AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LASER POWER CORPORATION,
AND
II-VI INCORPORATED
AND
II-VI ACQUISITION CORP.
JUNE 28, 2000
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ARTICLE I DEFINITIONS........................................................2
Section 1.1 CERTAIN DEFINITIONS........................................2
Section 1.2 TERMS GENERALLY............................................8
ARTICLE II THE OFFER.........................................................8
Section 2.1 THE OFFER..................................................8
Section 2.2 COMPANY ACTIONS...........................................10
Section 2.3 COMPOSITION OF THE BOARD OF DIRECTORS.....................11
ARTICLE III THE MERGER......................................................12
Section 3.1 THE MERGER................................................12
Section 3.2 CONVERSION OF SHARES......................................13
Section 3.3 PAYMENT OF MERGER CONSIDERATION FOR COMPANY COMMON STOCK..13
Section 3.4 DISSENTING SHARES.........................................15
Section 3.5 STOCK OPTIONS.............................................16
Section 3.6 FRACTIONAL SHARES.........................................16
ARTICLE IV THE SURVIVING CORPORATION........................................17
Section 4.1 CERTIFICATE OF INCORPORATION..............................17
Section 4.2 BYLAWS....................................................17
Section 4.3 DIRECTORS AND OFFICERS....................................17
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................17
Section 5.1 CORPORATE EXISTENCE AND POWER.............................17
Section 5.2 CORPORATE AUTHORIZATION...................................18
Section 5.3 GOVERNMENTAL AUTHORIZATION................................18
Section 5.4 NON-CONTRAVENTION.........................................18
Section 5.5 CAPITALIZATION............................................19
Section 5.6 SUBSIDIARIES..............................................20
Section 5.7 REPORTS AND FINANCIAL STATEMENTS..........................20
Section 5.8 OFFER DOCUMENTS; PROXY STATEMENT..........................20
Section 5.9 ABSENCE OF CERTAIN CHANGES OR EVENTS......................21
Section 5.10 NO UNDISCLOSED MATERIAL LIABILITIES.......................23
Section 5.11 LITIGATION................................................23
Section 5.12 TAXES.....................................................23
Section 5.13 ERISA.....................................................25
Section 5.14 LABOR MATTERS.............................................26
Section 5.15 COMPLIANCE WITH LAWS AND COURT ORDERS.....................27
Section 5.16 FINDERS' FEES.............................................27
Section 5.17 ENVIRONMENTAL MATTERS.....................................27
Section 5.18 YEAR 2000 PROGRAM.........................................29
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TABLE OF CONTENTS (Con't)
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Section 5.19 INSURANCE.................................................29
Section 5.20 CERTAIN BUSINESS PRACTICES................................29
Section 5.21 SUPPLIERS AND CUSTOMERS...................................30
Section 5.22 CONTRACTS.................................................30
Section 5.23 DISCLOSURE................................................31
Section 5.24 INTELLECTUAL PROPERTY.....................................32
Section 5.25 RELATED PARTY TRANSACTIONS................................32
Section 5.26 ASSETS....................................................32
Section 5.27 DELAWARE SECTION 203......................................33
Section 5.28 BUSINESS RELATIONS........................................33
Section 5.29 RIGHTS AGREEMENT..........................................33
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TABLE OF CONTENTS (Con't)
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF II-VI AND MERGERSUB............34
Section 6.1 CORPORATE EXISTENCE AND POWER.............................34
Section 6.2 CORPORATE AUTHORIZATION...................................34
Section 6.3 GOVERNMENTAL AUTHORIZATION................................34
Section 6.4 NON-CONTRAVENTION.........................................34
Section 6.5 REGISTRATION STATEMENTS, OFFER DOCUMENTS AND PROXY
STATEMENT............................................35
Section 6.6 LITIGATION................................................35
Section 6.7 FINDERS' FEES.............................................35
Section 6.8 FINANCING.................................................36
Section 6.9 CAPITALIZATION............................................36
Section 6.10 II-VI REPORTS AND FINANCIAL STATEMENTS....................36
ARTICLE VII COVENANTS OF THE COMPANY........................................37
Section 7.1 CONDUCT OF THE COMPANY....................................37
Section 7.2 PROXY STATEMENT...........................................39
Section 7.3 STOCKHOLDERS' MEETING.....................................39
Section 7.4 ACCESS TO INFORMATION; RIGHT OF INSPECTION................39
Section 7.5 OTHER POTENTIAL ACQUIRERS.................................40
Section 7.6 RESIGNATION OF DIRECTORS..................................41
ARTICLE VIII COVENANTS OF II-VI AND MERGERSUB...............................42
Section 8.1 VOTING OF SHARES..........................................42
Section 8.2 DIRECTOR AND OFFICER LIABILITY............................42
Section 8.3 NASDAQ NATIONAL MARKET LISTING............................43
ARTICLE IX COVENANTS OF II-VI AND MERGERSUB AND THE COMPANY.................43
Section 9.1 REASONABLE BEST EFFORTS...................................43
Section 9.2 CERTAIN FILINGS...........................................43
Section 9.3 PUBLIC ANNOUNCEMENTS......................................44
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TABLE OF CONTENTS (Con't)
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Section 9.4 FURTHER ASSURANCES........................................44
Section 9.5 NOTICES OF CERTAIN EVENTS.................................45
ARTICLE X CONDITIONS TO THE MERGER..........................................45
Section 10.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY...............45
Section 10.2 CONDITIONS TO THE OBLIGATIONS OF II-VI AND MERGERSUB......46
Section 10.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY..............47
ARTICLE XI TERMINATION......................................................47
Section 11.1 TERMINATION...............................................47
Section 11.2 TERMINATION FEES..........................................49
Section 11.3 EFFECT OF TERMINATION.....................................49
ARTICLE XII MISCELLANEOUS...................................................50
Section 12.1 NOTICES...................................................50
Section 12.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES................51
Section 12.3 AMENDMENTS' NO WAIVERS....................................51
Section 12.4 EXPENSES..................................................51
Section 12.5 TRANSFER TAXES............................................51
Section 12.6 SUCCESSORS AND ASSIGNS....................................52
Section 12.7 GOVERNING LAW.............................................52
Section 12.8 COUNTERPARTS; EFFECTIVENESS; FACSIMILE TRANSMISSION.......52
Section 12.9 SEVERABILITY..............................................52
Section 12.10 SPECIFIC PERFORMANCE......................................52
Section 12.11 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES............53
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APPENDICES
A. Tender Offer Conditions
DISCLOSURE LETTER
Section 5.1 - Corporate Existence and Power
Section 5.4 - Non-Contravention
Section 5.5 - Capitalization
Section 5.6 - Subsidiaries
Section 5.9 - Absence of Certain Changes or Events
Section 5.10 - No Undisclosed Material Liabilities
Section 5.11 - Litigation
Section 5.12 - Taxes
Section 5.13 - ERISA
Section 5.14 - Labor Matters
Section 5.17 - Environmental Matters
Section 5.18 - Year 2000 Program
Section 5.22 - Contracts
Section 5.24 - Intellectual Property
Section 5.25 - Related Party Transactions
Section 5.26 - Assets
Section 7.1 - Conduct of the Company
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") dated as of June
28, 2000 by and between LASER POWER CORPORATION, a Delaware corporation (the
"COMPANY"), II-VI INCORPORATED, a Pennsylvania corporation ("II-VI"), and II-VI
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of II-VI
("MERGERSUB").
RECITALS
A. The respective Boards of Directors of the Company, II-VI and
MergerSub each have determined that it is fair to, and in the best interests of
their respective companies and stockholders for MergerSub to acquire the Company
upon the terms and subject to the conditions set forth herein.
B. In furtherance of such acquisition, it is proposed that MergerSub
will make an exchange offer (the "OFFER") to purchase, subject to the terms and
conditions of this Agreement, up to 100% of all the issued and outstanding
shares of common stock, $.001 par value per share (the "COMPANY COMMON STOCK")
of the Company (the "SHARES"), the consideration for such purchase to consist of
shares of common stock, no par value, of II-VI (the "II-VI COMMON STOCK") and
cash.
C. The Board of Directors of the Company has approved the making of the
Offer and resolved to recommend that the holders of the Shares tender their
Shares pursuant to the Offer.
D. The respective Boards of Directors of the Company, II-VI and
MergerSub each have approved in accordance with the Delaware General Corporation
Law, as amended ("DELAWARE CORPORATE LAW"), this Agreement and the merger of the
MergerSub with and into the Company following the consummation of the Offer (the
"MERGER") and upon the terms and subject to the conditions set forth herein.
E. The Company, II-VI and MergerSub desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe certain conditions to the Offer and
the Merger.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
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Section 1.1 CERTAIN DEFINITIONS.
For purposes of this Agreement, the following terms shall have
the respective meanings set forth below:
"BALANCE SHEET" shall mean the consolidated balance sheet of
the Company as of September 30, 1999 (and the notes thereto) set forth in the
Company's annual report on Form 10-K for the fiscal year ended September 30,
1999.
"BALANCE SHEET DATE" shall mean September 30, 1999.
"BENEFIT ARRANGEMENTS" shall have the meaning set forth in
Section 5.13(a).
"CERTIFICATE" shall have the meaning set forth in Section
3.2(b).
"CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 3.1(b).
"CLAIMS" shall mean all demands, claims, actions or causes of
action, assessments, losses, damages (including, without limitation, diminution
in value), liabilities, sanctions, costs and expenses, including, without
limitation, interest, penalties and attorneys' fees and disbursements.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMMENCEMENT DATE" shall mean the date of the filing of the
Offer Registration Statement, as defined in Section 2.1(b).
"COMMON SHARE EXCHANGE RATIO" shall have the meaning set forth
in Section 2.1(a).
"COMPANY" shall mean Laser Power Corporation, a Delaware
corporation.
"COMPANY INTELLECTUAL PROPERTY RIGHTS" shall have the meaning
set forth in Section 5.24.
"COMPANY SEC REPORTS" shall have the meaning set forth in
Section 5.7(a).
"COMPANY SECURITIES" shall have the meaning set forth in
Section 5.5(b).
"CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality
Agreement dated as of January 5, 2000, by and between the Company and II-VI.
"CONTINUING DIRECTORS" shall have the meaning set forth in
Section 2.3(b).
"CONTRACTS" shall have the meaning set forth in Section 5.22.
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"CONTROL" shall mean possession, directly or indirectly, or
power to direct or cause the direction of management or policies (whether
through ownership of voting securities, by agreement or otherwise).
"CURRENT POLICIES" shall have the meaning set forth in Section
8.2(a).
"DELAWARE CORPORATE LAW" shall mean the Delaware General
Corporation Law, as amended.
"DIRECTOR OPTIONS" shall mean the outstanding options to
acquire Shares granted to directors of the Company.
"DISBURSING AGENT" shall have the meaning set forth in Section
3.3(a).
"DISCLOSURE LETTER" shall have the meaning set forth in the
preamble to ARTICLE V.
"DISSENTING SHARES" shall have the meaning set forth in
Section 3.4.
"DOD" shall mean the United States Department of Defense.
"EFFECTIVE TIME" shall have the meaning set forth in Section
3.1(b).
"EMPLOYEE BENEFIT PLAN" shall have the meaning set forth in
Section 3(3) of ERISA.
"EMPLOYEE OPTIONS" shall mean the outstanding options to
acquire shares of Company Common Stock granted to employees of the Company.
"EMPLOYEE PLANS" shall have the meaning set forth in Section
5.13(a).
"ENVIRONMENTAL LAWS" shall mean any Laws (including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act), including any plans, other criteria, or guidelines promulgated
pursuant to such Laws, now or hereafter in effect relating to the manufacture,
importation, distribution, generation, production, installation, use, storage,
treatment, transportation, Release, threatened Release, or disposal of Hazardous
Materials, noise control, or the protection of human health or safety, natural
resources, or the environment.
"ENVIRONMENTAL PERMITS" shall mean any permits, licenses,
certificates and approvals required under any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"EXPENSES" shall have the meaning set forth in Section 12.4.
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"FINANCING" shall have the meaning set forth in Section 6.8.
"FURNISHED" shall mean supplied, delivered or provided in any
way.
"GAAP" shall mean generally accepted accounting principles, as
in effect in the United States, from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any agency, public or
regulatory authority, instrumentality, department, commission, court, ministry,
tribunal or board of any government, whether foreign or domestic and whether
national, federal, tribal, provincial, state, regional, local or municipal,
including without limitation the SEC and DOD.
"HAZARDOUS MATERIALS" shall mean any wastes, substances,
radiation, or materials (whether solids, liquids or gases): (i) which are
hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or
mutagenic; (ii) which are or become defined as "pollutants," "contaminants,"
"hazardous materials," "hazardous wastes," "hazardous substances," "toxic
substances," "radioactive materials," "solid wastes," or other similar
designations in, or otherwise subject to regulation under, any Environmental
Laws; (iii) the presence of which on the Real Property cause or threaten to
cause a nuisance pursuant to applicable statutory or common law upon the Real
Property or to adjacent properties; (iv) without limitation, which contain
polychlorinated biphenyls (PCBs), asbestos and asbestos-containing materials,
lead-based paints, urea-formaldehyde foam insulation, or petroleum or petroleum
products (including, without limitation, crude oil or any fraction thereof) or
(v) which pose a hazard to human health, safety, natural resources, industrial
hygiene, or the environment, or an impediment to working conditions.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"II-VI BANKER" shall mean PNC Capital Markets, Inc.
"II-VI DESIGNEES" shall have the meaning set forth in Section
2.3(a).
"II-VI INFORMATION" shall have the meaning set forth in
Section 6.5.
"II-VI SHARE VALUE" means the weighted-average trading price
of the II-VI Common Stock for the 12 trading days ending on the trading day
before the date in question.
"INSURANCE POLICIES" shall have the meaning set forth in
Section 5.19.
"INTERNATIONAL TRADE IN ARMS REGULATIONS" shall mean 22 CFR
Part 120.
"LAWS" shall mean all foreign, federal, state and local
statutes, laws, ordinances, regulations, rules, resolutions, orders,
determinations, writs, injunctions, common law rulings, awards (including,
without limitation, awards of any arbitrator), judgments and decrees applicable
to the specified persons or entities and to the businesses and assets thereof
(including, without limitation, Laws relating to securities registration and
regulation; the sale, leasing, ownership or management of real property;
employment practices, terms and conditions, and wages and hours; building
standards, land use and zoning; safety, health and fire prevention; and
environmental protection, including Environmental Laws).
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"LETTER OF TRANSMITTAL" shall have the meaning set forth in
Section 2.1(c).
"LIEN" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect of
such asset.
"MATERIAL ADVERSE EFFECT" shall mean with respect to the same
or any similar events, acts, conditions or occurrences, whether individually or
in the aggregate, a material adverse effect on: (i) the business, prospects,
condition (financial or otherwise), results of operations, assets or liabilities
of such party; (ii) the legality or enforceability against a party to this
Agreement; or (iii) the ability of a party to perform its obligations and to
consummate the transactions under this Agreement. An adverse change in the
market price or trading volume of the Shares shall not be deemed, by itself, to
constitute a Material Adverse Effect.
"MERGER" shall have the meaning set forth in the Recitals
hereto.
"MERGER CONSIDERATION" shall have the meaning set forth in
Section 3.2(a).
"MERGER REGISTRATION STATEMENT" shall have the meaning set
forth in Section 6.5.
"MERGERSUB" shall have the meaning set forth in the Recitals
hereto.
"MERGERSUB SECURITIES" shall have the meaning set forth in
Section 6.9.
"NATIONAL INDUSTRIAL SECURITY PROGRAM REGULATIONS" shall mean
implementing regulations under the National Industrial Security Program,
Executive Order 12829, January 6, 1993; DOD 5220.22-M.
"NOTICE OF SUPERIOR PROPOSAL" shall have the meaning set forth
in Section 7.5(b).
"OFFER DOCUMENTS" shall have the meaning set forth in Section
2.1(c).
"OFFER PRICE" shall mean, per issued and outstanding share of
Company Common Stock: (i) .052 shares of II-VI Common Stock provided, however,
that in the event that the II-VI Share Value on the date of the closing of the
Offer exceeds $53.08, then the shares of II-VI Common Stock shall be reduced to
the fraction whose numerator is $2.76 and whose denominator is the II-VI Share
Value on the date of the closing of the Offer; plus (ii) $2.89 net to the seller
in cash; PROVIDED, HOWEVER, if the II-VI Share Value on the date of the closing
of the Offer is less than $43.46, then II-VI shall increase the number of shares
of II-VI Common Stock or increase the amount of cash, at the election of II-VI,
so that the Offer Price equals an amount of cash plus a fraction of a share of
II-VI Common Stock (based on the II-VI Share Value on the date of the closing of
the Offer) that equals $5.15.
