SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 18, 1996
Restor Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-19998 65-0044209
(State or other (Commission File Number) (IRS Employer Identification
jurisdiction of Number)
incorporation)
4501 Vineland Road, Orlando, Florida 32811
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 843-7031
----------------
<PAGE>
Item 2. Acquisition or Disposition of Assets
On June 18, 1996, Restor-Comtech, Inc. ("Acquisition"), a Delaware corporation
and wholly-owned subsidiary of Restor Industries, Inc. (the "Company"), and
Comtech Sunrise, Inc., a California corporation ("Comtech"), merged under the
terms and conditions of a Merger Agreement by and between Acquisition, the
Company, Comtech and certain of the shareholders of Comtech (the
"Shareholders"). Pursuant to the Merger Agreement attached hereto as Exhibit 2,
Comtech, a Livermore, California-based company which designs, manufactures and
markets transmission and access telecommunications products under the trade
names of Sunrise Technology and Sunrise Sierra, was merged with and into
Acquisition with Acquisition as the surviving corporation.
Pursuant to the Merger, all of the issued and outstanding shares of the capital
stock of Comtech were converted into the right to receive (i) an aggregate of
597,246 shares of the Company's $.01 par value common stock ("Common Stock"), of
which 211,765 shares are subject to the terms of the Escrow Agreement attached
as exhibit 2.1(b) to the Merger Agreement; plus (ii) an amount equal to
Eighty-Eight Thousand Dollars ($88,000); plus (iii) the Shareholders have the
right to receive additional consideration in the form of cash, or Common Stock
at the option of the Company, not to exceed One Million Eight Hundred Thousand
Dollars ($1,800,000) in the aggregate, as set forth in the Merger Agreement (the
"Additional Consideration"), payable in three installments not to exceed Five
Hundred Thousand ($500,000) on February 15, 1997, Six Hundred Fifty Thousand
($650,000) on February 15, 1998 and Six Hundred Fifty Thousand ($650,000) on
February 15, 1999, provided that Acquisition's Pre-Tax Net Income, as defined in
the Merger Agreement, equals or exceeds certain predefined levels for the three
performance periods January 1, 1996 to and including December 31, 1996; January
1, 1997 to and including December 31, 1997 and January 1, 1998 to and including
December 31, 1998. If the Pre-Tax Net Income levels are not obtained, the
Additional Consideration will be reduced as set forth in the Merger Agreement.
Other conditions to the payment of the Additional Consideration are set forth in
the Merger Agreement. Michael Joe, President of Comtech, also entered into an
employment agreement with Acquisition, a copy of which is attached to the Merger
Agreement as exhibit 6.2(h).
The Consideration for the Merger was determined as a result of negotiations
between the Company and Comtech and was approved by the boards of directors of
the Company, Acquisition and Comtech. The Company presently intends to fund the
Additional Consideration out of working capital (if paid in cash) at the time it
becomes payable. Prior to the Merger, neither the Company nor any of its
affiliates, directors or officers, nor any associate of any such director or
officer had any relationship with Comtech or any of its shareholders.
The description contained herein of the Merger is qualified in its entirety by
reference to the Merger Agreement and the Press Release, which are attached
hereto as Exhibits 2 and 99, respectively, and incorporated herein by reference.
<PAGE>
Item 7. Financial Statements, Proforma Financial Information and Exhibits
Item 7(a). Financial Statements
Included in this Report are the financial statements of Comtech as of December
31, 1995 and the year then ended. Such financial statements have been audited by
Tedder, Grimsley & Company, P.A., Independent Certified Public Accountants,
whose opinion thereon is also included herein.
The results of Comtech were included in the Company's consolidated financial
statements from January 1, 1996, its effective date of acquisition.
<PAGE>
COMTECH SUNRISE, INC.
FINANCIAL STATEMENTS
Year Ending December 31, 1995
<PAGE>
TABLE OF CONTENTS
Page No.
INDEPENDENT AUDITOR'S REPORT..................................................1
FINANCIAL STATEMENTS
Balance Sheet...............................................................2
Statement of Income.........................................................3
Statement of Stockholders' Equity...........................................4
Statement of Cash Flows.....................................................5
Notes to Financial Statements...............................................6
<PAGE>
Independent Auditor's Report
To the Board of Directors
Comtech Sunrise, Inc.
