Offer, either the FTC
or the Antitrust Division could take such action under the antitrust laws as
it deems necessary or desirable in the public interest, including seeking to
enjoin the purchase of Shares pursuant to the Offer or seeking the
divestiture of Shares purchased by the Purchaser or the divestiture of
substantial assets of Crane, its subsidiaries or the Company. Private parties
and state attorneys general may also bring legal action under U.S. federal or
state antitrust laws under certain circumstances.
Based upon an examination of publicly available information relating to
the businesses in which the Company is engaged, Crane is confident that it
can overcome any antitrust objections of the Antitrust Division and the FTC
or any other party to the acquisition of Shares pursuant to the Offer and the
Merger. Nevertheless, there can be no assurance that a challenge to the Offer
on antitrust grounds will not be made, or, if such challenge is made, what
the result will be.
16. CERTAIN FEES AND EXPENSES
Beacon Hill Partners, Inc. has been retained by the Purchaser as
Information Agent in connection with the Offer. The Information Agent may
contact holders of Shares by mail, telephone, telex, telegraph and personal
interview and may request brokers, dealers and other nominee shareholders to
forward material relating to the Offer to beneficial owners of Shares. The
Purchaser will pay the Information Agent reasonable and customary
compensation for all such services in addition to reimbursing the Information
Agent for reasonable out-of-pocket expenses in connection therewith.
In addition, First Chicago Trust Company of New York has been retained as
the Depositary. The Purchaser will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, will
reimburse the Depositary for its reasonable out-of-pocket expenses in
connection therewith and will indemnify the Depositary against certain
liabilities and expenses in connection therewith, including certain
liabilities under the U.S. federal securities laws.
Except as set forth above, neither Crane nor the Purchaser will pay any
fees or commissions to any broker, dealer or other person for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks
and trust companies and other nominees will, upon request, be reimbursed by
Crane or the Purchaser for customary clerical and mailing expenses incurred
by them in forwarding offering materials to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares residing in any jurisdiction in which the making
of the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, the
Purchaser may, in its discretion, take such action as it may deem necessary
to make the Offer in any jurisdiction and extend the Offer to holders of
Shares in such jurisdiction.
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In any jurisdiction where the securities, blue sky or other laws require
the Offer to be made by a licensed broker or dealer, the Offer will be deemed
to be made on behalf of the Purchaser by one or more registered brokers or
dealers that are licensed under the laws of such jurisdiction.
Crane and the Purchaser have filed with the Commission a Schedule 14D-l,
together with exhibits, pursuant to Rule 14d-3 of the General Rules and
Regulations under the Exchange Act, furnishing certain additional information
with respect to the Offer, and may file amendments thereto. Such Schedule
14D-l and any amendments thereto, including exhibits, may be examined and
copies may be obtained from the office of the Commission in the same manner
as described in Section 8 with respect to information concerning the Company,
except that copies will not be available at the regional offices of the
Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF CRANE OR THE PURCHASER NOT CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, ANY
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
Neither the delivery of the Offer to Purchase nor any purchase pursuant to
the Offer shall under any circumstances create any implication that there has
been no change in the affairs of Crane, the Purchaser, the Company or any of
their respective subsidiaries since the date as of which information is
furnished or the date of this Offer to Purchase.
LTI MERGER, INC.
August 14, 1998
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
CRANE AND THE PURCHASER
1. Directors and Executive Officers of Crane. The following table sets
forth the name and present principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Crane. The
current business address of each person is 100 First Stamford Place,
Stamford, Connecticut 06902, each such person is a citizen of the United
States and, unless otherwise indicated, the named individual has held the
principal occupation indicated for more than the past five years.
A. DIRECTORS
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME YEARS AND BUSINESS ADDRESSES THEREOF
- --------------------------- ------------------------------------------------------------------
<S> <C>
R.S. Evans ................ Director of Crane since 1979; Chairman and Chief Executive Officer
of Crane; Chairman and Chief Executive Officer of Medusa
Corporation to June 1998; Director of Fansteel, Inc., HBD
Industries, Inc., and Southdown, Inc.
E. Thayer Bigelow, Jr. .... Director of Crane Since 1984; Chief Executive Officer, Court TV,
New York, New York, an affiliate of Time Warner Entertainment LP
(cable television program services) since March 1, 1997; President
and Chief Executive Officer, Time Warner Cable Programming Inc.,
Stamford, Connecticut, a subsidiary of Time Warner Entertainment
LP (cable television program services), 1991 to 1997; Director of
Lord Abbett & Co. Mutual Funds.
Richard S. Forte .......... Director of Crane since 1983; President, Dawson Forte Cashmere
Company, South Natick, Massachusetts (importer) since January
1997; Chairman since January 1997 and, prior thereto, President,
Forte Cashmere Company, Inc. (importer and manufacturer).
Dorsey R. Gardner ......... Director of Crane from 1982 to 1986 and since 1989; President,
Kelso Management Company, Inc., Boston, Massachusetts (investment
management); Director of Filene's Basement Corp., and Medicus
Systems Corp.
Jean Gaulin ............... Director of Crane since 1996; Vice Chairman, President and Chief
Operating Officer, Ultramar Diamond Shamrock Corporation, San
Antonio, Texas (petroleum refining and marketing) since 1996;
Chairman and Chief Executive Officer, Ultramar Corporation,
Greenwich, Connecticut (petroleum refining and marketing) 1992 to
1996; Director of Quebec Telephone and Ultramar Diamond Shamrock
Corporation.
Dwight C. Minton .......... Director of Crane since 1983; Chairman of the Board, Church &
Dwight Co., Inc., Princeton, New Jersey (manufacturer of consumer
and specialty products); Director of Church & Dwight Co., Inc.
Charles J. Queenan, Jr. ... Director of Crane since 1986; Senior Counsel since 1995 and prior
thereto, Partner, Kirkpatrick & Lockhart LLP, Pittsburgh,
Pennsylvania (attorneys at law); Director of Allegheny Teledyne
Incorporated.
I-1
<PAGE>
James L. L. Tullis ........ Director of Crane since 1998; Chairman and Chief Executive
Officer, Tullis-Dickerson & Co., Inc., Greenwich, Connecticut
(venture capital investments in the health care industry) since
1986; Director of Acme United Corporation and Physician Sales &
Service, Inc.
Boris Yavitz .............. Director of Crane since 1987; Principal, Lear, Yavitz & Associates
LLC, New York, New York (governance consultants); Paul Garret
Professor Emeritus of Public Policy and Business Responsibility,
Dean Emeritus, Columbia University Graduate School of Business,
New York, New York since 1993; Director and Vice Chairman, The
Institute for the Future; Director of Israel Discount Bank of New
York.
</TABLE>
B. EXECUTIVE OFFICERS
Crane's current executive officers and certain biographical information
concerning such individuals is set forth below. Each such person is a citizen
of the United States and has a current business address of 100 First Stamford
Place, Stamford, Connecticut 06902.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME YEARS AND BUSINESS ADDRESSES THEREOF
- ------------------------- ---------------------------------------------------------------------
<S> <C>
R. S. Evans ............. Director of Crane since 1979; Chairman and Chief Executive Officer of
Crane; Chairman and Chief Executive Officer of Medusa Corporation to
June 1998; Director of Fansteel, Inc., HBD Industries, Inc., and
Southdown, Inc.
L. Hill Clark ........... President and Chief Operating Officer of Crane since October 1995;
Executive Vice President of Crane from January 1994 to October 1995;
Group Vice President--Fluid Handling Systems of Crane from September
1993 to January 1994; President of Crane's Lear Romec Division from
May 1990 to September 1993; Previously held various positions within
Allied Signal Inc., a diversified manufacturing company.
Gil A. Dickoff .......... Treasurer of Crane since 1992.
Augustus I. duPont ...... Vice President, General Counsel and Secretary of Crane since January
1996; Vice President, General Counsel and Secretary of Reeves
Industries, Inc., a manufacturer of apparel textiles and industrial
coated fabrics from May 1994 to December 1995; Vice President,
General Counsel and Secretary of Sprague Technologies, Inc., a
manufacturer of electronic components, from May 1987 to December
1993.
Bradley L. Ellis.......... Vice President--Chief Information Officer of Crane since 1997; Previously
with the business systems consulting group of Arthur Andersen LLP.
Anthony D. Pantaleoni .... Vice President--Environment, Health & Safety of Crane since 1989.
Richard B. Phillips ..... Vice President--Human Resources of Crane since 1987.
Michael L. Raithel ....... Controller of Crane since 1985.
David S. Smith ........... Vice President--Finance and Chief Financial Officer of Crane since March
1994; Vice President--Corporate Development of Crane from March 1991 to
March 1994.
</TABLE>
I-2
<PAGE>
2. Director and Executive Officers of the Purchaser. The following table
sets forth the name, and present principal occupation or employment, and
material occupations, positions, offices or employments and business
addresses thereof for the past five years of the director and each executive
officer of the Purchaser. The current business address of each person is 100
First Stamford Place, Stamford, Connecticut 06902. Each such person is a
United States citizen.
A. DIRECTOR
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME YEARS AND BUSINESS ADDRESSES THEREOF
- ----------------------- ------------------------------------------------------------------
<S> <C>
Augustus I. duPont .... Vice President, General Counsel and Secretary of Crane since
January 1996; Vice President, General Counsel and Secretary of
Reeves Industries, Inc., a manufacturer of apparel textiles and
industrial coated fabrics from May 1994 to December 1995; Vice
President, General Counsel and Secretary of Sprague Technologies,
Inc., a manufacturer of electronic components, from May 1987 to
December 1993.
</TABLE>
B. EXECUTIVE OFFICERS
The Purchaser's current executive officers and certain biographical
information concerning such individuals are set forth below.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST FIVE
NAME YEARS AND BUSINESS ADDRESSES THEREOF
- ---------------------- ------------------------------------------------------------------
<S> <C>
Augustus I. duPont ... Vice President, General Counsel and Secretary of Crane since
January 1996; Vice President, General Counsel and Secretary of
Reeves Industries, Inc., a manufacturer of apparel textiles and
industrial coated fabrics from May 1994 to December 1995; Vice
President, General Counsel and Secretary of Sprague Technologies,
Inc., a manufacturer of electronic components, from May 1987 to
December 1993.
David S. Smith ....... Vice President--Finance and Chief Financial Officer of Crane since
March 1994; Vice President--Corporate Development of Crane from
March 1991 to March 1994.
</TABLE>
I-3
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
SCHEDULE II
SECTIONS 1930(A) AND 1571 THROUGH 1580
(SUBCHAPTER D OF CHAPTER 15) OF THE
PENNSYLVANIA BUSINESS CORPORATION LAW
1930 DISSENTERS RIGHTS
(a) General rule. If any shareholder of a domestic business corporation
that is to be a party to a merger or consolidation pursuant to a plan of
merger or consolidation objects to the plan of merger or consolidation and
complies with the provisions of Subchapter D of Chapter 15 (relating to
dissenters rights), the shareholder shall be entitled to the rights and
remedies of dissenting shareholders therein provided, if any. See also
Section 1906(c) (relating to dissenters rights upon special treatment).
1571 APPLICATION AND EFFECT OF SUBCHAPTER
(a) General rule. Except as otherwise provided in subsection (b), any
shareholder of a business corporation shall have the right to dissent from,
and to obtain payment of the fair value of his shares in the event of, any
corporate action, or to otherwise obtain fair value for his shares, where
this part expressly provides that a shareholder shall have the rights and
remedies provided in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special treatment).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on
transfer of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of election).
Section 2907(a) (relating to proceedings to terminate breach of qualifying
conditions).
Section 7104(b)(3) (relating to procedure).
(b) Exceptions. (1) Except as otherwise provided in paragraph (2) , the
holders of the shares of any class or series of shares that, at the record
date fixed to determine the shareholders entitled to notice of and to vote at
the meeting at which a plan specified in any of sections 1930, 1931(d),
1932(c) or 1952(d) is to be voted on, are either:
(i) listed on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders; shall not have the
right to obtain payment of the fair value of any such shares under this
subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in the
case of:
(i) Shares converted by a plan if the shares are not converted solely into
shares of the acquiring, surviving, new or other corporation or solely into
such shares and money in lieu of fractional shares.
II-1
<PAGE>
(ii) Shares of any preferred or special class unless the articles, the
plan or the terms of the transaction entitle all shareholders of the class to
vote thereon and require for the adoption of the plan or the effectuation of
the transaction the affirmative vote of a majority of the votes cast by all
shareholders of the class.
(iii) Shares entitled to dissenters rights under section 1906(c) (relating
to dissenters rights upon special treatment).
(3) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares,
property or assets of another corporation by the issuance of shares,
obligations or otherwise, with or without assuming the liabilities of the
other corporation and with or without the intervention of another corporation
or other person, shall not be entitled to the rights and remedies of
dissenting shareholders provided in this subchapter regardless of the fact,
if it be the case, that the acquisition was accomplished by the issuance of
voting shares of the corporation to be outstanding immediately after the
acquisition sufficient to elect a majority or more of the directors of the
corporation.
(c) Grant of optional dissenters rights. The bylaws or a resolution of the
board of directors may direct that all or a part of the shareholders shall
have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholder to dissenters
rights.
(d) Notice of dissenters rights. Unless otherwise provided by statute, if
a proposed corporate action that would give rise to dissenters rights under
this subpart is submitted to a vote at a meeting of shareholders, there shall
be included in or enclosed with the notice of meeting:
(1) A statement of the proposed action and a statement that the
shareholders have a right to dissent and obtain payment of the fair value of
their shares by complying with the terms of this subchapter; and
(2) A copy of this subchapter.
(e) Other statutes. The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this part
that makes reference to this subchapter for the purpose of granting
dissenters rights.
(f) Certain provisions of articles ineffective. This subchapter may not be
relaxed by any provision of the articles.
(g) Cross references. See sections 1105 (relating to restriction on
equitable relief), 1904 (relating to de facto transaction doctrine abolished)
and 2512 (relating to dissenters rights procedure) .
1572 DEFINITIONS
The following words and phrases when used in this subchapter shall have
the meanings given to them in this section unless the context clearly
indicates otherwise:
"Corporation." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation,
division, conversion or otherwise of that issuer. A plan of division may
designate which of the resulting corporations is the successor corporation
for the purposes of this subchapter. The successor corporation in a division
shall have sole responsibility for payments to dissenters and other
liabilities under this subchapter except as otherwise provided in the plan of
division.
"Dissenter." A shareholder or beneficial owner who is entitled to and does
assert dissenters rights under this subchapter and who has performed every
act required up to the time involved for the assertion of those rights.
"Fair Value." The fair value of shares immediately before the effectuation
of the corporate action to which the dissenter objects, taking into account
all relevant factors, but excluding any appreciation or depreciation in
anticipation of the corporate action.
"Interest." Interest from the effective date of the corporate action until
the date of payment at such rate as is fair and equitable under all the
circumstances, taking into account all relevant factors, including the
average rate currently paid by the corporation on its principal bank loans.
II-2
<PAGE>
1573 RECORD AND BENEFICIAL HOLDERS AND OWNERS
(a) Record holders of shares. A record holder of shares of a business
corporation may assert dissenters rights as to fewer than all of the shares
registered in his name only if he dissents with respect to all the shares of
the same class or series beneficially owned by any one person and discloses
the name and address of the person or persons on whose behalf he dissents. In
that event, his rights shall be determined as if the shares as to which he
has dissented and his other shares were registered in the names of different
shareholders.
(b) Beneficial owners of shares. A beneficial owner of shares of a
business corporation who is not the record holder may assert dissenters
rights with respect to shares held on his behalf and shall be treated as a
dissenting shareholder under the terms of this subchapter if he submits to
the corporation not later than the time of the assertion of dissenters rights
a written consent of the record holder. A beneficial owner may not dissent
with respect to some but less than all shares of the same class or series
owned by the owner, whether or not the shares so owned by him are registered
in his name.
1574 NOTICE OF INTENTION TO DISSENT
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair market value of his shares must file with the
corporation, prior to the vote, a written notice of intention to demand that
he be paid the fair value for his shares if the proposed action is
effectuated, must effect no change in the beneficial ownership of his shares
from the date of such filing continuously through the effective date of the
proposed action and must refrain from voting his shares in approval of such
action. A dissenter who fails in any respect shall not acquire any right to
payment of the fair value of his shares under this subchapter. Neither a
proxy nor a vote against the proposed corporate action shall constitute the
written notice required by this section.
1575 NOTICE TO DEMAND PAYMENT
(a) General rule. If the proposed corporate action is approved by the
required vote at a meeting of shareholders of a business corporation, the
corporation shall mail a further notice to all dissenters who gave due notice
of intention to demand payment of the fair value of their shares and who
refrained from voting in favor of the proposed action. If the proposed
corporate action is to be taken without a vote of shareholders, the
corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of
the plan or other corporate action. In either case, the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in order to obtain
payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the shares.
(4) Be accompanied by a copy of this subchapter.
(b) Time for receipt of demand for payment. The time set for receipt of
the demand and deposit of certificated shares shall be not less than 30 days
from the mailing of the notice.
1576 FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.
(a) Effect of failure of shareholder to act. A shareholder who fails to
timely demand payment, or fails (in the case of certificated shares) to
timely deposit certificates, as required by a notice pursuant to section 1575
(relating to notice to demand payment) shall not have any right under this
subchapter to receive payment of the fair value of his shares.
II-3
<PAGE>
(b) Restriction on uncertificated shares. If the shares are not
represented by certificates, the business corporation may restrict their
transfer from the time of receipt of demand for payment until effectuation of
the proposed corporate action or the release of restrictions under the terms
of section 1577(a) (relating to failure to effectuate corporate action) .
(c) Rights retained by shareholder. The dissenter shall retain all other
rights of a shareholder until those rights are modified by effectuation of
the proposed corporate action.
1577 RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES.
(a) Failure to effectuate corporate action. Within 60 days after the date
set for demanding payment and depositing certificates, if the business
corporation has not effectuated the proposed corporate action, it shall
return any certificates that have been deposited and release uncertificated
shares from any transfer restrictions imposed by reason of the demand for
payment.
(b) Renewal of notice to demand payment. When uncertificated shares have
been released from transfer restrictions and deposited certificates have been
returned, the corporation may at any later time send a new notice conforming
to the requirements of section 1575 (relating to notice to demand payment)
with like effect.
(c) Payment of fair value of shares. Promptly after effectuation of the
proposed corporate action, or upon timely receipt of demand for payment if
the corporate action has already been effectuated, the corporation shall
either remit to dissenters who have made demand and (if their shares are
certificated) have deposited their certificates the amount that the
corporation estimates to be the fair value of the shares, or give written
notice that no remittance under this section will be made. The remittance or
notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of the
shares held or owned by the dissenter for a fiscal year ending not more than
16 months before the date of remittance or notice together with the latest
available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the
shares.
(3) A notice of the right of the dissenter to demand payment or
supplemental payment, as the case may be, accompanied by a copy of this
subchapter.
(d) Failure to make payment. If the corporation does not remit the amount
of its estimate of the fair value of the shares as provided by subsection
(c), it shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of the
demand for payment. The corporation may make a notation on any such
certificate or on the records of the corporation relating to any such
uncertificated shares that such demand has been made. If shares with respect
to which notation has been so made shall be transferred, each new certificate
issued therefor or the records relating to any transferred uncertificated
shares shall bear a similar notation, together with the name of the original
dissenting holder or owner of such shares. A transferee of such shares shall
not acquire by such transfer any rights in the corporation other than those
that the original dissenter had after making demand for payment of their fair
value.
1578 ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES.
(a) General rule. If the business corporation gives notice of its estimate
of the fair value of the shares, without remitting such amount, or remits
payment of its estimate of the fair value of a dissenter's shares as
permitted by section 1577(c) (relating to payment of fair value of shares)
and the dissenter believes that the amount stated or remitted is less than
the fair value of his shares, he may send to the corporation his own estimate
of the fair value of the shares, which shall be deemed a demand for payment
of the amount or the deficiency.
(b) Effect of failure to file estimate. Where the dissenter does not file
his own estimate under subsection (a) within 30 days after the mailing by the
corporation of its remittance or notice, the dissenter shall be entitled to
no more than the amount stated in the notice or remitted to him by the
corporation.
II-4
<PAGE>
1579 VALUATION PROCEEDINGS GENERALLY.
(a) General rule. Within 60 days after the latest of:
(1) Effectuation of the proposed corporate action;
(2) Timely receipt of any demands for payment under section 1575 (relating
to notice to demand payment); or
(3) Timely receipt of any estimates pursuant to section 1578 (relating to
estimate by dissenter of fair value of shares);
If any demands for payment remain unsettled, the business corporation may
file in court an application for relief requesting that the fair value of the
shares be determined by the court.
(b) Mandatory joinder of dissenters. All dissenters, wherever residing,
whose demands have not been settled shall be made parties to the proceeding
as in an action against their shares. A copy of the application shall be
served on each such dissenter. If a dissenter is a nonresident, the copy may
be served on him in the manner provided or prescribed by or pursuant to 42
Pa.C.S. Ch. 53 (relating to bases of jurisdiction and interstate and
international procedure) .
(c) Jurisdiction of the court. The jurisdiction of the court shall be
plenary and exclusive. The court may appoint an appraiser to receive evidence
and recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or
in any amendment thereof.
(d) Measure of recovery. Each dissenter who is made a party shall be
entitled to recover the amount by which the fair value of his shares is found
to exceed the amount, if any, previously remitted, plus interest.
(e) Effect of corporation's failure to file application. If the
corporation fails to file an application as provided in subsection (a), any
dissenter who made a demand and who has not already settled his claim against
the corporation may do so in the name of the corporation at any time within
30 days after the expiration of the 60-day period. If a dissenter does not
file an application within the 30-day period, each dissenter entitled to file
an application shall be paid the corporation's estimate of the fair value of
the shares and no more, and may bring an action to recover any amount not
previously remitted.
1580 COSTS AND EXPENSES OF VALUATION PROCEEDINGS.
(a) General rule. The costs and expenses of any proceeding under section
1579 (relating to valuation proceedings generally), including the reasonable
compensation and expenses of the appraiser appointed by the court, shall be
determined by the court and assessed against the business corporation except
that any part of the costs and expenses may be apportioned and assessed as
the court deems appropriate against all or some of the dissenters who are
parties and whose action in demanding supplemental payment under section 1578
(relating to estimate by dissenter of fair value of shares) the court finds
to be dilatory, obdurate, arbitrary, vexatious or in bad faith.
(b) Assessment of counsel fees and expert fees where lack of good faith
appears. Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court deems appropriate against the
corporation and in favor of any or all dissenters if the corporation failed
to comply substantially with the requirements of this subchapter any may be
assessed against either the corporation or a dissenter, in favor of any other
party, if the court finds that the party against whom the fees and expenses
are assessed acted in bad faith or in a dilatory, obdurate, arbitrary or
vexatious manner in respect to the rights provided by this subchapter.
(c) Award of fees for benefits to other dissenters. If the court finds
that the services of counsel for any dissenter were of substantial benefit to
other dissenters similarly situated and should not be assessed against the
corporation, it may award to those counsel reasonable fees to be paid out of
the amounts awarded to the dissenters who were benefited.
II-5
<PAGE>
Facsimiles of the Letter of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal and certificates
evidencing Shares and any other required documents should be sent or
delivered by each shareholder or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary at one of its addresses set forth
below.
THE DEPOSITARY FOR THE OFFER IS:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
BY MAIL: BY HAND DELIVERY: BY OVERNIGHT MAIL:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
Tenders & Exchanges, Suite 4660 c/o Securities Transfer & Reporting Services Tenders & Exchanges, Suite 4680
P.O. Box 2569 One Exchange Place, Third Floor 14 Wall Street, 8th Floor
Jersey City, New Jersey 07303-2569 Attention: Tenders & Exchanges New York, New York 10005
New York, New York 10006
</TABLE>
-------------
Questions or requests for assistance may be directed to the Information
Agent, at its address and telephone number listed below. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may be obtained from the Information Agent. A shareholder
may also contact brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
(800) 253-3814
BANKS AND BROKERAGE FIRMS
PLEASE CALL:
(212) 843-8500
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
LIBERTY TECHNOLOGIES, INC.
PURSUANT TO THE OFFER TO PURCHASE, DATED AUGUST 14, 1998
BY
LTI MERGER, INC.
A WHOLLY OWNED SUBSIDIARY
OF
CRANE CO.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Hand Delivery: By Overnight Mail:
First Chicago Trust Company First Chicago Trust Company
First Chicago Trust Company c/o Securities Transfer & Reporting Services Tenders & Exchanges, Suite 4680
Tenders & Exchanges, Suite 4660 One Exchange Place, Third Floor 14 Wall Street, 8th Floor
P.O. Box 2569 Attention: Tenders & Exchanges New York, New York 10005
Jersey City, New Jersey 07303-2569 New York, New York 10006
</TABLE>
For Information Telephone:
(800) 253-3814
Banks and Brokerage Firms please call:
(212)843-8500
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OR TELEX
TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND
COMPLETE THE SUBSTITUTE FORM W-9 PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by the shareholders of
Liberty Technologies, Inc. either if certificates evidencing Shares (as
defined below) are to be forwarded herewith, or if delivery of Shares is to
be made by book-entry transfer to the Depositary's account at the Depository
Trust Company (the "Book-Entry Transfer Facility") pursuant to the book-entry
transfer procedure described in "Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase (as defined below), unless an
Agent's Message (as defined in the Offer to Purchase) is transmitted to the
Book-Entry Transfer Facility. Delivery of documents to the Book-Entry
Transfer Facility does not constitute delivery to the Depositary. Unless the
Rights (as defined below) are redeemed, holders of Shares will also be
required to tender one Right for each Share tendered in order to effect a
valid tender of such Shares.