"OFFER REGISTRATION STATEMENT" shall have the meaning set
forth in Section 2.1(b).
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"OFFER TO PURCHASE" shall have the meaning set forth in
Section 2.1(c).
"OPTIONS" shall mean Employee Options and Director Options.
"PENSION PLANS" shall have the meaning set forth in Section
5.13(a).
"PERMITS" shall mean any licenses, franchises, permits,
certificates, consents, approvals or other similar authorizations affecting, or
relating in any way to, the assets or business of the Company.
"PERSON" shall mean any individual, corporation, limited
liability company, partnership, association, trust or any other entity or
organization, including any government or political subdivision or any agency or
instrumentality thereof.
"PREFERRED STOCK" shall mean the capital stock of the Company
designated as Series A Preferred Stock, $.001 par value per share.
"PROCEEDING" shall have the meaning set forth in Section 5.11.
"PROXY STATEMENT" shall have the meaning set forth in Section
5.8.
"REAL PROPERTY" shall mean the real property owned, leased,
operated, or used by the Company or the Subsidiaries as of the date of this
Agreement.
"RELATED PARTIES" shall have the meaning set forth in Section
5.25.
"RELEASE" shall mean any emission, spill, seepage, leak,
escape, leaching, discharge, injection, pumping, pouring, emptying, dumping,
disposal, or release of Hazardous Materials from any source (including, without
limitation, the Real Property and property adjacent to the Real Property) into
or upon the environment, including the air, soil, improvements, surface water,
groundwater, the sewer, septic system, storm drain, publicly owned treatment
works, or waste treatment, storage, or disposal systems at, on, from, above, or
under the Real Property or any other property at which Hazardous Materials
originating on or from the Real Property or the businesses or Assets of the
Company or any Subsidiary have been stored, treated or disposed.
"REPLACEMENT POLICIES" shall have the meaning set forth in
Section 8.2(a).
"RIGHTS AGREEMENT" shall mean the Rights Agreement, dated
October 15, 1999, as amended, between the Company and American Securities
Transfer & Trust, Inc.
"ROTH" shall mean Roth Capital Partners, Inc.
"SCHEDULE TO" shall have the meaning set forth in Section
2.1(c).
"SCHEDULE 14D-9" shall have the meaning set forth in Section
2.2(c).
"SEC" shall mean the Securities and Exchange Commission.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"STOCKHOLDERS' MEETING" shall have the meaning set forth in
Section 5.8.
"SUBSIDIARY" shall mean any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by such Person.
"SUPERIOR PROPOSAL" shall have the meaning set forth in
Section 7.5(c).
"SURVIVING CORPORATION SHARES" shall mean the common stock of
the Surviving Corporation.
"SURVIVING CORPORATION" shall have the meaning set forth in
Section 3.1(a).
"SYSTEM" has the meaning set forth in Section 5.18(a).
"TAX" or "TAXES" shall mean (A) all taxes, charges, fees,
duties, levies, penalties or other assessments, including, without limitation,
income, gross receipts, excise, real and personal property, sales, use,
transfer, license, payroll, withholding, social security, franchise,
unemployment insurance, workers' compensation, employer health tax or other
taxes, fees, assessments or charges of any kind whatsoever, imposed by any
Governmental Authority and shall include any interest, penalties or additions to
tax attributable to any of the foregoing, (B) any liability for payment of
amounts described in clause (A) whether as a result of transferee liability, of
being a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of law, and (C) any liability for the
payment of amounts described in clauses (A) or (B) as a result of any tax
sharing agreement, tax allocation agreement, tax indemnity agreement, or other
agreement that includes indemnification for any tax liability.
"TAX RETURN" shall mean all returns, declarations, reports,
forms, estimates, information returns, statements or other documents (including
any related or supporting information) filed or required to be filed with or
supplied to any Governmental Authority in connection with any Taxes.
"TENDER OFFER CONDITIONS" shall have the meaning set forth in
Section 2.1(a).
"TERMINATION DATE" shall have the meaning set forth in Section
11.1(b).
"THIRD PARTY" shall have the meaning set forth in Section
7.5(c).
"THIRD PARTY-ACQUISITION" shall have the meaning set forth in
Section 7.5(c).
"YEAR 2000 COMPLIANT" shall have the meaning set forth in
Section 5.18(b).
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Section 1.2 TERMS GENERALLY.
The definitions in Section 1.1 shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation" even if not followed actually by
such phrase unless the context expressly provides otherwise. All references
herein to Sections, paragraphs and Exhibits and Schedules shall be deemed
references to Sections or paragraphs of or Exhibits or Schedules to this
Agreement unless the context shall otherwise require. Unless otherwise expressly
defined, terms defined in this Agreement shall have the same meanings when used
in any Exhibit or Schedule and terms defined in any Exhibit or Schedule shall
have the same meanings when used in this Agreement or in any other Exhibit or
Schedule. The words "herein," "hereof," "hereto" and "hereunder" and other words
of similar import refer to this Agreement as a whole and not to any particular
provision of this Agreement.
ARTICLE II
THE OFFER
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Section 2.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated in accordance with ARTICLE XI hereof and so long as none of the
events set forth on Annex A hereto (the "TENDER OFFER CONDITIONS") shall have
occurred and are continuing, MergerSub shall, and II-VI shall cause MergerSub
to, commence (within the meaning of Rule 14d-2 promulgated under the Exchange
Act) the Offer at the Offer Price as promptly as reasonably practicable, but in
no event later than ten (10) business days after the date of this Agreement. The
obligation of MergerSub to accept for payment and to pay for any Shares tendered
pursuant to the Offer shall be subject only to the satisfaction of the Tender
Offer Conditions. Subject to the terms of this Agreement, II-VI and MergerSub
expressly reserve the right to modify the terms of the Offer, including, without
limitation, to extend the Offer beyond any scheduled expiration date or waive
any Tender Offer Condition; PROVIDED, HOWEVER, that neither II-VI nor MergerSub
shall, without the prior written consent of the Company: (i) reduce the number
of Shares to be purchased pursuant to the Offer; (ii) reduce the Offer Price;
(iii) impose any additional conditions to the Offer; (iv) change the form of
consideration payable in the Offer; (v) make any change to the terms of the
Offer which is adverse in any manner to the holders of the Shares; (vi) extend
the expiration date of the Offer beyond the twentieth (20th) business day after
commencement of the Offer, except (A) as required by applicable law and (B) that
if any condition to the Offer has not been satisfied or waived, MergerSub may,
in its sole discretion, extend the expiration date of the Offer for one or more
periods not exceeding, in each case, twenty (20) business days, but in no event
later than the Termination Date; (vii) waive the Minimum Condition (as defined
in ANNEX A); or (viii) waive the Tender Offer Condition relating to the
expiration of the waiting period under the HSR Act or the Tender Offer
Conditions set forth in clauses (iii), (iv), (v)(A), (v)(B) or (v)(F) of ANNEX
A; PROVIDED, HOWEVER, that the Offer may be extended in connection with an
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increase in the consideration to be paid pursuant to the Offer so as to comply
with applicable rules and regulations of the SEC. Assuming prior satisfaction or
waiver of the Tender Offer Conditions, II-VI shall provide funds to MergerSub
and MergerSub shall, as soon as practicable after the expiration of the Offer,
and in any event in compliance with the obligations respecting prompt payment
pursuant to Rule 14e-1(c) under the Exchange Act, accept for payment and pay
for, in accordance with the terms of the Offer, the Shares which have been
validly tendered and not withdrawn pursuant to the Offer. If, on any scheduled
expiration date of the Offer, the Offer would have expired without MergerSub
being able to purchase the Shares pursuant to the Offer due to the failure to
satisfy (x) any of the Tender Offer Conditions set forth in clauses (iii), (iv),
(v)(A), (v)(B) or (v)(C) of ANNEX A, (y) the Tender Offer Condition relating to
the expiration of the waiting period under the HSR Act or (z) the Minimum
Condition, then II-VI shall, at the request of the Company, cause MergerSub to
extend the expiration date of the Offer for one or more periods not exceeding,
in each case, twenty (20) business days, but in no event later than the
Termination Date. In addition, notwithstanding anything in this Section 2.1(a)
to the contrary, if the Company shall have affirmatively announced to the
stockholders of the Company a neutral position with respect to any Third-Party
Acquisition proposal, II-VI shall, at the request of the Company, cause
MergerSub to extend the expiration date of the Offer to ten (10) business days
after the date of initial announcement of such neutral position.
(b) II-VI and MergerSub shall file with the SEC a registration
statement on Form S-4 (the "OFFER REGISTRATION STATEMENT") with respect to the
Offer as soon as reasonably practicable following the date of this Agreement.
(c) As soon as reasonably practicable on the Commencement
Date, II-VI and MergerSub shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, the "SCHEDULE
TO") with respect to the Offer. The Schedule TO shall contain (included as an
exhibit) or shall incorporate by reference an offer to purchase (the "OFFER TO
Purchase") and the related letter of transmittal (the "LETTER OF TRANSMITTAL"),
as well as all other information and exhibits required by law (which Schedule
TO, Offer to Purchase, Letter of Transmittal, and such other information and
exhibits, together with any supplements or amendments thereto, are referred to
herein collectively as the "OFFER DOCUMENTS"). II-VI and MergerSub shall cause
to be disseminated the Offer to Purchase and related Letter of Transmittal to
holders of Shares promptly upon commencement of the Offer. The Company and its
counsel shall be given reasonable opportunity to review and comment upon the
Schedule TO prior to its filing with the SEC. The Schedule TO shall comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and the date first published, sent or given
to the holders of the Shares, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by II-VI or MergerSub with respect to any information
supplied by the Company in writing for inclusion in the Schedule TO. Each of
II-VI and MergerSub, on the one hand, and the Company, on the other hand, agrees
to promptly correct any information provided by it for use in the Offer
Documents that shall be, or have become, false or misleading in any material
respect, and II-VI and MergerSub further agree to take all steps necessary to
cause the Schedule TO as so corrected to be filed with the SEC and the other
Offer Documents as so corrected to be disseminated to holders of the
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Shares, in each case as and to the extent required by applicable federal
securities laws. Each of II-VI and MergerSub agrees to provide the Company and
its counsel with information with respect to any oral comments and copies of any
written comments or other correspondence II-VI and MergerSub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments and shall provide the Company and
its counsel an opportunity to participate in the response of II-VI or MergerSub
to such comments, including by participating with II-VI and MergerSub or their
counsel in any discussions with the SEC or its staff.
Section 2.2 COMPANY ACTIONS.
The Company hereby consents to the Offer and the Merger and
represents and warrants that:
(a) Its Board of Directors (at a meeting duly called and held)
has, based on the recommendation of a special committee of two (2) independent
directors: (i) determined that each of the Offer and the Merger is fair to, and
in the best interest of, the holders of Company Common Stock; (ii) approved the
Offer and the Merger and adopted this Agreement in accordance with the
provisions of Delaware Corporate Law; (iii) recommended that the stockholders of
the Company accept the Offer, tender their Shares pursuant to the Offer and
approve this Agreement and transaction contemplated hereby, including the
Merger; and (iv) taken all other actions necessary to render Section 203 of
Delaware Corporate Law and the Rights Agreement inapplicable to the Offer and
the Merger.
(b) Roth has delivered to the Board of Directors of the
Company its opinion that the consideration to be received by the holders of
Company Common Stock, other than II-VI and any direct or indirect Subsidiary of
II-VI (including MergerSub), pursuant to the Offer and the Merger is fair to
such holders of Company Common Stock from a financial point of view, subject to
the assumptions and qualifications contained in such opinion.
(c) The Company shall file with the SEC, as soon as
practicable on the Commencement Date, a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto, the
"SCHEDULE 14D-9"), containing the recommendations referred to in Section
2.2(a)(iii) (unless the Board of Directors of the Company determines in good
faith that such action would be inconsistent with its fiduciary duties to the
stockholders of the Company under Delaware Corporate Law) and shall disseminate
the Schedule 14D-9 as required by Rule 14d-9 under the Exchange Act. II-VI and
MergerSub and their counsel shall be given reasonable opportunity to review and
comment upon the Schedule l4D-9 prior to its filing with the SEC. 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 holders of the Company Common Stock, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading, except that no representation is made by the Company with respect to
information supplied by II-VI or MergerSub in writing for inclusion in the
Schedule 14D-9. Each of II-VI and MergerSub shall promptly supply to the Company
in writing, for inclusion in the Schedule 14D-9, all information concerning the
II-VI Designees (as defined in Section 2.3(a)), as required by Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder, and the Company shall include such
information in the Schedule 14D-9. Each of the Company, on the one hand, and
II-VI and MergerSub, on the other hand, agrees promptly to correct any
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information provided by it for use in the Schedule 14D-9 if and to the extent
that the Schedule 14D-9 shall be, or 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 holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company agrees to provide II-VI and its
counsel with information with respect to any oral comments and copies of any
written comments or other correspondence the Company or its counsel may receive
from the SEC or its staff with respect to the Schedule 14D-9 promptly after the
receipt of such comments and shall provide II-VI and its counsel an opportunity
to participate in the response of the Company to such comments, including by
participating with the Company and its counsel in any discussions with the SEC
or its staff.
(d) In connection with the Offer, the Company shall promptly
furnish MergerSub with mailing labels, security position listings and any
available listing or computer list containing the names and addresses of the
record holders of Company Common Stock as of the most recent practicable date
and shall furnish MergerSub with such additional information (including, but not
limited to, updated lists of holders of Company Common Stock and their
addresses, mailing labels and lists of security positions) and such other
assistance as MergerSub or its agents may reasonably request in communicating
the Offer to the holders of Company Common Stock. 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,
MergerSub shall hold in confidence the information contained in any such labels,
listings and files, will use such information only in connection with the Offer
and the Merger and, if this Agreement is terminated, shall deliver to the
Company all copies of such information in their possession.
Section 2.3 COMPOSITION OF THE BOARD OF DIRECTORS.
(a) Promptly upon the acceptance for payment of, and payment
by MergerSub for, Shares equal to at least a majority of the outstanding shares
of Company Common Stock pursuant to the terms of the Offer, MergerSub shall be
entitled to designate three directors ("II-VI DESIGNEES") on the Board of
Directors of the Company, one of whom shall be an outside director who is
completely disinterested, i.e. having had no prior relationship with the
Company, II-VI, MergerSub, or any of their respective affiliates, and the
Company shall, at such time, use commercially reasonable efforts to take any and
all such action necessary to cause such II-VI Designees, which II-VI Designees
shall be reasonably satisfactory to the Company, to be appointed to the Board of
Directors of the Company (including using its commercially reasonable efforts to
cause relevant directors to resign and/or increasing the size of the Board of
Directors of the Company (subject to the limitations set forth in the Company's
certificate of incorporation and the Company's bylaws)). At the Effective Time,
the Company, if so requested, shall use its commercially reasonable efforts to
cause each II-VI Designee to be a member of each committee of its Board of
Directors, each Board of Directors of each Subsidiary of the Company and each
committee of each such Board of Directors (in each case to the extent of the
Company's ability to elect such persons).
(b) Notwithstanding the provisions of this Section 2.3, the parties
hereto shall use their respective commercially reasonable efforts to ensure that
at least two (2) of the members of the Board of Directors shall, at all times
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prior to the Effective Time, be persons who are directors of the Company on the
date hereof and who are U.S. citizens eligible to have a Department of Defense
personnel security clearance at the level of the Company's security clearance
(the "CONTINUING DIRECTORS"); PROVIDED that, if there shall be in office less
than two (2) Continuing Directors, the Board of Directors may cause the person
designated by the remaining Continuing Director or Continuing Directors to fill
such vacancy and such person shall be deemed to be a Continuing Director for all
purposes of this Agreement, or if no Continuing Directors then remain, the other
directors of the Company then in office shall designate two (2) persons to fill
such vacancies who will not be officers, employees or Affiliates of the Company
or II-VI and such persons shall be deemed to be Continuing Directors for all
purposes of this Agreement; PROVIDED, FURTHER, that II-VI, MergerSub and the
II-VI Designees shall take no action prior to the Effective Time to remove any
Continuing Director. Following the election or appointment of the II-VI
Designees pursuant to this Section 2.3 and prior to the Effective Time, any
amendment or modification of this Agreement, the Company's certificate of
incorporation or the Company's bylaws, any 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 II-VI and MergerSub or waiver of any of the
Company's rights hereunder, and any other consent or action by the Company
hereunder, shall be effected only if there are in office one or more Continuing
Directors and such action is approved by a majority of the Continuing Directors.