Livermore, California
We have audited the accompanying balance sheet of Comtech Sunrise, Inc. (a
California corporation) as of December 31, 1995, and the related statements of
income, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Comtech Sunrise, Inc. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Tedder, Grimsley & Company, P.A.
Tedder, Grimsley & Company, P.A.
May 23, 1996
<PAGE>
COMTECH SUNRISE, INC.
BALANCE SHEET
December 31, 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 806,907
Accounts receivable (net of allowance
for doubtful accounts of $28,884) 175,547
Notes receivable 17,237
Inventory 421,576
Prepaid expenses 2,913
------------
TOTAL CURRENT ASSETS 1,424,180
EQUIPMENT - net 27,096
OTHER ASSETS
Investment 15,000
Notes receivable 10,964
Deposits 10,500
------------
36,464
------------
$ 1,487,740
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Loan from stockholder $ 55,371
Accounts payable 151,220
Accrued liabilities 167,344
Income taxes payable 138,498
------------
TOTAL CURRENT LIABILITIES 512,433
STOCKHOLDERS' EQUITY
Common stock 317,467
Retained earnings 657,840
------------
975,307
------------
$ 1,487,740
============
See accompanying notes to financial statements.
<PAGE>
COMTECH SUNRISE, INC.
STATEMENT OF INCOME
For the Year Ended December 31, 1995
SALES $ 3,610,412
COST OF SALES 2,292,796
------------
GROSS PROFIT 1,317,616
OPERATING EXPENSES 959,052
------------
INCOME FROM OPERATIONS 358,564
OTHER INCOME 22,362
INTEREST EXPENSE (7,516)
------------
INCOME BEFORE TAXES 373,410
PROVISION FOR INCOME TAXES 141,104
------------
NET INCOME $ 232,306
============
See accompanying notes to financial statements.
<PAGE>
COMTECH SUNRISE, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
For the Year Ended December 31, 1995
Common Stock Retained
Number Amount Earnings
Balance, December 31, 1994 2,275,620 $ 303,467 $ 425,534
Issuance of shares 500,000 14,000 -
Net income - - 232,306
--------- ---------- ----------
Balance, December 31, 1995 2,775,620 $ 317,467 $ 657,840
========= ========== ==========
See accompanying notes to financial statements.
<PAGE>
COMTECH SUNRISE, INC.
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 232,306
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 14,625
Provision for warranties 30,000
Provision for bad debts 11,104
(Increase) Decrease in:
Accounts receivable 163,684
Inventory (104,726)
Increase (Decrease) in:
Accounts payable (821)
Accrued liabilities 50,866
Income taxes 98,150
----------
NET CASH AND CASH EQUIVALENTS
PROVIDED BY OPERATING ACTIVITIES 495,188
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment (6,565)
Collections on notes receivable 30,429
New notes issued (35,416)
----------
NET CASH AND CASH EQUIVALENTS
USED BY INVESTING ACTIVITIES (11,552)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of stock 14,000
Payment of accrued dividends (18,000)
----------
NET CASH AND CASH EQUIVALENTS
USED BY FINANCING ACTIVITIES (4,000)
----------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 479,636
CASH AND CASH EQUIVALENTS, beginning of year 327,271
----------
CASH AND CASH EQUIVALENTS, end of year $ 806,907
==========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 8,446
==========
Income taxes paid $ 42,954
==========
See accompanying notes to financial statements.
<PAGE>
COMTECH SUNRISE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Comtech Sunrise, Inc. was incorporated in the State of California on August
23, 1988. In August of 1994, the Company acquired Tradewinds Technology, Inc. by
trading shares of Comtech Sunrise, Inc. for the outstanding shares of Tradewinds
Technology, Inc. Just prior to the acquisition, Tradewinds Technology, Inc.
acquired some of the stock from the shareholders and declared an $18,000
dividend. These liabilities were settled in 1995. In July of 1995, Comtech
Sunrise, Inc. acquired Sierra Transmission Systems, Inc. by trading stock of
Comtech Sunrise, Inc. for all of the outstanding shares of Sierra Transmission
Systems, Inc. The financial statements reflect the operations as if Comtech
Sunrise, Inc. had acquired Sierra Transmission Systems, Inc. as of January 1,
1995. Comtech Sunrise, Inc. (the "Company") produces and sells communications
equipment from their facility located in Livermore, California. The sales
operations are conducted throughout the United States as well as other foreign
countries.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The significant estimates and
assumptions are explained below.