Shareholders whose certificates are not immediately available or who
cannot deliver their certificates for Shares and all other required documents
to the Depositary before the Expiration Date (as defined in the Offer to
Purchase) or whose Shares cannot be delivered on a timely basis pursuant to
the procedure for book-entry transfer must tender their Shares according to
the guaranteed delivery procedure set forth in Section 3 of the Offer to
Purchase. See Instruction 2.
<PAGE>
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------
Account Number:
--------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
---------------------------------------------
Window Ticket Number (if any):
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------
Name of Institution which Guaranteed Delivery:
-------------------------------
Account Number:
--------------------------------------------------------------
Transaction Code Number:
-----------------------------------------------------
<PAGE>
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
NAME(S) AND ADDRESS(ES) OF REGISTERED
HOLDER(S) SHARE CERTIFICATE(S) TENDERED
(PLEASE FILL IN, IF BLANK) (ATTACH ADDITIONAL LIST IF NECESSARY)
- --------------------------------------------- -----------------------------------------------------
TOTAL NUMBER OF
SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
- --------------------------------------------- ---------------- ------------------- --------------
<S> <C> <C> <C>
- --------------------------------------------- ---------------- ------------------- --------------
- --------------------------------------------- ---------------- ------------------- --------------
- --------------------------------------------- ---------------- ------------------- --------------
- --------------------------------------------- ---------------- ------------------- --------------
TOTAL SHARES
- --------------------------------------------- ---------------- ------------------- --------------
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares being delivered to the
Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------
</TABLE>
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificates and number of Shares
that the undersigned wishes to tender should be indicated in the appropriate
boxes.
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to LTI Merger, Inc., a Pennsylvania
corporation ("Purchaser") and a wholly owned subsidiary of Crane Co., a
Delaware corporation, the above described shares of common stock, par value
$.01 per share (the "Shares") of Liberty Technologies, Inc., a Pennsylvania
corporation (the "Company"), including the associated Preferred Stock
Purchase Rights (the "Rights") issued pursuant to the Amended and Restated
Rights Agreement, dated as of October 6, 1997, between the Company and
StockTrans, Inc., as Rights Agent (the "Rights Agreement"), at a price of
$3.50 per Share, net to the seller in cash, without interest thereon (the
"Offer Price"), upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated August 14, 1998 (the "Offer to Purchase"), and in
this Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). Unless the Rights are redeemed by the Company, a
tender of the Shares will also constitute a tender of the associated Rights.
Unless the context requires otherwise, all references herein to the Shares
shall include the associated Rights, and all references to the Rights shall
include all benefits that may inure to the holders of the Rights pursuant to
the Rights Agreement.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such
extension or amendment), the undersigned hereby sells, assigns and transfers
to, or upon the order of, Purchaser all right, title and interest in and to
all the Shares that are being tendered hereby (and any and all non-cash
dividends, distributions, rights, other Shares or other securities issued or
issuable in respect thereof or declared, paid or distributed in respect of
such Shares on or after August 14, 1998 (collectively, "Distributions")),
purchased pursuant to the Offer and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (i) deliver certificates for such Shares (individually, a
"Share Certificate") and all Distributions, or transfer ownership of such
Shares and all Distributions on the account books maintained by the
Book-Entry Transfer Facility, together, in either case, with all accompanying
evidence of transfer and authenticity to, or upon the order of, Purchaser,
(ii) present such Shares and all Distributions for transfer on the books of
the Company, and (iii) receive all benefits and otherwise exercise all rights
of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, that the undersigned own(s) the Shares
tendered hereby and that, when such Shares are accepted for payment by
Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will
be subject to any adverse claim. The undersigned, upon request, shall execute
and deliver all additional documents deemed by the Depositary or Purchaser to
be necessary or desirable to complete the sale, assignment and transfer of
the Shares tendered hereby and all Distributions. In addition, the
undersigned shall remit and transfer promptly to the Depositary for the
account of Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending
such remittance and transfer or appropriate assurance thereof, Purchaser
shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares
tendered hereby or deduct from such purchase price, the amount or value of
such Distribution as determined by Purchaser in its sole discretion. The
undersigned further represents and warrants that the undersigned has read and
agrees to all terms of the Offer.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding
upon the heirs, executors, personal and legal representatives,
administrators, trustees in bankruptcy, successors and assigns of the
undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in "Procedures for Accepting the Offer and Tendering
Shares" of the Offer to Purchase and in the Instructions hereto will
constitute the undersigned's acceptance of the terms and conditions of the
Offer. Purchaser's acceptance for payment of Shares tendered pursuant to the
Offer will constitute a binding agreement between the undersigned and
Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain circumstances set forth in the
Offer to Purchase, Purchaser may not be required to accept for payment any of
the Shares tendered hereby.
<PAGE>
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price and/or return
any certificates evidencing Shares not tendered or accepted for payment, in
the name(s) of the registered holder(s) appearing above under "Description of
Shares Tendered." Similarly, unless otherwise indicated in the box entitled
"Special Delivery Instructions," please mail the check for the purchase price
and/or return any certificates evidencing Shares not tendered or accepted for
payment (and accompanying documents, as appropriate) to the address(es) of
the registered holder(s) appearing above under "Description of Shares
Tendered." In the event that the box entitled "Special Payment Instructions"
and/or "Special Delivery Instructions" is completed, please issue the check
for the purchase price and/or return any certificates for Shares not
purchased or not tendered or accepted for payment in the name(s) of, and/or
mail such check and/or return such certificates to, the person(s) so
indicated. Unless otherwise indicated herein in the box entitled "Special
Payment Instructions," please credit any Shares tendered hereby and delivered
by book-entry transfer, but which are not purchased, by crediting the account
at the Book-Entry Transfer Facility designated above. The undersigned
recognizes that Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name of the registered
holder(s) thereof if Purchaser does not accept for payment any of the Shares
tendered hereby.
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7 OF THIS
LETTER OF TRANSMITTAL)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to
be issued in the name of someone other than the undersigned.
Issue check and/or certificates to:
Name:
-----------------------------------------------------------------------
(Please Print)
Address:
--------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Include Zip Code)
----------------------------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 on reverse)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7 OF THIS
LETTER OF TRANSMITTAL)
To be completed ONLY if certificates for Shares not tendered or not
purchased and/or the check for the purchase price of Shares purchased are to
be sent to someone other than the undersigned, or to the undersigned at an
address other than that shown above.
Mail check and/or certificates to:
Name
------------------------------------------------------------------------
(Please Print)
Address:
--------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(Include Zip Code)
<PAGE>
SIGN HERE
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: , 1998
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, please provide the
following information. See Instruction 5 of this Letter of Transmittal.)
Name(s):
--------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
------------------------------------------------------
Address:
--------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
---------------------------------------------
Tax Identification or Social Security Number:
-------------------------------
(COMPLETE SUBSTITUTE FOR W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5 OF THIS LETTER OF TRANSMITTAL)
Authorized Signature:
-------------------------------------------------------
Name:
-----------------------------------------------------------------------
(PLEASE PRINT)
Title:
----------------------------------------------------------------------
Name of Firm:
---------------------------------------------------------------
Address:
--------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number:
---------------------------------------------
Dated: , 1998
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES.
Except as otherwise provided below, all signatures on this Letter of
Transmittal must be guaranteed by a firm which is a bank, broker, dealer,
credit union, savings association, or other entity that is a member in good
standing of the Securities Transfer Agents Medallion Program (each, an
"Eligible Institution"). No signature guarantee is required on this Letter of
Transmittal (i) if this Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this document, shall include any
participant in the Book-Entry Transfer Facility whose name appears on a
security position listing as the owner of Shares) of Shares tendered
herewith, unless such holder(s) has completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" included herein, or (ii) if such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES.
This Letter of Transmittal is to be used either if certificates evidencing
Shares ("Certificates") are to be forwarded herewith or if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in
"Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase, unless an Agent's Message is transmitted to the Book-Entry Transfer
Facility. Certificates evidencing all tendered Shares, or confirmation of a
book-entry transfer of such Shares, if such procedure is available, into the
Depositary's account at the Book-Entry Transfer Facility pursuant to the
procedures set forth in "Procedures for Accepting the Offer and Tendering
Shares" of the Offer to Purchase, together with a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof) with
any required signature guarantees (or, in the case of a book-entry transfer,
an Agent's Message) and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in "Terms of the Offer"
of the Offer to Purchase). If Certificates are forwarded to the Depositary in
multiple deliveries, a properly completed and duly executed Letter of
Transmittal must accompany each such delivery. Shareholders whose
Certificates are not immediately available, who cannot deliver their
Certificates and all other required documents to the Depositary prior to the
Expiration Date or who cannot complete the procedure for delivery by
book-entry transfer on a timely basis may tender their Shares pursuant to the
guaranteed delivery procedure described in "Procedures for Accepting the
Offer and Tendering Shares" of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible
Institution; (ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by Purchaser herewith, must be
received by the Depositary prior to the Expiration Date; and (iii) in the
case of a guarantee of Shares, the Certificates, in proper form for transfer,
or a confirmation of a book-entry transfer of such Shares, if such procedure
is available, into the Depositary's account at the Book-Entry Transfer
Facility, together with a properly completed and duly executed Letter of
Transmittal (or manually signed facsimile thereof) with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message), and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three Nasdaq National Market
trading days after the date of execution of the Notice of Guaranteed
Delivery, all as described in "Procedures for Accepting the Offer and
Tendering Shares" of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, CERTIFICATES AND ALL
OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE SOLE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE
DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of
Transmittal (or a facsimile hereof), all tendering shareholders waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE.
If the space provided herein under "Description of Shares Tendered" is
inadequate, the Certificate numbers, the number of Shares evidenced by such
Certificates and the number of Shares tendered should be listed on a separate
schedule and attached hereto.
<PAGE>
4. PARTIAL TENDERS.
(Not applicable to shareholders who tender by book-entry transfer.) If
fewer than all the Shares evidenced by any Certificate delivered to the
Depositary herewith are to be tendered hereby, fill in the number of Shares
which are to be tendered in the box entitled "Number of Shares Tendered." In
such cases, new Certificate(s) evidencing the remainder of the Shares that
were evidenced by the Certificates delivered to the Depositary herewith will
be sent to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the box entitled "Special Delivery Instructions," as soon as
practicable after the expiration or termination of the Offer. All Shares
evidenced by Certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the Certificates evidencing such Shares without
alteration, enlargement or any other change whatsoever.
If any Shares tendered hereby are owned of record by two or more persons,
all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Certificates or separate stock
powers are required, unless payment is to be made to, or Certificates
evidencing Shares not tendered or not purchased are to be issued in the name
of, a person other than the registered holder(s), in which case, the
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Certificate(s).
Signatures on such Certificate(s) and stock powers must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Certificate(s)
tendered hereby must be endorsed or accompanied by appropriate stock powers,
in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such Certificate(s). Signatures on such Certificate(s) and stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any Certificate(s) or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or
representative capacity, such person should so indicate when signing, and
proper evidence satisfactory to Purchaser of such person's authority so to
act must be submitted.
6. STOCK TRANSFER TAXES.
Except as otherwise provided in this Instruction 6, Purchaser will pay all
stock transfer taxes with respect to the sale and transfer of any Shares to
it or its order pursuant to the Offer. If, however, payment of the purchase
price of any Shares purchased is to be made to, or Certificate(s) evidencing
Shares not tendered or not purchased are to be issued in the name of, a
person other than the registered holder(s), the amount of any stock transfer
taxes (whether imposed on the registered holder(s), such other person or
otherwise) payable on account of the transfer to such other person will be
deducted from the purchase price of such Shares purchased, unless evidence
satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will
not be necessary for transfer tax stamps to be affixed to the Certificate(s)
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS.
If a check for the purchase price of any Shares tendered hereby is to be
issued, or Certificate(s) evidencing Shares not tendered or not purchased are
to be issued, in the name of a person other than the person(s) signing this
Letter of Transmittal or if such check or any such Certificate is to be sent
to someone other than the person(s) signing this Letter of Transmittal or to
the person(s) signing this Letter of Transmittal but at an address other than
that shown in the box entitled "Description of Shares Tendered," the
appropriate boxes on this Letter of Transmittal must be completed.
Shareholders tendering Shares hereby by book-entry transfer may request that
Shares not purchased be credited to such
<PAGE>
account maintained at the Book-Entry Transfer Facility as such shareholder
may designate in the box entitled "Special Payment Instructions" on the
reverse hereof. If no such instructions are given, all such Shares not
purchased will be returned by crediting the account at the Book-Entry
Transfer Facility as the account from which such Shares were delivered.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Requests for assistance may be directed to the Information Agent at its
respective address or telephone number set forth herein. Additional copies of
the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed
Delivery and the Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 may be obtained from the Information Agent or
from brokers, dealers, commercial banks or trust companies.
9. SUBSTITUTE FORM W-9.
Each tendering shareholder is required to provide the Depositary with a
correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9
which is provided under "Important Tax Information" below, and to certify,
under penalties of perjury, that such number is correct and that such
shareholder is not subject to backup withholding of U.S. federal income tax.
If a tendering shareholder has been notified by the Internal Revenue Service
that such shareholder is subject to backup withholding, such shareholder must
cross out item (2) of the Certification box of the Substitute Form W-9,
unless such shareholder has since been notified by the Internal Revenue
Service that such shareholder is no longer subject to backup withholding.
Failure to provide the information on the Substitute Form W-9 may subject the
tendering shareholder to 31% U.S. federal income tax withholding on the
payment of the purchase price of all Shares purchased from such shareholder.
If the tendering shareholder has not been issued a TIN and has applied for
one or intends to apply for one in the near future, such shareholder should
write "Applied For" in the space provided for the TIN in Part I of the
Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied
For" is written in Part I and the Depositary is not provided with a TIN
within 60 days, the Depositary will withhold 31% on all payments of the
purchase price to such shareholder until a TIN is provided to the Depositary.
10. LOST, DESTROYED OR STOLEN CERTIFICATES.
If any Certificate(s) representing Shares has been lost, destroyed or
stolen, the shareholder should promptly notify StockTrans, Inc. at Seven East
Lancaster Avenue, Ardmore, Pennsylvania 19003-2318 (or by telephone at (610)
649-7300 or facsimile at (610) 649-7302). The shareholder will then be
instructed as to the steps that must be taken in order to replace the
Certificate(s). This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates
have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE GUARANTEES, OR AN
AGENT'S MESSAGE (TOGETHER WITH CERTIFICATES FOR SHARES OR CONFIRMATION OF
BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR, IF APPLICABLE, A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the U.S. federal income tax law, a shareholder whose tendered Shares
are accepted for payment is required by law to provide the Depositary (as
payer) with such shareholder's correct TIN on Substitute Form W-9 below. If
such shareholder is an individual, the TIN is such shareholder's social
security number. If the Depositary is not provided with the correct TIN, the
shareholder may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, payments that are made to such shareholder with respect
to Shares purchased pursuant to the Offer may be subject to backup
withholding of 31%.
Certain shareholders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, such individual must submit a statement, signed under
penalties of perjury, attesting to such individual's exempt status. Forms of
such statements can be obtained from the Depositary. See the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 for additional instructions.
<PAGE>
If backup withholding applies with respect to a shareholder, the
Depositary is required to withhold 31% of any payments made to such
shareholder. Backup withholding is not an additional tax. Rather, the tax
liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a shareholder
with respect to Shares purchased pursuant to the Offer, the shareholder is
required to notify the Depositary of such shareholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such shareholder is awaiting a TIN), and (b)
that (i) such shareholder has not been notified by the Internal Revenue
Service that such shareholder is subject to backup withholding as a result of
a failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified such shareholder that such shareholder is no longer
subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The shareholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the
name of the actual owner, consult the enclosed Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9 for additional
guidance on which number to report. If the tendering shareholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future, the shareholder should write "Applied For" in the space
provided for the TIN in Part I, and sign and date the Substitute Form W-9. If
"Applied For" is written in Part I and the Depositary is not provided with a
TIN within 60 days, the Depositary will withhold 31% of all payments of the
purchase price to such shareholder until a TIN is provided to the Depositary.
<PAGE>
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK, AS DEPOSITARY
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SUBSTITUTE PART I--PLEASE PROVIDE YOUR TIN IN THE BOX --------------------------------------------
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number
Department of the Treasury BELOW. or
Internal Revenue Service
Payer's Request for Taxpayer --------------------------------------------
Identification Number ("TIN") Employee Identification Number
(If awaiting TIN write "Applied For")
- ------------------------------------------------------------------------------------------------------------------------------
PART II--For Payees Exempt From Backup Withholding, see the enclosed Guidelines
and complete as instructed therein.
CERTIFICATION--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or a Taxpayer Identification Number has not been issued to me and either (a) I
have mailed or delivered an application to receive a Taxpayer Identification
Number to the appropriate Internal Revenue Service ("IRS") or Social Security
administration office or (b) I intend to mail or deliver an application in the
near future. I understand that if I do not provide a Taxpayer Identification
Number within sixty (60) days, 31% of all reportable payments made to me
thereafter will be withheld until I provide a number) and
(2) I am not subject to backup withholding because (a) I am exempt from backup
withholding, (b) I have not been notified by the IRS that I am subject to
backup withholding as a result of failure to report all interest or dividends
or (c) the IRS has notified me that I am no longer subject to backup
withholding.
Certificate Instructions--You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of under
reporting interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item (2). (Also see instructions in the enclosed
Guidelines.)
- ------------------------------------------------------------------------------------------------------------------------------
SIGNATURE: DATE: , 1998
----------------------------------------- ----------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
Questions and requests for assistance or additional copies of the Offer to
Purchase, Letter of Transmittal and other tender offer materials may be
directed to the Information Agent set forth below:
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 Broad Street
New York, New York 10004
Toll Free: (800) 253-3814
Banks and Brokerage Firms please call:
(212) 834-8500
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES
OF
COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
LIBERTY TECHNOLOGIES, INC.
TO
LTI MERGER, INC.
A WHOLLY OWNED SUBSIDIARY OF
CRANE CO.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 3 of the Offer to Purchase (as defined below),
this form, or a form substantially equivalent to this form, must be used to
accept the Offer (as defined below) if the certificates representing shares
of common stock, par value $.01 per share, and the associated Preferred Stock
Purchase Rights, of Liberty Technologies, Inc. (the "Shares"), are not
immediately available or time will not permit all required documents to reach
the Depositary prior to the Expiration Date (as defined in the Offer to
Purchase) or the procedures for book-entry transfer cannot be completed on a
timely basis. Such form may be delivered by hand or transmitted by telegram,
facsimile transmission or mail to the Depositary and must include a guarantee
by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase). See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
<S> <C> <C>
By Mail: By Hand Delivery: By Overnight Mail:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
Tenders & Exchanges, Suite 4660 c/o Securities Transfer & Reporting Services Tenders & Exchanges, Suite 4680
P.O. Box 2569 One Exchange Place, Third Floor 14 Wall Street, 8th Floor
Jersey City, New Jersey 07303-2569 Attention: Tenders & Exchanges New York, New York 10005
</TABLE>
New York, New York, 10006
By Facsimile Transmission:
(for Eligible Institutions Only)
(201) 222-4720 or (201) 222-4721
Facsimile Confirmation Number:
(201) 222-4707
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to LTI Merger, Inc., a Pennsylvania
corporation and a wholly owned subsidiary of Crane Co., a Delaware corporation,
upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated August 14, 1998 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer"), receipt of each of which is hereby acknowledged, the number of
Shares specified below pursuant to the guaranteed delivery procedures described
in "Procedures for Accepting the Offer and Tendering Shares" of the Offer to
Purchase.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
Number of Shares:
- -----------------------------------------------------------------------------
Share Certificate Numbers (if available):
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
[ ] Check here if Shares will be delivered by book-entry transfer.
Account Number
--------------------------------------------------------------
Dated: ____, 1998
Name(s) of Record Holder(s):
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Please Type or Print
Address(es)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Zip Code
Area Code and Telephone Number:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Signature(s)
Dated:_______ , 1998
<PAGE>
The undersigned, a participant in the Security Transfer Agents Medallion
Program (each, an "Eligible Institution"), hereby guarantees that either the
certificates representing the Shares tendered hereby in proper form for
transfer, or timely confirmation of a book-entry transfer of such Shares into
the Depositary's account at The Depository Trust Company (pursuant to
procedures set forth in Section 3 of the Offer to Purchase), together with a
properly completed and duly executed Letter of Transmittal (or a manually
signed facsimile thereof) with any required signature guarantees and any other
documents required by the Letter of Transmittal, will be received by the
Depositary at one of its addresses set forth above within three (3) Nasdaq
National Market trading days after the date of execution hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in financial loss to such Eligible Institution.
Name of Firm:
- -----------------------------------------------------------------------------
Address:
- -----------------------------------------------------------------------------
Zip Code
Area Code and
Telephone Number:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Authorized Signature
Name:
- -----------------------------------------------------------------------------
Please Type or Print
Title:
- -----------------------------------------------------------------------------
Dated: _____, 1998
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SUCH CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
LIBERTY TECHNOLOGIES, INC.
AT
$3.50 NET PER SHARE
BY
LTI MERGER, INC.
A WHOLLY OWNED SUBSIDIARY OF
CRANE CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
August 14, 1998
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We are asking you to contact your clients for whom you hold shares of common
stock, par value $.01 per share (the "Shares"), of Liberty Technologies, Inc.,
a Pennsylvania corporation (the "Company"). Please bring to their attention as
promptly as possible the offer being made by LTI Merger, Inc., a Pennsylvania
corporation ("Purchaser") and a wholly owned subsidiary of Crane Co., a
Delaware corporation ("Crane"), to purchase all of the outstanding Shares,
including the associated Preferred Stock Purchase Rights issued pursuant to the
Amended and Restated Rights Agreement, dated as of October 6, 1997, between the
Company and StockTrans, Inc. at a price of $3.50 per Share, net to the seller
in cash, without interest thereon (the "Offer Price"), upon the terms and
subject to the conditions set forth in the Offer to Purchase dated August 14,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer") enclosed
herewith.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. Letter of Transmittal to be used by holders of Shares in accepting the
Offer. Manually signed facsimile copies of the Letter of Transmittal may be
used to accept the Offer;
2. Notice of Guaranteed Delivery to be used to accept the Offer if the
certificates evidencing such Shares are not immediately available or time will
not permit all required documents to reach the Depositary prior to the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis;
3. A letter which may be sent to your clients for whose accounts you hold
Shares registered in your name or in the name of your nominees, with space
provided for obtaining such clients' instructions with regard to the Offer;
4. Guidelines of the Internal Revenue Service for Certification of Taxpayer
Identification Number on Substitute Form W-9; and
5. Return envelope addressed to the Depositary.
We are asking you to contact your clients for whom you hold Shares
registered in your name (or in the name of your nominee) or who hold Shares
registered in their own names. Please bring the Offer to their attention as
promptly as possible. The Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. You will be reimbursed by
the Purchaser for customary mailing expenses incurred by you in forwarding any
of the enclosed materials to your clients. The Purchaser will
<PAGE>
pay or cause to be paid any stock transfer taxes payable on the sale and
transfer of Shares to it or its order, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, EASTERN TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS
EXTENDED.
In order to take advantage of the Offer, (1) a duly executed and properly
completed Letter of Transmittal, and, if necessary, any other required
documents should be sent to the Depositary and (2) either certificates
representing the tendered Shares should be delivered to the Depositary, or such
Shares should be tendered by book-entry transfer into the Depositary's account
at the Book-Entry Transfer Facility (as defined in the Offer to Purchase), all
in accordance with the Instructions set forth in the Letter of Transmittal and
the Offer to Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent at the address and telephone number set forth on the back
cover page of the Offer to Purchase.
Additional copies of the above documents may be obtained from the
Information Agent, at the address and telephone number set forth on the back
cover of the Offer to Purchase.
Very truly yours,
LTI MERGER, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF CRANE, PURCHASER, THE DEPOSITARY OR THE
INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF
THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE
STATEMENTS CONTAINED THEREIN.
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES
OF
COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
LIBERTY TECHNOLOGIES, INC.
AT
$3.50 NET PER SHARE
BY
LTI MERGER, INC.