ARTICLE III
THE MERGER
----------
Section 3.1 THE MERGER.
(a) Upon the terms and subject to the satisfaction or waiver
of the conditions contained herein, at the Effective Time, the MergerSub shall
be merged with and into the Company in accordance with Delaware Corporate Law.
Upon consummation of the Merger, the separate existence of MergerSub shall cease
and the Company shall be the surviving corporation to the Merger (the "SURVIVING
CORPORATION").
(b) As soon as practicable after satisfaction of (or, to the
extent permitted hereunder, waiver of) all conditions to the Merger, the Company
and MergerSub will file a certificate of merger (the "CERTIFICATE OF MERGER")
with the Secretary of State of the State of Delaware in accordance with Delaware
Corporate Law and make all other filings or recordings required by Law in
connection with the Merger. The Merger shall become effective at such time as
the Certificate of Merger is certified by the Secretary of State of the State of
Delaware or at such later time as is specified in the Certificate of Merger (the
"EFFECTIVE Time").
(c) The Merger shall have the effects set forth in Sections
251, 259 and 261 of Delaware Corporate Law.
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Section 3.2 CONVERSION OF SHARES.
At the Effective Time, pursuant to this Agreement and by
virtue of the Merger and without any action on the part of MergerSub, the
Company or the holders of any of the following securities:
(a) Each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time other than: (i) Dissenting Shares; and
(ii) any shares of Company Common Stock to be canceled pursuant to Section
3.2(c), shall be canceled and shall be converted automatically into the right to
receive the same amount of cash, without interest, and the same fraction of a
share of II-VI Common Stock paid in the Offer (the "MERGER CONSIDERATION"), upon
surrender of the certificate formerly representing such share of common stock in
the manner provided in Section 3.3.
(b) All of the shares of Company Common Stock converted into
II-VI Common Stock and cash pursuant to this Section 3.2 shall no longer be
outstanding and shall automatically be canceled and shall cease to exist, and
each certificate (each a "CERTIFICATE") previously representing any such shares
of Company Common Stock shall thereafter represent the right to receive the
Merger Consideration. Certificates previously representing shares of Company
Common Stock shall be exchanged for the Merger Consideration upon the surrender
of such Certificates in accordance with Section 3.3 hereof, without any interest
thereon. If prior to the Effective Time the Company should split or combine its
common stock, or pay a dividend or other distribution in such common stock, then
the Merger Consideration shall be appropriately adjusted to reflect such split,
combination, dividend or distribution.
(c) At the Effective Time, all shares of Company Common Stock
that are owned by the Company as treasury stock shall be canceled and shall
cease to exist and no Merger Consideration shall be delivered in exchange
therefor
(d) Each share of common stock of MergerSub issued and
outstanding on the Effective Date of the Merger shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted into and
exchanged for one (1) share of Company Common Stock.
Section 3.3 PAYMENT OF MERGER CONSIDERATION FOR COMPANY COMMON STOCK.
(a) At the Effective Time, II-VI shall cause the Surviving
Corporation to irrevocably deposit or cause to be deposited with a bank or trust
company to be designated by the Surviving Corporation which is organized and
doing business under the laws of the United States or any state thereof and has
a combined capital and surplus of at least $100,000,000 (the "DISBURSING
AGENT"), as agent for the holders of Company Common Stock, II-VI Common Stock
and cash in the aggregate amount required to pay the Merger Consideration in
respect of the shares of Company Common Stock outstanding immediately prior to
the Effective Time. Pending distribution pursuant to Section 3.3(b) hereof of
the II-VI Common Stock and cash deposited with the Disbursing Agent, such II-VI
Common Stock and cash shall be held in trust for the benefit of the holders of
Company Common Stock and such II-VI Common Stock and cash shall not be used for
any other purposes; provided; however, that the Surviving Corporation may direct
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the Disbursing Agent to invest such cash, provided that such investments: (i)
shall be obligations of or guaranteed by the United States of America, in
commercial paper obligations receiving the highest rating from either Moody's
Investors Services, Inc. or Standard & Poor's Corporation, or in certificates of
deposit, bank repurchase agreements or bankers acceptances of domestic
commercial banks with capital exceeding $250,000,000 (collectively "PERMITTED
INVESTMENTS") or in money market funds which are invested solely in Permitted
Investments; and (ii) shall have maturities that will not prevent or delay
payments to be made pursuant to Section 3.3(b) hereof. Each holder of a
Certificate or Certificates canceled and extinguished at the Effective Time
pursuant to Section 3.2(a) hereof may thereafter surrender such Certificate or
Certificates to the Disbursing Agent, as agent for such holder of Company Common
Stock, to effect the exchange of such Certificate or Certificates on such
holder's behalf for a period ending six months after the Effective Time.
(b) After surrender to the Disbursing Agent of any Certificate
which prior to the Effective Time shall have represented any shares of Company
Common Stock, the Disbursing Agent shall promptly distribute to the person in
whose name such Certificate shall have been registered, the Merger Consideration
into which such shares of Common Stock shall have been converted at the
Effective Time pursuant to Section 3.2(a) hereof. Until so surrendered and
exchanged, each such Certificate shall, after the Effective Time, be deemed to
represent only the right to receive the Merger Consideration, and until such
surrender and exchange, no shares of II-VI Common Stock shall be issued and no
cash shall be paid to the holder of such outstanding Certificate in respect
thereof. The Surviving Corporation shall promptly after the Effective Time cause
to be distributed to such holders appropriate materials to facilitate such
surrender.
(c) If payment is to be made to a Person other than the
registered holder of the Company Common Stock represented by the Certificate or
Certificates surrendered in exchange therefor, it shall be a condition to such
payment that the Certificate or Certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Disbursing Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such shares of Company Common Stock or establish to the satisfaction
of the Disbursing Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further
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 representing shares of Company
Common Stock are presented to the Surviving Corporation for transfer, they shall
be canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this ARTICLE III.
(e) If any cash or shares of II-VI Common Stock deposited with
the Disbursing Agent for purposes of payment in exchange for shares of Company
Common Stock remains unclaimed six months after the Effective Time, such cash
and II-VI Common Stock shall be returned to the Surviving Corporation, upon
demand, whereupon the Disbursing Agent's duties shall terminate and any such
holder who has not converted his, her or its shares of Company Common Stock into
the Merger Consideration prior to that time shall thereafter look only to the
Surviving Corporation for payment of the Merger Consideration. Notwithstanding
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the foregoing, the Surviving Corporation shall not be liable to any holder of
shares of Company Common Stock for any amount paid to a public official pursuant
to applicable unclaimed property laws. Any amounts remaining unclaimed by
holders of shares of Company Common Stock seven (7) years after the Effective
Time (or such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any Governmental Authority) shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto.
(f) Any portion of the Merger Consideration made available to
the Disbursing Agent pursuant to Section 3.3(a) to pay for shares of Company
Common Stock for which dissenter's rights have been perfected shall be returned
to the Surviving Corporation, upon demand.
(g) No dividends or other distributions with respect to
capital stock of the Surviving Corporation with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate for
shares of Company Common Stock.
(h) From and after the Effective Time, the holders of shares
of Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock, other than the right to receive the Merger Consideration as provided in
this Agreement.
(i) In the event that 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 Company, the posting by such holder of a bond in such reasonable amount as
the Company may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Disbursing Agent will issue in exchange
for such lost, stolen or destroyed Certificate the Merger Consideration
deliverable in respect thereof pursuant to this Agreement and the Merger.
Section 3.4 DISSENTING SHARES.
Notwithstanding Section 3.2, shares of Company Common Stock
which are issued and outstanding immediately prior to the Effective Time and
which are held by a holder who has not tendered such shares of Company Common
Stock in the Offer and who has delivered a written demand for relief as a
dissenting stockholder in the manner provided by Delaware Corporate Law and who,
as of the Effective Time, shall not have effectively withdrawn or lost such
right to relief as a dissenting stockholder ("DISSENTING SHARES") shall not be
converted into a right to receive the Merger Consideration. The holders thereof
shall be entitled only to such rights as are granted by Section 262 of Delaware
Corporate Law. Each holder of Dissenting Shares who becomes entitled to payment
for such Dissenting Shares pursuant to Section 262 of Delaware Corporate Law
shall receive payment therefor from the Surviving Corporation in accordance with
Delaware Corporate Law; provided, however, that if any such holder of Dissenting
Shares: (i) shall have failed to establish his, her or its entitlement to relief
as a dissenting stockholder as provided in Section 262 of Delaware Corporate
Law; (ii) shall have effectively withdrawn his, her or its demand for relief as
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a dissenting stockholder with respect to such shares or lost his, her or its
right to relief as a dissenting stockholder and payment for his, her or its
Dissenting Shares under Section 262 of Delaware Corporate Law; or (iii) shall
have failed to file a complaint with the appropriate court seeking relief as to
determination of the value of all Dissenting Shares within the time provided in
Section 262 of Delaware Corporate Law, such holder shall forfeit the right to
relief as a dissenting stockholder with respect to such Dissenting Shares and
each such Dissenting Share shall be converted into the right to receive the
appropriate Merger Consideration without interest thereon, from the Surviving
Corporation as provided in Section 3.2. The Company shall give II-VI and
MergerSub prompt notice of any demands received by the Company for relief as a
dissenting stockholder and II-VI and MergerSub shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of II-VI and
MergerSub, make any payment with respect to, or settle or offer to settle, any
such demands.
Section 3.5 STOCK OPTIONS.
(a) Each Option that either: (i) has an exercise price equal
to or greater than the Merger Consideration (with II-VI Common Stock being
valued for this purpose using the II-VI Share Value as of the date of the
closing of the Offer); or (ii) is not vested and exercisable as of the Effective
Time shall be canceled at the Effective Time.
(b) Immediately prior to the Effective Time, all other
outstanding Options that are vested and exercisable as of the Effective Time
shall be canceled and, in lieu thereof, as soon as reasonably practicable as of
or after the Effective Time, the holders of such Options shall receive a cash
payment from the Company equal to the product of: (i) the total number of Shares
previously subject to such Option; and (ii) the excess of (A) the Merger
Consideration that would be paid with respect to each shares of Company Common
Stock subject to such Option if the Option were exercised over (B) the exercise
price per share of Company Common Stock subject to such Option, as reduced by
any required withholding of taxes.
(c) Prior to the Effective Time, the Company shall: (i) take
all steps necessary to cause the Company's stock option plans to be terminated
on or prior to the Effective Time and to otherwise make any amendments to the
terms of such stock option plans that are necessary to give effect to the
transactions contemplated by this Agreement; and (ii) use all necessary efforts
to obtain at the earliest practicable date all written consents from holders of
Options to the cancellation of such holder's Options to take effect at the
Effective Time. Notwithstanding any other provision of this Section 3.5(c),
payment may be withheld in respect of any vested and exercisable Director Option
or Employee Option until necessary or appropriate consents are obtained with
respect to such Director Option or Employee Option.
Section 3.6 FRACTIONAL SHARES.
Notwithstanding anything in this Agreement to the contrary, no
certificates representing fractional shares of II-VI Common Stock shall be
issued upon the surrender for exchange in the Offer or the Merger of
Certificates representing Company Common Stock, and such fractional share
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interests will not entitle the owner thereof to vote or to any rights of a
shareholder of II-VI. Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged in the Offer or
converted into shares of II-VI Common Stock in the Merger who would otherwise be
entitled to receive a fraction of a share of II-VI Common Stock (after taking
into account all Certificates delivered for exchange by such holder) shall
receive, in lieu thereof, cash (without interest) in an amount equal to such
fractional part of a share of Company Common Stock multiplied by the II-VI Share
Value on the date of the Closing of the Offer.
ARTICLE IV
THE SURVIVING CORPORATION
-------------------------
Section 4.1 CERTIFICATE OF INCORPORATION.
The certificate of incorporation of MergerSub in effect
immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance therewith
and with applicable Law.
Section 4.2 BYLAWS.
The bylaws of MergerSub in effect at the Effective Time shall
be the bylaws of the Surviving Corporation until amended in accordance therewith
and in accordance with applicable law.
Section 4.3 DIRECTORS AND OFFICERS.
From and after the Effective Time, until successors are duly
elected or appointed and qualified in accordance with applicable Law: (i) the
directors of the Surviving Corporation at the Effective Time shall be (A) the
three II-VI Designees, including one outside director, (B) two officers of
MergerSub and (C) one additional outside director to be appointed by II-VI and
MergerSub, who shall be a completely disinterested person having had no prior
relationship with the Company, II-VI, MergerSub or any of their respective
affiliates; and (ii) the officers of MergerSub at the Effective Time shall be
the officers of the Surviving Corporation.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to II-VI and MergerSub that except
as set forth in the corresponding sections or subsections of the Disclosure
Letter delivered to II-VI and MergerSub by the Company concurrently with
entering into this Agreement (the "DISCLOSURE LETTER"):
Section 5.1 CORPORATE EXISTENCE AND POWER.
Each of the Company and its Subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, and has all corporate powers required to carry on
its business as now conducted. Each of the Company and its Subsidiaries is duly
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qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or leased by it or
the nature of its activities makes such qualification necessary, except for
those jurisdictions where the failure to be so qualified would not, individually
or in the aggregate, be reasonably likely to have a Material Adverse Effect on
the Company. Without limiting the generality of the foregoing, the Company and
its Subsidiaries are qualified to do business in the states shown on SECTION 5.1
of the Disclosure Letter. The Company has heretofore made available to II-VI and
MergerSub true and complete copies of the currently effective certificate of
incorporation and bylaws or similar organizational documents of the Company and
its Subsidiaries (as the same may be amended and restated as of the date
hereof).
Section 5.2 CORPORATE AUTHORIZATION.
The execution, delivery and performance by the Company of this
Agreement and the consummation by the Company of the transactions contemplated
hereby: (i) are within the Company's corporate powers; and (ii) except for the
adoption of this Agreement by the affirmative vote of a majority in voting
interests of the shares of Company Common Stock, have been duly authorized by
all necessary corporate and stockholder action. This Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid, legal and
binding agreement of the Company enforceable against the Company in accordance
with its terms, except: (i) as rights to indemnity hereunder may be limited by
federal or state securities laws or the public policies embodied therein; (ii)
as such enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting the enforcement of creditors' rights
generally; and (iii) as the remedy of specific performance and other forms of
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
Section 5.3 GOVERNMENTAL AUTHORIZATION.
The execution, delivery and performance by the Company of this
Agreement and the consummation of the Merger by the Company require no action by
or in respect of, or filing with, any governmental body, agency, official or
authority other than: (i) the filing of a certificate of merger in accordance
with Delaware Corporate Law; (ii) compliance with any applicable requirements of
the HSR Act; (iii) compliance with the applicable requirements of the Exchange
Act; (iv) compliance with the applicable requirements of the Securities Act; (v)
compliance with any applicable foreign or state securities or Blue Sky laws;
(vi) any applicable requirements of the National Industrial Security Program
Regulations; (vii) the filing of appropriate documents with the relevant
authorities of the jurisdictions in which the Company is qualified to do
business; (viii) compliance with the requirements of the International Trade in
Arms Regulations; and (ix) such other items (A) required solely by reason of the
participation of II-VI and MergerSub in the Merger or (B) that, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Company.
Section 5.4 NON-CONTRAVENTION.
Other than as set forth in SECTION 5.4 of the Disclosure
Letter, the execution, delivery and performance by the Company of this Agreement
and the consummation by the Company of the transactions contemplated hereby do
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not and will not: (i) contravene or conflict with the organizational documents
of the Company or any of its Subsidiaries; (ii) contravene or conflict with or
constitute a violation of any provision of any Law, regulation, judgment, writ,
injunction, order or decree of any court or Governmental Authority binding upon
or applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets; (iii) constitute a default under or give rise
to a right of termination, cancellation or acceleration of any right or
obligation of the Company or any of its Subsidiaries or to a loss of any benefit
to which the Company or any of its Subsidiaries is entitled under any provision
of any agreement, contract or other instrument binding upon the Company or any
of its Subsidiaries; or (iv) result in the creation or imposition of any Lien on
any asset of the Company or any of its Subsidiaries. Without limiting the
foregoing, the Company shall have terminated that certain Agreement and Plan of
Merger dated June 1, 2000 by and among the Company, Union Minere S.A. and ACEC,
Inc. (the "UM Merger Agreement").