Basis of Accounting
The Company prepares its financial statements using the accrual basis of
accounting.
Cash and Cash Equivalents
For purposes of financial presentation, the Company considers all highly liquid
debt instruments purchased with a maturity of three months or less to be cash
equivalents.
<PAGE>
COMTECH SUNRISE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
Inventory
Inventories are stated at the lower of cost or market using the first-in
first-out method.
Equipment
Equipment is stated at cost. Expenditures for maintenance and repairs are
expensed as incurred.
Depreciation has been provided using the straight-line method over the estimated
useful lives of the assets as follows:
Equipment 5 years
Furniture and office equipment 5 years
Income Taxes
The Company has accrued federal and state income taxes based on its current
income. There are no significant differences between income for tax purposes and
financial reporting purposes.
NOTE B - INVESTMENTS
Long-term investments consists of 25,000 shares in Netra, Inc. In March of 1996,
Netra, Inc. was merged with DTS Acquisition Corporation (DTS) at which time the
Company received 7,463 shares of common stock of DTS. Management expects the
stock to begin trading on the open market within one year of the merger.
NOTE C - NOTES RECEIVABLE
Notes receivable consist of unsecured loans to employees that carry interest
between 9% and 12%. Payments are deducted from the employee paychecks and range
from $45 to $138 every two weeks.
NOTE D - INVENTORY
Inventory consists of completed data communications equipment and raw material
to manufacture the equipment.
Inventory is stated at the lower of cost or market using the first-in first-out
method.
<PAGE>
COMTECH SUNRISE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
Inventory at December 31, 1995 consists of:
Completed $ 185,028
Raw material 236,548
----------
$ 421,576
==========
NOTE E - EQUIPMENT
Equipment at December 31, 1995 consists of the following:
Equipment $ 93,591
Office furniture and equipment 15,245
----------
108,836
Less accumulated depreciation (81,740)
----------
$ 27,096
==========
NOTE F - LOAN FROM STOCKHOLDER
The Company borrowed $75,000 from a stockholder in August, 1991. The note is
unsecured and carries interest at 12% per annum. The note was paid off in
February of 1996.
NOTE G - STOCKHOLDER'S EQUITY
The Company has authorized 5,000,000 shares of no par common stock, of which
2,775,620 shares were issued and outstanding as of December 31, 1995.
The Company has issued various stock options to its employees. However, as
described in Note I, all of the outstanding shares in Comtech Sunrise, Inc. will
be acquired by Restor-Comtech Inc. According to the terms of that agreement, the
stock options are limited to 426,507 shares at a total value of $9,000.
NOTE H - OPERATING LEASE
The Company leases its facility under an operating lease. The lease agreement
expires December 31, 1998. Lease expense was $86,400 for the year ended December
31, 1995. Minimum lease obligations for future periods are as follows: 1996,
$91,200; 1997, $96,000; 1998, $96,000.
<PAGE>
COMTECH SUNRISE, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
NOTE I - SUBSEQUENT EVENTS
On February 21, 1996, the shareholders entered into a letter of intent to sell
all of their stock in the Company to Restor-Comtech, Inc., a subsidiary of
Restor Industries, Inc. On April 22, 1996, a definitive agreement, plan of
merger and irrevocable proxies were executed by the shareholders. The
consummation of the merger is expected to occur in June 1996, after a mandatory
registration process is completed in the State of California.
NOTE J - CREDIT RISK AND CONCENTRATIONS
The Company had 2 major customers during the year which constituted 41.45% of
total sales.
<PAGE>
Item 7(b). Pro Forma Financial Information
In May 1995, the Company acquired AIT, Inc. ("AIT"), a provider of switching
systems, add-on frames and related circuit boards to the telecommunications
industry. In October 1995, the Company acquired Westec Communications, Inc.
("Westec"), a provider of wireless systems and repair services to the cable
television and telecommunications industries. The results of operations for both
AIT and Westec were included in the Company's consolidated financial statements
from their respective dates of acquisition.