A WHOLLY OWNED SUBSIDIARY OF
CRANE CO.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
EASTERN TIME, ON FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
August 14, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated August 14,
1998 (the "Offer to Purchase") and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the Offer by LTI Merger, Inc., a Pennsylvania corporation ("Purchaser") and a
wholly owned subsidiary of Crane Co., a Delaware corporation ("Crane"), to
purchase all of the outstanding shares of common stock, par value $.01 per
share (the "Shares") of Liberty Technologies, Inc., a Pennsylvania corporation
(the "Company"), including the associated Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Amended and Restated Rights Agreement, dated
as of October 6, 1997 (the "Rights Agreement"), between the Company and
StockTrans, Inc., at a price of $3.50 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set
forth in the Offer.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF
RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT
BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $3.50 per Share, net to the seller in cash.
2. The Offer and withdrawal rights will expire at 12:00 Midnight, Eastern
time, on Friday, September 11, 1998, unless the Offer is extended.
3. The Offer is being made for 100% of the outstanding Shares.
4. The Offer is conditioned upon, among other things, Shares representing at
least a majority of the total number of outstanding Shares of Common Stock of
the Company on a fully diluted basis (assuming exercise of all outstanding
options to acquire Shares) being validly tendered and not withdrawn prior to
the expiration of the Offer.
<PAGE>
5. Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares by Purchaser
pursuant to the Offer.
The Offer is made solely by the Offer to Purchase, and the related Letter of
Transmittal, and is being made to all holders of Shares. Purchaser is not aware
of any state where the making of the Offer is prohibited by administrative or
judicial action pursuant to any valid state statute. If Purchaser becomes aware
of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, Purchaser will make a good faith effort
to comply with such state statute. If, after such good faith effort, Purchaser
cannot comply with such state statute, the Offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of Shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
Offer to be made by a licensed broker or dealer, the Offer shall be deemed to
be made on behalf of Purchaser by one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form set forth in this
letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER
TO PURCHASE FOR CASH ALL OF THE OUTSTANDING
SHARES OF COMMON STOCK
(INCLUDING ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
LIBERTY TECHNOLOGIES, INC.
The undersigned acknowledge(s) receipt of your letter, the enclosed Offer to
Purchase, dated August 14, 1998, and the related Letter of Transmittal (which,
as amended from time to time, together constitute the "Offer"), in connection
with the offer by LTI Merger, Inc., a Pennsylvania corporation ("Purchaser")
and a wholly owned subsidiary of Crane Co., a Delaware corporation, to purchase
all of the shares of common stock, par value $.01 per share (the "Shares"), of
Liberty Technologies, Inc., a Pennsylvania corporation (the "Company"),
including the associated Preferred Stock Purchase Rights issued pursuant to the
Amended and Restated Rights Agreement, dated as of October 6, 1997 between the
Company and StockTrans, Inc., at a price of $3.50 per Share, net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer.
This will instruct you to tender to Purchaser the number of Shares indicated
below (or, if no number is indicated in either appropriate space below, all
Shares) held by you for the account of the undersigned, upon the terms and
subject to the conditions set forth in the Offer.
NUMBER OF SHARES TO BE TENDERED:*
Shares
Account Number:
Dated: , 1998
SIGN HERE
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Signature(s)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Please Type or Print Name(s)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
Please Type or Print
Address(es) Here
- -----------------------------------------------------------------------------
Area Code and Telephone Number
- -----------------------------------------------------------------------------
Taxpayer Identification or
Social Security Number(s)
- ------------
* Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
GIVE THE
TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- --------------------------------------- ------------------------------
<S> <C>
1.An individual's account The individual
2.Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the first
individual on the account(1)
3.Husband and wife The actual owner of
(joint account) the account or, if joint
funds, either person(1)
4.Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5.Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6.Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent(3)
minor, or incompetent person(3)
7.a.The usual revocable savings trust The grantor-trustee(1)
account (grantor is also trustee)
b.So-called trust account that is not The actual owner(1)
a legal or valid trust under State
law
8.Sole proprietorship account The owner(4)
- --------------------------------------- ------------------------------
</TABLE>
<TABLE>
<CAPTION>
GIVE THE
TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- -------------------------------------- ----------------------------------
<S> <C>
9.A valid trust, estate or pension The legal entity (Do not furnish
trust the identifying number of the
personal representative or trustee
unless the legal entity itself is
not designated in the account
title.)(5)
10.Corporate account The corporation
11.Religious, charitable, or The organization
educational organization account
12.Partnership account held in the The partnership
name of the business
13.Association, club, or other The organization
tax-exempt organization
14.A broker or registered nominee The broker or nominee
15.Account with the Department of The public entity
Agriculture in the name of a public
entity (such as a State or local
government, school district, or
prison) that receives agricultural
program payments
- -------------------------------------- ----------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number or employer identification number.
(4) Show your individual name. You may also enter your business name. You
may use your social security number or employer identification number.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), at the local office of the Social
Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
o A corporation.
o A financial institution.
o An organization exempt from tax under section 501(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
o An international organization or any agency or instrumentality thereof.
o A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a) of the Code.
o An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
o An entity registered at all times under the Investment Company Act of
1940.
o A foreign central bank of issue.
o A futures commission merchant registered with the Commodity Futures
Trading Commission.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441
of the Code.
o Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
o Payments made to an appropriate nominee.
o Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600
or more and is paid in the course of the payer's trade or business and
you have not provided your correct taxpayer identification number to the
payer.
o Payments of tax-exempt interest (including exempt-interest dividends
under section 852 of the Code).
o Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
o Payments on tax-free covenant bonds under section 1451 of the Code.
o Payments made by certain foreign organizations.
o Payments of mortgage interest to you.
o Payments made to an appropriate nominee.
Exempt payees described above should file substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. IF YOU ARE A NONRESIDENT
ALIEN OR A FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER
A COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend,
interest, or other payments to give correct taxpayer identification numbers
to payers who must report the payments to the IRS. The IRS uses the numbers
for identification purposes. Payers must be given the numbers whether or not
recipients are required to file a tax return. Payers must generally withhold
31% of taxable interest, dividend, and certain other payments to a payee who
does not furnish a correct taxpayer identification number to a payer. Certain
penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you
fail to furnish your correct taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your failure is
due to reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being
due to negligence and will be subject to a penalty of 20% on any portion of
an underpayment attributable to that failure unless there is clear and
convincing evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you
make a false statement with no reasonable basis that results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE
<PAGE>
NEWS FROM CRANE
CONTACT: READ IT ON THE WEB:
R.S. Evans http://www.shareholder.com/crane
Chairman and Chief Executive Officer
203-363-7300
FOR IMMEDIATE RELEASE
CRANE CO. TO ACQUIRE LIBERTY TECHNOLOGIES, INC.
STAMFORD, CONNECTICUT - AUGUST 12, 1998 - CRANE CO. (NYSE:CR) announced
that it had signed a definitive merger agreement with Liberty Technologies,
Inc., providing for Crane's acquisition of all of the outstanding shares of
Liberty Technologies at $3.50 per share. There are 5,013,233 shares outstanding.
Crane has also signed agreements with shareholders holding approximately
19.6 percent of Liberty's outstanding shares in which such holders agree to
tender their shares in the offer. In addition, Liberty has granted Crane an
option to purchase up to 997,633 newly issued shares of Liberty common stock at
$2.75 per share, exercisable upon the termination of the merger agreement under
certain specified circumstances.
Liberty Technologies, Inc. which had sales in the first six months of 1998
of $8.4 million and is headquartered in Conshohocken, PA, develops,
manufactures, markets and sells valve, motor, engine and compressor condition
monitoring products and related services to customers in the nuclear power
generation and industrial process markets worldwide. Liberty's technology and
markets are very complementary with Crane's Nuclear Valve business, which
provides valves, valve diagnostic equipment, and related valve services to the
nuclear power industry, and with Crane's Dynalco Controls business which
provides sensors, instrumentation, control products and automation systems for
use in industrial engine applications.
The merger agreement provides for a cash tender offer by LTI Merger, Inc.,
a Crane subsidiary, for all outstanding Liberty Technologies, Inc., shares at
$3.50 per share. The consummation of the tender offer will be conditioned upon,
among other things, there being duly tendered and not withdrawn at least a
majority of the then outstanding shares. It is contemplated that the tender
offer will commence on Monday, August 17, 1998. Any shares not tendered and
purchased pursuant to the tender offer will be acquired in a subsequent merger
transaction at the same $3.50 cash price.
Crane Co. is a diversified manufacturer of engineered industrial products
and the largest American distributor of doors, windows and millwork.
CRANE
CRANE CO. * 100 FIRST STAMFORD PLACE * STAMFORD, CT 06902
<PAGE>
This announcement is not an offer to purchase or a solicitation of an offer to
sell Shares. The Offer is made solely by the Offer to Purchase dated August 14,
1998 and the related Letter of Transmittal and is not being made to, nor will
tenders be accepted from or on behalf of, holders of Shares in any jurisdiction
in which the making of the Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction. In those jurisdictions where
applicable laws require that the Offer be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Purchaser by one or more
registered brokers or dealers licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
LIBERTY TECHNOLOGIES, INC.
AT
$3.50 NET PER SHARE
BY
LTI MERGER, INC.
A WHOLLY OWNED SUBSIDIARY
OF
CRANE CO.
LTI Merger, Inc., a Pennsylvania corporation (the "Purchaser"), is
offering to purchase all outstanding shares of Common Stock, par value $.01 per
share (the "Shares"), of Liberty Technologies, Inc., a Pennsylvania corporation
(the "Company"), at $3.50 per Share, net to the seller in cash, upon the terms
and subject to the conditions set forth in the Offer to Purchase dated August
14,1998 (the "Offer to Purchase") and in the related Letter of Transmittal
(which together constitute the "Offer").
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON
FRIDAY, SEPTEMBER 11, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS DETERMINED THAT EACH OF THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE OFFER AND THE
MERGER (AS SUCH TERMS ARE DEFINED HEREIN), IS FAIR TO AND IN THE BEST INTERESTS
OF THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE OFFER AND THE MERGER AND
RECOMMENDS ACCEPTANCE OF THE OFFER BY THE COMPANY'S SHAREHOLDERS.
The Offer is conditioned upon, among other things, Shares representing
at least a majority of the total number of outstanding shares of Common Stock
of the Company on a fully diluted basis being validly tendered prior to the
expiration of the Offer and not properly withdrawn.
The Offer is being made pursuant to an Agreement and Plan of Merger
dated as of August 11, 1998 (the "Merger Agreement") among Crane Co., a
Delaware corporation ("Crane"), the Purchaser and the Company. The Merger
Agreement provides, among other things, that as soon as practicable after the
consummation of the Offer, the Purchaser will be merged with and into the
Company (the "Merger"), with the Company continuing as the surviving
corporation. Pursuant to the Merger, each outstanding Share (other than Shares
held by Crane, the Purchaser or any other subsidiary of Crane or Shares held by
shareholders exercising dissenters' rights) will be converted into the right to
receive $3.50 in cash, without interest.
The Offer is subject to certain conditions set forth in the Offer to
Purchase. If any such condition is not satisfied, the Purchaser may (i)
terminate the Offer and return all tendered Shares to tendering shareholders,
(ii) extend the Offer and, subject to withdrawal rights as set forth below,
retain all such Shares until the expiration of the Offer as so extended or
(iii) waive such condition and, subject to any requirement to extend the time
during which the Offer is open, purchase all Shares validly tendered prior to
the Expiration Date and not withdrawn. The Purchaser reserves the right, at any
time or from time to time, to extend the period of time during which the Offer
is open by giving oral or written notice of such extension to the Depositary.
Any such extension will be followed as promptly as practicable by public
announcement thereof.
For purposes of the Offer, the Purchaser shall be deemed to have
accepted for payment tendered Shares when, as and if the Purchaser gives oral
or written notice to the Depositary of its acceptance of the tenders of such
Shares. Payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of certificates for such
Shares (or a confirmation of a book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase)), a properly completed and duly executed Letter of
Transmittal (or facsimile thereof) and any other required documents.
Tenders of Shares made pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date. Thereafter, such tenders are irrevocable,
except that they may be withdrawn after October 12, 1998 unless theretofore
accepted for payment as provided in the Offer to Purchase. To be effective, a
written, telegraphic, telex or facsimile transmission notice of withdrawal must
be timely received by the Depositary at one of its addresses set forth in the
Offer to Purchase and must specify the name of the person who tendered the
Shares to be withdrawn and the number of Shares to be withdrawn. If the Shares
to be withdrawn have been delivered to the Depositary, a signed notice of
withdrawal with (except in the case of Shares tendered by an Eligible
Institution (as defined in the Offer to Purchase)) signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Shares. In
addition, such notice must specify, in the case of Shares tendered by delivery
of certificates, the name of the registered holder (if different from that of
the tendering shareholder) and the serial numbers shown on the particular
certificates evidencing the Shares to be withdrawn or, in the case of Shares
tendered by book-entry transfer, the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934 as contained in the Offer to Purchase is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's shareholder
list and security position listings for the purpose of disseminating the Offer
to holders of Shares. The Offer to Purchase and related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
banks and similar persons whose names, or the name of whose nominees, appear on
the shareholder list or, if applicable, who are listed as participants in a
clearing agency's position listing for subsequent transmittal to beneficial
owners of Shares.
The Offer to Purchase and Letter of Transmittal contain important
information which should be read before any decision is made with respect to
the Offer. Requests for copies of the Offer to Purchase and the related Letter
of Transmittal and other tender offer materials may be directed to the
Information Agent as set forth below, and copies will be furnished promptly at
the Purchaser's expense.
The Information Agent for the Offer is:
Beacon Hill Partners, Inc.
90 Broad Street
New York, New York 10004
(800) 253-3814
August 14, 1998
<PAGE>
AGREEMENT AND PLAN OF MERGER
Dated as of August 11, 1998
among
CRANE CO.,
LTI MERGER, INC.
and
LIBERTY TECHNOLOGIES, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER AND THE MERGER..................................2
SECTION 1.01. The Offer.................................................2
SECTION 1.02. Company Actions...........................................3
SECTION 1.03. Directors.................................................4
SECTION 1.04. The Merger................................................5
SECTION 1.05. Closing...................................................5
SECTION 1.06. Effective Time............................................5
SECTION 1.07. Effects of the Merger.....................................5
SECTION 1.08. Articles of Incorporation and By-laws.....................6
SECTION 1.09. Directors of the Surviving Corporation....................6
SECTION 1.10. Officers of the Surviving Corporation.....................6
SECTION 1.11. Shareholders' Meeting.....................................6
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS..............................7
SECTION 2.01. Effect on Capital Stock...................................7
SECTION 2.02. Exchange of Certificates..................................8
SECTION 2.03 Treatment of Stock Options...............................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............10
SECTION 3.01 Organization, Standing and Corporate Power...............10
SECTION 3.02 Subsidiaries.............................................10
SECTION 3.03 Capital Structure........................................10
SECTION 3.04 Authority; Noncontravention..............................11
SECTION 3.05 SEC Filings; Financial Statements........................12
SECTION 3.06 Indebtedness; Absence of Undisclosed Liabilities.........13
SECTION 3.07 Absence of Certain Changes or Events.....................14
SECTION 3.08 Tax Matters..............................................14
SECTION 3.09 Certain Transactions; Certain Payments...................15
SECTION 3.10 Required Authorizations..................................15
SECTION 3.11 Litigation...............................................15
SECTION 3.12 Compliance with Law; Regulatory Compliance...............16
SECTION 3.13 Contracts................................................17
SECTION 3.14 Real Property............................................17
SECTION 3.15 Personal Property........................................18
SECTION 3.16 Intellectual Property Rights.............................18
SECTION 3.17 Environmental Matters....................................19
SECTION 3.18 Products Liability.......................................20
SECTION 3.19 Insurance................................................20
SECTION 3.20 Employment and Change in Control Agreements..............20
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SECTION 3.21 Labor Relations..........................................21
SECTION 3.22 Employee Benefit Plans...................................22
SECTION 3.23 No Existing Discussions..................................23
SECTION 3.24 Information Supplied.....................................23
SECTION 3.25 Voting Requirements......................................23
SECTION 3.26 State Statutes...........................................24
SECTION 3.27 Rights Agreement.........................................24
SECTION 3.28 Brokers..................................................24
SECTION 3.29 Disclosure...............................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CRANE..................24
SECTION 4.01 Organization, Standing and Corporate Power...............25
SECTION 4.02 Authority; Noncontravention..............................25
SECTION 4.03 Information Supplied.....................................26
SECTION 4.04 Share Ownership..........................................26
ARTICLE V COVENANTS................................................26
SECTION 5.01. Conduct of Business by the Company.......................26
SECTION 5.02. No Solicitation..........................................29
SECTION 5.03. Access to Information; Confidentiality...................31
SECTION 5.04. Required Authorizations..................................31
SECTION 5.05 Financial Statements of the Company......................32
SECTION 5.06. Employee Matters.........................................33
SECTION 5.07. Rights Agreement.........................................33
SECTION 5.08. Continuance of Existing Indemnification Rights...........33
SECTION 5.09. Public Announcements.....................................35
SECTION 5.10. Shareholder Litigation...................................35
SECTION 5.11. Financial Disclosure.....................................35
ARTICLE VI CONDITIONS PRECEDENT.....................................35
SECTION 6.01. Conditions to Each Party's Obligation To Effect
the Merger...............................................35
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................36
SECTION 7.01. Termination..............................................36
SECTION 7.02. Effect of Termination....................................37
SECTION 7.03 Fees and Expenses........................................37
SECTION 7.04. Amendment................................................37
SECTION 7.05. Extension; Waiver........................................38
SECTION 7.06. Procedure for Termination, Amendment, Extension
or Waiver................................................38
ARTICLE VIII GENERAL PROVISIONS.......................................38
SECTION 8.01. Nonsurvival of Representations and Warranties............38
SECTION 8.02. Notices..................................................38
SECTION 8.03. Definitions..............................................39
SECTION 8.04. Interpretation...........................................39
SECTION 8.05. Counterparts.............................................40
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SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries...........40
SECTION 8.07. Governing Law............................................40
SECTION 8.08. Assignment...............................................40
SECTION 8.09. Severability.............................................40
Exhibit 1 Second Amended and Restated Articles of Incorporation
of the Company
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 11, 1998, among CRANE
CO., a Delaware corporation ("Crane" or "Parent"), LTI MERGER, INC., a
Pennsylvania corporation and wholly owned subsidiary of Crane (the "Purchaser"
or "Merger Sub"), and LIBERTY TECHNOLOGIES, INC., a Pennsylvania corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Crane, the Purchaser
and the Company have approved the acquisition of the Company by Crane upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Crane proposes to cause
the Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the outstanding
shares of common stock, par value $.01 per share, of the Company ("Company
Common Stock" or "Shares"), including the associated preferred stock purchase
rights (the "Rights") issued under the Amended and Restated Rights Agreement,
dated October 6, 1997, between the Company and StockTrans, Inc., as rights
agent (the "Rights Agreement"), at a purchase price of $3.50 per share (such
amount, or any greater amount to be paid per share of Company Common Stock in
the Offer, being referred to as the "Per Share Amount"), net to the seller in
cash, upon the terms and subject to the conditions set forth in this Agreement
and in the Offer, and the Board of Directors of the Company has approved the
Offer and is recommending that the Company's shareholders accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of Crane, Purchaser and the Company have approved the
merger of Purchaser with and into the Company (the "Merger") upon the terms and
subject to the conditions set forth in this Agreement and in accordance with
the provisions of the Pennsylvania Business Corporation Law, as amended (the
"PBCL"), whereby each issued and outstanding share of Company Common Stock
other than shares owned by the Company or by Crane, the Purchaser or any wholly
owned subsidiary of the Company, Crane or the Purchaser and other than
Dissenting Shares, will be converted into the right to receive the Per Share
Amount; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Crane's willingness to enter
into this Agreement, Crane has entered into (i) a Stock Option Agreement (the
"Stock Option Agreement") with the Company pursuant to which the Company has
granted Crane an option to acquire shares of Company Common Stock and (ii)
Shareholder Agreements (the "Shareholder Agreements") with certain shareholders
of the Company pursuant to which, among other things, such shareholders have
agreed to tender their Shares pursuant to the Offer and have granted to Crane
an option to otherwise purchase such Shares;
<PAGE>
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties, intending to
be legally bound, agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Article VII hereof and none of the
events set forth in Annex II hereto (the "Tender Offer Conditions") shall have
occurred, as promptly as practicable but in no event later than the fifth
business day from the date of this Agreement, Crane shall cause the Purchaser
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (including the rules and regulations promulgated
thereunder, the "Exchange Act")) an offer to purchase all outstanding shares of
Company Common Stock, together with associated Rights (all references herein to
shares of Company Common Stock in the context of the Offer being deemed to
include such Rights) at the Per Share Price, shall, after affording the Company
a reasonable opportunity to review and comment thereon, file all necessary
documents with the Securities and Exchange Commission (the "SEC") in connection
with the Offer (the "Offer Documents") and shall consummate the Offer, subject
to the terms and conditions thereof. The obligation of the Purchaser to accept
for payment or pay for any shares of Company Common Stock tendered pursuant to
the Offer will be subject only to the satisfaction of the conditions set forth
in Annex II hereto.
(b) Without the prior written consent of the Company, the
Purchaser shall not decrease the Offer price or change the form of
consideration payable in the Offer, decrease the number of shares of Company
Common Stock sought to be purchased in the Offer, impose additional conditions
to the Offer or amend any other term of the Offer in any manner adverse to the
holders of shares of Company Common Stock. The Offer shall remain open until
the date that is 20 business days (as such term is defined in Rule 14d-1(c)(6)
under the Exchange Act) after the commencement of the Offer (the "Expiration
Date"), unless the Purchaser shall have extended the period of time for which
the Offer is open pursuant to, and in accordance with, the two succeeding
sentences or as may be required by applicable law, in which event the term
"Expiration Date" shall mean the latest time and date as the Offer, as so
extended, may expire. If at any Expiration Date, any of the Tender Offer
Conditions are not satisfied or waived by the Purchaser, the Purchaser may
extend the Offer from time to time. Subject to the terms of the Offer and this
Agreement and the satisfaction of all the Tender Offer Conditions as of any
Expiration Date, the Purchaser will accept for payment and pay for all shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after such Expiration Date of the Offer consistent with applicable law,
provided that, if all of the Tender Offer Conditions are satisfied and more
than 65% but less than 80% of the outstanding shares of Company Common Stock on
a fully diluted basis (including shares of Company Common Stock issuable upon
exercise of outstanding options to acquire shares of Company Common Stock) have
been validly tendered and not withdrawn in the Offer, the Purchaser shall have
the right, in its sole discretion, to extend the Offer from time to time for up
to a maximum of 10 additional business days in the aggregate for all such
extensions provided the Purchaser agrees to waive the conditions set forth in
paragraphs (c), (f) and (g) of Annex II.
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(c) Crane and the Purchaser represent that 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 shareholders, 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 made therein,
in light of the circumstances under which they were made, not misleading,
except that no representation is made by Crane or the Purchaser with respect to
information derived from the Company SEC Reports or supplied by the Company in
writing expressly for inclusion in the Offer Documents. Each of Crane 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 or misleading in any material
respect and each of Crane 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 shareholders of the Company, in each case, as and to
the extent required by applicable federal securities laws.
SECTION 1.02. Company Actions. (a) The Company shall, after affording
Crane a reasonable opportunity to review and comment thereon, file with the SEC
and mail to the holders of shares of Company Common Stock, as promptly as
practicable on the date of the filing by Crane and the Purchaser of the Offer
Documents, a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") reflecting
the recommendation of the Board of Directors of the Company that holders of
shares of Company Common Stock tender their shares pursuant to the Offer and
shall disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated
under the Exchange Act. The Schedule 14D-9 will set forth, and the Company
hereby represents, that the Board of Directors of the Company, at a meeting
duly called and held, has (i) determined by vote of its directors that each of
the transactions contemplated hereby, including each of the Offer and the
Merger, is fair to and in the best interests of the Company and its
shareholders, (ii) approved the Offer, the Merger, the Stock Option Agreement
and the Shareholder Agreements, (iii) recommended acceptance of the Offer and
approval of this Agreement by the Company's shareholders, and (iv) taken all
other action necessary to render Section 2538 and Subchapter F of Chapter 25 of
the PBCL and the Rights inapplicable to the Offer and the Merger. Such
recommendation and approval may be withdrawn, modified or amended only to the
extent permitted by Section 5.02(b). The Company further represents that, prior
to the execution hereof, Legg Mason Wood Walker, Inc. has delivered to the
Board of Directors of the Company its written opinion that, as of August 10,
1998, the consideration to be received by the holders of shares of Company
Common Stock pursuant to the Offer and the Merger is fair to the Company's
shareholders from a financial point of view. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board of
Directors of the Company described in this Section 1.02(a).