Section 5.5 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of:
(i) 15,000,000 shares of Company Common Stock of which as of May 31, 2000 there
were 9,679,001 shares issued and outstanding; and (ii) 3,000,000 shares of
Preferred Stock of which as of the date hereof there are no shares issued and
outstanding. As of May 31, 2000 there were outstanding Options to purchase an
aggregate of 367,977 shares of Company Common Stock (all of which Options were
vested and exercisable). All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable.
(b) Except for the Rights Agreement, except as set forth in
this Section 5.5 and except for changes since May 31, 2000 resulting from the
exercise of Options outstanding on such date, there are no outstanding: (i)
shares of capital stock or other voting securities of the Company; (ii)
securities of the Company convertible into or exchangeable for shares of capital
stock or voting securities of the Company or its Subsidiaries; (iii) options or
other rights to acquire from the Company or its Subsidiaries, or obligations of
the Company or its Subsidiaries to issue, any shares of capital stock, voting
securities or securities convertible into or exchangeable for shares of capital
stock or voting securities of the Company or any Subsidiary; and (iv) no equity
equivalent interests in the ownership or earnings of the Company or its
Subsidiaries or other similar rights (the items in clauses (b)(i), (ii), (iii)
and (iv) being referred to collectively as the "COMPANY SECURITIES"). Except as
set forth on SECTION 5.5 of the Disclosure Letter, there are no outstanding
obligations of the Company or any Subsidiary to repurchase, redeem or otherwise
acquire any Company Securities. There are no stockholder agreements, voting
trusts or other agreements or understandings to which the Company or any of its
Subsidiaries is a party or by which it is bound relating to the voting or
registration of any shares of capital stock of the Company or any of its
Subsidiaries or any preemptive rights with respect thereto.
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Section 5.6 SUBSIDIARIES.
SECTION 5.6 of the Disclosure Letter lists each Subsidiary of
the Company together with the jurisdiction of incorporation of each Subsidiary
and the percentage of each Subsidiary's outstanding capital stock or other
equity interests owned by the Company or another Subsidiary of the Company.
Except as disclosed on SECTION 5.6 of the Disclosure Letter, all the outstanding
shares of capital stock of each Subsidiary have been validly issued, are fully
paid and nonassessable and are owned by the Company, by another Subsidiary or by
the Company and another such Subsidiary, free and clear of all Liens or any
other limitation or restriction. Except for the capital stock of the
Subsidiaries and except as set forth on SECTION 5.6 of the Disclosure Letter,
the Company does not own directly or indirectly, any capital stock or other
ownership interest in any other Person.
Section 5.7 REPORTS AND FINANCIAL STATEMENTS.
(a) The Company has timely filed with the SEC all forms,
reports, schedules, statements and other documents required to be filed by it
since April 2, 1997 under the Securities Act or the Exchange Act (such
documents, as supplemented or amended since the time of filing, the "COMPANY SEC
REPORTS"). As of their respective dates, the Company SEC Reports, including
without limitation, any financial statements or schedules included or
incorporated by reference therein, at the time filed (and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of mailing, respectively): (i) complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act; and (ii)
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements and unaudited
consolidated interim financial statements included or incorporated by reference
in the Company SEC Reports (including any related notes and schedules) fairly
present, in all material respects, the financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the results of their
operations and their cash flows for the periods set forth therein, in each case
in accordance with past practice and GAAP consistently applied during the
periods involved (except as otherwise disclosed in the notes thereto and
subject, where appropriate, to normal year-end adjustments that would not be
material in amount or effect).
(b) The Company has heretofore made available to II-VI and
MergerSub a complete and correct copy of any amendments or modifications to any
Company SEC Reports filed prior to the date hereof which are required to be
filed with the SEC but have not yet been filed with the SEC.
Section 5.8 OFFER DOCUMENTS; PROXY STATEMENT.
The Schedule 14D-9, when filed with the SEC and first
published, sent or given to stockholders of the Company, will comply in all
material respects with the Exchange Act and the rules and regulations
thereunder. Neither the Schedule 14D-9 nor any of the information provided by or
on behalf of the Company specifically for inclusion in the Schedule TO or the
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Offer Documents will, at the respective times the Schedule 14D-9, the Schedule
TO and the Offer Documents or any amendments or supplements thereto are filed
with the SEC or first published, sent or given to stockholders of the Company,
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. No representation is made by the Company with respect to written
information supplied by II-VI or MergerSub specifically for inclusion in the
Schedule 14D-9. Any proxy statement to be sent to the stockholders of the
Company in connection with a meeting of the Company's stockholders to consider
the Merger (the "STOCKHOLDERS' MEETING") (such proxy statement, as amended or
supplemented, is herein referred to as the "PROXY STATEMENT"), will comply in
all material respects with the applicable requirements of the Exchange Act and
the rules and regulations thereunder, except that no representation or warranty
is being made by the Company with respect to II-VI Information contained
therein. The Proxy Statement will not, at the time the Proxy Statement is filed
with the SEC or first sent to stockholders, at the time of the Stockholders'
Meeting or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 5.9 ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Since the Balance Sheet Date, and except as discussed in
the Company SEC Reports, the business of the Company and its Subsidiaries has
been conducted in all material respects in the ordinary course consistent with
past practice, neither the Company nor any of its Subsidiaries has engaged in
any transaction or series of related transactions material to the Company and
its Subsidiaries taken as a whole other than in the ordinary course consistent
with past practice, and there has not been any event, occurrence or development,
alone or taken together with all other existing facts, that, individually or in
the aggregate, has had, or would reasonably be expected to have, a Material
Adverse Effect on the Company.
(b) Without limiting the generality of the foregoing Section
5.9(a), since the Balance Sheet Date and except as disclosed in SECTION 5.9 of
the Disclosure Letter, there has not been:
(i) any damage, destruction or loss to any of the
assets or properties of the Company or any of its Subsidiaries
that, individually or in the aggregate, has a Material Adverse
Effect on the Company;
(ii) any declaration, setting aside or payment of any
dividend or distribution or capital return in respect of any
shares of the Company's capital stock or any redemption,
purchase or other acquisition by the Company or any of its
Subsidiaries of any shares of the Company's capital stock or
any repurchase, redemption or other purchase by the Company or
any of its Subsidiaries of any outstanding shares of capital
stock or other securities of, or other ownership interests in,
the Company or any of its Subsidiaries, or any amendment of
any material term of any outstanding security of the Company
or any of its Subsidiaries;
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(iii) any sale, assignment, transfer, lease or other
disposition or agreement to sell, assign, transfer, lease or
otherwise dispose of any of the assets of the Company or any
of its Subsidiaries for consideration in the aggregate in
excess of One Hundred Thousand Dollars ($100,000) or other
than in the ordinary course of business consistent with past
practices;
(iv) any acquisition (by merger, consolidation, or
acquisition of stock or assets) by the Company or any of its
Subsidiaries of any corporation, partnership or other business
organization or division thereof or any equity interest
therein for consideration, or any loans or advances to any
Person in excess of One Hundred Thousand Dollars ($100,000) in
the aggregate;
(v) any incurrence of or guarantee with respect to
any indebtedness for borrowed money by the Company or any of
its Subsidiaries other than pursuant to the Company's existing
credit facilities in the ordinary course of business or any
creation or assumption by the Company or any of its
Subsidiaries of any material Lien on any material asset;
(vi) any material change in any method of accounting
or accounting practice used by the Company or any of its
Subsidiaries, other than such changes required by a change in
law or generally accepted accounting principles;
(vii) (A) any employment, deferred compensation,
severance or similar agreement entered into or amended by the
Company or any of its Subsidiaries and any employee, in each
case other than sales commission agreements entered into in
the ordinary course of business consistent with past practice,
(B) any increase in the compensation payable or to become
payable by it to any of its directors or officers or generally
applicable to all or any category of the Company's employees,
(C) any increase in the coverage or benefits available under
any vacation pay, company awards, salary continuation or
disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee
benefit plan, payment or arrangement made to, for or with any
of the directors or officers of the Company or generally
applicable to all or any category of the Company's employees,
or (D) severance pay arrangements made to, for or with such
directors, officers or employees other than, in the case of
(B) and (C) above, increases in the ordinary course of
business consistent with past practice and that in the
aggregate have not resulted in a material increase in the
benefits or compensation expense of the Company or any of its
Subsidiaries;
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(viii) any revaluing in any material respect of any
of the assets of the Company or any of its Subsidiaries,
including without limitation writing down the value of
inventory or writing off notes or accounts receivable other
than in the ordinary course of business;
(ix) any loan, advance or capital contribution made
by the Company or any of its Subsidiaries to, or investment
in, any person other than loans, advances or capital
contributions, or investments of the Company made in the
ordinary course of business consistent with past practices; or
(x) any agreement to take any actions specified in
this Section 5.9(b), except for this Agreement.
Section 5.10 NO UNDISCLOSED MATERIAL LIABILITIES.
Except as disclosed in the Company's Annual Report on Form
10-K for the year ended September 30, 1999 and the Company's Quarterly Reports
on Form 10-Q for each of the periods ended December 31, 1999 and March 31, 2000,
there are no liabilities of the Company or any of its Subsidiaries of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, which would be required by GAAP to be reflected on a consolidated
balance sheet of the Company (including the notes thereto), other than
liabilities and obligations which, individual or in the aggregate, will not have
a Material Adverse Effect on the Company, and other than:
(i) actual trade payables incurred in the ordinary
course of business consistent with past practices;
(ii) liabilities incurred to perform this Agreement;
and
(iii) those set forth in SECTION 5.10 of the
Disclosure Letter.
Section 5.11 LITIGATION.
Except as set forth on SECTION 5.11 to the Disclosure Letter:
(i) there is no action, suit, investigation or proceeding pending against, or to
the knowledge of the Company threatened against or affecting, the Company or any
of its Subsidiaries or their respective businesses or properties before any
court or arbitrator or any Governmental Authority which, if determined
adversely, would reasonably be expected to have a Material Adverse Effect on the
Company (a "PROCEEDING"); and (ii) to the knowledge of the Company, there is no
basis for any such Proceeding.
Section 5.12 TAXES.
(a) Except as set forth on SECTION 5.12 to the Disclosure
Letter, the Company:
(i) has timely paid or caused to be paid all Taxes
required to be paid by it (including, but not limited to, any
such Taxes shown due on any Tax Return). The accrual for
current Taxes payable in the latest financial statements
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included or incorporated by reference in the Company SEC
Reports is adequate to cover all Taxes attributable to periods
or portions thereof ending on the date of such financial
statements, and no Taxes attributable to periods following the
date of such financial statements have been incurred other
than in the ordinary course of business;
(ii) has filed or caused to be filed in a timely and
proper manner (within any applicable extension periods) all
Tax Returns required to be filed by it with the appropriate
taxing authority in all jurisdictions in which such Tax
Returns are required to be filed, and all Tax Returns filed by
the Company are true, correct and complete and accurately set
forth all items to the extent required to be included therein;
and
(iii) has not requested or caused to be requested any
extension of time within which to file any material Tax
Return, which Tax Return has not since been filed.
(b) The Company has made available to II-VI and MergerSub
true, correct and complete copies of all federal Tax Returns filed by or on
behalf of the Company or any of its Subsidiaries through the date hereof for all
periods open to audit.
(c) Except as set forth in SECTION 5.12 to the Disclosure
Letter:
(i) the Company has not been notified by the Internal
Revenue Service or any other taxing authority that any issues
have been raised by the Internal Revenue Service or any other
taxing authority in connection with any Tax Return filed by or
on behalf of the Company;
(ii) there are no pending Tax audits and no waivers
of statutes of limitations have been given or requested;
(iii) no Liens have been filed against the Company,
except for Liens for current Taxes not yet due and payable for
which adequate reserves have been provided for in the latest
balance sheet of the Company;
(iv) no unresolved deficiencies or additions to Taxes
have been proposed, asserted, or assessed against the Company;
(v) the Company has not received notice within the
last three years from any taxing authority in a jurisdiction
in which the Company does not file Tax Returns that the
Company is or may be subject to taxation by that jurisdiction;
(vi) the Company has withheld and paid all Taxes
required to be withheld and paid in connection with amounts
paid or owing to any employee, independent contractor,
creditor, shareholder or other third party;
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(vii) the Company is not a party to a Tax sharing,
Tax allocation or similar agreement and is not bound by any
closing agreement, offer in compromise or other agreement with
any Tax authority; and
(viii) except in accordance with past practice, the
Company has not taken any action that would have the effect of
deferring any taxable income of the Company from any taxable
period or portion thereof ending before the Effective Time to
any period following the Effective Time. The Company is not
required to include in its income any adjustment pursuant to
Section 481 of the Code following the Effective Time.
Section 5.13 ERISA.
(a) SECTION 5.13(A) of the Disclosure Letter sets forth a list
identifying each "EMPLOYEE BENEFIT PLAN" (as defined in Section 3(3) of ERISA),
material benefit arrangement, plan, or policy, including without limitation: (i)
each deferred compensation plan, (ii) each equity compensation plan; and (iii)
each plan or arrangement providing severance benefits ("BENEFIT ARRANGEMENTS")
which: (A) is subject to any provision of ERISA or (B) is maintained,
administered or contributed to by the Company or any affiliate (as defined
below) within the last three (3) years, under which the Company has any
liability. The most recent copies of such plans (and, if applicable, related
trust agreements) and all amendments thereto have been made available to
MergerSub together with: (i) the most recent annual reports (Form 5500 including
applicable schedules and financial reports) or ERISA alternative compliance
statements prepared in connection with any such plan; and (ii) the most recent
actuarial valuation report prepared in connection with any such plan. Such plans
are referred to collectively herein as the "EMPLOYEE PLANS." For purposes of
this Section 5.13, "AFFILIATE" of any Person means any other Person which,
together with such Person, would be treated as a single employer under Section
414 of the Code. Employee Plans which individually or collectively would
constitute an "employee pension benefit plan" as defined in Section 3(2) of
ERISA (the "PENSION PLANS") are identified as such in the list referred to
above.
(b) Neither the Company nor any of its affiliates maintains or
contributes to or has maintained or contributed to within the last five (5)
years a Pension Plan subject to Title IV of ERISA or Section 412 of the Code.
Nothing done or omitted to be done and no transaction or holding of any asset
under or in connection with any Employee Plan has or will make the Company or
any Subsidiary, any officer or director of the Company or any Subsidiary subject
to any liability under Title I of ERISA or liable for any tax pursuant to
Section 4975 of the Code that could have a Material Adverse Effect.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a determination letter from the Internal
Revenue Service to the effect that such Employee Plan is so qualified and no
amendments have been adopted since the receipt of such determination letter that
would result in the revocation of such letter. The Company has made available to
MergerSub copies of the most recent Internal Revenue Service determination
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letters with respect to each such Employee Plan. Nothing has occurred since the
date of the most recent Internal Revenue Service determination letters that
would adversely affect the tax-qualified status of any Employee Plan. Each
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and regulations,
including but not limited to ERISA and the Code, which are applicable to such
Employee Plan other than any non-compliance which could not have a Material
Adverse Effect.
(d) Except as set forth on SECTION 5.13(D) of the Disclosure
Letter, there is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any of its affiliates that,
individually or collectively, could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of the Code or
that could obligate the Company to make any payments that will not be fully
deductible by virtue of Section 162(m) of the Code.
(e) Except as set forth on SECTION 5.13(E) of the Disclosure
Letter, there has been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its affiliates relating to, or
change in employee participation or coverage under, any Employee Plan or Benefit
Arrangement which would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the expense incurred in
respect thereof for the fiscal year ended on the Balance Sheet Date.
(f) Except as disclosed on SECTION 5.13(F) of the Disclosure
Letter, the Company or any Subsidiary is not a party to or subject to: (i) any
employment contract or arrangement providing for annual future compensation of
$75,000 or more with any officer, consultant, director or employee, or that have
a remaining term in excess of one year or are not cancelable (without material
penalty, cost or other liability) within one year; (ii) any severance
agreements, programs and policies with or relating to its employees except
programs and policies required to be maintained by law; or (iii) any plans,
programs, agreements and other arrangements with or relating to its employees
which contain change in control provisions. The Company has made available to
II-VI and MergerSub copies (or descriptions in detail reasonably satisfactory to
II-VI and MergerSub) of all such agreements, plans, programs and other
arrangements.
(g) Except as disclosed in SECTION 5.13(G) of the Disclosure
Letter, there will be no payment, accrual of additional benefits, acceleration
of payments or vesting in any benefit under any Employee Plan or similar
agreement or arrangement disclosed in this Agreement solely by reason of the
Company's entering into this Agreement or in connection with the transactions
contemplated by this Agreement.