The acquisition of Comtech has been accounted for using the purchase method of
accounting. The pro forma consolidated statements of operations for the years
ended December 31, 1995 and 1994 reflect the acquisitions of Comtech, AIT and
Westec as if they had been completed as of January 1, 1994. No pro forma
condensed balance sheet has been presented herein because the Company's
consolidated balance sheet as of March 31, 1996, as reported in the Company's
Form 10-Q for the quarter ended March 31, 1996, reflects all three acquisitions.
The pro forma data does not purport to be indicative of the results which would
actually have been reported if the three acquisitions had occurred on such dates
or which may be reported in the future. The pro forma data should be read in
conjunction with the historical consolidated financial statements of the
Company, the financial statements of Comtech, AIT and Westec, and the related
notes thereto.
<PAGE>
<TABLE>
World Access, Inc. and Subsidiaries
Unaudited Pro Forma Statements of Operations
Year Ended December 31, 1995
<CAPTION>
RESTOR (A) (B) (C) PRO FORMA PRO FORMA
HISTORICAL AIT WESTEC COMTECH ADJUSTMENTS COMBINED
------------ ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales of products $ 17,383,904 $ 2,030,559 $ 787,833 $ 3,323,671 $ (85,511)(D) $ 23,440,456
Service revenues 12,754,585 1,618,653 286,741 14,659,979
------------ ----------- ----------- ----------- ----------- ------------
Total Sales 30,138,489 2,030,559 2,406,486 3,610,412 (85,511) 38,100,435
Cost of products sold 12,657,218 1,455,293 677,447 2,147,626 (29,296)(D) 16,908,288
Cost of services 11,118,411 744,300 172,045 2,004 (D) 12,036,760
------------ ----------- ----------- ----------- ----------- ------------
Total Costs of Sales 23,775,629 1,455,293 1,421,747 2,319,671 (27,292) 28,945,048
------------ ----------- ----------- ----------- ----------- ------------
Gross Profit 6,362,860 575,266 984,739 1,290,741 (58,219) 9,155,387
Engineering and development 577,299 137,750 715,049
Selling, general and adminis 3,124,559 484,418 454,089 794,427 4,857,493
Amortization of goodwill 157,394 255,179 (E) 412,573
Special charges 980,000 980,000
------------ ----------- ----------- ----------- ----------- ------------
Total Costs and Expenses 4,839,252 484,418 454,089 932,177 255,179 6,965,115
------------ ----------- ----------- ----------- ----------- ------------
Operating Income (Loss) 1,523,608 90,848 530,650 358,564 (313,398) 2,190,272
Interest expense 493,797 11,840 897 7,516 119,450 (F) 633,500
Interest and other income (142,632) (2,121) (10,479) (22,362) (20,250)(G) (197,844)
------------ ----------- ----------- ----------- ----------- ------------
Net Income (Loss) 1,172,443 81,129 540,232 373,410 (412,598) 1,754,616
============ =========== =========== =========== =========== ============
Net Income Per Common Share .12 0.17 (H)
============ ===========
Wted Avg Shs 9,083,260 10,435,386 (H)
============ ===========
<FN>
Notes to Unaudited Pro Forma Statement of Operations
(A) Represents results of AIT for the 4.5 month period 1/1/95 to 5/16/95.
(B) Represents results of Westec for the nine months ended 9/30/95.
(C) Represents results of Comtech for the year ended 12/31/95.
(D) Represents elimination of intercompany shipments and adjustment to
depreciation expense based on estimated fair values of assets acquired
and useful lives assigned.
(E) Represents adjustment to amortize the excess of cost over the net assets
acquired.
(F) Adjustment for estimated interest expense the Company would have
incurred had it borrowed the cash paid to shareholders of businesses
acquired.
(G) Represents adjustment to interest income related to $1.3 million note
receivable from the former shareholder of AIT.
(H) Includes shares of Company common stock issued to the shareholders of
businesses acquired.