(b) The Company represents that 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 shareholders, 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 made therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is
3
<PAGE>
made by the Company with respect to information supplied by Crane or the
Purchaser in writing expressly for inclusion in the Schedule 14D-9. 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 either of them for use
in the Schedule 14D-9 if and to the extent that it shall have become false or
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 the holders of shares of Company Common
Stock, in each case, as and to the extent required by applicable federal
securities law.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with mailing labels, security position listings, any
available non-objecting beneficial owner lists and any available listing or
computer list containing the names and addresses of the record holders of
shares of Company Common Stock as of the most recent practicable date and shall
furnish the Purchaser with such additional available information (including,
but not limited to, updated lists of holders of shares of Company Common Stock
and their addresses, mailing labels and lists of security positions and
non-objecting beneficial owner lists) and such other assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to
the Company's record and beneficial shareholders. Subject to the requirements
of applicable law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Merger,
Crane, the Purchaser and their affiliates, associates, agents and advisors,
shall keep such information confidential and use the information contained in
any such labels, listings and files only in connection with the Offer and the
Merger and, should the Offer terminate or if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
SECTION 1.03. Directors. (a) Subject to compliance with applicable
law, promptly upon the payment by the Purchaser for shares of Company Common
Stock which represent at least a majority of the Company Common Stock (on a
fully diluted basis) pursuant to the Offer and from time to time thereafter,
Crane shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of the total number of directors on the Board of Directors of the
Company (determined after giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of shares
of Company Common Stock beneficially owned by Crane or its affiliates bears to
the total number of shares of Company Common Stock outstanding, and the Company
shall, upon request of Crane, promptly take all actions (but specifically
excluding the calling of a shareholders meeting) necessary to cause Crane's
designees to be so elected, including, if necessary, amending the By-laws of
the Company to the extent permitted to be amended by the Board of Directors and
seeking the resignations of one or more existing directors; provided, however,
that prior to the Effective Time, the Board of Directors of the Company shall
always have not less than two members who are directors of the Company on the
date hereof ("Current Directors") and, in Crane's sole discretion, up to five
Current Directors. If the number of Current Directors is reduced prior to the
Effective Time below the number of Current Directors so specified by Crane due
to the death or resignation of one or more of the Current Directors, then the
remaining director or directors who is or are Current Directors shall be
entitled to designate, by majority action of the remaining Current Directors or
action of the sole remaining Current Director, one or more persons, as the case
may
4
<PAGE>
be, that has not been designated by, and is not an Affiliate of, Crane to fill
such vacancy or vacancies and who shall be deemed to be Current Directors for
all purposes of this Agreement.
(b) The Company's obligations to appoint Crane's designees to the
Board of Directors of the Company shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03 and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors as
is required under such Section and Rule in order to fulfill its obligations
under this Section 1.03. Crane will supply promptly, and in any event no later
than the date the appointment of such directors is effective, any information
with respect to itself and its officers, directors and affiliates required by
such Section and Rule to the Company.
(c) Following the election or appointment of Crane's designees
pursuant to this Section 1.03 and prior the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Crane
or the Purchaser or waiver of any of the Company's rights hereunder, will
require the concurrence of a majority of the directors of the Company then in
office who are Current Directors (or in the case where there are two or fewer
directors who are Current Directors, the concurrence of one director who is a
Current Director).
SECTION 1.04. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the PBCL, Merger Sub shall
be merged with and into the Company at the Effective Time. Following the
Effective Time, the separate corporate existence of Merger Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Merger Sub in accordance with the PBCL.
SECTION 1.05. 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 (the "Closing
Date"), which shall be as soon as practicable after satisfaction or waiver of
the conditions set forth in Section 6.01, at the offices of Pepper Hamilton LLP
in Philadelphia, Pennsylvania unless another time, date or place is agreed to
in writing by the parties hereto.
SECTION 1.06. Effective Time. Subject to the provisions of this
Agreement, on the Closing Date, the parties shall file articles of merger (the
"Articles of Merger") executed in accordance with the relevant provisions of
the PBCL and shall make all other filings or recordings required under the
PBCL. The Merger shall become effective at such time as the Articles of Merger
are duly filed with the Pennsylvania Secretary of State, or at such subsequent
time as Crane and the Company shall agree and as is specified in the Articles
of Merger (the time the Merger becomes effective being hereinafter referred to
as the "Effective Time").
SECTION 1.07. Effects of the Merger. The Merger shall have the effects
specified in Section 1929 of the PBCL.
5
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SECTION 1.08. Articles of Incorporation and By-laws. (a) The Second
Amended and Restated Articles of Incorporation of the Company attached hereto
as Exhibit 1 shall be the articles of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of the Company as in effect at the Effective Time
shall be the by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.09. Directors of the Surviving Corporation. The directors of
Merger Sub immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be. The Company will obtain such resignations as may be necessary to effect
the foregoing.
SECTION 1.10. Officers of the Surviving Corporation. The officers of
Merger Sub immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
SECTION 1.11. Shareholders' Meeting. (a) If required by applicable law
in order to consummate the Merger, as soon as practicable following the
acceptance for payment of and payment for shares of Company Common Stock by the
Purchaser pursuant to the Offer, the Company, acting through the Board of
Directors of the Company, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Company Shareholders Meeting")
for the purpose of considering and taking action upon this
Agreement;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to this Agreement, and use its reasonable
efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter
defined) and cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its shareholders and (y) to obtain
the necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) subject to Section 5.02, include in the Proxy
Statement the recommendation of the Board of Directors of the
Company that shareholders of the Company vote in favor of the
approval of the Merger and this Agreement.
(b) Crane agrees that it will vote, or cause to be voted, all of
the shares of Company Common Stock then owned by it, the Purchaser or any of
its other Subsidiaries in favor of the approval of the Merger and of this
Agreement. Following the consummation of the Offer, if required by applicable
law in order to consummate the Merger, Crane shall use its best efforts to
cause the Company to take the actions set forth in Section 1.11(a).
6
<PAGE>
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of Common Stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Stock Owned by Crane or
the Purchaser. Each share of Company Common Stock that is owned by the Company
or by Crane or the Purchaser or any wholly owned subsidiary of the Company,
Crane or the Purchaser shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be canceled in
accordance with Section 2.01(b) and other than Dissenting Shares) shall be
converted into the right to receive the Per Share Amount in cash, without
interest (the "Merger Consideration").
(d) Shares of Dissenting Shareholders. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding share of Company
Common Stock held by a person (a "Dissenting Shareholder") who shall have
demanded and perfected a right to receive payment of the fair value of his or
her shares pursuant to Subchapter D of Chapter 15 of the PBCL ("Dissenting
Shares") shall not be converted as described in Section 2.01(c), unless such
holder fails to comply with the provisions of Subchapter D of Chapter 15 of the
PBCL or withdraws or otherwise loses his right to receive such fair value
payment. If, after the Effective Time, such Dissenting Shareholder fails to
comply with the provisions of Subchapter D of Chapter 15 of the PBCL or
withdraws or loses his right to receive such fair value payment, such
Dissenting Shareholder's shares of Company Common Stock shall no longer be
considered Dissenting Shares for the purposes of this Agreement and shall
thereupon be deemed to have been converted into and to have become exchangeable
for, at the Effective Time, the right to receive for each such share the Merger
Consideration, without interest. The Company shall give Crane (i) prompt notice
of any demands to receive payment of fair value of shares of Company Common
Stock received by the Company and (ii) the opportunity to participate in and
direct all negotiations and proceedings with respect to any such demands. The
Company shall not, without the prior written consent of Crane, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
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(e) Cancellation of Company Common Stock. As of the Effective
Time, all shares of Company Common Stock shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares of Company Common Stock (a "Certificate") shall cease to have any rights
with respect thereto, except the right to receive the applicable Merger
Consideration, without interest, or, in the case of Dissenting Shareholders, if
any, the rights, if any, accorded under the PBCL.
SECTION 2.02. Exchange of Certificates. (a) Deposit with the Exchange
Agent. As of the Effective Time, Crane shall deposit with First Chicago Trust
Company of New York or other independent agent mutually acceptable to the
Company and Crane (the "Exchange Agent") for the benefit of the holders of
shares of Company Common Stock, for exchange through the Exchange Agent, the
cash representing the Merger Consideration (the "Exchange Fund") payable
pursuant to Section 2.01(c) in exchange for outstanding shares of Company
Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate or Certificates, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to such
Certificates shall pass, only upon delivery of such Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Crane and the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of such Certificates in exchange for the applicable
Merger Consideration. Upon surrender of such a Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by
Crane, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive cash which such holder has the
right to receive pursuant to this Article II, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock that is not registered in the transfer
records of the Company, cash may be paid to a person other than the person in
whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer. Until
surrendered as contemplated by this Section 2.02(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration which the holder thereof
has the right to receive in respect of such Certificate pursuant to the other
provisions of this Article II. No interest will be paid or will accrue on cash
payable to holders of Certificates pursuant to the provisions of this Article
II. Crane shall pay the charges and expenses of the Exchange Agent.
(c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore represented by
such Certificates, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent
8
<PAGE>
for any reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Crane, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Crane for payment of their claim for
any cash comprising the Merger Consideration.
(e) No Liability. None of Crane, the Company or the Exchange
Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Crane, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Crane.
(g) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if 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
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof, pursuant
to this Agreement.
(h) Withholding Rights. Crane or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as Crane or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld and paid
over to the appropriate taxing authority by Crane or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by Crane or the Exchange Agent.
Notwithstanding the foregoing, neither Crane nor the Exchange Agent shall
withhold any amounts payable pursuant to this Agreement to any holder of shares
of Company Common Stock so long as such holder provides to Crane or the
Exchange Agent a form W-9 or W-8, as required by applicable law, certifying
such holder's exemption from back-up withholding.
SECTION 2.03. Treatment of Stock Options. Prior to the Effective Time,
the Company shall take all such actions as may be necessary to cause (i) each
unexpired and unexercised option to acquire Company Common Stock held by
current or former directors, officers, employees or consultants of the Company,
whether or not then exercisable or vested (each, a "Company Option"), that has
an exercise price less than the Per Share Amount to be
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automatically converted at the Effective Time into an amount equal to the
difference between the Per Share Amount and the exercise price of the Company
Option, multiplied by the number of shares of Common Stock issuable immediately
prior to the Effective Time upon exercise of the Company Option (without regard
to vesting periods or to restrictions on exercisability) and (ii) each
unexpired and unexercised Company Option that has an exercise price equal to or
greater than the Per Share Amount to be canceled so that no Company Option
shall have any force or effect on or after the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule delivered by the
Company to Crane prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to Crane as follows:
SECTION 3.01. Organization, Standing and Corporate Power. The Company
and each of its Subsidiaries is a corporation duly organized, validly
subsisting or existing and in good standing under the laws of the jurisdiction
in which it is incorporated and has the requisite corporate power and authority
to carry on its business as now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed or to be in good standing
individually or in the aggregate would not have a Material Adverse Effect with
respect to the Company and its Subsidiaries taken as a whole.
SECTION 3.02. Subsidiaries. Section 3.02 of the Company Disclosure
Schedule sets forth a true and complete list of the Subsidiaries of the
Company. All the outstanding shares of capital stock of each such Subsidiary
have been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company, free and clear of all Liens, except for
liens of Silicon Valley Bank (the "Silicon Valley Bank Liens") pursuant to the
Loan and Security Agreement dated May 7, 1998 among the Company and Silicon
Valley Bank (the "Silicon Valley Bank Loan"). Except for the capital stock of
its Subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, limited liability
company, partnership, joint venture or other entity.
SECTION 3.03 Capital Structure. The authorized capital stock of the
Company consists of 20,000,000 shares of Company Common Stock and 2,000,000
shares of preferred stock, par value $.01 per share ("Company Preferred
Stock"). As of the date of this Agreement, (i) 5,013,233 shares of Company
Common Stock were issued and outstanding, (ii) no shares of Company Preferred
Stock were issued or outstanding, (iii) 14,754 shares of Company Common Stock
were held by the Company in its treasury, (iv) 1,154,000 shares of Company
Common Stock were reserved for issuance pursuant to options outstanding under
the Company's 1992
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Stock Option Plan and the Company's 1988 Stock Option Plan (together, the
"Stock Plans"), and (v) 10,000 shares of Company Series A Junior Participating
Preferred Stock were reserved for issuance in connection with the Rights.
Section 3.03 of the Company Disclosure Schedule sets forth each holder of each
option outstanding pursuant to the Stock Plans on the date hereof and the date
of grant, number of shares of Company Common Stock subject thereto, expiration
date, vesting schedule and exercise price of each such option held by such
holder. Except as set forth above, as of the date of this Agreement, no shares
of capital stock or other voting securities of the Company were issued or
outstanding or reserved for issuance. As of the date of this Agreement, there
were no outstanding stock appreciation rights or rights (other than outstanding
Company Options issued under the Stock Plans as set forth in subparagraph (iv)
above) to receive shares of Company Common Stock on a deferred basis granted
under the Stock Plans or otherwise, except as set forth in the Rights
Agreement. All outstanding shares of capital stock of the Company are, and all
shares which may be issued pursuant to any options outstanding on the date
hereof pursuant to the Stock Plans and the Stock Option Agreement will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no notes, bonds, debentures or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote. Except as set forth above, as of the date
of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its Subsidiaries was a party or by which
any of them was bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its Subsidiaries. As of the date of
this Agreement, there are no outstanding contractual obligations of the Company
to vote or to dispose of any shares of the capital stock of any of its
Subsidiaries. The Company has delivered to Crane a complete and correct copy of
the Rights Agreement.
SECTION 3.04. Authority; Noncontravention. (a) The Company has all
requisite corporate power and authority to enter into this Agreement and the
Stock Option Agreement and, subject (in the case of this Agreement) to the
Company Shareholder Approval, to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
the approval of this Agreement and the transactions contemplated hereby, to the
Company Shareholder Approval. This Agreement and the Stock Option Agreement
have been duly executed and delivered by the Company and constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of
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whether asserted in a proceeding in equity or at law; provided, however, that
the Company cannot consummate the Merger unless and until it receives the
Company Shareholder Approval.
(b) The execution and delivery of this Agreement and the Stock
Option Agreement by the Company do not, and the consummation of the
transactions contemplated hereby and thereby will not, (i) conflict with, or
result in any violation or breach of any provision of the Amended and Restated
Articles of Incorporation or Bylaws of the Company, (ii) except as set forth in
Section 3.04 of the Company Disclosure Schedule, result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any material benefit) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which the Company or
any of its Subsidiaries is a party or which any of them or any of their
properties or assets may be bound, or (iii) subject to obtaining the Company
Shareholder Approval and compliance with the requirements set forth in Section
3.04(c) below, conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of its or their
properties or assets, except in the case of (ii) and (iii) for any such
conflicts, violations, defaults, terminations, cancellations or accelerations
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Authority is required
by or with respect to the Company or any of its Subsidiaries in connection with
the execution and delivery of this Agreement or the Stock Option Agreement or
the consummation of the transactions contemplated hereby or thereby, except for
(i) the filing of the Articles of Merger with the Pennsylvania Secretary of
State, (ii) the filing of the Schedule 14D-9 with the SEC in accordance with
the Exchange Act, (iii) the filing of the Proxy Statement with the SEC in
accordance with the Exchange Act, (iv) the filing of a premerger notification
and report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as either (x) may be
required under applicable state securities laws and the laws of any foreign
country or (y) which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole, or would not reasonably be expected to impair the ability of
the Company to perform its obligations under this Agreement in any material
respect.
SECTION 3.05. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by the Company with
the SEC since January 1, 1994 (collectively, together with any forms, reports
and documents filed by the Company with the SEC after the date hereof until the
Closing, the "Company SEC Reports"). Each such report, when filed, complied in
all material respects with the requirements of the Exchange Act and the
applicable rules and regulations thereunder and, as of their respective dates,
none of such reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
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(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Company SEC Reports complied as
to form in all material respects with the applicable rules and regulations of
the SEC with respect thereto, was prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements) and fairly presented the consolidated financial position of the
Company and its Subsidiaries as at the respective dates and the consolidated
results of their operations and cash flows for the periods indicated, except
that unaudited interim financial statements contained in any Company Quarterly
Report on Form 10-Q (i) were or are subject to normal year-end adjustments
which were not or are not expected to be material in amount, and (ii) do not
contain footnote disclosure. The unaudited balance sheet of the Company as of
June 30, 1998 is referred to herein as the "Company Balance Sheet."
SECTION 3.06. Indebtedness; Absence of Undisclosed Liabilities. (a)
Section 3.06 of the Company Disclosure Schedule sets forth a list of each
instrument which evidences Indebtedness of the Company or any Subsidiary, and
the aggregate principal amount thereof outstanding as of the date hereof. The
total aggregate principal amount outstanding as of the date hereof of all such
Indebtedness is $189,945, which includes $0 in face amount of outstanding
letters of credit. Except as set forth in Section 3.06 of the Company
Disclosure Schedule, all of such instruments are in full force and effect and
neither the Company, nor any Subsidiary (as the case may be) is in default
thereunder, nor, to the knowledge of the Company, is any other party to any
such instrument in default thereunder, nor to the knowledge of the Company,
does any condition exist that, with the giving of notice or lapse of time or
both, would constitute a default thereunder, which default could reasonably be
expected to give rise to a right on the part of some party thereto to terminate
such instrument, accelerate the obligations thereunder or claim damages
thereunder, except such default (i) as to which requisite waivers or consents
have been obtained or (ii) which is curable and is cured within the applicable
period for cure permitted under such instruments. Section 3.06 of the Company
Disclosure Schedule also sets forth a list of each other instrument or
agreement that contains a restriction, limitation or encumbrance, of any kind,
on the ability of the Company or any Subsidiary to pay dividends on its
respective capital stock.
(b) Section 3.06 of the Company Disclosure Schedule also sets
forth all contracts and other agreements and arrangements pursuant to which the
Company or any Subsidiary has agreed to indemnify or exonerate any officer,
director or employee of the Company or of any Subsidiary with respect to any
matter. Except as described in Section 3.06 of the Company Disclosure Schedule,
the Company has not received any written notice of, and, to the best knowledge
of the Company, there are no circumstances which might give rise to, any
obligation or liability on the part of the Company or any Subsidiary so to
indemnify any such officer, director or employee.
(c) Except as disclosed in the Company SEC Reports filed prior to
the date hereof, the Company and its Subsidiaries do not have any liabilities
as of the date hereof, either accrued or contingent, and whether due or to
become due that, under generally accepted accounting principles, are required
to be reflected in the Company's financial statements, other than (i)
liabilities reflected or reserved against in the Company Balance Sheet, (ii)
liabilities specifically
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described in this Agreement, or in the Company Disclosure Schedule, and (iii)
normal or recurring liabilities incurred since June 30, 1998 in the ordinary
course of business consistent with past practices and which are not,
individually or in the aggregate, material to the business, results,
operations, financial condition or prospects of the Company and its
Subsidiaries, taken as a whole.
SECTION 3.07 Absence of Certain Changes or Events. Since the date of
the Company Balance Sheet, the Company and its Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, since such date, there has not been (i) any Material Adverse
Effect with respect to the Company and its Subsidiaries, taken as a whole, and,
to the best knowledge of the Company, no fact or condition exists or is
threatened which is reasonably likely to cause a Material Adverse Effect with
respect to the Company and its Subsidiaries, taken as a whole, in the future,
or (ii) any material change by the Company in its accounting methods,
principles or practices except as required by concurrent changes in generally
accepted accounting principles.
SECTION 3.08. Tax Matters. (a) Each of the Company and its
Subsidiaries has prepared and timely filed, and will file on a timely basis,
all material federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to any and all Taxes concerning or
attributable to the Company or its Subsidiaries or their operations and
required to be filed on or prior to the Effective Time.
(b) Each such Return was true, correct and complete on the
respective date on which it was filed and, to the knowledge of the Company, no
event has since occurred requiring any amendment thereto, which amendment has
not been made in a manner such that each such Return remains true, correct and
complete.
(c) The Company as of the Effective Time: (A) will have paid all
Taxes it is required to pay prior to the Effective Time and (B) will have
withheld with respect to its employees all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld.
(d) The accounts shown on the Company Balance Sheet (excluding
amounts classified thereon as deferred) are sufficient for the discharge of all
Taxes attributable or with respect to all periods, or portions thereof, prior
to the date of the Company Balance Sheet remaining unpaid as of such date,
except as set forth in Section 3.08 of the Company Disclosure Schedule. There
is no Tax deficiency outstanding or assessed, or to the Company's knowledge
proposed, against the Company or its Subsidiaries that is not reflected as a
liability on the Company Balance Sheet nor has the Company executed any waiver
of any statute of limitations on or extending the period for the assessment or
collection of any Tax. No tax audit or examination is now pending or currently
in progress with respect to the Company or its Subsidiaries.
(e) The Company has not filed a consent under Section 341(f) of
the Code concerning collapsible corporations. The Company has not made any
payment, nor is it obligated to make any payment, nor is it a party to any
agreement that under certain circumstances could obligate it to make any
payment, that will not be deductible under Sections 280G or 162(m) of the Code.
The Company has not been (nor does it have any liability for unpaid Taxes
because it once was) a member of an affiliated group (other than the current
affiliated group of the Company and its
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Subsidiaries) during any part of any consolidated return year within any part
of which consolidated return year any other corporation was also a member of
such group. The Company is not and has not been during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code a United States real property
holding corporation as defined in Section 897(c)(2) of the Code. Without taking
into account the transactions contemplated by this Agreement, including,
without limitation, the Offer and the Merger, neither the Company nor any of
its Subsidiaries has any losses subject to the limitations of Section 382 of
the Code.
SECTION 3.09. Certain Transactions; Certain Payments. (a) Except as
set forth in Section 3.09 of the Company Disclosure Schedule, none of the
officers or directors of the Company or of any of its Subsidiaries nor any
Affiliate of the Company, and, to the knowledge of the Company, none of the
employees of the Company or of any of its Subsidiaries is currently a party to
any transaction with the Company or any of its Subsidiaries (other than for
services as an employee, officer or director), including, without limitation,
any contract, agreement or other arrangement (i) providing for the furnishing
of services to or by, (ii) providing for rental of real or personal property to
or from, or (iii) otherwise requiring payments to or from, any such officer,
director, Affiliate or employee, any member of the family of any such officer,
director or employee or any corporation, partnership, trust or other entity in
which any such officer, director or employee has a substantial interest or
which is an Affiliate of such officer, director or employee.
(b) Except as set forth in Section 3.09 of the Company Disclosure
Schedule, none of the officers or directors of the Company or of any of its
Subsidiaries nor any Affiliate of the Company, or, to the knowledge of the
Company, any other person or entity associated with or acting for or on behalf
of the Company or any of its Subsidiaries, has directly or indirectly (i) made
any bribe, payoff, influence payment (other than payments made in accordance
with normal commercial practices), kickback or other unlawful gift or payment
to any person or entity, private or public, regardless of form, whether in
money, property or services (w) to obtain favorable treatment in securing
business, (x) to pay for favorable treatment for business secured, (y) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any of its Subsidiaries or Affiliates or (z) in
violation of the United States Foreign Corrupt Practices Act or any other
federal, state, territorial, local or foreign law, statute, rule or regulation
or (ii) established or maintained any fund or asset that has not been recorded
in the books and records of the Company in connection with any of the matters
described in clause (i) above.
SECTION 3.10. Required Authorizations. Section 3.10 of the Company
Disclosure Schedule sets forth a true and complete list of all Required
Authorizations which the Company or any of its Subsidiaries must give or obtain
for the execution and delivery of this Agreement or the Stock Option Agreement
by the Company or the consummation by the Company or any of its Subsidiaries of
any of the transactions contemplated hereby or thereby or in order to enable
all the issued and outstanding capital stock of the Company to be acquired in
the Offer or to be converted as contemplated by Article II.
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SECTION 3.11. Litigation. Except as set forth in Section 3.11 of the
Company Disclosure Schedule or as indicated in any of the Company SEC Reports
filed prior to the date hereof, there are no suits, litigations,
investigations, actions or proceedings of any kind pending or (to the knowledge
of the Company) threatened against the Company or any Subsidiary, nor (to the
knowledge of the Company) is any such matter pending or threatened against any
other person, which, if adversely determined, would have a Material Adverse
Effect with respect to the Company and its Subsidiaries taken as a whole.
SECTION 3.12. Compliance with Law; Regulatory Compliance. (a) Except
as set forth in Section 3.12 of the Company Disclosure Schedule and except for
instances of non-compliance which, individually or in the aggregate, would not
have a Material Adverse Effect with respect to the Company and its Subsidiaries
taken as a whole, neither the Company nor any of its Subsidiaries is or has
been in violation of any applicable federal, state, provincial, local or
foreign law, regulation, ordinance or other requirement of any Governmental
Authority relating to it or to its securities, property, operations or
business, and, to the best knowledge of the Company, no event has occurred or
condition or state of facts exists that could give rise to any such violation.
Except as set forth in Section 3.12 of the Company Disclosure Schedule, there
is no outstanding order, writ, judgment, stipulation, injunction, decree,
determination, award or other order of any court or governmental agency or
instrumentality, domestic or foreign, against or affecting the Company, any of
its Subsidiaries or any of the assets of the Company or its Subsidiaries.