Section 5.14 LABOR MATTERS.
There are no strikes, slowdowns, work stoppages, lockouts,
union organizational campaigns or other protected concerted activity under the
National Labor Relations Act or, to the knowledge of Company, threats thereof,
by or with respect to any employees of the Company or any of its Subsidiaries
which could have a Material Adverse Effect on the Company. There are no
controversies pending or, to the knowledge of the Company, threatened between
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the Company or any of its Subsidiaries and any of their respective employees,
which controversies have or would reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
is a party to any collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its Subsidiaries except as
disclosed in SECTION 5.14 of the Disclosure Letter. There are no pending or, to
the knowledge of the Company, threatened charges or complaints against the
Company or its Subsidiaries by the National Labor Relations Board or any
comparable state agency which, if adversely determined, would have a Material
Adverse Effect on the Company.
Section 5.15 COMPLIANCE WITH LAWS AND COURT ORDERS.
Neither the Company nor its Subsidiaries is in violation of,
nor has it since January 1, 1997 violated, and to the knowledge of the Company
nothing is under investigation with respect to or has been threatened to be
charged with or given notice of any violation of, any applicable Law, except for
possible violations that have not had and would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on the
Company. This Section does not relate to matters with respect to Taxes or
Environmental Laws which are exclusively the subject of Sections 5.12 and 5.17,
respectively. Section 5.16 FINDERS' FEES.
With the exception of fees payable to Roth, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf, of the Company or any of its Subsidiaries
who might be entitled to any fee or commission from the Company or any of its
affiliates upon consummation of the transactions contemplated by this Agreement.
Section 5.17 ENVIRONMENTAL MATTERS.
(a) The Company and each Subsidiary have complied and are in
compliance with, and the Real Property and all improvements thereon are in
compliance with, all Environmental Laws.
(b) Neither the Company nor any Subsidiary have any liability
(known or unknown, contingent or non-contingent) under any Environmental Law,
nor is the Company or any Subsidiary responsible for any liability of any other
person under Environmental Law, either by contract or by operation of law. There
are no pending or, to the knowledge of the Company, threatened actions, suits,
orders, claims, legal proceedings or other proceedings based on, and neither the
Company nor any Subsidiary, nor any officer, director or stockholder thereof has
directly or indirectly received any formal or informal notice of any complaint,
order, directive, citation, notice of responsibility, notice of potential
responsibility, or information request from any governmental authority or any
other person or entity or knows or suspects any fact(s) which might reasonably
form the basis for any such actions or notices arising out of or attributable
to: (i) the current or past presence, Release, or threatened Release of
Hazardous Materials at or from any part of the Real Property or any real
property formerly owned, operated, leased or used by the Company or any
Subsidiary; (ii) the off-site disposal or treatment of Hazardous Materials
originating on or from the Real Property or the businesses or Assets of the
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Company or any Subsidiary; or (iii) any violation of Environmental Laws at any
part of the Real Property or arising from the Company's or any Subsidiary's
activities (or the activities of the Company's or any Subsidiary's predecessors
in title) involving Hazardous Materials.
(c) The Company and the Subsidiaries have been duly issued,
and currently have and will maintain through the Closing Date, all Environmental
Permits necessary to operate the business or assets of the Company as currently
operated. A true and complete list of all such Environmental Permits, all of
which are valid and in full force and effect, is set out in SECTION 5.17(C) of
the Disclosure Letter. The Company and the Subsidiaries have timely filed
applications for all Environmental Permits. Except in accordance with
Environmental Permits, there has been no Release of Hazardous Materials at, on,
under, or from: (i) the Real Property; or (ii) any real property formerly owned,
operated or leased by the Company or the Subsidiaries, during the period of such
ownership, operation, or tenancy. All of the Environmental Permits listed on the
Disclosure Schedule are transferable and none require consent, notification, or
other action to remain in full force and effect following consummation of the
transaction contemplated hereby.
(d) The Real Property contains no underground improvements,
including but not limited to treatment or storage tanks, or underground piping
associated with such tanks, used currently or in the past for the management of
Hazardous Materials, and no portion of the Real Property is or has been used as
a dump or landfill or consists of or contains filled in land or wetlands. With
respect to any real property formerly owned, operated, or leased by the Company
or the Subsidiaries, during the period of such ownership, operation or tenancy,
no portion of such property was used as a dump or landfill. Neither PCBs nor
asbestos-containing materials are present on or in the Real Property or the
improvements thereon.
(e) The Company has Furnished to II-VI and MergerSub copies of
all environmental assessments, reports, audits and other documents in its
possession or under its control that relate to the Real Property, compliance
with Environmental Laws, or any other real property that the Company or the
Subsidiaries formerly owned, operated, or leased. Any information the Company or
the Subsidiaries has Furnished to II-VI and MergerSub concerning the
environmental history of the Real Property and the operations of the Company or
the Subsidiaries related to compliance with Environmental Laws is accurate and
complete.
(f) No Real Property, and no property to which Hazardous
Materials originating on or from such properties or the businesses or assets of
the Company or any Subsidiary has been sent for treatment or disposal, is listed
or proposed to be listed on the National Priorities List or CERCLIS or on any
other governmental database or list of properties that may or do require
investigation or cleanup under Environmental Laws.
(g) No Lien in favor of any person relating to or in
connection with any Claim under any Environmental Law has been filed or has
attached to the Real Property.
(h) No authorization, notification, recording, filing,
consent, waiting period, remediation, investigation, or approval is required
under any Environmental Law in order to consummate the transaction contemplated
hereby.
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(i) No proposed or final regulation published pursuant to
Environmental Laws and no Environmental Permit for which the Company or the
Subsidiaries has or should have applied, could reasonably be expected to result
in a capital expenditure in excess of $100,000.
Section 5.18 YEAR 2000 PROGRAM.
(a) Except as described in SECTION 5.18 of the Disclosure
Letter, to the knowledge of the Company, the Company's central operating and
accounting systems described in the Company's most recently filed Form 10-K (the
"SYSTEM") are Year 2000 Compliant.
(b) "YEAR 2000 COMPLIANT" means the System:
(i) will accurately input, process and output all
date and time data, whether from years in the same century or
in different centuries, including by yielding correct results
in arithmetic operations, comparisons, sequencing and sorting
of date and time data and in leap year calculations; and
(ii) will not operate abnormally or cease to operate,
return an error message or otherwise fail due to date- or
time-related processing relating to the then current date
being after January 1, 2000 or any other date.
Section 5.19 INSURANCE.
Each of the Company and its Subsidiaries maintains insurance
policies (the "INSURANCE POLICIES") against all risks of a character and in such
amounts as are usually insured against by similarly situated companies in the
same or similar businesses. Each Insurance Policy is in full force and effect
and is valid, outstanding and enforceable, and all premiums due thereon have
been paid in full. None of the Insurance Policies will terminate or lapse (or be
affected in any other materially adverse manner) by reason of the transactions
contemplated by this Agreement. Each of the Company and its Subsidiaries has
complied in all material respects with the provisions of each Insurance Policy
under which it is the insured party. No insurer under any Insurance Policy has
canceled or generally disclaimed liability under any such policy or, to the
Company's knowledge, indicated any intent to do so or not to renew any such
policy. All material claims under the Insurance Policies have been filed in a
timely fashion.
Section 5.20 CERTAIN BUSINESS PRACTICES.
None of the Company, any of its Subsidiaries or any directors,
officers, agents or employees of the Company or any of its Subsidiaries has: (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses related to political activity; (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended; or (iii) made any other unlawful
payment. Neither the Company nor any of its Subsidiaries has participated in any
boycotts.
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Section 5.21 SUPPLIERS AND CUSTOMERS.
The documents and information supplied by the Company to II-VI
and MergerSub or any of their representatives in connection with this Agreement
with respect to relationships and volumes of business done with its significant
suppliers and customers are accurate in all material respects. During the last
twelve (12) months, the Company has received no notices of termination or
material alteration of a contract or business relationship, or written threats
of any such action from any of the fifteen (15) largest suppliers or the fifteen
(15) largest customers of the Company and its Subsidiaries.
Section 5.22 CONTRACTS.
(a) SECTION 5.22 of the Disclosure Letter contains a complete
and accurate list of all contracts (written or oral), undertakings, commitments
or agreements (other than contracts, undertakings, commitments or agreements for
employee benefit matters set forth in SECTION 5.12 of the Disclosure Letter and
real property leases set forth in SECTION 5.26 of the Disclosure Letter) of the
following categories to which the Company or any of its Subsidiaries is a party
or by which any of them is bound (collectively, and together with the contracts,
undertakings, commitments or agreements for employee benefit matters set forth
in SECTION 5.13 of the Disclosure Letter and the real property leases set forth
in SECTION 5.26 of the Disclosure Letter, the "CONTRACTS"):
(i) Contracts requiring annual expenditures by or
liabilities of the Company and its Subsidiaries in excess of
One Hundred Thousand Dollars ($100,000) which have a remaining
term in excess of one hundred eighty (180) days or are not
cancelable (without material penalty, cost or other liability)
within one hundred eighty (180) days;
(ii) promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments relating to the
lending of money, whether as borrower, lender or guarantor, in
excess of One Hundred Thousand Dollars ($100,000).
(iii) Contracts containing covenants limiting the
freedom of the Company or any of its Subsidiaries to engage in
any line of business (other than prohibitions against engaging
in business relating to specific product lines) or compete
with any person, in any product line or line of business, or
operate at any location;
(iv) joint venture or partnership agreements or joint
development or similar agreements pursuant to which any third
party has been entitled or is reasonably expected to be
entitled to share in profits or losses of the Company or its
Subsidiaries;
(v) Contracts with any federal, state or local
government which have a remaining term in excess of one year
or are not cancelable (without material penalty, cost or other
liability) within one year;
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(vi) other Contracts or commitments in which the
Company or any of its Subsidiaries has granted manufacturing
rights or exclusive marketing rights relating to any product
or service, any group of products or services or any
territory; and
(vii) to the knowledge of the Company, as of the date
hereof any other Contract the performance of which could be
reasonably expected to require expenditures by the Company or
any of its Subsidiaries in excess of One Hundred Thousand
Dollars ($100,000).
(b) Except as set forth in SECTION 5.22 of the Disclosure
Letter, true and complete copies of the written Contracts and descriptions of
verbal Contracts, if any, have been delivered or made available to II-VI and
MergerSub. Each of the Contracts is a valid and binding obligation of the
Company and, to the Company's knowledge, the other parties thereto, enforceable
against the Company in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium, reorganization, arrangement or
similar laws affecting creditors' rights generally and by general principles of
equity. To the knowledge of the Company, except for the execution of this
Agreement and the consummation of the transactions contemplated hereby and
thereby, no event has occurred which would, on notice or lapse of time or both,
entitle the holder of any indebtedness issued pursuant to a Contract identified
in SECTION 5.22 of the Disclosure Letter in response to paragraph (ii) above to
accelerate, or which does accelerate, the maturity of any such indebtedness.
(c) None of the Company or its Subsidiaries is in breach,
default or violation (and no event has occurred or not occurred through the
Company's action or inaction or, to the knowledge of the Company, through the
action or inaction of any third parties, which with notice or the lapse of time
or both would constitute a breach, default or violation) of any term, condition
or provision of any Contract to which the Company or any of its Subsidiaries is
now a party or by which any of them or any of their respective properties or
assets may be bound, except for violations, breaches or defaults that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
Section 5.23 DISCLOSURE.
None of the representations or warranties made by the Company
herein or in any schedule hereto, including the Disclosure Letter, or in any
certificate furnished by the Company pursuant to this Agreement, or in the
Company SEC Reports, when all such documents are read together in their
entirety, contains or will contain at the Effective Time any untrue statement of
a material fact, or omits or will omit at the Effective Time to state any
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which made, not misleading.
Section 5.24 INTELLECTUAL PROPERTY.
(a) Each of the Company and its Subsidiaries owns or possesses
adequate licenses or other valid rights to use all existing United States and
foreign patents, trademarks, trade names, service marks, copyrights, trade
secrets and applications therefor (the "COMPANY INTELLECTUAL PROPERTY RIGHTS")
except where the failure to own or possess valid rights to use such Company
Intellectual Property Rights would not have a Material Adverse Effect on the
Company.
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(b) The validity of the Company Intellectual Property Rights
and the title thereto of the Company or any Subsidiary, as the case may be, is
not being questioned in any pending litigation proceeding to which the Company
or any Subsidiary is a party nor, to the knowledge of the Company, is any such
litigation proceeding threatened. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company and except as set forth in SECTION 5.24 of the Disclosure Letter, the
conduct of the business of the Company and its Subsidiaries as now conducted
does not, to the knowledge of the Company, infringe any valid patents,
trademarks, trade names, service marks or copyrights of others, and the
consummation of the transactions completed by this Agreement will not result in
the loss or impairment of any Company Intellectual Property Rights.
Section 5.25 RELATED PARTY TRANSACTIONS.
Except as set forth in SECTION 5.25 of the Disclosure Letter,
(a) no beneficial owner of 5% or more of the Company's outstanding capital
stock, or (b) officer or director of the Company or (c) any Person (other than
the Company) in which any such beneficial owner, officer or director owns any
beneficial interest (other than a publicly held corporation whose stock is
traded on a national securities exchange or in the over-the-counter market and
less than 1% of the stock of which is beneficially owned by all such Persons)
(collectively, "RELATED PARTIES") has any interest in: (i) any contract,
arrangement or understanding with, or relating to, the business or operations
of, the Company or any of its Subsidiaries; (ii) any loan, arrangement,
understanding, agreement or contract for or relating to indebtedness of the
Company or any of its Subsidiaries; or (iii) any property (real, personal or
mixed), tangible or intangible, used in the business or operations of the
Company or any of its Subsidiaries, excluding any such contract, arrangement,
understanding or agreement constituting an Employee Plan. Following the
Effective Time, except for obligations set forth in this Agreement, neither the
Company nor any of its Subsidiaries will have any obligations to any Related
Party except for: (i) accrued salary for the pay period commencing immediately
prior to the Effective Time; and (ii) the obligations set forth in the SECTION
5.25 of the Disclosure Letter.
Section 5.26 ASSETS.
(a) The assets and properties of the Company and its
Subsidiaries, considered as a whole, constitute all of the material assets and
properties which are reasonably required for the business and operations of the
Company and its Subsidiaries as presently conducted. The Company and its
Subsidiaries have good and marketable title to or a valid leasehold estate in
all personal properties and assets reflected on the Company's Balance Sheet at
the Balance Sheet Date (except for properties or assets subsequently sold in the
ordinary course of business consistent with past practice), except as would not,
individually or in the aggregate, have a Material Adverse Effect on the Company.
(b) SECTION 5.26 of the Disclosure Letter sets forth: (i) a
complete and accurate list of all improved and unimproved Real Property of the
Company or any of its Subsidiaries, and the current use of such Real Property
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and indicating whether the Real Property is owned or leased; (ii) a complete and
accurate list of all leases pursuant to which the Company or any of its
Subsidiaries lease personal property and which require an annual expenditure by
the Company or any of its Subsidiaries individually in excess of $100,000 or
which are not cancelable (without material penalty, cost or other liability)
within one year; and (iii) with respect to each lease for real property, the
term (including renewal options) and current fixed rent.
(c) Except as set forth in SECTION 5.26 of the Disclosure
Letter, there are no pending or, to the knowledge of the Company, threatened
condemnation or similar proceedings relating to any of the Real Properties of
the Company and its Subsidiaries, except for such proceedings which would not,
individually or in the aggregate, have a Material Adverse Change on the Company.
Section 5.27 DELAWARE SECTION 203.
The provisions of Section 203 of Delaware Corporate Law will
not apply to this Agreement, as it may be amended from time to time, or any of
the transactions contemplated hereby. The Company has heretofore delivered to
II-VI and MergerSub a complete and correct copy of the resolutions of the Board
of Directors of the Company to the effect that pursuant to 203(a)(1) of the
Delaware Corporate Law, the restrictions contained in Section 203 of Delaware
Corporate Law are and shall be inapplicable to the Merger and the transactions
contemplated by this Agreement, as it may be amended from time to time.
Section 5.28 BUSINESS RELATIONS.
The Company does not have any knowledge that any customer,
supplier or licensor engaged in doing business with the Company will cease to do
business with the Company after the consummation of the Merger as previously
conducted with the Company except for any terminations which will not, in the
aggregate, result in a Material Adverse Change.
Section 5.29 RIGHTS AGREEMENT.