</FN>
</TABLE>
<PAGE>
<TABLE>
World Access, Inc. and Subsidiaries
Unaudited Pro Forma Statements of Operations
Year Ended December 31, 1994
<CAPTION>
RESTOR (A) (B) (C) PRO FORMA PRO FORMA
HISTORICAL AIT WESTEC COMTECH ADJUSTMENTS COMBINED
------------ ----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Sales of products $ 2,776,094 $ 5,612,469 $ 368,620 $ 2,842,381 $ (76,433)(D) $ 11,523,131
Service revenues 12,507,302 2,159,911 247,163 14,914,376
------------ ----------- ----------- ----------- ----------- ------------
Total Sales 15,283,396 5,612,469 2,528,531 3,089,544 (76,433) 26,437,507
Cost of products sold 2,195,588 4,076,362 380,946 1,837,970 (32,499)(D) 8,458,367
Cost of services 11,111,942 1,010,854 147,371 43,850 (D) 12,314,017
------------ ----------- ----------- ----------- ----------- ------------
Total Costs of Sales 13,307,530 4,076,362 1,391,800 1,985,341 11,351 20,772,384
------------ ----------- ----------- ----------- ----------- ------------
Gross Profit 1,975,866 1,536,107 1,136,731 1,104,203 (87,784) 5,665,123
Engineering and development 580,917 118,021 698,938
Selling, general and adminis 2,657,710 1,199,725 914,221 679,700 5,451,356
Amortization of goodwill 29,776 370,680 (E) 400,456
------------ ----------- ----------- ----------- ----------- ------------
Total Costs and Expenses 3,268,403 1,199,725 914,221 797,721 370,680 6,550,750
------------ ----------- ----------- ----------- ----------- ------------
Operating Income (Loss) (1,292,537) 336,382 222,510 306,482 (458,464) (885,627)
Interest expense 523,011 31,573 400 9,478 204,750 (F) 769,212
Debt conversion costs 80,109 80,109
Interest and other income (13,071) (5,656) (28,940) (8,944) (84,000)(G) (140,611)
------------ ----------- ----------- ----------- ----------- ------------
Net Income (Loss) (1,882,586) 310,465 251,050 305,948 (579,214) (1,594,337)
============ =========== =========== =========== =========== ============
Net (Loss) Per Common Share (0.41) (0.26)(H)
============ ===========
Wted Avg Shs 4,630,895 6,178,723 (H)
============ ===========
<FN>
Notes to Unaudited Pro Forma Statement of Operations
(A) Represents results of AIT for the year ended 12/31/94.
(B) Represents results of Westec for the year ended 12/31/94.
(C) Represents results of Comtech for the year ended 12/31/94.
(D) Represents elimination of intercompany shipments and adjustment to
depreciation expense based on estimated fair values of assets acquired
and useful lives assigned.
(E) Represents adjustment to amortize the excess of cost over the net assets
acquired.
(F) Adjustment for estimated interest expense the Company would have
incurred had it borrowed the cash paid to shareholders of businesses
acquired.
(G) Represents adjustment to interest income related to $1.3 million note
receivable from the former shareholder of AIT.
(H) Includes shares of Company common stock issued to the shareholders of
businesses acquired.
</FN>
</TABLE>
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
RESTOR INDUSTRIES, INC.
By: /s/ Mark A. Gergel
-----------------------
Mark A. Gergel
Its Vice President and
Chief Financial Officer
Dated as of June 19, 1996.
<PAGE>
EXHIBIT INDEX
NO. DESCRIPTION
- ------------------ ------------------------------------------
Exhibit No. 2 Merger Agreement
Exhibit No. 2.1(b) Escrow Agreement
Exhibit No. 5.13 Irrevocable Proxy
Exhibit No. 5.17 Affiliate Letter
Exhibit No. 6.2(h) Employment Agreement
Exhibit No. 6.2(j) Lock-up Letter
Exhibit No. 23.1 Consent of Tedder, Grimsley & Company, P.A.
Exhibit No. 99 Press Release
<PAGE>
EXHIBIT NO. 2
AGREEMENT AND PLAN OF MERGER
between and among
RESTOR INDUSTRIES, INC. and
RESTOR-COMTECH, INC.
and
MICHAEL R. JOE
and
MICHAEL G. RAMLOGAN
and
DANIEL P. LUBARSKY
and
COMTECH SUNRISE, INC.