(b) The Company and its Subsidiaries possess, or have made timely
application for, all Governmental Approvals with and under all federal, state,
provincial, local and foreign laws and Governmental Authorities, required by
the Company and its Subsidiaries to carry on any substantial part of their
respective businesses as presently conducted and to use and operate any of
their respective property and assets, other than Governmental Approvals, the
absence of which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Company and its
Subsidiaries, taken as a whole. All such Governmental Approvals are in full
force and effect and neither the Company nor any of its Subsidiaries is in
violation of any such Governmental Approval or any other permit, license,
approval, authorization or registration applicable to it or to the operation of
its respective business, other than violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
with respect to the Company and its Subsidiaries taken as a whole, and, to the
best knowledge of the Company, no event or condition or state of facts exists
(or would exist upon the giving of notice or lapse of time or both) that could
result in such a violation. Except as disclosed in Section 3.12 of the Company
Disclosure Schedule, the Company has no reason to believe that any pending
application for any such Governmental Approval will not be timely granted and
no proceeding is pending or, to the knowledge of the Company, threatened to
revoke, suspend or materially modify any Governmental Approval possessed by the
Company or its Subsidiaries or deny any renewal thereof.
(c) Except as disclosed in Section 3.12 of the Company Disclosure
Schedule, the Company and its Subsidiaries have made all Governmental Filings
required to be made with any Governmental Authority with respect to the
operation of their respective businesses and the use and operation of their
respective properties and assets, other than Governmental Filings, the
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absence of which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Company and its
Subsidiaries, taken as a whole.
SECTION 3.13 Contracts. Set forth in Section 3.13 of the Company
Disclosure Schedule is a list of (a) all contracts, agreements, commitments,
undertakings or obligations to which the Company or any of its Subsidiaries is
a party or by which it or its assets or properties are bound or subject which
involve the payment by or to the Company or any of its Subsidiaries of more
than $50,000 under any one of such contracts and which have a remaining term of
more than 120 days (taking into account the effect of any renewal options), (b)
all contracts, agreements or other instruments evidencing Indebtedness; (c) all
joint venture or partnership agreements to which the Company or any Subsidiary
is a party; (d) all contracts or agreements restricting the right of any person
or entity to compete with the Company or any Subsidiary, and all contracts or
agreements restricting the right of the Company or any Subsidiary to compete
with any person or entity, to sell to or purchase from any person or entity or
to hire any person; (e) all contracts or agreements, other than contracts or
agreements for the sale of products in the ordinary course of business,
providing for indemnification or exoneration of any other person or entity by
the Company or any Subsidiary; (f) all contracts or agreements with any public
utility pursuant to which the Company or any Subsidiary provides goods or
services to such public utility; (g) all contracts pursuant to which the
Company provides services and pursuant to which there is no limitation on the
liability of the Company; and (h) all other contracts, agreements, commitments,
undertakings or obligations to which the Company or any of its Subsidiaries is
a party or by which it or its assets or properties are bound or subject (other
than Real Property Leases, Personal Property Leases, Employment Agreements and
Benefit Plans) (x) which if terminated or lost would have a Material Adverse
Effect with respect to the Company and its Subsidiaries, taken as a whole, or
(y) was not entered into in the ordinary course of business (collectively, the
"Contracts"). There have been made available to Crane true and complete copies
of all such Contracts that are in writing (including all amendments thereto, if
any). Except as set forth in Section 3.13 of the Company Disclosure Schedule,
all of the Contracts are in full force and effect and neither the Company nor
any of its Subsidiaries (as the case may be) is in default thereunder, nor, to
the knowledge of the Company, is any other party to any Contract in default
thereunder, nor, to the best of the Company's knowledge, does any condition
exist that, with the giving of notice or lapse of time or both, would
constitute a default thereunder, which default would give rise to a right on
the part of some party thereto to terminate such Contract or claim damages
thereunder, except such default (i) as to which requisite waivers or consents
have been obtained or (ii) which is curable and is cured within the applicable
period for cure permitted under such Contract. Except as set forth in Section
3.10 of the Company Disclosure Schedule, no approval or consent of any person
is needed in order for the Contracts to continue in full force and effect under
the same terms and conditions currently in effect following the consummation of
the transactions contemplated by this Agreement.
SECTION 3.14 Real Property. None of the Company or any of its
Subsidiaries owns any real property. Section 3.14 of the Company Disclosure
Schedule sets forth a list (by lessee) and summary description of all Real
Property Leases. The Company and each Subsidiary (as the case may be) has a
valid leasehold interest in each Real Property
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Lease held by it as of the date of this Agreement, in each case free and clear
of all Liens, except for the Silicon Valley Bank Liens. The Company has made
available to Crane a true and complete copy of each Real Property Lease which
is in writing. Neither the Company nor any of its Subsidiaries is a party to or
holds property subject to any Real Property Lease which is not in writing. The
Real Property Leases are in full force and effect and neither the Company nor
any of its Subsidiaries (as the case may be) has received any written notice of
default thereunder which has not been remedied or waived. Each Real Property
Lease was negotiated on an arm's length basis. Neither the Company nor any of
its Subsidiaries has received any written notice or has any knowledge of any
pending, threatened or contemplated condemnation proceeding or assessment for
public improvements affecting any real property leased pursuant to a Real
Property Lease or any part thereof or of any sale or other disposition thereof
in lieu of condemnation.
SECTION 3.15. Personal Property. The Company or one of its
Subsidiaries (as the case may be) owns all Personal Property owned by it as of
the date of this Agreement, whether or not reflected in the Company Balance
Sheet, in each case free and clear of all Liens, except for the Silicon Valley
Bank Liens. Section 3.15 of the Company Disclosure Schedule also sets forth a
list (by lessee or licensee) and a summary description of all Personal Property
Leases. The Company or one of its Subsidiaries (as the case may be) has a valid
leasehold interest in each Personal Property Lease held by it as of the date of
this Agreement, in each case free and clear of all Liens except for the Silicon
Valley Bank Liens. All of the Personal Property owned or leased by, and
currently used or necessary for or in the operations of, the Company or any of
its Subsidiaries, taken as a whole, is in good operating condition and repair,
ordinary wear and tear excepted.
SECTION 3.16. Intellectual Property Rights. Except as set forth on
Section 3.16 of the Company Disclosure Schedule:
(a) the Company and each of its Subsidiaries owns or has the
exclusive, perpetual, royalty-free right to use all Intellectual Property
Rights that are used in connection with the operation of its business
(collectively, the "Requisite Rights"), free and clear of all Liens other than
the Silicon Valley Bank Liens;
(b) to the knowledge of the Company, no product or service
licensed, marketed or sold by the Company or any of its Subsidiaries violates
any license or infringes any Intellectual Property Rights of others and no
person is infringing upon or has misappropriated any Requisite Rights.
(c) there is no pending or, to the knowledge of the Company,
threatened claim or litigation against the Company or any of its Subsidiaries
contesting the validity of or right to use the Requisite Rights, nor has the
Company or any of its Subsidiaries received any written notice that any of the
Requisite Rights or the operation of their respective businesses conflicts with
the asserted rights of others, in any case, which, individually or in the
aggregate, if adversely determined against the Company or the applicable
Subsidiary would reasonably be expected to have a Material Adverse Effect with
respect to the Company and its Subsidiaries, taken as a whole.
As used herein, the term "Intellectual Property Rights" means all intellectual
property rights, including, without limitation, Proprietary Technology,
patents, patent applications, patent rights,
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trademarks, trademark applications, trade names, service marks, service mark
applications and registrations, copyrights, copyright applications and
registrations, know-how, licenses, trade secrets, proprietary processes and
formulae. As used herein, "Proprietary Technology" means all source and object
code, processes, inventions, trade secrets, know-how and other proprietary
rights owned by the Company or any of its Subsidiaries pertaining to any
product or service licensed, marketed or sold by the Company or any of its
Subsidiaries or used, employed or exploited in the development, license, sale,
marketing, distribution or maintenance thereof, and all documentation
describing or relating to the foregoing, including, without limitation,
manuals, memoranda, know-how, notebooks, patents and patent applications,
trademarks and trademark applications and registrations, copyrights and
copyright applications and registrations, records and disclosures.
SECTION 3.17 Environmental Matters. (a) The Company and each of its
Subsidiaries has applied for and has in effect all federal, state and local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Environmental Permits")
under applicable statutes, laws, ordinances, rules, orders and regulations
which are administered, interpreted or enforced by a Governmental Authority
with jurisdiction over pollution or protection of the environment
(collectively, "Environmental Laws") necessary for it to carry on its business
as now conducted, and there has occurred no default under any such
Environmental Permit, except for the lack of Environmental Permits and for
defaults under Environmental Permits that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect with respect
to the Company and its Subsidiaries taken as a whole.
(b) The Company and each of its Subsidiaries is, and has been, in
compliance with applicable Environmental Laws except for instances of possible
noncompliance which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Company and its
Subsidiaries taken as a whole.
(c) There is no suit, action, proceeding or inquiry pending or,
to the Company's knowledge, threatened before any Governmental Authority in
which the Company or any or its Subsidiaries has been or, to the best knowledge
of the Company with respect to threatened suits, actions and proceedings, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material (as hereinafter defined), asbestos,
polychlorinated biphenyls or oil, whether or not occurring at, on, under or
involving a site owned, leased or operated by the Company or any of its
Subsidiaries, or (iii) for any site or location for which it or its
Subsidiaries has been designated as a potentially responsible party under any
federal, state, local or foreign superfund law, or (iv) for any claim for
damages to natural resources, except in the cases of clauses (i) through (iv)
above for any such suits, actions,, proceedings and inquiries that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect with respect to the Company and its Subsidiaries taken
as a whole.
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(d) During the period of ownership or operation by the Company
and its current or former Subsidiaries of any of their respective current or
formerly owned properties, there have been no underground storage tanks
(whether currently active or not) and no polychlorinated biphenyls in
transformers or other electrical equipment and there have been no releases of
Hazardous Material or of asbestos, polychlorinated biphenyls or oil in, on,
under or affecting such properties or, to the Company's knowledge, any
surrounding site, except for those that, individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect with respect to
the Company and its Subsidiaries taken as a whole. Prior to the period of
ownership or operation by the Company or its current or former Subsidiaries of
any of their respective current or formerly owned properties, to the Company's
knowledge, there were no releases of Hazardous Material or asbestos,
polychlorinated biphenyls or oil or other petroleum products in, on, under or
affecting any such property or any surrounding site, except for those that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect with respect to the Company and its Subsidiaries taken
as a whole. "Hazardous Material" means any pollutant, contaminant, or hazardous
substance within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act or other applicable Environmental Laws.
(e) The Company and each of its Subsidiaries have all
Environmental Permits required in connection with the use, storage, handling
and disposal of radioactive materials, and have complied and are in current
compliance with all applicable federal, state, local and foreign laws in
connection with the disposal of radioactive materials.
SECTION 3.18. Products Liability. Other than ordinary course warranty
claims, during the past five years there have been no claims made against the
Company, its Subsidiaries or any Predecessor for personal injury, property
damage or other loss as a result of product defects that exceed, with respect
to any one type or class of defect, $25,000 in the aggregate.
SECTION 3.19. Insurance. The Company and each of its Subsidiaries has
in effect valid and effective policies of insurance (true and complete copies
of which have been provided to Crane), issued by companies believed by the
Company to be sound and reputable, insuring the Company or such Subsidiary (as
the case may be) for losses customarily insured against by others engaged in
similar lines of business. To the best knowledge of the Company, such policies
are reasonable, in both scope and amount, in light of the risks attendant to
the businesses conducted by the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries will have any liability after the Effective
Time for retrospective or retroactive premium adjustments. The Company has
delivered to Crane true and complete copies of lists furnished by the Company's
insurance brokers identifying the names of any third party named as an
additional insured under any insurance policy maintained by the Company or any
of its Subsidiaries since 1994. Section 3.19 of the Company Disclosure Schedule
also discloses the manner in which the Company and its Subsidiaries provide
coverage for workers' compensation claims and a list of all workers'
compensation claims filed against the Company or any of its Subsidiaries during
the past five years.
SECTION 3.20 Employment and Change in Control Agreements. (a) Section
3.20 of the Company Disclosure Schedule sets forth a true and complete list of
all written, and to the
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best knowledge of the Company, oral agreements with any officer, director or
employee of the Company or any of its Subsidiaries to which the Company or any
of its Subsidiaries is a party, providing for the terms of his or her
employment with the Company or any of its Subsidiaries and/or the terms of his
or her severance or other payments upon termination of such employment (the
"Employment Agreements"). The Company has previously furnished to Crane true
and complete copies of all Employment Agreements, together with all amendments
thereto (if any). Since the date of the Company Balance Sheet, neither the
Company nor any Subsidiary has (i) except as set forth in Section 3.20 of the
Company Disclosure Schedule, effected any increase in salary, wage or other
compensation of any kind, whether current or deferred, to any officer,
director, employee, agent, broker or consultant in excess of five percent of
the compensation payable to any such person or (ii) made any contribution to
any trust or plan for the benefit of employees except for contributions made in
the normal and ordinary course of business in a manner consistent with past
practices or as required by the terms thereof as now in effect.
(b) Except as set forth in Section 3.20 of the Company Disclosure
Schedule or as disclosed in the Company SEC Reports filed prior to the date of
this Agreement, and except as provided for in this Agreement, neither the
Company nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any officer or other key employee of the Company or any of its
Subsidiaries (A) the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company of the nature contemplated by this Agreement or (B) providing for
compensation payments that would not be deductible by the Company for federal
income tax purposes, (ii) agreement with any officer or other key employee of
the Company or any of its Subsidiaries providing any compensation guarantee in
excess of $50,000 per annum, or (iii) agreement or Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
SECTION 3.21 Labor Relations. To the best knowledge of the Company,
relations of the Company and each of its Subsidiaries with their employees are
good. Except as disclosed on Section 3.21 of the Company Disclosure Schedule,
no employee of the Company or any of its Subsidiaries is represented by any
union or other labor organization. No representation election, arbitration
proceeding, grievance, labor strike, dispute, slowdown, stoppage or other labor
trouble is pending or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries. No complaint against the Company or any of
its Subsidiaries is pending or, to the knowledge of the Company, threatened
before the National Labor Relations Board, the Equal Employment Opportunity
Commission or any similar state or local agency, by or on behalf of any
employee of the Company or any of its Subsidiaries.
SECTION 3.22. Employee Benefit Plans. (a) The Company has set forth on
Section 3.22 of the Company Disclosure Schedule a list of all employee benefit
plans (as defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, fringe benefits, incentive, deferred compensation, supplemental
retirement, post-retirement health or welfare plan, severance and other
employee benefit plans and arrangements, written or otherwise, maintained by
the Company or any trade or business (whether or not incorporated) which is a
member or
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which is under common control with the Company (an "ERISA Affiliate") within
the meaning of Section 414 of the Code, or any Subsidiary of the Company for
the benefit of, or relating to, any current or former employee of the Company
or an ERISA Affiliate (together, the "Company Group") or with respect to which
the Company or an ERISA Affiliate may have liability (together, the "Benefit
Plans").
(b) With respect to each Benefit Plan, the Company has made
available to Crane a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the Internal Revenue Service ("IRS"), (ii) such Benefit
Plan (or in the case of an unwritten Benefit Plan, a written summary thereof),
(iii) each trust agreement and group annuity contract, if any, relating to such
Benefit Plan and (iv) the most recent actuarial report or valuation relating to
a Benefit Plan subject to Title IV of ERISA.
(c) Each of the Benefit Plans and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered in
all respects in compliance with all applicable laws and in compliance with the
plan document, trust agreement, insurance policy or other writing creating the
same or applicable thereto. No Benefit Plan is or, to the best knowledge of the
Company, is proposed to be under audit or investigation, and no completed audit
of any Benefit Plan has resulted in the imposition of any tax, fine or penalty.
(d) No prohibited transaction (within the meaning of Section 406
of ERISA and Section 4975 of the Code) with respect to any Benefit Plan exists
or has occurred that could subject any member of the Company Group to any
liability or tax under Part 5 of Title I of ERISA or Section 4975 of the Code.
No member of the Company Group, nor any administrator or fiduciary of any
Benefit Plan, nor any agent of any of the foregoing, has engaged in any
transaction or acted or failed to act in a manner that will subject any member
of the Company Group to any liability for a breach of fiduciary or other duty
under ERISA or any other applicable law. With the exception of the requirements
of Section 4980B of the Code, no post-retirement benefits are provided under
any Benefit Plan that is a welfare benefit plan as described in ERISA Section
3(1).
(e) Section 3.22 of the Company Disclosure Schedule discloses
each Benefit Plan that purports to be a qualified plan under Section 401(a) of
the Code and exempt from United States federal income tax under Section 501(a)
of the Code (a "Qualified Plan"). With respect to each Qualified Plan, a
determination letter (or opinion or notification letter, if applicable) has
been received from the IRS that such plan is qualified under Section 401(a) of
the Code and exempt from federal income tax under Section 501(a) of the Code.
No Qualified Plan has been amended since the date of the most recent such
letter applicable to such Qualified Plan. No member of the Company Group, nor
any fiduciary of any Qualified Plan, nor any agent of any of the foregoing, has
taken any action that would adversely affect the qualified status of a
Qualified Plan or the qualified status of any related trust.
(f) No Benefit Plan is a defined benefit plan within the meaning
of Section 3(35) of ERISA (a "Defined Benefit Plan"). No Defined Benefit Plan
sponsored or maintained by any member of the Company Group has been terminated
or partially terminated except as set forth on Section 3.22 of the Company
Disclosure Schedule. Each Defined Benefit Plan identified as
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terminated on Section 3.22 of the Company Disclosure Schedule has met the
requirement for standard termination of single-employer plans contained in
Section 4041(b) of ERISA. During the five-year period ending at the Effective
Time, no member of the Company Group has transferred a Defined Benefit Plan to
a corporation that was not, at the time of transfer, related to the transferor
as described in Section 414 of the Code.
(g) No Benefit Plan is a multiemployer plan within the meaning of
Section 3(37) or Section 4001(a)(3) of ERISA (a "Multiemployer Plan"). No
member of the Company Group has withdrawn from any Multiemployer Plan or
incurred any withdrawal liability to or under any Multiemployer Plan. No
Benefit Plan covers any employees of any member of the Company Group in any
foreign country or territory.
(h) With respect to the Benefit Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of the Company.
SECTION 3.23. No Existing Discussions. As of the date hereof, the
Company is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to an Acquisition Proposal.
SECTION 3.24. Information Supplied. None of the written information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in the Offer Documents or the Proxy Statement will,
at the respective times filed with the SEC and, in the case of the Proxy
Statement, the date it is first mailed to the Company's shareholders or at the
time of the Company Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Crane specifically for inclusion or incorporation by reference in the Proxy
Statement.
SECTION 3.25. Voting Requirements. The affirmative vote of the holders
of at least a majority of the votes cast by the holders of Company Common Stock
entitled to vote thereon (the "Company Shareholder Approval") is the only vote
of the holders of any class or series of the Company's capital stock necessary
to adopt this Agreement and to approve the transactions contemplated by this
Agreement.
SECTION 3.26. State Statutes. The Board of Directors of the Company
has approved the terms of this Agreement, the Stock Option Agreement and the
Shareholders Agreements, the making of the Offer and the consummation of the
Merger and the other transactions contemplated by this Agreement, the Stock
Option Agreement and the Shareholder
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Agreements and such approval renders the provisions of Section 2538 and
Subchapter F of Chapter 25 of the PBCL inapplicable to the transactions
contemplated by this Agreement, the Stock Option Agreement and the Shareholders
Agreements. To the best of the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to this
Agreement, the Stock Option Agreement or the Shareholder Agreements or any of
the transactions contemplated hereby or thereby.
SECTION 3.27. Rights Agreement. The Rights Agreement has been amended
as of the date hereof (i) to render the Rights Agreement inapplicable to this
Agreement, the Stock Option Agreement, the Shareholder Agreements, the Offer,
the Merger and the other transactions contemplated by this Agreement, the Stock
Option Agreement or the Shareholder Agreements and (ii) to ensure that (x)
neither Crane nor any of its wholly owned subsidiaries is an Acquiring Person
(as defined in the Rights Agreement) pursuant to the Rights Agreement, (y)
Crane and its wholly owned subsidiaries are Exempt Persons (as defined in the
Rights Agreement) pursuant to the Rights Agreement, and (z) a Stock Acquisition
Date, Distribution Date or Triggering Event (in each case as defined in the
Rights Agreement) does not occur solely by reason of the execution of this
Agreement, the Stock Option Agreement or the Shareholder Agreements, or the
consummation of the Offer, the Merger or the other transactions contemplated by
this Agreement, the Stock Option Agreement or the Shareholder Agreements.
SECTION 3.28. Brokers. No broker, investment banker, financial advisor
or other person, other than Legg Mason Wood Walker, Inc., is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has provided
Crane with a true and correct copy of its engagement letter with Legg Mason
Wood Walker, Inc..
SECTION 3.29. Disclosure. No representation or warranty of the Company
in this Agreement or any certificate, schedule, statement, document or
instrument furnished or to be furnished to Crane pursuant hereto or in
connection herewith, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CRANE
Except as set forth on the disclosure schedule delivered by Crane to
the Company prior to the execution of this Agreement (the "Crane Disclosure
Schedule"), Crane and the Purchaser represent and warrant to the Company as
follows:
SECTION 4.01. Organization, Standing and Corporate Power. Each of
Crane and the Purchaser is a corporation duly organized, validly existing or
subsisting and in good standing under the laws of the jurisdiction in which it
is incorporated and has the requisite corporate power and authority to carry on
its business as now being conducted. Crane is duly qualified or
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licensed to do business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed or to be in good standing individually or in the
aggregate would not have a Material Adverse Effect on Crane and its
Subsidiaries taken as a whole.
SECTION 4.02. Authority; Noncontravention. Each of Crane and the
Purchaser has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Crane and the Purchaser and the
consummation by them of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Crane and
the Purchaser. This Agreement has been duly executed and delivered by Crane and
the Purchaser and constitutes a valid and binding obligation of each of Crane
and the Purchaser, enforceable against Crane and the Purchaser in accordance
with its terms except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) general principles of
equity, regardless of whether asserted in a proceeding in equity or at law. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement by Crane and the Purchaser will not, conflict with, 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 to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Crane or the Purchaser under, (i) the Certificate or Articles of Incorporation
or By-laws of Crane or the Purchaser, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Crane or the Purchaser or their
respective properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Crane or the
Purchaser or their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults, rights,
losses or Liens that individually or in the aggregate would not (x) have a
Material Adverse Effect on Crane and its Subsidiaries, taken as a whole, (y)
impair the ability of Crane to perform its obligations under this Agreement in
any material respect or (z) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required by or with respect to Crane or the Purchaser
in connection with the execution and delivery of this Agreement by Crane or the
Purchaser or the consummation by Crane or the Purchaser of the transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form under the HSR Act; (2) the filing with the SEC of
the Offer Documents and such reports under Section 13(a), 13(d), 15(d) or 16(a)
of the Exchange Act as may be required in connection with this Agreement, the
Stock Option Agreement or the Shareholder Agreements; (3) the filing of the
Articles of Merger with the Pennsylvania Secretary of State and appropriate
documents with the relevant authorities of other states; (4) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
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necessitated by the Offer or the Merger or the transactions contemplated by
this Agreement; and (5) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure to make or obtain which
would not have a Material Adverse Effect on Crane and its Subsidiaries, taken
as a whole, or impair the ability of Crane or the Purchaser to perform its
obligations under this Agreement in any material respect.
SECTION 4.03. Information Supplied. None of the written information
supplied or to be supplied by Crane or the Purchaser specifically for inclusion
or incorporation by reference in the Schedule 14D-9 or in the Proxy Statement
will, at the respective times filed with the SEC and, in the case of the Proxy
Statement, at the date it or any amendment or supplement thereto is mailed to
Company shareholders and at the date of the Company Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
except that no representation or warranty is made by Crane or the Purchaser
with respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference therein.
SECTION 4.04 Share Ownership. Without giving effect to the
transactions contemplated by this Agreement, the Stock Option Agreement and the
Shareholder Agreements, neither Crane nor the Purchaser is an "interested
shareholder" for purposes of Section 2538 or Subchapter F of Chapter 25 of the
PBCL.
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business and Other Actions by the Company.