The Company has taken all actions necessary to cause the
Rights Agreement to be amended to: (i) render the Rights Agreement inapplicable
to the acquisition by MergerSub of Shares pursuant to the Offer in accordance
with this Agreement and the Merger and (ii) ensure that (A) neither II-VI nor
MergerSub is an Acquiring Person (as defined in the Rights Agreement) pursuant
to the Rights Agreement solely by virtue of the execution of this Agreement or
the consummation of the Offer, the Merger or the other transactions contemplated
by this Agreement and (B) the provisions of the Rights Agreement, including the
occurrence of a Distribution Date (as defined in the Rights Agreement) are not
triggered solely by reason of the execution of this Agreement or the
consummation of the Offer, the Merger or the consummation of the other
transactions contemplated by this Agreement in accordance with the provisions
hereof.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF II-VI AND MERGERSUB
----------------------
II-VI and MergerSub represent and warrant to the Company that:
Section 6.1 CORPORATE EXISTENCE AND POWER.
Each of II-VI and MergerSub is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers to execute and
deliver this Agreement and to consummate the Merger and the transactions
contemplated hereby.
Section 6.2 CORPORATE AUTHORIZATION.
The execution, delivery and performance by II-VI and MergerSub
of this Agreement and the consummation by MergerSub of the transactions
contemplated hereby are within the corporate powers of II-VI and MergerSub and
have been duly authorized by all necessary corporate and stockholder action.
This Agreement constitutes a valid and binding agreement of II-VI and MergerSub.
Section 6.3 GOVERNMENTAL AUTHORIZATION.
The execution, delivery and performance by II-VI and MergerSub
of this Agreement and the consummation by II-VI and MergerSub of the
transactions contemplated by this Agreement require no action by or in respect
of, or filing with, any Governmental Authority other than: (i) the filing of a
certificate of merger in accordance with Delaware Corporate Law; (ii) compliance
with any applicable requirements of the HSR Act; (iii) compliance with the
applicable requirements of the Exchange Act; (iv) compliance with the applicable
requirements of the Securities Act; (v) compliance with any applicable foreign
or state securities or Blue Sky laws; (vi) compliance with the requirements of
the National Industrial Security Program Regulations; (vii) compliance with the
requirements of the International Trade in Arms Regulations; and (viii) such
other items the failure of which to be obtained will not have a Material Adverse
Effect on II-VI and MergerSub.
Section 6.4 NON-CONTRAVENTION.
The execution, delivery and performance by II-VI and MergerSub
of this Agreement and the consummation by II-VI and MergerSub of the
transactions contemplated hereby do not and will not: (i) contravene or conflict
with the certificate of incorporation or bylaws of II-VI and MergerSub; (ii)
contravene, conflict with or constitute a violation of any provision of law,
regulation, judgment, order or decree binding upon II-VI and MergerSub; or (iii)
constitute a default under or give rise to any right of termination,
cancellation or acceleration of any right or obligation of II-VI and MergerSub
or to a loss of any benefit to which II-VI and MergerSub is entitled under any
agreement, contract or other instrument binding upon II-VI and MergerSub which
in the aggregate would have a Material Adverse Effect on II-VI and MergerSub.
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Section 6.5 REGISTRATION STATEMENTS, OFFER DOCUMENTS AND PROXY
STATEMENT.
None of the information supplied by or on behalf of II-VI or
MergerSub for inclusion in the Offer Registration Statement, the registration
statement to be filed with the SEC in connection with the issuance of II-VI
Common Stock pursuant to the Merger ("MERGER REGISTRATION STATEMENT"), Schedule
TO, the Schedule 14D-9 or the Proxy Statement (the "II-VI INFORMATION"), will,
at the time the Offer Registration Statement, Merger Registration Statement,
Schedule TO, the Schedule 14D-9 or the Proxy Statement, as the case may be, is
filed with the SEC or sent to shareholders, at the time of the Stockholders'
Meeting or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Offer Registration Statement,
the Merger Registration Statement and the Offer Documents willnot, at the
respective times they are filed with the SEC or first published, sent or given
to the Company's stockholders, 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 statement therein, in light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, II-VI and
MergerSub do not make any representation or warranty with respect to statements
made or incorporated by reference in any of the foregoing documents based upon
information that has been supplied by the Company or its accountants, counsel or
other authorized representatives for use in any of the foregoing documents. The
Offer Registration Statement, the Merger Registration Statement and the Offer
Documents will comply as to form in all material respects with the provisions of
Securities Act and the Exchange Act and the rules and regulations thereunder.
Section 6.6 LITIGATION.
There is no action, suit or proceeding, claim, arbitration or
investigation against II-VI or MergerSub pending or, to II-VI's and MergerSub's
knowledge, threatened against II-VI and/or MergerSub or any of their properties,
assets or rights before any court, arbitrator or administrative or environmental
body, which could prevent II-VI and MergerSub from consummating the transactions
contemplated by this Agreement.
Section 6.7 FINDERS' FEES.
Except for fees payable to II-VI Banker, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of II-VI and MergerSub who would be
entitled to any fee or commission from II-VI or MergerSub or any of its
affiliates upon consummation of the transactions contemplated by this Agreement.
Section 6.8 FINANCING.
II-VI and MergerSub shall have at the Closing sufficient cash
to enable it to pay the cash portion of the Merger Consideration as provided
herein, to make all other necessary payments by it in connection with the Merger
and to pay all of the related fees and expenses (the "FINANCING"). The Company
shall use all commercially reasonable efforts to cooperate with and assist
MergerSub in obtaining the consent of Wells Fargo Bank to the assignment to the
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Surviving Corporation of the Company's obligations under its outstanding
indebtedness. If such consent cannot be obtained from Wells Fargo Bank, then
II-VI and MergerSub shall have at the Closing sufficient cash to enable it to
repay the Company's outstanding indebtedness.
Section 6.9 CAPITALIZATION.
As of the date hereof, the authorized capital shares of
MergerSub consists of 3,000 shares of common stock, no par value, of which as of
the date hereof there are outstanding 1,000 shares. As of the date hereof, the
authorized capital shares of II-VI consists of 30,000,000 shares of common
stock, no par value, of which as of the date hereof are outstanding 6,445,333
shares and 5,000,000 shares of preferred stock, no par value, none of which as
of the date hereof is outstanding. All outstanding capital stock of II-VI and
MergerSub have been duly authorized and validly issued and are fully paid and
nonassessable. All II-VI Common Stock that will be issued pursuant to the Offer
and the Merger will be duly authorized and validly issued and fully paid and
nonassessable. As of the moment immediately prior to the Effective Time, except
as set forth in this Section 6.9, there will be: (i) no capital stock or other
voting securities of MergerSub; (ii) no securities of MergerSub convertible into
or exchangeable for capital stock of MergerSub; and (iii) no options or other
rights to acquire from MergerSub, and no obligation of MergerSub to issue any
capital stock, voting securities or securities convertible into or exchangeable
for capital stock or voting securities of MergerSub (the items referred to in
clauses (i), (ii) and (iii) being referred to collectively as the "MERGERSUB
SECURITIES"). There are no outstanding obligations of MergerSub to repurchase,
redeem or otherwise acquire any MergerSub Securities.
Section 6.10 II-VI REPORTS AND FINANCIAL STATEMENTS
Since December 31, 1997, II-VI has filed all forms, reports
and documents with the SEC required to be filed by it pursuant to the federal
securities laws and the SEC rules and regulations thereunder, and all forms,
reports and schedules, registration statements and other documents (together
with any exhibits, any amendments thereto and information incorporated by
reference therein, collectively referred to as "II-VI SEC REPORTS") filed with
the SEC by II-VI have complied in all material respects with all applicable
requirements of the federal securities laws and the SEC rules and regulations
thereunder. As of their respective dates, the II-VI SEC Reports did not contain
any untrue statement of a material fact or omit 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. The
audited consolidated financial statements and the unaudited consolidated interim
financial statements of II-VI included in the II-VI SEC Reports were prepared in
accordance with GAAP applied on a consistent basis (except as may be indicated
therein or in the notes or schedules thereto) and present fairly, in all
material respects, the consolidated financial position of II-VI and its
subsidiaries as of the dates thereof and their consolidated results of
operations and changes in financial position for the periods then ended.
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ARTICLE VII
COVENANTS OF THE COMPANY
------------------------
Section 7.1 CONDUCT OF THE COMPANY.
Except for matters set forth in SECTION 7.1 of the Disclosure
Letter or as otherwise contemplated by or specifically provided in this
Agreement, without the prior written consent of II-VI and MergerSub from the
date hereof to the Effective Time, the Company shall carry on its business in
the ordinary and usual course of business and consistent with past practice and
shall use its reasonable best commercial efforts to: (i) preserve intact its
present business organization; (ii) maintain in effect all material federal,
state and local Permits that are required for the Company or any of its
Subsidiaries to carry on its business; (iii) keep available the services of its
key officers and employees; and (iv) maintain satisfactory relationships with
its customers, lenders, suppliers and others having material business
relationships with it. Without limiting the generality of the foregoing, and
except for matters set forth in SECTION 7.1 of the Disclosure Letter attached
hereto or as otherwise contemplated by or specifically provided in this
Agreement, without the prior written consent of II-VI and MergerSub, prior to
the Effective Time, the Company shall not and shall not permit its Subsidiaries
to:
(a) adopt any change in its amended and restated certificate
of incorporation or bylaws or comparable organizational documents;
(b) except pursuant to existing agreements or arrangements:
(i) acquire (by merger, consolidation, acquisition of stock or assets, joint
venture or otherwise of a direct or indirect ownership interest or investment)
any corporation, partnership or other business organization or division thereof,
or sell, lease or otherwise dispose of a material amount of assets (excluding
sales of inventory or other assets in the ordinary course of business) or
securities; (ii) waive, release, grant, or transfer any rights of material
value; (iii) modify or change in any material respect any material Permit; (iv)
except to refund or refinance commercial paper, incur, assume or prepay any
indebtedness for borrowed money except in the ordinary course of business,
consistent with past practice; (v) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
any indebtedness for borrowed money or trade payables of any other Person,
except in the ordinary course of business consistent with past practice; (vi)
make any loans, advances or capital contributions to, or investments in, any
other Person, except in the ordinary course of business, consistent with past
practice; (vii) authorize any capital expenditure or expenditures not in the
ordinary course of business that have not been authorized and approved prior to
the date hereof (other than the Company's computer upgrade currently in process)
which individually or in the aggregate is in excess of One Hundred Thousand
Dollars ($100,000); (viii) pledge or otherwise encumber shares of capital stock
of the Company or any of its Subsidiaries; (ix) mortgage or pledge any of its
material assets, tangible or intangible, or create or suffer to exist any
material Lien thereupon; (x) enter into any contract or agreement other than in
the ordinary course of business consistent with past practice that would be
material to the Company and its Subsidiaries, taken as a whole; or (xi) amend,
modify or waive in any material respects any right under any material contract
of the Company or any of its Subsidiaries;
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(c) take any action that would result in any representation
and warranty of the Company hereunder becoming untrue in any material respects
as of the Effective Time;
(d) split, combine or reclassify any shares of, declare, set
aside or pay any dividend (including, without limitation, an extraordinary
dividend) or other distribution (whether in cash, stock or property or any
combination thereof) in respect of Company Securities or redeem, repurchase or
otherwise acquire or offer to redeem, repurchase, or otherwise acquire any
Company Securities;
(e) adopt or amend any bonus, profit sharing, compensation,
severance, termination, stock option, pension, retirement, deferred
compensation, employment or employee benefit plan, agreement, trust, plan, fund
or other arrangement for the benefit and welfare of any director, officer or
employee, or increase in any manner the compensation or fringe benefits of any
director, officer or any class of employees (or support any portion thereof) or
pay any benefit not required by any existing plan or arrangement (including,
without limitation, the granting of stock options or stock appreciation rights
or the removal of existing restrictions in any benefit plans or agreements);
provided, however, that notwithstanding the foregoing, the Company shall be
entitled to adopt or amend any bonus, profit sharing, compensation, severance,
deferred compensation, termination of employment agreement for the benefit and
welfare of any individual employee (excluding officers), or increase in any
manner the compensation or fringe benefits of any such employee in each case in
the ordinary course of business and consistent with past practice;
(f) except as required by applicable Law or GAAP, revalue in
any material respect any of its assets, including writing down the value of
inventory in any material manner or write-off of notes or accounts receivable in
any material manner;
(g) pay, discharge or satisfy any material claims, liabilities
or obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practices, or as otherwise required by
the terms thereof;
(h) make any material Tax election or settle or compromise any
material Tax liability;
(i) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets, liabilities or
results of operations of the Company, except insofar as may have been required
by a change in GAAP;
(j) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any Company Securities or equity equivalents;
(k) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
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(l) alter through merger, liquidation, reorganization,
restructuring or any other fashion the corporate structure of ownership of any
Subsidiary; or
(m) agree or commit to do any of the foregoing.
Section 7.2 PROXY STATEMENT.
As promptly as practicable after the consummation of the Offer
and if required by law in order to consummate the Merger, the Company shall
prepare and file with the SEC the Proxy Statement. The Company shall use its
reasonable efforts to cause the Proxy Statement to be cleared by the SEC for
mailing to the stockholders of the Company as promptly as practicable and shall
mail the Proxy Statement to its stockholders as promptly as practicable
thereafter. II-VI shall furnish all information concerning it and the holders of
its capital stock as the Company may reasonably request in connection with such
actions.
Section 7.3 STOCKHOLDERS' MEETING.
Promptly after the consummation of the Offer, if required by
law in order to consummate the Merger, the Company shall take all action
reasonably necessary in accordance with Delaware Corporate Law and its articles
of incorporation and bylaws to convene the Stockholders' Meeting. The Company
shall use commercially reasonable efforts to solicit from stockholders of the
Company proxies in favor of the approval of this Agreement and the Merger.
Notwithstanding the foregoing, if MergerSub or any other subsidiary of II-VI
shall acquire at least ninety percent (90%) of the outstanding Shares, and
provided that the conditions set forth in ARTICLE X shall have been satisfied or
waived, the Company shall, at the request of II-VI, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after such acquisition, without the approval of the stockholders of
the Company, in accordance with Section 253 of Delaware Corporate Law.
Section 7.4 ACCESS TO INFORMATION; RIGHT OF INSPECTION.
From the date hereof until the Effective Time, the Company
will give II-VI, MergerSub, their counsel, financial advisors, auditors and
other authorized representatives full access to the offices, properties, books
and records of the Company (so long as such access does not unreasonably
interfere with the operations of the Company), will furnish to II-VI, MergerSub,
their counsel, financial advisors, auditors and other authorized representatives
such financial and operating data and other information as such Persons may
reasonably request and will instruct the Company's employees, counsel and
financial advisors to cooperate with II-VI and MergerSub in their investigation
of the business of the Company; PROVIDED, that any information provided to II-VI
and MergerSub pursuant to this Section 7.4 shall be subject to the
Confidentiality Agreement. The Company hereby grants to II-VI and MergerSub a
license to enter and inspect the Real Property, such inspection to be completed
prior to Closing. In order to complete their investigation pursuant to this
section, II-VI and MergerSub or their designated consultant shall have the right
but not the obligation: (i) to conduct tests of the soil, surface or subsurface
waters, and air quality at, in, on, beneath or about the Property, in a manner
consistent with good engineering practice; (ii) to inspect all records, reports,
permits, applications, monitoring results, studies, correspondence, data and any
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other information or documents related to Hazardous Materials, compliance with
Environmental Laws or other environmental conditions; and (iii) to inspect all
buildings and equipment at the Real Property for asbestos-containing materials
or other Hazardous Materials. II-VI and MergerSub agree to conduct such
investigations in a manner that minimizes the disruption to the business
activities of the Company and the Subsidiaries, and the Company agrees to permit
II-VI and MergerSub reasonable access to all portions of the Real Property, both
during business hours and after business hours. II-VI and MergerSub agree to
keep and hold any and all reports, summaries, studies or results that are the
product of their investigations of the Real Property in accordance with the
terms of the Confidentiality Agreement, and not to disclose such reports prior
to the Closing without the written consent of the Company or unless required to
do so by applicable Law.
Section 7.5 OTHER POTENTIAL ACQUIRERS.
(a) Neither the Company nor any of its affiliates shall, nor
shall the Company authorize or permit any of its or their respective officers,
directors, employees, representatives or agents to, directly or indirectly,
encourage, solicit or engage in discussions or negotiations with or provide any
non-public information to any person or group (other than II-VI or its
affiliates or any designees of II-VI or its affiliates) concerning any
subsequent Third-Party Acquisition; provided, however, that nothing herein shall
prevent the Board of Directors of the Company from: (i) making any disclosure
required under applicable law; and (ii) conducting such "due diligence"
inquiries (which shall be in writing to the extent possible) in response to any
Third-Party Acquisition proposal as the Board of Directors of the Company, by a
majority disinterested vote, determines in its good faith judgment, after
consultation with and based, among other things, upon the advice of legal
counsel, may be required in order to comply with its fiduciary duties. The
Company shall immediately notify II-VI and MergerSub in the event it receives
any proposal or inquiry concerning a Third Party Acquisition, including the
terms and conditions thereof and the identity of the party submitting such
proposal, and shall promptly update II-VI and MergerSub of the status and any
material developments concerning the same, including furnishing copies of any
such written inquiries.
(b) Except as set forth in this Section 7.5(b), the Board of
Directors of the Company shall not withdraw its recommendation of the
transactions contemplated hereby or approve or recommend, or cause the Company
to enter into any agreement with respect to, any Third Party Acquisition. If the
Board of Directors of the Company, by a majority disinterested vote determines
in its good faith judgment after consultation with and based, among other
things, upon the advice of legal counsel, that it is required to do so in order
to comply with its fiduciary duties, the Board of Directors of the Company may
withdraw its recommendation of the transactions contemplated hereby or approve
or recommend a Superior Proposal (as defined in subsection (c) below), but in
each case only: (i) after providing written notice to II-VI and MergerSub (a
"NOTICE OF SUPERIOR PROPOSAL") advising II-VI and MergerSub that the Board of
Directors of the Company has received a Superior Proposal, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal; and (ii) if II-VI and MergerSub do not,
within two (2) business days of II-VI's and MergerSub's receipt of the Notice of
Superior Proposal, make an offer that the Board of Directors of the Company by a
majority disinterested vote determines in its good faith judgment (after receipt
of written advice of a financial adviser of nationally recognized reputation
consistent with such determination) to be at least as favorable to the Company's
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stockholders as such Superior Proposal; provided, however, that the Company
shall not be permitted to enter into any agreement with respect to a Superior
Proposal unless and until this Agreement is terminated by its terms pursuant to
Section 11.1 and the Company has paid all amounts due to II-VI and MergerSub
pursuant to Section 11.2. Any disclosure that the Board of Directors of the
Company may be compelled to make with respect to the receipt of a proposal for a
Third-Party Acquisition or otherwise in order to comply with its fiduciary
duties or Rule 14d-9 or 14e-2 will not constitute a violation of this Agreement,
provided that such disclosure states that no action will be taken by the Board
of Directors of the Company in violation of this Section 7.3(b).
(c) For the purposes of this Agreement, "THIRD PARTY-ACQUISITION" means the
occurrence of any of the following events: (i) the acquisition of the Company by
merger or otherwise by any person (which includes a "person" as such term is
defined in Section 13(d)(3) of the Exchange Act) other than MergerSub or any
affiliate thereof (a "THIRD-PARTY"); (ii) the acquisition by a Third Party of
any material portion of the assets of the Company and its Subsidiaries taken as
a whole, other than the sale of its products in the ordinary course of business
consistent with past practices; (iii) the acquisition by a Third Party of ten
percent (10%) or more of the outstanding Company Common Stock or the issuance by
the Company of preferred stock of a new series containing terms which are
inconsistent with the consummation of the transactions contemplated by this
Agreement; (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; (v) the repurchase by the
Company or any of its Subsidiaries of more than ten percent (10%) of the
outstanding Shares; or (vi) the acquisition by the Company or any of its
Subsidiaries by merger, purchase of stock or assets, joint venture or otherwise
of a direct or indirect ownership interest or investment in any business whose
annual revenues, net income or assets is equal or greater than ten percent (10%)
of the annual revenues, net income or assets of the Company, other than any such
acquisition to which II-VI and MergerSub have consented pursuant to Section
7.1(b). For purposes of this Agreement, a "SUPERIOR PROPOSAL" means any bona
fide proposal to acquire directly or indirectly for consideration consisting of
cash and/or securities more than ten percent (10%) of the shares of Company
Common Stock then outstanding or all or substantially all the assets of the
Company and otherwise for a consideration higher than the Merger Consideration
and on terms that the Board of Directors of the Company by a majority vote
determines in its good faith judgment (after receipt of written advice of a
financial advisor of nationally recognized reputation consistent with such
determination) to be more favorable to the Company's stockholders than the
Merger.
Section 7.6 RESIGNATION OF DIRECTORS.
Prior to the Effective Time, the Company shall deliver to
MergerSub evidence satisfactory to MergerSub of the resignation of all directors
of the Company effective at the Effective Time.
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ARTICLE VIII
COVENANTS OF II-VI AND MERGERSUB
--------------------------------
Section 8.1 VOTING OF SHARES.
MergerSub agrees, and II-VI agrees to cause MergerSub, to vote
all Shares beneficially owned by it in favor of adoption of this Agreement at
the Company Stockholder Meeting.
Section 8.2 DIRECTOR AND OFFICER LIABILITY.
(a) The Surviving Corporation shall honor all of the Company's
obligations to indemnify and hold harmless (including any obligations to advance
funds for expenses) the present and former officers and directors of the Company
in respect of acts or omissions occurring prior to the Effective Time to the
extent provided under the Company's articles of incorporation and bylaws in
effect on the date hereof, and such obligations shall survive the Merger and
shall continue in full force and effect in accordance with the terms of the
Surviving Corporation's articles of incorporation and bylaws, from the Effective
Time until the expiration of the applicable statue of limitations with respect
to any claims against such directors or officers arising out of such acts or
omissions; provided that such indemnification shall be subject to any limitation
imposed from time to time under applicable Law. For a period of three (3) years
after the Effective Time, the Surviving Corporation shall cause to be maintained
the current policies of officers' and directors' liability insurance maintained
by the Company (the "CURRENT POLICIES") (provided that the Surviving Corporation
may substitute therefor policies with reputable and financially sound carriers
of at least the same coverage and amount containing terms and conditions that
are no less favorable (the "REPLACEMENT POLICIES")) in respect of acts or
omissions occurring prior to the Effective Time covering each such Person
currently covered by such Current Policies; provided, however, that in no event
will the Surviving Corporation be required to expend in excess of 150% of the
annual premium currently paid by the Company for such coverage (or such coverage
as is available for 150% of such annual premium); provided further that if the
annual premium required to cause the Current Policies to be maintained as
provided in this Section 8.2(a) exceeds 150% of the annual premium currently
paid by the Company, any present or former officer or director of the Company
who desires to be covered by the Current Policies may so elect and shall be
covered by the Current Policies so long as such former officer or director pays
the portion of the premium for such Current Policies in excess of the amount
which the Surviving Corporation is obligated to pay pursuant to this Section
8.2(a).
(b) The Surviving Corporation shall keep in effect the
provisions in its articles of incorporation and bylaws to honor the Company's
indemnification obligations as set forth in Section 8.2(a) to the fullest extent
permitted by law and such provisions shall not be amended, repealed or otherwise
modified in any manner adverse to the present and former officers and directors
of the Company, without the prior written consent of such persons, except as
required by applicable law.
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(c) In the event that the Surviving Corporation or any of its
controlling persons or successors or assigns: (i) consolidates with or mergers
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 purpose of this Section 8.2,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation or such controlling persons shall succeed to the
obligations set forth in this Section 8.2.
Section 8.3 NASDAQ NATIONAL MARKET LISTING
II-VI shall use its reasonable best efforts to cause the II-VI
Common Stock to be issued in connection with the Offer and the Merger to be
listed on the Nasdaq National Market, subject to official notice of issuance.
ARTICLE IX
COVENANTS OF II-VI AND MERGERSUB AND THE COMPANY
------------------------------------------------
The parties hereto agree that:
Section 9.1 REASONABLE BEST EFFORTS.
Subject to the terms and conditions of this Agreement, each
party will use its reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement, including without limitation the Securities Act
and , if applicable, the National Industrial Security Program Regulations. Each
party shall also refrain from taking, directly or indirectly, any action which
would impair such party's ability to consummate the Merger and the other
transactions contemplated hereby. Without limiting the foregoing, the Company
shall use its reasonable best efforts to: (i) take all action necessary so that
no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger or any of the other transactions contemplated by this
Agreement; and (ii) if any state takeover statute or similar statute or
regulation becomes applicable to any of the foregoing, take all action necessary
so that the Merger 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.
Notwithstanding the foregoing, the Board of Directors of the Company shall not
be prohibited from taking any action permitted by Section 7.4.
Section 9.2 CERTAIN FILINGS.
(a) The parties shall cooperate with one another: (i) in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals or
waivers are required to be obtained from parties to any material contracts, in
connection with the consummation of the transactions contemplated by this
Agreement; and (ii) in seeking any such actions, consent approvals or waivers or
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making any such filings, furnishing information required in connection therewith
or with the Offer Registration Statement, Merger Registration Statement or Proxy
Statement and seeking to obtain any such actions, consents, approvals or
waivers, provided, however, that the Company shall not be required to make any
material monetary expenditure or grant any material accommodation (financial or
otherwise) in connection with any of the foregoing.
(b) The Company and II-VI shall: (i) use their respective
reasonable best efforts to take or cause to be taken, (A) all actions necessary,
proper or advisable by such party with respect to the prompt preparation and
filing with the SEC of the Offer Registration Statement, Merger Registration
Statement and Proxy Statement, (B) such actions as may be required to have the
Offer Registration Statement, Merger Registration Statement and Proxy Statement
cleared by the SEC, as promptly as practicable, and (C) such actions as may be
required to be taken under the Exchange Act and state securities or applicable
Blue Sky Laws in connection with the Merger; and (ii) promptly prepare and file
all necessary documentation, effect all necessary applications, notices,
petitions and filings, and use all reasonable efforts to obtain all necessary
permits, consents, approvals and authorizations of Governmental Authorities
(including, without limitation, the Offer Registration Statement, Merger
Registration Statement, , the National Industrial Security Program Regulations,
the International Trade in Arms Regulations and the HSR Act or any other
applicable antitrust law or regulation).
(c) The Company agrees to provide and will cause its
Subsidiaries and its and their respective officers, employees and advisors to
provide, prior to the Effective Date, all documents that II-VI and MergerSub may
reasonably request relating to the existence of the Company and the authority of
the Company for this Agreement, all in form and substance reasonably
satisfactory to II-VI and MergerSub.
Section 9.3 PUBLIC ANNOUNCEMENTS.
II-VI and the Company will consult with each other before
issuing any press release or making any public statement with respect to this
Agreement and the transactions contemplated hereby (other than following a
change, if any, of the Board of Directors of the Company's recommendation of the
Merger (in accordance with Section 7.5(b)), and except for any press release or
public statement as may be required by applicable Law or any listing agreement
with Nasdaq, will not issue any such press release or make any such public
statement prior to such consultation.
Section 9.4 FURTHER ASSURANCES.
At and after the Effective Time, the officers and directors of
the Surviving Corporation will be authorized to execute and deliver, in the name
and on behalf of the Company, II-VI or MergerSub (as appropriate), any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of the Company, II-VI or MergerSub, any other actions and things to vest,
perfect or confirm of record or otherwise in the Surviving Corporation any and
all right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation as
a result of, or in connection with, the Merger.
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Section 9.5 NOTICES OF CERTAIN EVENTS.
Each of the parties hereto shall promptly notify the other
party of:
(i) the receipt by such party of any notice or other
communication from any Person alleging that the consent of
such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(ii) the receipt by such party of any notice or other
communication from any Governmental Authority in connection
with the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of such party's
knowledge threatened against, or affecting such party which,
if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to this Agreement or
which relate to the consummation of the transactions
contemplated by this Agreement.
ARTICLE X
CONDITIONS TO THE MERGER
------------------------
Section 10.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The obligations of the Company and MergerSub to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) If required by Delaware Corporate Law, this Agreement
shall have been approved in accordance with Delaware Corporate Law by the
affirmative vote of the holders of a majority in voting interests of the shares
of Company Common Stock.
(b) Any applicable waiting period under the HSR Act relating
to the Merger shall have expired or been terminated.
(c) The Merger Registration Statement shall be effective, no
stop order suspending the effectiveness of the Merger Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall have
been initiated by the SEC that have not been concluded or withdrawn and all
state securities or Blue Sky authorizations necessary to consummate the Merger
shall have been obtained.
(d) No provision of any applicable Law and no judgment, order,
decree or injunction shall prohibit or restrain the consummation of the Merger;
provided, however, that the parties shall each use their reasonable best efforts
to have any such judgment, order, decree or injunction vacated.
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(e) Representations shall have been obtained from the DOD
under the National Industrial Security Program Regulations that II-VI will be
able to operate after the Merger those portions of the business of the Surviving
Corporation that are governed by the National Industrial Security Program
Regulations, either unconditionally or subject only to such conditions as are
customarily imposed under the National Industrial Security Program, and are not,
in the judgment of II-VI, after consultation with the Company, to the extent
practicable, materially burdensome to II-VI and its affiliates.
(f) MergerSub shall have accepted for payment and paid for all
Shares validly tendered in the Offer and not withdrawn.
Section 10.2 CONDITIONS TO THE OBLIGATIONS OF II-VI AND MERGERSUB.
The obligations of II-VI and MergerSub to consummate the Merger are
subject to the satisfaction of the following further conditions:
(a) The Company shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Effective Time, the representations and warranties of the Company contained
in this Agreement shall be true in all material respects at and as of the
Effective Time (provided that representations made as of a specific date shall
be required to be true as of such date only) as if made at and as of such time
and MergerSub shall have received a certificate signed by the Chief Executive
Officer and the Chief Financial Officer of the Company to his knowledge to the
foregoing effect;
(b) There shall not be pending: (i) any action or proceeding
by any Governmental Authority; or (ii) any action or proceeding by any other
Person, in any case referred to in clauses (i) and (ii), before any court or
Governmental Authority that has reasonable likelihood of success seeking to: (i)
make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the consummation of the Merger or seeking to obtain
material damages; (ii) restrain or prohibit II-VI's (including its affiliates)
ownership or operation of all or any material portion of the business or assets
of the Surviving Corporation or the Company, or to compel II-VI or any of its
affiliates to dispose of or hold separate all or any material portion of the
business or assets of the Surviving Corporation or the Company; (iii) impose or
confirm material limitations on the ability of II-VI or any of its affiliates to
effectively control the business or operations of the Surviving Corporation or
the Company or effectively to exercise full rights of ownership of the shares of
Company Common Stock, including, without limitation, the right to vote any
Shares acquired or owned by II-VI or any of its affiliates on all matters
properly presented to the Company's stockholders, or (iv) require divestiture by
II-VI or any of its affiliates of any material amount of share;, and no court,
arbitrator or Governmental Authority shall have issued any judgment, order,
decree or injunction, and there shall not be any statute, rule or regulation,
that, in the sole judgment of II-VI is likely, directly or indirectly, to result
in any of the consequences referred to in the preceding clauses (i) through
(iv); provided, however, that II-VI shall use its reasonable best efforts to
have any such judgment, order, decree or injunction vacated;
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(c) The parties shall have received, each in form and
substance satisfactory to II-VI and MergerSub, all authorizations, consents,
orders and approvals of all Governmental Authorities and officials, including,
without limitation, approvals or agreements required by the DOD under the
National Industrial Security Program Regulations, and all third party consents
and estoppel certificates, which II-VI and MergerSub deem necessary or desirable
for the consummation of the transactions contemplated by this Agreement or the
conduct of the business of the Company and its Subsidiaries by II-VI after the
Merger;
(d) The Merger Registration Statement shall be effective, no
stop order suspending the effectiveness of the Merger Registration Statement
shall have been issued by the SEC and no proceedings for that purpose shall have
been initiated by the SEC that have not been concluded or withdrawn and all
state securities or Blue Sky authorizations necessary to consummate the Merger
shall have been obtained.
(e) The aggregate number of Dissenting Shares shall not equal
10% or more of the shares of the Company outstanding as of the record date for
the Company Stockholder Meeting; and
(f) Since the date of this Agreement, there shall not have
occurred any change, event, occurrence, development or circumstance which,
individually or in the aggregate, has had, or would reasonably be expected to
have, a Material Adverse Effect on the Company.
Section 10.3 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.