(a) Except with the consent of Crane, during the period from the date of this
Agreement to the consummation of the Offer, the Company shall, and shall cause
its Subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted
and in compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with those persons having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at the time of
consummation of the Offer. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the consummation of the
Offer, the Company shall, and shall cause its Subsidiaries to:
(i) preserve and maintain its corporate existence and all of its
rights, privileges and franchises reasonably necessary or desirable in the
normal conduct of its business, except to the extent contemplated by any
transactions specifically permitted by this Agreement;
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(ii) not acquire any stock or other interest in, nor (except in
the ordinary course of business) purchase any assets of, any corporation,
partnership, association or other business organization or entity or any
division thereof (except any stock or assets distributed to the Company or any
of its Subsidiaries as part of any bankruptcy or other creditor settlement or
pursuant to a plan of reorganization), nor agree to do any of the foregoing;
(iii) not sell, lease, assign, transfer or otherwise dispose of
any of its assets (including, without limitation, patents, trade secrets or
licenses), nor suffer to exist or create any Lien on any of its assets, except
as permitted by this Agreement or in the ordinary course of business and except
that the Company and each of its Subsidiaries may sell or otherwise dispose of
any assets which are obsolete;
(iv) not incur any Indebtedness, other than as a result of
borrowings or drawdowns, the issuance of letters of credit for the account of
the Company and the incurrence of interest, letter of credit reimbursement
obligations and other obligations under the terms of the Silicon Valley Bank
Loan, which Indebtedness shall be incurred only for working capital purposes;
(v) not (x) alter, amend or repeal any provision of its Articles
of Incorporation or Bylaws or its certificate of incorporation or by-laws (as
the case may be), (y) change the number of its directors (other than as a
result of the death, retirement or resignation of a director), (z) form or
acquire any Subsidiaries not existing as of the date of this Agreement, (xx)
enter into, modify or terminate any Contracts, Real Property Leases or Personal
Property Leases or agree to do so, (yy) enter into, modify or terminate any
Employment Agreement or hire any personnel other than temporary personnel not
eligible to participate in any benefit plans or programs of the Company, or
(zz) declare, pay, commit to or incur any obligation of any kind for the
payment of any bonus, additional salary or compensation or retirement,
termination, welfare or severance benefits or change in control benefits
payable or to become payable to any of its employees or such other persons,
except for such matters as are required pursuant to the terms of any existing
Employment Agreement or Benefit Plan;
(vi) maintain its books, accounts and records in the usual,
ordinary and regular manner and in material compliance with all applicable
laws;
(vii) pay and discharge all Taxes imposed upon it or upon its
income or profits, or upon any property belonging to it, prior to the date on
which penalties attach thereto, except to the extent that the Company is
currently contesting, in good faith and by proper proceedings, the payment of
such Taxes and the Company maintains appropriate reserves with respect thereto;
(viii) not settle any tax claim against the Company or any of its
Subsidiaries or any litigation (net of applicable insurance proceeds) in excess
of $10,000;
(ix) meet in all material respects its obligations under all
Contracts, Real Property Leases and Personal Property Leases and not become in
default thereunder;
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(x) maintain in all material respects its business and assets in
good repair, order and condition, reasonable wear and tear excepted, and
maintain insurance upon such business and assets at least comparable in amount
and kind to that in effect on the date hereof;
(xi) maintain in all material respects its present relationships
and goodwill with suppliers, brokers, manufacturers, representatives,
distributors, customers and others having business relations with it (provided
that it may pursue overdue accounts and otherwise exercise lawful remedies in
its customary fashion);
(xii) not declare, set aside, make or pay any dividends or other
distributions with respect to its capital stock, including, without limitation,
in the case of the Company, the Company Common Stock, or purchase or redeem any
shares of its capital stock, including, without limitation, in the case of the
Company , the Company Common Stock, or agree to take any such action;
(xiii) not authorize or make any single capital expenditure in
excess of $5,000, or make any capital expenditure if the aggregate of the
amount of such capital expenditure together with the amounts of all other
capital expenditures since the date of this Agreement shall exceed $25,000;
(xiv) not violate any law or regulation applicable to it nor
violate any order, injunction or decree applicable to the conduct of its
business; and
(xv) not increase the number of shares authorized or issued and
outstanding of its capital stock, including, without limitation, in the case of
the Company, the Company Common Stock, nor grant or make any pledge, option,
warrant, call, commitment, right or agreement of any character relating to its
capital stock, including, without limitation, in the case the Company, the
Company Common Stock, nor issue or sell any shares of its capital stock,
including, without limitation, in the case of the Company, the Company Common
Stock, or securities convertible into such capital stock, or any bonds,
promissory notes, debentures or other corporate securities or become obligated
so to sell or issue any such securities or obligations, except, in any case,
issuance of shares of the Company Common Stock (i) pursuant to the exercise of
options, warrants or other rights outstanding as of the date hereof and
referred to in Section 3.03 or (ii) pursuant to the Stock Option Agreement;
(xvi) not make any change to its accounting methods, principles
or practices, except as may be required by generally accepted accounting
principles;
(xvii) not expend any money pursuant to, or incur expenses
related to performance under, the Development Contract with Norwegian Oil
Companies, Saga Petroleum ASA, Phillips Petroleum Co., Statoil and Norsk Hydro
Produksjon (Contract #ANS 0029555 ESD) in excess of $100,000 in the aggregate;
(xviii) not waive any right of substantial value or cancel any
debt owed to the Company or any Subsidiary or claim against any person or
entity; and
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(xix) not authorize, or commit or agree to take, any of the
foregoing actions;
provided, however, that if the Company requests in writing that Crane consent
to the taking of any affirmative action on the part of the Company the taking
of which would require such consent pursuant to this Section 5.01(a) and the
failure to grant such consent within four business days of receipt by Crane of
such request is the sole cause of the occurrence of a Material Adverse Effect,
then such Material Adverse Effect shall not be an Event for purposes of Annex
II nor shall Crane be permitted to terminate this Agreement solely due to the
occurrence of such Material Adverse Effect.
(b) Other Actions. The Company shall not, and shall not permit
any of its Subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of its representations and
warranties set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of its representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) subject to the
Company's rights under Section 5.02 and Article VII hereof, any of the
conditions to the Merger set forth in Article VI that are within the Company's
control not being satisfied.
(c) Advice of Changes. The Company shall promptly advise Crane
orally and in writing of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect, (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or (iii) any change or event having, or which could reasonably be
expected to have, a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole or on the truth of its representations and warranties or the
ability of the conditions set forth in Article VI to be satisfied. Upon such
notification, Crane and the Purchaser shall have the option to either terminate
this Agreement or to waive any right to consider any of the foregoing in
connection with a determination as to whether any of the Events specified in
subparagraphs (c), (f) or (g) of Annex II has occurred.
SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i) solicit or
initiate (including by way of furnishing information), or take any other action
to facilitate, any inquiries or the making of any proposal that constitutes an
Acquisition Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding any Acquisition Proposal; provided, however, that if,
at any time prior to the acceptance for payment of shares of Company Common
Stock pursuant to the Offer, the Board of Directors of the Company determines
in good faith, based upon the advice of outside counsel (including, for all
purposes of this Agreement, Pepper Hamilton LLP), that it is required to do so
in order to comply with its fiduciary duties to the Company's shareholders
under applicable law, the Company may, in
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response to an Acquisition Proposal that was not solicited by it, and subject
to compliance with Section 5.02(c), (x) furnish information with respect to the
Company and its Subsidiaries to any person pursuant to a customary
confidentiality agreement (as determined by the Company after consultation with
its outside counsel) and (y) participate in negotiations regarding such
Acquisition Proposal. For purposes of this Agreement, "Acquisition Proposal"
means any inquiry, proposal or offer from any person or entity relating to any
direct or indirect acquisition or purchase of 20% or more of the assets of the
Company and its Subsidiaries or 20% or more of any class of equity securities
of the Company or any of its Subsidiaries, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or more
of any class of equity securities of the Company or any of its Subsidiaries, or
any merger, consolidation, business combination, share exchange,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Except as expressly permitted by this Section 5.02, neither
the Board of Directors of the Company nor any committee thereof shall (i)
(unless, prior to the acceptance for payment of shares of Company Common Stock
pursuant to the Offer, it determines in good faith, based upon the advice of
outside counsel, that it is required to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Crane, the approval or recommendation by such Board of Directors or such
committee of the Offer (including by amendment of the Schedule 14D-9), the
Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that prior to
the acceptance for payment of shares of Company Common Stock pursuant to the
Offer the Company receives a Superior Proposal (as defined below), the Board of
Directors of the Company may (if it determines in good faith, based upon the
advice of outside counsel, that it is required to do so in order to comply with
its fiduciary duties to the Company's shareholders under applicable law) (x)
withdraw or modify its approval or recommendation of the Offer, the Merger or
this Agreement or (y) approve or recommend such Superior Proposal and terminate
this Agreement (and concurrently with or after such termination, if it so
chooses, cause the Company to enter into an Acquisition Agreement with respect
to any Superior Proposal) but only at a time that is after the third business
day following Crane's receipt of written notice from the Company advising Crane
that the Board of Directors of the Company has received a Superior Proposal,
specifying the terms and conditions of such Superior Proposal and identifying
the person making such Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any proposal or offer made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of Company
Common Stock then outstanding or a substantial portion of the assets of the
Company and its subsidiaries and otherwise on terms which the Board of
Directors of the Company determines in its good faith judgment, based upon the
advice of its financial advisors, to be more favorable to the Company's
shareholders than the Offer and the Merger and for which financing is either
not a contingency, or, if a contingency, is then committed and available.
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(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.02, the Company shall as promptly as
practicable advise Crane of any Acquisition Proposal, the material terms and
conditions of such Acquisition Proposal and the identity of the person making
such request or Acquisition Proposal. The Company will keep Crane reasonably
informed of the status and details (including amendments) of any such
Acquisition Proposal.
(d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its fiduciary duties to the
Company's shareholders under applicable law; provided, however, that neither
the Company nor its Board of Directors nor any committee thereof shall, except
as permitted by Section 5.02(b), withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to this Agreement or the Offer or
the Merger or approve or recommend, or propose publicly to approve or
recommend, an Acquisition Proposal.
SECTION 5.03. Access to Information; Confidentiality. During normal
business hours during the period prior to the earlier of the termination of
this Agreement and the Effective Time, upon reasonable notice, the Company
shall (and shall cause its Subsidiaries to) (i) afford to the officers,
employees, accountants, counsel and other representatives of Crane, access, to
all its properties, books, contracts, commitments, records, officers,
employees, accountants, accountants' work papers, correspondence and affairs,
and (ii) cause its and their officers and employees to furnish, to Crane, and
its authorized representatives, any and all financial, technical and operating
data and other information pertaining to the businesses of the Company and its
Subsidiaries as Crane shall from time to time reasonably request. In addition,
without limiting the generality of the foregoing, the Company will, and will
cause each of its Subsidiaries to make available to Crane for examination true
and complete copies of all Returns filed by the Company or any of its
Subsidiaries, together with all available revenue agents' reports, all other
reports, notices and correspondence concerning tax audits or examinations and
analyses of all provisions for reserves or accruals of taxes, including
deferred taxes.
SECTION 5.04. Required Authorizations. (a) Crane, Merger Sub and,
subject to Section 5.02 of this Agreement, the Company, shall each, and,
subject to Section 5.02 of this Agreement, the Company shall cause each of its
Subsidiaries to, as promptly as practicable, take all reasonable actions
necessary to obtain all Required Authorizations (if any) required to be given
or obtained by it, respectively, to permit Crane and Merger Sub, on the one
hand, and the Company, on the other, to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement and to realize
the respective benefits to each party contemplated hereby and thereby; provided
that Crane shall not be required to take any action to comply with any legal
requirement or agree to the imposition of any order of any Governmental
Authority that would (i) prohibit or restrict the ownership or operation by
Crane of any portion of the business or assets of Crane or the Company (or
any of
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their respective Subsidiaries), (ii) compel Crane or the Company (or any of
their respective Subsidiaries) to dispose of or hold separate any portion of
its or the Company's business or assets, or (iii) impose any limitation on the
ability of Crane or the Surviving Corporation or any of their respective
affiliates or Subsidiaries to own or operate the business and operations of the
Company and its Subsidiaries, and provided further that the Company and its
Subsidiaries shall not incur fees and expenses in excess of $25,000 in the
aggregate in order to obtain any such Required Authorizations described in
clause (ii) of the definition thereof without the prior written consent of
Crane.
(b) Without limiting the generality of the foregoing, Crane,
Merger Sub and, subject to Section 5.02 of this Agreement, the Company shall
each cooperate with the others in filing in a timely manner any applications,
requests, reports, registrations or other documents, including, without
limitation, all reports and documents required to be filed by or under the
Exchange Act (including, without limitation, the Offer Documents, the Schedule
14D-9 and the Proxy Statement), with any Governmental Authority having
jurisdiction with respect to the transactions contemplated hereby and in
consulting with and seeking favorable action from any Governmental Authority.
(c) Without limiting the generality of the foregoing, and subject
to Section 5.02 of this Agreement, the Company shall, and shall cause each of
its Subsidiaries to, take all reasonable action necessary to obtain all
approvals or consents of any person needed in order that the Contracts continue
in full force and effect under the same terms and conditions currently in
effect following consummation of the transactions contemplated by the
Agreement; provided, however, that the receipt of any approval or consent under
any Contracts pursuant to this Section 5.04(c) shall not be a condition
precedent to the obligations of Parent or Purchaser under this Agreement.
(d) Without limiting the generality of the foregoing, and subject
to Section 5.02 of this Agreement, the Company and its Board of Directors shall
(i) take all reasonable action necessary to ensure that no state takeover
statute or similar statute or regulation in effect on the date of this
Agreement is or becomes applicable to the Offer, the Merger, this Agreement,
the Stock Option Agreement, the Shareholder Agreements or any of the other
transactions contemplated by this Agreement and (ii) if any such state takeover
statute or similar statute or regulation becomes applicable to the Offer, the
Merger, this Agreement, the Stock Option Agreement, the Shareholder Agreements
or any other transaction contemplated by this Agreement, take all reasonable
action necessary to ensure that the Offer, the Merger, the Stock Option
Agreement, the Shareholder Agreements and the other transactions contemplated
by this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger and the other transactions contemplated by
this Agreement.
SECTION 5.05. Financial Statements of the Company. As soon as
practicable but in any event within 30 days after the end of each calendar
month commencing with July, 1998, through the consummation of the Offer or
earlier termination of this Agreement in accordance with Article VII, the
Company will deliver to Crane unaudited consolidated balance sheets of the
Company and its Subsidiaries as at the end of such calendar month and as at the
end of the
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comparative month of the preceding year, together with unaudited summaries of
consolidated earnings of the Company and its Subsidiaries for such calendar
month and the comparative calendar month of the preceding year. As soon as
practicable but in any event within 30 days after the end of each fiscal
quarter of the Company, commencing with June 30, 1998, and within 60 days after
the end of the fiscal year ended December 31, 1998, as the case may be, through
the consummation of the Offer or earlier termination of this Agreement in
accordance with Article VII, the Company will deliver to Crane unaudited
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such fiscal quarter and as at the end of the
comparative fiscal quarter of the preceding year, together with the related
unaudited statements of consolidated income and cash flows for the fiscal
quarters then ended. All such financial statements of the Company shall present
fairly, in all material respects, the financial position, results of operations
and cash flows of the Company and its Subsidiaries, as at or for the periods
indicated (and, in the case of all such financial statements which are interim
financial statements, shall contain all adjustments necessary so to present
fairly) and shall be prepared in accordance with generally accepted accounting
principles (other than to omit certain footnotes which might be required
thereby and subject, in the case of interim financial statements, to normal
year-end adjustments) consistent with past practice, except as otherwise
indicated in such statements. All such financial statements of the Company
shall be certified, on behalf of the Company, by the President and Chief
Financial Officer of the Company.
SECTION 5.06. Employee Matters. Crane agrees (a) that on and after the
consummation of the Offer and until the date that is 18 months after the
Effective Time, Crane shall cause the Company and, on and after the Effective
Time, the Surviving Corporation, to honor the severance policy of the Company
and the employment agreements that are identified in Section 5.06 of the
Company Disclosure Schedule, (b) to give the employees of the Company full
credit for purposes of eligibility and vesting under any employee benefit plans
or arrangements maintained by Crane, the Surviving Corporation or any
Subsidiary of Crane for such employees' service with the Company or any of its
Subsidiaries to the same extent recognized by the Company immediately prior to
the consummation of the Offer, (c) to waive all limitations as to pre-existing
conditions, exclusions or waiting periods with respect to participation and
coverage requirements applicable to the Company employees under any welfare
benefit plans that such employees may be eligible to participate in after the
consummation of the Offer and (d) to provide employees of the Company and, from
and after the Effective Time, the Surviving Corporation, with employee benefits
comparable to those provided by Crane (or any of its Subsidiaries) to similarly
situated employees of Crane (or any of its Subsidiaries).
SECTION 5.07. Rights Agreement. The Board of Directors of the Company
shall take all further action (in addition to that referred to in Section 3.27)
reasonably requested in writing by Crane (including redeeming the Rights
immediately prior to the Effective Time or amending the Rights Agreement) in
order to render the Rights inapplicable to the Offer, the Merger and the other
transactions contemplated by this Agreement.
SECTION 5.08. Continuance of Existing Indemnification Rights. (a) For
six years after the Effective Time, Crane shall, or shall cause the Company
(or, if after the Effective Time, the Surviving Corporation) to, indemnify,
defend and hold harmless any person who is now, or
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has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director or an officer (an "Indemnified Person") of the
Company or any of its Subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and expenses),
judgments, fines, losses 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 Indemnified Person is or was a director or an officer of the
Company or any of its Subsidiaries or is or was serving at the request of the
Company or any of its Subsidiaries as a director or an officer 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 prior to, at or after the Effective Time, to the
full extent permitted under the PBCL and the Company's Articles of
Incorporation or By-laws in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any such Claim;
provided, however, that neither Crane nor the Surviving Corporation shall be
required to indemnify any Indemnified Person in connection with any proceeding
(or portion thereof) involving any Claim initiated by such Indemnified Person
unless the initiation of such proceeding (or portion thereof) was authorized by
the Board of Directors of Crane or unless such proceeding is brought by an
Indemnified Person to enforce rights under this Section 5.08. Without limiting
the generality of the preceding sentence, in the event any Indemnified Person
becomes involved in any Claim, after the consummation of the Offer, Crane
shall, or shall cause the Surviving Corporation to, periodically advance to
such Indemnified Person its legal and other expenses (including the cost of any
investigation and preparation incurred in connection therewith), subject to the
providing by such Indemnified Person of an undertaking to reimburse all amounts
so advanced in the case of a final nonappealable determination by a court of
competent jurisdiction that such Indemnified Person is not entitled to be
indemnified therefor.
(b) Crane 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 Time;
provided, however, that Crane may substitute therefor policies of substantially
similar coverage (including pursuant to Crane's own policy) and amounts
containing terms no less advantageous to such former directors or officers;
provided further that, subject to the preceding proviso, if the existing D&O
Insurance expires or is canceled during such period, Crane or the Surviving
Corporation shall use their best efforts to obtain substantially similar D&O
Insurance; and provided further that neither Crane nor the Surviving
Corporation shall be required to pay an annual premium for D&O Insurance in
excess of 200% of the last annual premium paid prior to the date hereof, but in
such case shall purchase as much coverage as possible for such amount.
(c) In the event Crane or 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, in each such case, to the extent necessary to
effectuate the purposes of this Section 5.08, proper provision shall be made so
that the successors and assigns of Crane and Purchaser assume the obligations
set forth in this Section
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5.08 and none of the actions described in clauses (i) or (ii) shall be taken
until such provision is made.
SECTION 5.09. Public Announcements. Crane and the Company will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The parties agree that
the initial press releases to be issued with respect to the transactions
contemplated by this Agreement shall be in the forms heretofore agreed to by
the parties.
SECTION 5.10. Shareholder Litigation. The Company shall give Crane the
opportunity to participate, at no expense to the Company, in the defense or
settlement of any shareholder litigation against the Company and its directors
relating to the transactions contemplated by this Agreement. No such settlement
shall be agreed to without Crane's consent; provided, however, that if a
failure to so consent is the sole cause of the occurrence of a Material Adverse
Effect, then such Material Adverse Effect shall not be an Event for purposes of
Annex II nor shall Crane be permitted to terminate this Agreement solely due to
the occurrence of such Material Adverse Effect.
SECTION 5.11. Financial Disclosure. The Company shall give Crane the
opportunity to review and comment upon the Company's Quarterly Report of Form
10-Q for the quarter ending June 30, 1998.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. The Company Shareholder Approval shall
have been obtained, if required by applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) No Injunctions or Restraints. No judgment, decree, statute,
law, ordinance, rule, regulation, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered, promulgated, enforced or
issued by any court of competent jurisdiction or other Governmental Authority
or other legal restraint or prohibition (collectively, "Restraints") preventing
the consummation of the Merger shall be in effect; provided, however, that
each of
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the parties shall have used all reasonable efforts to prevent the entry of any
such Restraints and to appeal as promptly as possible any such Restraints that
may be entered.
(d) Purchase of Company Common Stock. The Purchaser shall have
accepted for payment and paid for shares of Company Common Stock pursuant to
the Offer in accordance with the terms hereof; provided, however, that this
condition shall be deemed to be satisfied with respect to the obligation of
Crane and the Purchaser to effect the Merger if the Purchaser fails to accept
for payment or pay for shares of Company Common Stock pursuant to the terms and
conditions of the Offer.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval:
(a) by mutual written consent of Crane and the Company;
(b) by either Crane or the Company:
(i) if the Offer is terminated or withdrawn pursuant to its
terms without any shares of Company Common Stock being purchased thereunder;
provided, however, that neither Crane nor the Company may terminate this
Agreement pursuant to this Section 7.01(b)(i) if such party shall have
materially breached this Agreement;
(ii) if the Offer has not been consummated on or before
October 31, 1998; or
(iii) if any Governmental Authority shall have issued an
order, decree, ruling or injunction or taken any other action permanently
enjoining, restraining or otherwise prohibiting acceptance for payment of
shares of Company Common Stock pursuant to the Offer or the consummation of the
Merger and such order, decree, ruling, injunction or other action shall have
become final and nonappealable;
(c) by the Company if (i) Crane or the Purchaser fails to
commence the Offer as provided in Section 1.01 hereof, or (ii) Crane or the
Purchaser shall not have accepted for payment and paid for shares of Company
Common Stock pursuant to the Offer in violation of the terms hereof and
thereof; provided, however, that the Company may not terminate this Agreement
pursuant to this Section 7.01(c) if the Company shall have materially breached
this Agreement;
(d) by the Company in accordance with Section 5.02(b) prior to
the acceptance for payment of shares of Company Common Stock pursuant to the
Offer; provided that the Company has complied with all provisions thereof;
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(e) by Crane prior to the purchase of shares of Company Common
Stock pursuant to the Offer if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to Crane
its approval or recommendation of the Offer (including by amendment of the
Schedule 14D-9), the Merger or this Agreement, or approved or recommended any
Superior Proposal or (ii) the Board of Directors of the Company or any
committee thereof shall have resolved to take any of the foregoing actions; or
(f) by Crane or the Purchaser pursuant to Section 5.01(c) of this
Agreement.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Crane as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Crane, Merger Sub or the Company, except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement; provided that the provisions of this Section 7.02,
Section 7.03 and Article VIII shall remain in full force and effect and survive
any termination of this Agreement.
SECTION 7.03. Fees and Expenses. (a) Except as set forth in this
Section 7.03, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated.
(b) The Company shall reimburse Crane for out-of-pocket expenses
incurred by Crane relating to the transactions contemplated by this Agreement
prior to termination (including, but not limited to, fees and expenses of
Crane's counsel, accountants and financial advisors) if (i) this Agreement
shall have been terminated pursuant to Sections 7.01(d) or (e), (ii) the
Company enters into an Acquisition Agreement with a party other than Crane or
any of its Affiliates within one year of the date of such termination and (iii)
the transaction contemplated by such Acquisition Agreement is consummated
within 18 months of the date of such termination. Such reimbursement shall be
paid in same-day funds within one business day after the consummation of the
transaction contemplated by any such Acquisition Agreement.
SECTION 7.04. Amendment. This Agreement may be amended by the parties
at any time before or after the Company Shareholder Approval; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by the shareholders of the Company
without the further approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
SECTION 7.05. Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.04, waive compliance by the other parties
with any of the
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agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
SECTION 7.06. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.04 or an extension or waiver pursuant
to Section 7.05 shall, in order to be effective, require action by its Board of
Directors or, with respect to any amendment to this Agreement, to the extent
permitted by applicable law, a duly authorized committee of its Board of
Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery) 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 Crane or Merger Sub, to
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Attn: Corporate Secretary
with a copy to:
Janice C. Hartman
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Fax: (412) 355-6501
(b) if to the Company, to
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Liberty Technologies, Inc.
Lee Park, Suite 6000
555 North Lane
Conshohocken, PA 19428
Attn: President
with a copy to:
James D. Rosener
Pepper Hamilton LLP
1235 Westlakes Drive
Suite 400
Berwyn, PA 19312
Fax: (610) 889-1839
SECTION 8.03 Definitions. Capitalized and other terms utilized in this
Agreement shall have the respective meanings ascribed thereto in Annex I to
this Agreement.
SECTION 8.04 Interpretation. When a reference is made in this
Agreement to an Article, Section, Exhibit or Schedule, such reference shall be
to an Article or Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. 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 words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined herein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
39
<PAGE>
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Article II, are not intended to confer upon any person other
than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either party without the
prior written consent of the other party. Any assignment in violation of the
preceding sentence shall be void. 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 8.09. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby. Upon any such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the parties.
40
<PAGE>
IN WITNESS WHEREOF, Crane, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
CRANE CO.
By: /s/ David S. Smith
--------------------------------
David S. Smith
Vice President - Finance and
Chief Financial Officer
LTI MERGER, INC.
By: /s/ David S. Smith
--------------------------------
David S. Smith
Chief Executive Officer
LIBERTY TECHNOLOGIES, INC.
By: /s/ R. Nim Evatt
--------------------------------
R. Nim Evatt
President
41
<PAGE>
ANNEX I
DEFINITIONS
For purposes of this Agreement (to which this Annex 1 is attached and
of which this Annex I forms a part), the following terms shall have the
meanings set forth below:
"Acquisition Agreement" shall have the meaning assigned thereto in
Section 5.02(b) of this Agreement.
"Acquisition Proposal" shall have the meaning assigned thereto in
Section 5.02(a) of this Agreement.
"Affiliate" of any person shall mean any "affiliate" of such person as
defined in Rule 12b-2 under the Exchange Act and, without limiting the
generality of the foregoing, shall include any person that beneficially owns
(within the meaning of Rule 13d-3 under the Exchange Act) 5% or more of the
outstanding equity interests in such person; provided, however, that for
purposes of this Agreement, neither Crane nor Merger Sub shall be deemed to be
an Affiliate of the Company.
"Affiliated Group" shall have the meaning assigned thereto in Section
3.08(f) of this Agreement.
"Agreement" shall mean this Agreement and Plan of Merger.
"Articles of Merger" shall have the meaning assigned thereto in
Section 1.06 of this Agreement.
"Benefit Plans" shall have the meaning assigned thereto in Section
3.22(a) of this Agreement.
"Certificate" shall have the meaning assigned thereto in Section
2.01(e) of this Agreement.
"Claim" shall have the meaning assigned thereto in Section 5.08(a) of
this Agreement.
"Closing" shall have the meaning assigned thereto in Section 1.05 of
this Agreement.
"Closing Date" shall have the meaning assigned thereto in Section 1.05
of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"Company" shall mean Freedom Company, Inc., a Pennsylvania corporation.
<PAGE>
"Company Balance Sheet" shall have the meaning assigned thereto in
Section 3.05(b) of this Agreement.
"Company Common Stock" shall have the meaning assigned thereto in the
preamble to this Agreement.
"Company Disclosure Schedule" shall have the meaning assigned thereto
in the introduction to Article III of this Agreement.
"Company Group" shall have the meaning assigned thereto in Section
3.22(a) of this Agreement.
"Company Options" shall have the meaning assigned thereto in Section
2.03 of this Agreement.
"Company Preferred Stock" shall have the meaning assigned thereto in
Section 3.03 of this Agreement.
"Company SEC Reports" shall have the meaning assigned thereto in
Section 3.05(a) of this Agreement.
"Company Shareholder Approval" shall have the meaning assigned thereto
in Section 3.25 of this Agreement.
"Company Shareholder Meeting" shall have the meaning assigned thereto
in Section 1.11 of this Agreement.
"Confidentiality Agreement" shall mean the confidentiality agreement
dated March 18, 1998 between Crane and the Company.
"Contracts" shall have the meaning assigned thereto in Section 3.13 of
this Agreement.
"Crane" shall mean Crane Co., a Delaware corporation.
"Crane Disclosure Schedule" shall have the meaning assigned thereto in
the introduction to Article IV of this Agreement.
"Current Directors" shall have the meaning assigned thereto in Section
1.03(a) of this Agreement.
"Defined Benefit Plan" shall have the meaning assigned thereto in
Section 3.22(f) of this Agreement.
"Dissenting Shareholder" shall have the meaning assigned thereto in
Section 2.01(d) of this Agreement.
<PAGE>
"Dissenting Shares" shall have the meaning assigned thereto in Section
2.01(d) of this Agreement.
"D&O Insurance" shall have the meaning assigned thereto in Section
5.08(b) of this Agreement.
"Effective Time" shall have the meaning assigned thereto in Section
1.06 of this Agreement.
"Employment Agreements" shall have the meaning assigned thereto in
Section 3.20(a) of this Agreement.
"Environmental Laws" shall have the meaning assigned thereto in
Section 3.17(a) of this Agreement.
"Environmental Permits" shall have the meaning assigned thereto in
Section 3.17(a) of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning assigned thereto in Section
3.22(a) of this Agreement.
"Event" shall have the meaning assigned thereto in Annex II to this
Agreement.
"Exchange Act" shall have the meaning assigned thereto in Section
1.01(a) of this Agreement.
"Exchange Agent" shall have the meaning assigned thereto in Section
2.02(a) of this Agreement.
"Exchange Fund" shall have the meaning assigned thereto in Section
2.02(a) of this Agreement.
"Expiration Date" shall have the meaning assigned thereto in Section
1.01(b) of this Agreement.
"Governmental Approval" means any permit, license, authorization,
consent, approval, waiver, exception, variance, order, or exemption issued by
any Governmental Authority.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of a
government with jurisdiction over the matter in question.
<PAGE>
"Governmental Filings" means any plans, filings, reports,
notifications, or other submissions required to be made to any Governmental
Authority.
"Hazardous Material" shall have the meaning assigned thereto in
Section 3.17(d) of this Agreement.
"HSR Act" shall have the meaning assigned thereto in Section 3.04(c)
of this Agreement.
"Indebtedness" shall mean, with respect to the Company, at any date,
and regardless of whether the indebtedness or obligation was created before, on
or after the date hereof (without duplication): (i) all indebtedness for
borrowed money, or other obligations or liabilities for borrowed money
(including, without limitation, letters of credit) of the Company or any
Subsidiary, whether matured or unmatured, liquidated or unliquidated, direct or
contingent, joint or several, and whether now existing or hereafter created;
(ii) all indebtedness for borrowed money secured by any mortgage, lien, pledge,
charge or encumbrance upon any property or asset of the Company or any
Subsidiary; (iii) all indebtedness, obligations or liabilities of others of the
type described in the preceding clauses (i) and (ii) which the Company or any
Subsidiary has guaranteed, assumed or is in any other way liable for; and (iv)
all amendments, renewals, extensions or refundings of any such indebtedness,
obligation or liability.
"Indemnified Person" shall have the meaning assigned thereto in
Section 5.08(a) of this Agreement.
"Intellectual Property Rights" shall have the meaning assigned thereto
in Section 3.16 of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Liens" shall mean all mortgages, deeds of trust, pledges, liens,
leases, security interests, security agreements, conditional sales agreements,
notes, easements, restrictions, encroachments and other charges or encumbrances
of any kind whatsoever.
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets (including intangible assets), condition (financial or
otherwise), or results of operations of the Company and its Subsidiaries taken
as a whole; provided, however, that, for purposes of this Agreement, (a) a
decline in the market price of the Company Common Stock shall not, in and of
itself, constitute a Material Adverse Effect and (b) operating losses shall not
constitute a Material Adverse Effect unless such operating losses exceed
$1,000,000 in any consecutive four week period from and after June 30, 1998
and, provided further, that such operating losses shall be determined on the
basis of accounting and financial management practices consistent with the
Company's past practices.
"Merger" shall have the meaning assigned thereto in the preamble to
this Agreement.
<PAGE>
"Merger Consideration" shall have the meaning assigned thereto in
Section 2.01(c) of this Agreement.
"Merger Sub" shall mean FTI Merger Inc., a Pennsylvania corporation.
"Minimum Condition" shall have the meaning assigned thereto in Annex
II to this Agreement.
"Multiemployer Plan" shall have the meaning assigned thereto in
Section 3.22(g) of this Agreement.
"Offer" shall have the meaning assigned thereto in the preamble to
this Agreement.
"Offer Documents" shall have the meaning assigned thereto in Section
1.01(a) of this Agreement.
"PBCL" shall have the meaning assigned thereto in the preamble to this
Agreement.
"Per Share Amount" shall have the meaning assigned thereto in the
preamble to this Agreement.
"Personal Property" shall mean all assets owned by the Company or any
Subsidiary which are personal property, other than the Intellectual Property.
"Personal Property Leases" shall mean all leases, subleases, licenses
or other agreements under which the Company or any Subsidiary is lessee,
sublessee or licensee of any Personal Property and under which the remaining
rental obligations are at least $10,000.
"Predecessor" shall mean (i) a predecessor entity which has been
merged with the Company or any Subsidiary of the Company, or (ii) the
predecessor owner or operator of any of the property or assets owned or
operated by the Company or any Subsidiary of the Company, where the Company or
its Subsidiary is liable (whether by reason of the contractual assumption of
liabilities, indemnification obligations or by other operation of law) for the
actions or inactions of such predecessor.
"Proprietary Technology" shall have the meaning assigned thereto in
Section 3.16 of this Agreement.
"Proxy Statement" shall have the meaning assigned thereto in Section
1.11 of this Agreement.
"Purchaser" shall mean FTI Merger Inc., a Pennsylvania corporation.
"Qualified Plan" shall have the meaning assigned thereto in Section
3.22(e) of this Agreement.
<PAGE>
"Real Property Leases" shall mean all leases or subleases under which
the Company or any Subsidiary is lessee or sublessee of any real property, and
under which the remaining rental obligations are at least $50,000.
"Required Authorizations" shall mean, with respect to any person, (i)
all consents, authorizations, approvals or other orders or actions of, or
filings or registrations with, any federal, state, local or foreign
governmental authority or agency and (ii) all notices, permits, approvals,
consents, qualifications, waivers or other actions of third parties under any
lease, note, mortgage, indenture, agreement or other instrument (or, in the
case of the Company, under any Contract, Employment Agreement or any
Governmental Approval) or under any other third-party franchise, license or
permit, other than any such consents, authorizations, approvals, permits,
qualifications, waivers, orders, registrations, filings, applications or other
actions, the absence of which would not reasonably be expected to have a
Material Adverse Effect with respect to such person and its Subsidiaries, taken
as a whole.
"Requisite Rights" shall have the meaning assigned thereto in Section
3.16(a) of this Agreement.
"Restraints" shall have the meaning assigned thereto in Section
6.01(c) of this Agreement.
"Returns" shall have the meaning assigned thereto in Section 3.08(a)
of this Agreement.
"Rights" shall have the meaning assigned thereto in the preamble to
this Agreement.
"Rights Agreement" shall have the meaning assigned thereto in the
preamble to this Agreement.
"Schedule 14D-9" shall have the meaning assigned thereto in Section
1.02(a) of this Agreement.
"SEC" shall have the meaning assigned thereto in Section 1.01(a) of
this Agreement.
"Shareholder Agreements" shall have the meaning assigned thereto in
the preamble to this Agreement.
"Shares" shall have the meaning assigned thereto in the preamble to
this Agreement.
"Silicon Valley Bank Liens" shall have the meaning assigned thereto in
Section 3.02 of this Agreement.
"Silicon Valley Bank Loan" shall have the meaning assigned thereto in
Section 3.02 of this Agreement.
<PAGE>
"Stock Option Agreement" shall have the meaning assigned thereto in
the preamble to this Agreement.
"Stock Plans" shall have the meaning assigned thereto in Section 3.03
of this Agreement.
"Subsidiary" shall mean, with respect to any party, any corporation,
other organization, whether incorporated or unincorporated, of which (i) such
party or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
"Superior Proposal" shall have the meaning assigned thereto in Section
5.02(b) of this Agreement.
"Surviving Corporation" shall have the meaning assigned thereto in
Section 1.04 of this Agreement.
"Tax" or, collectively, "Taxes," shall mean any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities including taxes based upon or measured by
gross receipts, income profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements
or arrangements with any other person with respect to such amounts and
including any liability for taxes of a predecessor entity.
"Tender Offer Conditions" shall have the meaning assigned thereto in
Section 1.01(a) of this Agreement.
<PAGE>
ANNEX II
Conditions to the Offer. Notwithstanding any other provisions of the
Offer, 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)
promulgated under the Exchange Act, pay for any tendered Shares and may
terminate or, subject to the terms of the Merger Agreement, amend the Offer, if
(i) there shall not be validly tendered and not properly withdrawn prior to the
Expiration Date for the Offer that number of Shares which represents at least a
majority of the total number of outstanding Shares on a fully diluted basis
(including Shares issuable upon exercise of options) on the date of purchase
(not taking into account the Rights) (the "Minimum Condition"), (ii) any
applicable waiting period (and any extensions thereof) under the HSR Act shall
not have expired or been terminated prior to the Expiration Date, or (iii) at
any time prior to the time of acceptance for payment or payment for any Shares,
any of the following events (each, an "Event") shall occur:
(a) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to the Offer,
by any Governmental Authority, directly or indirectly, (i) challenging the
acquisition by Parent or the Purchaser of any shares of capital stock of
the Company or the Surviving Corporation, seeking to restrain or prohibit
the consummation of the Offer or the Merger or any of the other
transactions contemplated by the Merger Agreement or seeking to obtain from
the Company or Parent any damages that are material in relation to the
Company and its subsidiaries taken as a whole or Parent and its
subsidiaries taken as a whole, as applicable, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries of all or any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, or
to compel the Company, Parent or any of their respective subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, as a
result of the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement, (iii) seeking to impose limitations
on the ability of Parent to acquire or hold, or exercise full rights of
ownership of, any shares of capital stock of the Company or the Surviving
Corporation, (iv) seeking to prohibit Parent or any of its Subsidiaries
from effectively controlling in any material respect the business or
operations of the Company or its subsidiaries or (v) which otherwise would
reasonably be expected to have a Material Adverse Effect on the Company or
Parent; or
(b) there shall be pending or threatened any action or proceeding by
any Governmental Authority seeking, or that is reasonably likely to result,
directly or indirectly, in, any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above or by any third party for which
there is a substantial likelihood of resulting in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
<PAGE>
(c) there shall have occurred any Material Adverse Effect with respect
to the Company and its Subsidiaries taken as a whole; or
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified (including by amendment to the Schedule
14D-9) in a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer or the Merger Agreement, or approved or
recommended any Superior Proposal, (ii) the Company shall have entered into
an Acquisition Agreement with a party other than Crane or any of its
Affiliates, or (iii) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing; or
(e) the Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the
Merger Agreement shall have been terminated in accordance with its terms;
or
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct (without regard to any
materiality qualifications or references to Material Adverse Effect
contained in any specific representation or warranty), as if such
representations and warranties were made at the time of such determination
except to the extent such representations and warranties expressly relate
to an earlier date (in which case as of such date); provided that this
paragraph (f) shall be deemed satisfied so long as the failure of all such
representations and warranties to be true and correct would not (i) have a
Material Adverse Effect on the Company, (ii) prevent or materially delay
the consummation of the Offer, (iii) materially increase the cost of the
Offer to the Purchaser or (iv) have a material adverse effect on the
benefits to Parent of the transactions contemplated by the Merger
Agreement; or.
(g) the Company shall have failed to perform in all material respects
all obligations required to be performed by it under the Merger Agreement;
or
(h) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
New York Stock Exchange or on the Nasdaq National Market, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war, armed
hostilities or other national or international crises involving the United
States or a material limitation (whether or not mandatory) by any
governmental Entity on the extension of credit by banks or other lending
institutions, or (iv) with respect to any of the foregoing in effect on the
date of the Merger Agreement, a material worsening or acceleration thereof.
The foregoing conditions (including those set forth in clauses (i) and
(ii) of the initial paragraph) are for the benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by Parent or the Purchaser
in whole or in part at any time and from time to time in their reasonable
discretion, in each case, subject to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a
<PAGE>
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
The terms used in this Annex II shall have the meanings ascribed
thereto in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex II is
appended.
<PAGE>
EXHIBIT 1
SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
LIBERTY TECHNOLOGIES, INC.
1. Name. The name of the Corporation is: Liberty Technologies, Inc.
2. Address. The location and post office address of the registered office of
the Corporation in this Commonwealth is Lee Park, 555 North lane, Conshohocken,
Pennsylvania 19428.
3. Purposes. The Corporation is incorporated under the Business Corporation Law
of the Commonwealth of Pennsylvania for the following purpose or purposes: to
have unlimited power to engage in and to do any lawful act concerning any and
all lawful business for which corporations may be incorporated under the
Business Corporation Law.
4. Perpetual Existence. The term for which the Corporation is to exist is
perpetual.
5. Authorized Capital. The total number of shares of capital stock which the
Corporation shall have authority to issue is 100 shares of Common Stock, par
value $0.01 per share.
6. No Preemptive Rights. No shareholder of the Corporation shall have any
preemptive rights with respect to the capital stock of the Corporation, and any
preemptive rights which previously may have attached to the capital stock of
the Corporation are hereby extinguished.
7. No Cumulative Voting. There shall not be cumulative voting with respect to
the shares of capital stock of the Corporation.
8. Directors' Personal Liability. A director of the Corporation shall not be
personally liable, as such, for monetary damages for any action taken, or any
failure to take any action; provided, however, that this provision shall not
eliminate or limit the liability of a director to the extent that such
elimination or limitation of liability is expressly prohibited by Section 1713
of the Business Corporation law of 1988 or any successor statute as in effect
at the time of the alleged action or failure to take action by such director.
9. Effective Time. This Second Amended and Restated Articles of Incorporation
shall become effective upon filing with the Secretary of State of the
Commonwealth of Pennsylvania.
<PAGE>
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of August 11, 1998
("Agreement"), between Liberty Technologies, Inc., a Pennsylvania corporation
(the "Company"), and Crane Co., a Delaware corporation ("Crane");
W I T N E S S E T H:
WHEREAS, the Company, Crane and LTI Merger, Inc., a Pennsylvania
corporation and wholly owned subsidiary of Crane ("Merger Sub"), propose to
enter into an Agreement and Plan of Merger, of even date herewith (the "Merger
Agreement"), which provides that, among other things, upon the terms and
subject to the conditions thereof, Merger Sub will be merged with and into the
Company, with the Company continuing as the surviving corporation; and
WHEREAS, as a condition to the willingness of Crane to enter into the
Merger Agreement, Crane has required that the Company agree, and in order to
induce Crane to enter into the Merger Agreement, the Company has agreed, to
grant Crane an option to purchase certain shares of the common stock of the
Company together with the Rights associated therewith, in accordance with the
terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and in the Merger Agreement, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
Section 1.1 Grant of Stock Option. The Company hereby grants to Crane
an irrevocable option (the "Stock Option") to purchase up to 997,633 newly
issued shares (the "Option Shares") of common stock, par value $.01 per share,
together with the Rights associated therewith, of the Company ("Company Common
Stock") in the manner set forth below at a price (the "Purchase Price") of
$2.75 per Option Share. Capitalized terms used herein but not defined herein
shall have the meanings set forth in the Merger Agreement.
Section 1.2 Exercise of Stock Option. (a) Subject to the satisfaction
of the conditions set forth in Section 1.3 hereof, the Stock Option may be
exercised by Crane, in whole or in part, at any time or from time to time after
the occurrence of an Exercise Event (as defined below) and prior to the
Termination Date (as defined below).
(b) An "Exercise Event" shall occur for purposes of this
Agreement upon the termination of the Merger Agreement pursuant to Section
7.01(d) or (e) thereof.
<PAGE>
(c) The "Termination Date" shall occur for purposes of this
Agreement upon the first to occur of any of the following:
(i) the consummation of the Offer;
(ii) the date on which the Merger Agreement is terminated
pursuant to Section 7.01 thereof, if an Exercise Event shall not have
occurred; or
(iii) the date which is 365 days after the date on which the
Merger Agreement is terminated pursuant to Section 7.01 thereof, if an
Exercise Event shall have occurred;
provided that, with respect to clause (iii) above, if the Stock Option cannot
be exercised as of such date by reason of any applicable judgment, decree, law,
regulation or order, then the Termination Date shall be extended until fifteen
days after such impediment has been removed.
(d) In the event Crane wishes to exercise the Stock Option, Crane
shall send a written notice (an "Exercise Notice") to the Company specifying
the total number of Option Shares, if any, Crane wishes to purchase, the number
of Option Shares, if any, with respect to which Crane wishes to exercise its
Cash-Out Right (as defined herein) pursuant to Section 1.4 hereof, the
denominations of the certificate or certificates evidencing such Option Shares
which Crane wishes to receive, a date (a "Closing Date"), which shall be a
business day which is at least three business days after delivery of such
notice, and place for the closing of such purchase (a "Closing").
(e) Upon receipt of an Exercise Notice, the Company shall be
obligated to deliver to Crane the number of Option Shares specified therein, in
accordance with the terms of this Agreement, on the later of (i) the Closing
Date and (ii) the first business day on which there shall be no preliminary or
permanent injunction or other order by any court of competent jurisdiction
preventing or prohibiting such exercise of the Stock Option or the delivery of
the Option Shares in respect of such exercise.
Section 1.3 Closings. At each Closing, the Company will deliver to
Crane a certificate or certificates evidencing the number of Option Shares
specified in Crane's Exercise Notice, registered in the name of Crane or its
nominee, and Crane will deliver to the Company the aggregate Purchase Price for
such Option Shares. All payments made by Crane to the Company pursuant to this
Section 1.3 shall be made, at the option of Crane, by wire transfer of
immediately available funds, or by delivery to the Company of a certified or
bank check or checks payable to or on the order of the Company.
Section 1.4 Cash-Out Right. If, at any time during the period
commencing on the occurrence of an Exercise Event and terminating on the
Termination Date, Crane sends to the Company an Exercise Notice indicating
Crane's election to exercise its rights (the "Cash-Out Right") pursuant to this
Section 1.4, then the Company shall pay to Crane, on the Closing Date, in
exchange for the cancellation of the Stock Option with respect to such number
of Option Shares as Crane specifies in the Exercise Notice, an amount in cash
equal to such number of Option Shares multiplied by the difference between (i)
the average closing price for the 10 trading days commencing on the 12th
trading day immediately preceding the date of the Exercise
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Notice per share of Company Common Stock (the "Average Price") and (ii) the
Purchase Price. If Crane has sent an Exercise Notice to the Company prior to
the Termination Date, Crane shall be entitled to all of its rights under this
Section 1.4 to the extent exercised pursuant to the Exercise Notice
notwithstanding the failure of the Company to perform all of its obligations
under this Section 1.4 prior to the Termination Date.
Section 1.5 Adjustments Upon Share Issuances, Changes in
Capitalization, etc. (a) In the event of any change in Company Common Stock or
in the number of outstanding shares of Company Common Stock by reason of a
stock dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction or any other change in the corporate or capital structure
of the Company (including, without limitation, the declaration or payment of an
extraordinary dividend of cash, securities or other property), the type and
number of shares or securities to be issued by the Company upon exercise of the
Stock Option shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Crane shall receive
upon exercise of the Stock Option the number and class of shares or other
securities or property that Crane would have received in respect of Company
Common Stock if the Stock Option had been exercised immediately prior to such
event, or the record date therefor, as applicable, and such Company Common
Stock had elected to the fullest extent it would have been permitted to elect,
to receive such securities, cash or other property.
(b) No adjustment made in accordance with this Section 1.5 shall
constitute or be deemed a waiver of any breach of any of the Company's
representations, warranties, covenants, agreements or obligations contained in
the Merger Agreement.
(c) The provisions of this Agreement, including, without
limitation, Sections 1.1, 1.2, 1.3, 1.4 and 3.2, shall apply with appropriate
adjustments to any securities for which the Stock Option becomes exercisable
pursuant to this Section 1.5.
Section 1.6 Covenants of Crane. Crane agrees not to transfer or
otherwise dispose of the Option or the Option Shares, or any interest therein,
except in compliance with the Securities Act of 1933, as amended (the
"Securities Act") and any applicable state securities laws. Crane further
agrees to the placement of the following legend on the certificate(s)
representing the Option Shares (in addition to any legend required under
applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER (i) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
(ii) ANY APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF
SECURITIES, NO TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF
ANY INTEREST THEREIN, MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH OTHER STATE LAWS OR
PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH OTHER
STATE LAWS, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company. The Company
represents and warrants to Crane that (a) the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement, (b) the execution and delivery by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, (c) this Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, (d) the Company has taken all necessary corporate action to
authorize and reserve and permit it to issue, and at all times from the date
hereof through the Termination Date shall have reserved, all the Option Shares
issuable pursuant to this Agreement, and the Company will take all necessary
corporate action to authorize and reserve and permit it to issue all additional
shares of Company Common Stock or other securities which may be issued pursuant
to Section 1.5 hereof, all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, shall be duly authorized, validly
issued, fully paid and nonassessable, shall be delivered free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Crane's voting rights, charges and other
encumbrances of any nature whatsoever (other than this Agreement) and shall not
be subject to any preemptive rights, and (e) the execution and delivery of this
Agreement by the Company does not, and the consummation by the Company of the
transactions contemplated by this Agreement will not, conflict with, or result
in a violation of, or default under (with or without notice or lapse of time or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the Amended
and Restated Articles of Incorporation or Bylaws of the Company or (ii) any
mortgage, indenture, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company
or its properties or assets, except in the case of the preceding clause (ii)
for any such conflicts, violations, default, terminations, cancellations or
accelerations which would not have a Material Adverse Effect on the Company.