The obligation of the Company to consummate the Merger is
subject to the satisfaction of the following further conditions:
(a) II-VI and MergerSub shall have performed in all material
respects all of their obligations hereunder required to be performed by it at or
prior to the Effective Time, the representations and warranties of II-VI and
MergerSub contained in this Agreement and in any certificate or other writing
delivered by it pursuant hereto shall be true in all material respects at and as
of the Effective Time (provided that representations made as of a specific date
shall be required to be true as of such date only) as if made at and as of such
time and the Company shall have received a certificate signed by the President
or any Vice President of II-VI to the foregoing effect; and
(b) The Board of Directors of the Company shall have received
advice, reasonably satisfactory to the Board, from an independent advisor to the
effect that the transactions contemplated herein are fair and reasonable to the
Company and its stockholders.
ARTICLE XI
TERMINATION
-----------
Section 11.1 TERMINATION.
This Agreement may be terminated and the Offer and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company):
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(a) By mutual written consent of the Company on the one hand
and II-VI and MergerSub on the other hand;
(b) By either the Company or MergerSub, if the Offer has not
been consummated within 120 days of the date of this Agreement (the "TERMINATION
DATE"), provided that the party seeking to exercise such right is not then in
breach in any material respect of any of its obligations under this Agreement;
and provided, further that the Termination Date may be extended for one (1)
additional 30-day period in the event no party is in breach of this Agreement
and the sole condition to the Merger that remains unsatisfied is the consent,
authorization or approval of a Governmental Authority;
(c) By either the Company or II-VI and MergerSub at any time
prior to the consummation of the Offer, if II-VI and MergerSub (in the case of
termination by the Company) or the Company (in the case of termination by II-VI
and MergerSub) shall have breached in any material respect any of its covenants
or obligations under this Agreement or any representation or warranty of II-VI
and MergerSub (in the case of termination by the Company) or of the Company (in
the case of termination by II-VI and MergerSub) shall have been incorrect in any
material respect when made or at any time prior to the Effective Time (unless
such breach is capable of cure and, in such case, the breaching party shall not
have cured such breach within 15 days after the receipt of written notice from
the non-breaching party to the breaching party of such breach);
(d) By either the Company or II-VI and MergerSub, if any court
of competent jurisdiction in the United States or other United States federal or
state Governmental Authority shall have issued a final order, decree or ruling,
or taken any other final action restraining, enjoining or otherwise prohibiting
acceptance for payment of, or payment for, Shares pursuant to the Offer or
Shares pursuant to the Merger and such order, decree, ruling or other action is
or shall have become nonappealable;
(e) By II-VI and MergerSub: (i) if prior to the consummation
of the Offer and to the extent permitted by Section 7.5, the Board of Directors
of the Company shall have withdrawn, or modified or changed in a manner adverse
to II-VI and MergerSub its approval or recommendation of this Agreement or the
Merger or shall have approved a Third-Party Acquisition; (ii) if there shall
have occurred a Third-Party Acquisition; or (iii) if the Company, or any of the
Company's officers, directors, employees, representatives or agents, shall take
any of the actions described in the first sentence of Section 7.5(a) hereof,
other than the proviso thereto;
(f) By the Company at any time prior to the consummation of
the Offer, if the Company has approved a Superior Proposal in accordance with
Section 7.5(b), provided the Company has complied with all provisions thereof,
including the notice provisions therein, and that it makes simultaneous payment
of the Termination Fee;
(g) By the Company if: (i) the Offer shall not be commenced
upon the twentieth business day immediately following the date of this
Agreement; PROVIDED, that the failure to so commence has not been caused by and
does not result from the failure of the Company to perform any of its
representations, warranties, covenants or agreements contained in this
Agreement; or (ii) MergerSub terminates the Offer; or
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(h) By II-VI and MergerSub at any time prior to the
consummation of the Offer, if the Offer is terminated or expires in accordance
with its terms without MergerSub having purchased any Shares and pursuant to
ANNEX A hereto and ARTICLE II hereof, MergerSub is neither required to accept
and pay for the Shares tendered in the Offer nor extend the expiration date of
the Offer, provided that II-VI and MergerSub may not terminate this Agreement
pursuant to this Section 11.1(h) of II-VI or MergerSub is in material breach of
this Agreement.
The party desiring to terminate this Agreement pursuant to Section
11.1(b) through (h) shall give written notice of such termination to the other
party in accordance with Section 12.1.
Section 11.2 TERMINATION FEES.
(a) Notwithstanding any other provision of this Agreement, if
this Agreement is terminated pursuant to either of Sections 11.1(e) or 11.l(f),
then the Company shall immediately pay to II-VI a break-up fee of Two Million
Dollars ($2,000,000) (the "TERMINATION FEE"). The parties hereto agree that the
Termination Fee is not a penalty, but rather is liquidated damages in a
reasonable amount that will compensate MergerSub for the costs incurred, efforts
expended and opportunities foregone while negotiating this Agreement and in
reliance on this Agreement and on the expectation of the consummation of the
transactions contemplated hereby, which amount would otherwise be impossible to
calculate with precision.
(b) If (i) the Company shall have actually paid to Union
Miniere USA Inc. the termination fee contemplated by the UM Merger Agreement,
and (ii) and this Agreement is terminated for any reason other than as set forth
in the proviso to this subsection (b), then II-VI shall pay Laser Power a
termination fee of Two Million Five Hundred Thousand Dollars ($2,500,000) in
cash promptly after the date of such termination, PROVIDED, that II-VI shall not
be obligated to pay such termination fee if (A) prior to the consummation of the
Offer, a third party shall have publicly announced a Third-Party Acquisition
proposal, subsequent to which the Minimum Condition under the Offer shall be not
have been satisfied; (B) the Agreement shall have been terminated pursuant to
Section 11.1(e); (C) the Agreement shall have been terminated pursuant to
Section 11.1(d) as a result of an action, suit or proceeding brought by any
person other than a Governmental Entity; or (D) the Agreement shall have been
terminated by II-VI or MergerSub pursuant to Section 11.1(c) hereof. The
termination fee provided for in this subsection (b) constitutes liquidated
damages. Upon payment of the termination fee provided by this section, the
Company shall have no other rights or claims against II-VI or MergerSub and
neither II-VI nor MergerSub shall have any other or further obligations under
this Agreement.
Section 11.3 EFFECT OF TERMINATION.
If this Agreement is terminated pursuant to Section 11.1, this
Agreement shall become void and of no effect with no liability on the part of
any party hereto except to the extent that such termination results from the
willful and material breach by a party of any representation, warranty or
covenant contained in this Agreement except that the agreements contained in the
last proviso of Section 7.4 and Sections 11.2, 11.3, 12.1, 12.4 and 12.7 shall
survive the termination hereof.
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ARTICLE XII
MISCELLANEOUS
-------------
Section 12.1 NOTICES.
All notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar writing) and shall
be given,
if to II-VI or MergerSub, to:
II-VI Incorporated
375 Saxonburg Blvd.
Saxonburg, Pennsylvania 16056
Attention: Carl J. Johnson
Telephone: (724) 352-4455
Facsimile: (724) 352-5299
with a copy to:
Buchanan Ingersoll
Professional Corporation
One Oxford Centre
301 Grant street - 20th Floor
Pittsburgh, Pennsylvania 15219-1410
Attention: Ronald Basso, Esq.
Telephone: (412) 562-8800
Facsimile: (412) 562-1041
if to the Company, to:
Laser Power Corporation
36570 Briggs Road
Munrieta, CA 92563
Attention: Dick Sharman
Telephone: (909) 926-1986
Facsimile: (909) 926-9026
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with a copy to:
Best Best & Krieger
3750 University Avenue
P.O. Box 1026
Riverside, California 92502
Attention: George Reyes, Esq.
Telephone: (909) 686-1450
Facsimile: (909) 686-3083
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (i) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (ii) if given by any other
means when delivered at the address specified in this Section 12.1.
Section 12.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations and warranties contained herein and in any
certificate or other writing delivered pursuant hereto shall survive until (but
not beyond) the Effective Time. This Section 12.2 shall not limit any covenant
or agreement of the parties which by its terms contemplates performance after
the Effective Time.
Section 12.3 AMENDMENTS' NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
prior to the Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment by the Company and MergerSub or
in the case of a waiver, by the party against whom the waiver is to be
effective; provided that after the adoption of this Agreement by the
stockholders of the Company, there shall be no amendment that by law requires
further approval by the stockholders of the Company without the further approval
of such stockholders.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by Law.
Section 12.4 EXPENSES.
Except as provided in Sections 7.5 and 11.2, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense.
Section 12.5 TRANSFER TAXES.
All stock transfer, real estate transfer, documentary, stamp,
recording and other similar taxes (including interest, penalties and additions
to any such Taxes) ("TRANSFER TAXES") incurred in connection with the
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transactions contemplated by this Agreement shall be paid by either MergerSub or
the Surviving Corporation, and the Company shall cooperate with MergerSub in
preparing, executing and filing any returns with respect to such Transfer Taxes.
Section 12.6 SUCCESSORS AND ASSIGNS.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns, provided that no party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the consent of the
other parties hereto.
Section 12.7 GOVERNING LAW.
This Agreement shall be construed in accordance with and
governed by the law of the State of Delaware.
Section 12.8 COUNTERPARTS; EFFECTIVENESS; FACSIMILE TRANSMISSION.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. This Agreement shall become
effective when each party hereto shall have received counterparts hereof signed
by all of the other parties hereto. Signatures of a party to this Agreement or
other documents executed in connection herewith which are sent to the other
parties by facsimile transmission shall be binding as evidence of acceptance of
the terms hereof or thereof by such signatory party, with originals to be
circulated to the other parties in due course.
Section 12.9 SEVERABILITY.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any Law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
Section 12.10 SPECIFIC PERFORMANCE.
The parties hereby acknowledge and agree that the failure of
any party to perform its agreements and covenants hereunder, including its
failure to take all actions as are necessary on its part to the consummation of
the Merger, will cause irreparable injury to the other parties, for which
damages, even if available, will not be an adequate remedy. Accordingly, each
party hereby consents to the issuance of injunctive relief by any court of
competent jurisdiction to compel performance of such party's obligations and to
the granting by any court of the remedy of specific performance of its
obligations hereunder.
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Section 12.11 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.
This Agreement: (i) constitutes the entire agreement, and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter of this Agreement; and (ii)
except for the provisions of ARTICLE III and Section 8.2, is not intended to
confer upon any Person other than the parties any rights or remedies.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
LASER POWER CORPORATION
By: /s/ Dick Sharman
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Dick Sharman
Chief Executive Officer
II-VI INCORPORATED
By: /s/ Carl J. Johnson
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Carl J. Johnson
Chairman and Chief Executive Officer
II-VI ACQUISITION CORP.
By: /s/ Carl J. Johnson
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Carl J. Johnson
Chief Executive Officer
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ANNEX A
TENDER OFFER CONDITIONS
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The capitalized terms used but not defined in this ANNEX A shall have
the meanings set forth in the Agreement to which it is annexed.
Notwithstanding any other provision of the Offer and subject to the
provisions of the Merger Agreement, MergerSub shall not be required to accept
for payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to MergerSub's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer and
may terminate or amend the Offer and may postpone the acceptance of, and payment
for, any Shares, if:
(i) there shall not have been validly tendered and not
properly withdrawn prior to the expiration of the Offer a number of Shares
which, together with the Shares owned by II-VI on the date of this Agreement,
represent in the aggregate a majority of all issued and outstanding Shares, on a
fully diluted basis ("on a fully-diluted basis" meaning, at any time, the number
of Shares outstanding, together with the Shares which the Company may be
required to issue pursuant to options or other obligations outstanding at such
time under employee stock or similar benefit plans or otherwise, whether or not
vested or then exercisable), on the date of purchase (the "MINIMUM CONDITION");
(ii) any applicable waiting period (and any extension thereof)
under the HSR Act shall not have expired or been terminated; or
(iii) The Offer Registration Statement shall not have become
effective, a stop order suspending the effectiveness of the Offer Registration
Statement has been issued by the SEC or if proceedings for that purpose shall
have been initiated by the SEC and not concluded or withdrawn or all state
securities or Blue Sky authorizations necessary to consummate the Offer shall
not have been obtained.
(iv) Representations shall not have been obtained from the DOD
under the National Industrial Security Program Regulations that II-VI will be
able to own after the Merger those portions of the business of the Surviving
Corporation that are governed by the National Industrial Security Program,
either unconditionally or subject only to such conditions as are customarily
imposed under the National Industrial Security Program Regulations and are not,
in the judgment of II-VI, after consultation with the Company, to the extent
practicable, materially burdensome to II-VI and its affiliates; or
(v) at any time on or after the date of the Merger Agreement
and at or before the time of payment for any such Shares (whether or not any
Shares have theretofore been accepted for payment or paid for pursuant to the
Offer) any of the following shall occur:
(A) there shall be instituted or pending any action
or proceeding by any Governmental Entity before any court of competent
jurisdiction or Governmental Entity:, (i) challenging or seeking to, or which
would reasonably be expected to make, illegal, impede, materially delay or
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otherwise directly or indirectly restrain or prohibit the Offer or the Merger;
(ii) seeking to prohibit or materially limit the ownership or operation by II-VI
or MergerSub of all or any material portion of the business or assets of the
Company and the Company Subsidiaries taken as a whole or to compel II-VI or
MergerSub to dispose of or hold separately all or any material portion of the
business or assets of II-VI and the II-VI Subsidiaries taken as a whole or the
Company and the Company Subsidiaries taken as a whole, or seeking to impose any
limitation on the ability of II-VI or MergerSub to conduct its business or own
such assets; (iii) seeking to impose limitations on the ability of II-VI or
MergerSub effectively to exercise full rights of ownership of the shares of
Company Common Stock, including, without limitation, the right to vote any
shares of Company Common Stock acquired or owned by MergerSub or II-VI on all
matters properly presented to the Company's shareholders; (iv) seeking to
require divestiture by II-VI or MergerSub of any shares of Company Common Stock;
or (v) seeking any material diminution in the benefits expected to be derived by
II-VI or MergerSub as a result of the transactions contemplated by the Offer or
the Merger;
(B) there shall be any action taken, or any statute,
rule, regulation, legislation, interpretation, judgment, order or injunction
proposed, enacted, enforced, promulgated, amended or issued and applicable to or
deemed applicable to: (i) II-VI, MergerSub, the Company or any Company
Subsidiary; or (ii) the Offer or the Merger, by any legislative body, court or
Governmental Entity, other than the routine application of the waiting period
provisions of the HSR Act, to the Offer, Offer Registration Statement ,the
Merger or Merger Registration Statement, that would reasonably be expected to
result directly or indirectly in any of the consequences referred to in
paragraph (A) above;
(C) there shall have occurred: (i) any general
suspension of trading in, or limitation on prices for, securities on any United
States securities exchange or in any United States over-the-counter market, for
a period in excess of three hours (excluding suspensions or limitations
resulting solely from physical damage or interference with such exchanges not
related to market conditions); (ii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States; (iii) any
material limitation (whether or not mandatory) by any United States Federal or
United States state or governmental authority or agency on, the extension of
credit by banks or other financial institutions; or (iv) in the case of any of
the foregoing existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof;
(D) any representation or warranty of the Company
contained in the Agreement that: (i) is qualified as to Company Material Adverse
Effect shall not be true and correct as of the date of consummation of the Offer
as though made on or as of such date (other than representations and warranties
which by their terms address matters as of another specified date, which shall
be true and correct as of such other specified date); or (ii) is not qualified
as to Company Material Adverse Effect shall not be true and correct (except
where the failure of any such representation or warranty referred to in this
clause (ii) to be so true and correct would not, in the aggregate, have a
Company Material Adverse Effect), as of the date of consummation of the Offer as
though made on or as of such date (other than representations and warranties
which by their terms address matters as of another specified date, which shall
be true and correct as of such other specified date);
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(E) the Company shall have failed to perform in any
material respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be performed
or complied with by it under the Merger Agreement;
(F) the Merger Agreement shall have been terminated
in accordance with its terms; or
(G) since the date of this Agreement, there shall
have occurred an event, change, effect or development which would reasonably be
expected to have a Company Material Adverse Effect; which, in the reasonable
judgment of MergerSub, in any such case and regardless of the circumstances
(including any action or inaction by II-VI or MergerSub) giving rise to any such
condition, makes it inadvisable to proceed with the Offer and/or with such
acceptance for payment of, or payment for, Shares.
(vi) II-VI Common Stock to be issued in the Offer shall not
have been authorized for listing on the Nasdaq National Market, subject to
official notice of issuance.
The foregoing conditions are for the sole benefit of II-VI and
MergerSub, subject to the Company's rights under the Merger Agreement, and may
be asserted by II-VI or MergerSub, or may be waived by II-VI or MergerSub, in
whole or in part at any time and from time to time in their respective sole
discretion. The failure by II-VI or MergerSub 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.