Section 2.2 Representations and Warranties of Crane. Crane represents
and warrants to the Company that (a) Crane is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement,
(b) the execution and delivery by Crane of this Agreement and the consummation
by Crane of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Crane, and (c) the
execution and delivery of this Agreement by Crane does not, and the
consummation by Crane of the transactions contemplated by this Agreement will
not conflict with, or result in a violation of, or default under (with or
without notice or lapse of time or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Certificate of Incorporation or Bylaws
of Crane or (ii) any mortgage, indenture, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Crane or its properties or assets, except in the case of the
preceding clause (ii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which would not have a Material
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<PAGE>
Adverse Effect on Crane.
ARTICLE III
COVENANTS OF THE COMPANY
Section 3.1 Listing; Other Action. (a) The Company shall, at its
expense, use its best efforts to cause the Option Shares to be approved for
trading on the Nasdaq National Market ("Nasdaq"), subject to notice of
issuance, as promptly as practicable following the date of this Agreement, and
will provide prompt notice to Nasdaq of the issuance of each Option Share.
(b) The Company shall use its best efforts to take, or cause to
be taken, all appropriate 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 hereunder,
including, without limitation, obtaining all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Authorities.
Section 3.2 Registration. (a) As used in this Agreement, "Registrable
Securities" means each of the Option Shares issued to Crane hereunder and any
other securities issued in exchange for, or issued as dividends or otherwise on
or in respect of, any of such Option Shares.
(b) At any time or from time to time following the first Closing,
Crane may make a written request to the Company for registration under and in
accordance with the provisions of the Securities Act with respect to all or
part of the Registrable Securities (a "Demand Registration"). A Demand
Registration may be, at the option of Crane, a shelf registration or a
registration involving an underwritten offering. As soon as reasonably
practicable after Crane's request for a Demand Registration, the Company shall
file one or more registration statements on any appropriate form with respect
to all of the Registrable Securities requested to be so registered; provided
that the Company will not be required to file any such registration statement
during any period of time (not to exceed 30 days after such request) when (A)
the Company is in possession of material non-public information which it
reasonably believes, upon the advice of its outside counsel, would have to be
disclosed if a registration statement were filed at that time, and that any
such disclosure at that time would be materially detrimental to the Company, or
(B) the Company is required under the Securities Act to include audited
financial statements for any period in such registration statement that are not
yet available for inclusion therein. The Company shall use its best efforts to
have the Demand Registration declared effective as soon as reasonably
practicable after such filing and to keep the Demand Registration continuously
effective; provided that the effectiveness of any Demand Registration may be
terminated if and when all of the Registrable Securities covered thereby shall
have been sold. If any Demand Registration involves an underwritten offering,
(i) the Company shall have the right to select the managing underwriter, which
shall be reasonably acceptable to Crane, and (ii) the Company shall enter into
an underwriting agreement in customary form. The Company shall not include in
any Demand Registration any securities other than the Registrable Securities
requested to be registered therein by Crane.
(c) Up to two registrations effected under this Section 3.2 shall
be effected at the Company's expense except for underwriting commissions
allocable to the Registrable
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<PAGE>
Securities. The Company shall indemnify and hold harmless Crane, its affiliates
and controlling persons and their respective officers, directors, agents and
representatives from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, all out-of-pocket
expenses, investigation expenses, expenses incurred with respect to any
judgment and fees and disbursements of counsel and accountants) arising out of
or based upon any statements contained in, or omissions or alleged omissions
from, each registration statement (and related prospectus) filed pursuant to
this Section 3.2; provided, however, that the Company shall not be liable in
any such case to Crane or any affiliate or controlling person of Crane or any
of their respective officers, directors, agents or representatives to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or omission or alleged omission made in such registration statement or
prospectus in reliance upon, and in conformity with, written information
furnished to the Company specifically for use in the preparation thereof by
Crane, such affiliate, controlling person, officer, director, agent or
representative, as the case may be.
ARTICLE IV
COVENANT OF CRANE
Section 4.1 Distribution. Crane hereby covenants and agrees that Crane
is acquiring the Stock Option and will acquire the Option Shares for investment
purposes only and not with a view to any distribution thereof in violation of
the Securities Act, and shall not sell any Option Shares purchased pursuant to
this Agreement except in compliance with the Securities Act and applicable law.
ARTICLE V
MISCELLANEOUS
Section 5.1 Expenses. Except as otherwise provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
Section 5.2 Further Assurances. The Company and Crane will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
Section 5.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 5.4 Entire Agreement. This Agreement and the Merger Agreement
(together with the annexes and the other documents delivered pursuant thereto)
constitute the entire agreement between the parties and supersede all prior
agreements and understandings, both written and oral, between the parties or
any of them, with respect to the subject matter hereof.
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<PAGE>
Section 5.5 Assignment. This Agreement shall not be assigned by either
party without the prior written consent of the other party.
Section 5.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
Section 5.7 Amendment; Waiver. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto. Either party
hereto may with respect to the other party (i) extend the time for the
performance of any obligation or other act, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
Section 5.8 Severability. If any term or other provision of this
Agreement is held by a court or other competent authority to be invalid,
illegal or incapable of being enforced by any rule of law, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect.
Section 5.9 Notice. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, sent or transmitted, if delivered personally,
sent by reputable overnight courier to the respective parties at their
addresses as specified in the Merger Agreement or sent by electronic
transmission to the respective parties at their telecopier numbers as specified
in the Merger Agreement.
Section 5.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the principles of conflicts of law thereof.
Section 5.11 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 5.12 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Company and Crane have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
LIBERTY TECHNOLOGIES, INC.
/s/ R. Nim Evatt
----------------------------------------
R. Nim Evatt
President
CRANE CO.
/s/ David S. Smith
----------------------------------------
David S. Smith
Vice President - Finance and Chief
Financial Officer
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<PAGE>
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated as of August 11, 1998 (this
"Agreement"), between Crane Co., a Delaware corporation ("Crane"), and the
shareholder listed on the signature page hereof (such shareholder and (with
respect to Shares (as defined herein) owned by an individual jointly with such
shareholder's spouse) together with his or her spouse, being referred to herein
as the "Shareholder");
WITNESSETH:
WHEREAS, the Shareholder, as of the date hereof, is the owner of or
has the sole right to vote the number of shares of common stock, par value $.01
per share ("Common Stock"), of Liberty Technologies, Inc., a Pennsylvania
corporation (the "Company"), set forth below the name of the Shareholder on the
signature page hereof, together with the Rights associated therewith (the
"Shares"); and
WHEREAS, in reliance upon the execution and delivery of this
Agreement, Crane will enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), with, among others, the Company,
which provides, among other things, that upon the terms and subject to the
conditions thereof, the Offer will be made and the Company will become wholly
owned by Crane at the Effective Time of the Merger; and
WHEREAS, to induce Crane to enter into the Merger Agreement and to
incur the obligations set forth therein, the Shareholder is entering into this
Agreement pursuant to which the Shareholder agrees to vote in favor of the
transactions contemplated by the Merger Agreement and certain other matters as
set forth herein, and to make certain agreements with respect to the Shares
upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
Section 1. Tender of Shares. The Shareholder covenants and agrees to
tender, or cause to be tendered, and to not (without the consent of Crane)
withdraw the Shares owned by such Shareholder pursuant to the Offer until the
earlier of (i) the date on which the Offer is terminated or withdrawn or (ii)
the date on which the Merger Agreement is terminated.
Section 2. Voting of Shares; Proxy. (a) The Shareholder agrees that
until the earlier of (i) the Effective Time, (ii) the date on which the Merger
Agreement is terminated or (iii) the purchase of all of the Shares owned by the
Shareholder pursuant to the Offer (the earliest thereof being hereinafter
referred to as the "Expiration Date"), the Shareholder shall vote all Shares
owned by the Shareholder at any meeting of the Company's shareholders (whether
annual or special and whether or not an adjourned meeting), or, if applicable,
take action by written consent (x) for adoption and approval of the Merger
Agreement and in favor of the Merger and otherwise
<PAGE>
in favor of the transactions contemplated by the Merger Agreement as such
Merger Agreement may be modified or amended from time to time and (y) against
any action, omission or agreement which would or could impede or interfere
with, or have the effect of discouraging, the transactions contemplated by the
Merger Agreement, including, without limitation, any Acquisition Proposal other
than the transactions contemplated by the Merger Agreement. Any such vote shall
be cast or consent shall be given in accordance with such procedures relating
thereto as shall ensure that it is duly counted for purposes of determining
that a quorum is present and for purposes of recording the results of such vote
or consent.
(b) At the request of Crane, the Shareholder, in furtherance of the
transactions contemplated hereby and by the Merger Agreement, and in order to
secure the performance by the Shareholder of such Shareholder's duties under
this Agreement, shall promptly execute, in accordance with the provisions of
Section 1759(c) of the Pennsylvania Business Corporation Law, and deliver to
Crane, an irrevocable proxy, substantially in the form of Annex A hereto, and
irrevocably appoint Crane or its designees, with full power of substitution,
such Shareholder's attorney and proxy to vote, or, if applicable, to give
consent with respect to, all of the Shares owned by the Shareholder in respect
of any of the matters set forth in, and in accordance with the provisions of,
clauses (i) and (ii) above of Section 1(a). The Shareholder acknowledges that
the proxy executed and delivered by such Shareholder shall be coupled with an
interest, shall constitute, among other things, an inducement for Crane to
enter into the Merger Agreement, shall be irrevocable and shall not be
terminated by operation of law upon the occurrence of any event, including,
without limitation, the death or incapacity of the Shareholder. Notwithstanding
any provision contained in such proxy, such proxy shall terminate upon the
Expiration Date.
(c) The Shareholder agrees, and shall take all actions necessary to
ensure, that the certificate(s) evidencing the Shares shall have the following
legend placed thereon (in addition to any legend required under applicable
state or federal securities law):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION
PURSUANT TO A SHAREHOLDER AGREEMENT DATED AUGUST 11, 1998, BETWEEN THE
SHAREHOLDER WHOSE NAME APPEARS ON THIS CERTIFICATE AND CRANE CO. (THE
"SHAREHOLDER AGREEMENT")."
Section 3. Covenants of the Shareholder. The Shareholder covenants and
agrees for the benefit of Crane that such Shareholder, in his or her capacity
as a Shareholder, will:
(a) until the date that is six months after the Expiration Date,
except for the tendering of the Shares pursuant to the Offer and
except for the option granted to Crane pursuant to Section 4 hereof,
not sell, transfer, pledge, hypothecate, encumber, assign, tender or
otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer,
pledge, hypothecation, encumbrance, assignment, tender or other
disposition of, any of the Shares owned by such Shareholder or any
interest therein, unless and until such transferee executes and
delivers to Crane a joinder to this Agreement pursuant to which such
transferee shall agree that, for all purposes of this Agreement, (i)
such transferee shall be deemed to be the "Shareholder"
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<PAGE>
hereunder and (ii) all shares of the Common Stock of the Company
transferred to such transferee pursuant to this Section 3(a) shall be
deemed to be "Shares" hereunder;
(b) until the Expiration Date, except as may be required to vote
the Shares in accordance with Section 2 hereof, not grant any powers
of attorney or proxies or consents in respect of any of the Shares
owned by such Shareholder, deposit any of the Shares owned by such
Shareholder into a voting trust, enter into a voting agreement with
respect to any of the Shares owned by such Shareholder or otherwise
restrict the ability of the holder of any of the Shares owned by such
Shareholder freely to exercise all voting rights with respect thereto;
and
(c) until the Expiration Date, not, and cause such Shareholder's
agents and representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation
of any Acquisition Proposal or engage in any negotiations concerning,
or provide any confidential information or data to, or have any
discussions with, any person relating to a Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement a
Acquisition Proposal. The Shareholder shall immediately cease and
cause to be terminated any existing activities, including discussions
or negotiations with any parties, conducted heretofore with respect to
any of the foregoing and will take the necessary steps to inform such
Shareholder's agents and representatives of the obligations undertaken
in this Section 3(c). The Shareholder shall notify Crane immediately
if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, such Shareholder.
Section 4. Grant of Option. (a) The Shareholder hereby grants to Crane
an irrevocable option (the "Option") to purchase all or any part of the Shares
owned by such Shareholder (the "Option Shares") at a price of $3.50 per Option
Share.
(b) The Option may be exercised by Crane, in whole or in part, at
any time or from time to time if the Company enters into an Acquisition
Agreement with a party other than Crane or any of its Affiliates within six
months after the Expiration Date;
(c) In the event Crane wishes to exercise the Option, Crane shall
send a written notice (an "Exercise Notice") to the Shareholder specifying the
total number of Option Shares Crane wishes to purchase, the denominations of
the certificate or certificates evidencing such Option Shares which Crane
wishes to receive, a date (a "Closing Date"), which shall be a business day
which is at least three business days after delivery of such notice, and place
for the closing of such purchase (a "Closing"). Upon receipt of an Exercise
Notice, the Shareholder shall be obligated to deliver to Crane the number of
Option Shares specified therein, in accordance with the terms of this
Agreement, on the later of (i) the Closing Date and (ii) the first business day
on which there shall be no preliminary or permanent injunction or other order
by and court of competent jurisdiction preventing or prohibiting such exercise
of the Option or the delivery of the Option Shares in respect of such exercise.
At each Closing, the Shareholder will deliver to Crane a certificate or
certificates evidencing the number of Option Shares specified in Crane's
Exercise Notice, registered in the name of Crane or its nominee, and Crane will
deliver
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<PAGE>
to the Shareholder the aggregate purchase price for such Option Shares. All
payments made by Crane to the Shareholder pursuant to this Section 4 shall be
made, at the option of the Shareholder, by wire transfer of immediately
available funds, or by delivery to the Shareholder of a certified or bank check
or checks payable to or on the order of the Shareholder.
Section 5. Covenants of Crane. Crane covenants and agrees for the
benefit of the Shareholder that (a) immediately upon execution of this
Agreement, Crane shall enter into the Merger Agreement, and (b) until the
Expiration Date, it shall use all reasonable efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement, consistent with the
terms and conditions of each such agreement; provided, however, that nothing in
this Section 5, Section 14 or any other provision of this Agreement is
intended, nor shall it be construed, to limit or in any way restrict Crane's
right or ability to exercise any of its rights under the Merger Agreement.
Section 6. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to Crane that: (a) the execution, delivery
and performance by the Shareholder of this Agreement will not conflict with,
require a consent, waiver or approval under, or result in a breach of or
default under, any of the terms of any contract, commitment or other obligation
(written or oral) to which the Shareholder is bound, other than consents,
waivers and approvals the absence of which would not reasonably be expected to
have an adverse effect on the Shareholder's ability to perform his or her
obligations hereunder and except for such conflicts, breaches or defaults which
would not reasonably be expected to have an adverse effect on the Shareholder's
ability to perform his or her obligations hereunder; (b) this Agreement has
been duly executed and delivered by the Shareholder and constitutes a legal,
valid and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and subject to the application of equitable principles and the
discretion of the court (regardless of whether the enforceability is considered
in a proceeding in equity or at law); (c) the Shareholder is the sole owner of
or has the sole right to vote the Shares and the Shares represent all shares of
Common Stock which the Shareholder is the sole owner of or has the sole right
to vote at the date hereof, and the Shareholder does not have any right to
acquire, nor is he or she the "beneficial owner" (as such term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of, any other
shares of any class of capital stock of the Company or any securities
convertible into or exchangeable or exercisable for any shares of any class of
capital stock of the Company (other than shares subject to options or other
rights granted by the Company); (d) the Shareholder has full right, power and
authority to execute and deliver this Agreement and to perform his or her
obligations hereunder; and (e) the Shareholder owns the Shares free and clear
of all liens, claims, pledges, charges, proxies, restrictions, encumbrances,
proxies, voting trusts and voting agreements of any nature whatsoever, other
than restrictions upon resale which may be imposed by federal or state
securities laws and other than as provided by this Agreement. The
representations and warranties contained herein shall be made as of the date
hereof and, with respect to the representations and warranties set forth in
clauses (c), (d) and (e) of this Section 6, as of each day from the date hereof
through and
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including the earlier to occur of the date that is six months after the
Expiration Date or the date of the consummation of any transfer of Shares
permitted by Section 3(a) hereof.
Section 7. Adjustments; Additional Shares. In the event (a) of any
stock dividend, stock split, merger (other than the Mergers) recapitalization,
reclassification, combination, exchange of shares or the like of the capital
stock of the Company on, of or affecting the Shares or (b) that the Shareholder
shall become the beneficial owner of any additional shares of Common Stock or
other securities entitling the holder thereof to vote or give consent with
respect to the matters set forth in Section 2, then such additional shares of
Common Stock and other securities shall become Option Shares hereunder and the
terms of this Agreement shall otherwise apply to the shares of capital stock or
other instruments or documents held by the Shareholder immediately following
the effectiveness of the events described in clause (a) or the Shareholder
becoming the beneficial owner thereof as described in clause (b), as though, in
either case, they were Shares hereunder.
Section 8. Specific Performance. The Shareholder acknowledges that the
agreements contained in this Agreement are an integral part of the transactions
contemplated by the Merger Agreement, and that, without these agreements, Crane
would not enter into the Merger Agreement, and acknowledges that damages would
be an inadequate remedy for any breach by him or her of the provisions of this
Agreement. Accordingly, the Shareholder and Crane each agree that the
obligations of the parties hereunder shall be specifically enforceable and
neither party shall take any action to impede the other from seeking to enforce
such right of specific performance.
Section 9. Notices. All notices, requests, claims, demands and other
communications hereunder shall be effective upon receipt (or refusal of
receipt), shall be in writing and shall be delivered in person, by telecopy or
telefacsimile, by telegram, by next-day courier service, or by mail (registered
or certified mail, postage prepaid, return receipt requested) to the
Shareholder at the address listed on the signature page hereof, and to Crane at
100 First Stamford Place, Stamford, CT 06902, Attention: Augustus I. duPont,
telecopy number 203-363-7350 or to such other address or telecopy number as any
party may have furnished to the other in writing in accordance herewith.
Section 10. Binding Effect; Survival. Upon execution and delivery of
this Agreement by Crane, this Agreement shall become effective as to the
Shareholder at the time the Shareholder executes and delivers this Agreement.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
Section 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed entirely within such
Commonwealth.
Section 12. Counterparts. This Agreement may be executed in two
counterparts, both of which shall be an original and both of which together
shall constitute one and the same agreement.
5
<PAGE>
Section 13. Effect of Headings; Defined Terms. The Section headings
herein are for convenience of reference only and shall not affect the
construction hereof. Capitalized terms used but not defined herein shall have
the meanings assigned thereto in the Merger Agreement.
Section 14. Additional Agreements; Further Assurance. 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 to consummate and
make effective the transactions contemplated by this Agreement. The Shareholder
will provide Crane with all documents which may reasonably be requested by
Crane and will take reasonable steps to enable Crane to obtain all rights and
benefits provided it hereunder.
Section 15. Amendment; Waiver. No amendment or waiver of any provision
of this Agreement or consent to departure therefrom shall be effective unless
in writing and signed by Crane and the Shareholder, in the case of an
amendment, or by the party which is the beneficiary of any such provision, in
the case of a waiver or a consent to depart therefrom.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto all as of the day and year first above written.
CRANE CO.
By
--------------------------------
Title:
--------------------------
SHAREHOLDER:
- --------------------------------
[Name]
SPOUSE:
- --------------------------------
Name:
Address:
Number of Shares:
6
<PAGE>
ANNEX A
IRREVOCABLE PROXY
In order to secure the performance of the duties of the undersigned
pursuant to the Shareholder Agreement, dated as of August 11, 1998 (the
"Shareholder Agreement"), between the undersigned and Crane Co., a copy of such
agreement being attached hereto and incorporated by reference herein, the
undersigned hereby irrevocably appoints David S. Smith and Augustus I. duPont,
and each of them, the attorneys, agents and proxies, with full power of
substitution in each of them, for the undersigned and in the name, place and
stead of the undersigned, in respect of any of the matters set forth in clauses
(x) and (y) of Section 2 of the Shareholder Agreement, to vote or, if
applicable, to give written consent, in accordance with the provisions of said
Section 2 and otherwise act (consistent with the terms of the Shareholder
Agreement) with respect to all shares of Common Stock, par value $.01 per share
(the "Shares"), of Liberty Technologies, Inc., a Pennsylvania corporation (the
"Company"), whether now owned or hereafter acquired, which the undersigned is
or may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or,
if applicable, to give written consent with respect thereto. This Proxy is
coupled with an interest, shall be irrevocable and binding on any successor in
interest of the undersigned and shall not be terminated by operation of law
upon the occurrence of any event, including, without limitation, the death or
incapacity of the undersigned. This Proxy shall operate to revoke any prior
proxy as to the Shares heretofore granted by the undersigned. This Proxy has
been executed in accordance with Section 1759(c) of the Pennsylvania Business
Corporation Law.
- ----------------------------
[Name]
- ----------------------------
Dated:
----------------------
A-1
<PAGE>
FIRST AMENDMENT TO
AMENDED AND RESTATED RIGHTS AGREEMENT
This First Amendment (this "Amendment") to the Amended and Restated Rights
Agreement dated October 6, 1997 (the "Rights Agreement") among Liberty
Technologies, Inc., a Pennsylvania corporation (the "Company") and StockTrans,
Inc. (the "Rights Agent") is entered into this 11th day of August, 1998 between
the Company and the Rights Agent.
WHEREAS, upon the terms and subject to the conditions of the Rights
Agreement, the Board of Directors of the Company has authorized the issuance of
Rights; and
WHEREAS, the Board of Directors of the Company has determined that it is in
the best interests of the Company and its shareholders to amend the Rights
Agreement as set forth herein immediately prior to and in connection with the
execution and delivery of that certain Agreement and Plan of Merger (the
"Merger Agreement") dated as of August 11, 1998 among the Company, Crane Co., a
Delaware corporation ("Crane"), and LTI Merger, Inc., a Pennsylvania
corporation and a wholly-owned subsidiary of Crane ("Merger Sub"); and
WHEREAS, there has been delivered to the Rights Agent a certificate from a
duly authorized officer of the Company stating that this Amendment is in
compliance with the terms of Section 26 of the Rights Agreement.
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Section 7(a) of the Rights Agreement is hereby amended to read in its
entirety as follows:
"(a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date"), and (ii) the Effective
Time (as defined in the Agreement and Plan of Merger, dated as of August
11, 1998, as the same may be amended from time to time (the "Merger
Agreement"), among the Company, Crane Co, a Delaware corporation ("Crane"),
and LTI Merger, Inc., a Pennsylvania corporation and a wholly-owned
subsidiary of Crane ("Merger Sub"))(the earlier of (i) and (ii) being the
"Expiration Date"), the registered holder of any Rights Certificate may,
subject to the provisions of Sections 7(e) and 9(c), exercise the Rights
evidenced thereby in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of election to
purchase and the certificate on the reverse side thereof duly executed, to
the Rights Agent at the office of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price (as defined
herein) for the number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may
be) for which such surrendered Rights are then exercisable."
<PAGE>
2. Section 26 of the Rights Agreement is hereby amended by adding at the end
thereof the following sentence:
"Notwithstanding anything contained in this Agreement to the contrary, this
Agreement shall not be amended or supplemented in any manner until the
termination of the Merger Agreement in accordance with its terms without
the prior written consent of Crane."
3. The Rights Agreement is hereby amended by adding Section 35 as follows:
"SECTION 35. CRANE TRANSACTIONS. Notwithstanding anything contained in this
Rights Agreement to the contrary, (x) until the termination of the Merger
Agreement in accordance with its terms, Crane (including each Affiliate and
Associate of Crane) shall be an "Exempt Person", and (y) no Distribution
Date, Stock Acquisition Date or Triggering Event shall be deemed to have
occurred, neither Crane nor any Affiliate or Associate of Crane shall be
deemed to have become an Acquiring Person and no holder of Rights shall be
entitled to exercise such Rights under or be entitled to any rights
pursuant to Section 7, 11 or 13 of this Agreement by reason of (i) the
approval, execution, delivery or effectiveness of the Merger Agreement, the
Stock Option Agreement (as defined in the Merger Agreement) or the
Shareholder Agreements (as defined in the Merger Agreement) or (ii) the
consummation of any of the transactions contemplated by the Merger
Agreement, the Stock Option Agreement or Shareholder Agreements in
accordance with the terms thereof or the taking of any action by any party
thereto or any Affiliate or Associate thereof to facilitate the
consummation of any such transactions."
4. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Rights Agreement.
5. This Amendment shall be deemed effective as of August 11, 1998, as if
executed by both parties on such date. Except as amended hereby, the Rights
Agreement shall remain unchanged and shall remain in full force and effect.
6. This Amendment may be executed in two counterparts, each of which shall be
an original, but both of which together shall constitute one instrument.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective duly authorized representatives as of the date
first above written.
ATTEST: LIBERTY TECHNOLOGIES, INC.
By: By: /s/ R. Nim Evatt
-------------------------- ---------------------------
Name: Name: R. Nim Evatt
------------------------ -------------------------
Title: Title: Chief Executive Officer
----------------------- ------------------------
StockTrans, Inc.
By: /s/ Laurie Adams By: /s/ Jonathan Miller
-------------------------- ---------------------------
Name: Laurie Adams Name: Jonathan Miller
------------------------ -------------------------
Title: Corporate Secretary Title: President
----------------------- ------------------------
3