As of April 22, 1996
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1. THE MERGER............................................ 1
SECTION 1.1. Surviving Corporation............................... 1
SECTION 1.2. Certificate of Incorporation........................ 1
SECTION 1.3. Bylaws.............................................. 1
SECTION 1.4. Directors........................................... 2
SECTION 1.5. Officers............................................ 2
SECTION 1.6. Effective Time...................................... 2
ARTICLE 2. CONVERSION OF SHARES.................................. 2
SECTION 2.1. Comtech Stock....................................... 2
SECTION 2.2. Fractional Shares................................... 11
SECTION 2.3. Exchange of Comtech Stock........................... 12
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF COMTECH............. 13
SECTION 3.1. Organization........................................ 13
SECTION 3.2. Authorization....................................... 13
SECTION 3.3. Absence of Restrictions and Conflicts............... 14
SECTION 3.4. Capitalization; Ownership of Comtech Stock.......... 15
SECTION 3.5. Financial Statements................................ 15
SECTION 3.6. Absence of Certain Changes.......................... 16
SECTION 3.7. Legal Proceedings................................... 17
SECTION 3.8. Compliance with Law................................. 17
SECTION 3.9. Comtech Material Contracts.......................... 18
SECTION 3.10. Comtech Customer Contract........................... 19
SECTION 3.11. Tax Returns; Taxes.................................. 19
SECTION 3.12. Officers, Directors and Employees................... 20
SECTION 3.13. Comtech Employee Benefit Plans...................... 20
SECTION 3.14. Labor Relations..................................... 24
SECTION 3.15. Insurance........................................... 25
SECTION 3.16. Title to Properties and Related Matters............. 25
SECTION 3.17. Environmental Matters............................... 25
SECTION 3.18. Patents, Trademarks, Trade Names.................... 26
SECTION 3.19. Transactions with Affiliates........................ 27
SECTION 3.20. Brokers, Finders and Investment Bankers............. 27
SECTION 3.21. Disclosure.......................................... 28
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF RESTOR.............. 28
SECTION 4.1. Organization........................................ 28
SECTION 4.2. Authorization....................................... 28
SECTION 4.3. Absence of Restrictions and Conflicts............... 29
SECTION 4.4. Capitalization of Restor............................ 29
SECTION 4.5. Financial Statements................................ 29
SECTION 4.6. Absence of Certain Changes.......................... 30
SECTION 4.7. Legal Proceedings................................... 31
SECTION 4.8. Compliance with Law................................. 31
SECTION 4.9. Tax Returns; Taxes.................................. 32
SECTION 4.10. Restor SEC Reports.................................. 32
SECTION 4.11. Transactions with Affiliates........................ 33
SECTION 4.12. Disclosure.......................................... 33
ARTICLE 5. CERTAIN COVENANTS AND AGREEMENTS...................... 33
SECTION 5.1. Conduct of Business by Comtech...................... 33
SECTION 5.2. Inspection and Access to Information................ 35
<PAGE>
SECTION 5.3. No Solicitation; Acquisition Proposals.............. 36
SECTION 5.4. Reasonable Efforts; Further Assurances;Cooperation.. 37
SECTION 5.5. Public Announcements................................ 38
SECTION 5.6. Supplements to Disclosure Letters................... 38
SECTION 5.7. Noncompetition...................................... 38
SECTION 5.8. No Interference..................................... 39
SECTION 5.9. Continuation of Business............................ 39
SECTION 5.10. Indemnity for Lease................................. 39
SECTION 5.11. Certain Securities Law Matters...................... 40
SECTION 5.12. Shareholder Matters................................. 40
SECTION 5.13. Irrevocable Proxies................................. 40
SECTION 5.14. Management of Surviving Corporation................. 40
SECTION 5.15. Access to Books and Records......................... 41
SECTION 5.16. Indemnification Against Certain Liabilities......... 41
SECTION 5.17. Agreement of Affiliates..............................41
ARTICLE 6. OTHER MATTERS......................................... 41
SECTION 6.1. Conditions to Each Party's Obligations.............. 41
SECTION 6.2. Conditions to Obligations of Restor and Merger Sub...42
SECTION 6.3. Conditions to Obligations of the Comtech............ 45
ARTICLE 7. CLOSING............................................... 48
ARTICLE 8. TERMINATION........................................... 48
SECTION 8.1. Termination and Abandonment......................... 48
SECTION 8.2. Specific Performance and Other Remedies............. 49
SECTION 8.3. Effect of Termination............................... 49
ARTICLE 9. INDEMNIFICATION....................................... 49
SECTION 9.1. Definitions......................................... 49
SECTION 9.2. Agreement of Comtech Indemnitors to Indemnify........50
SECTION 9.3. Agreement of Restor Indemnitors to Indemnify........ 51
SECTION 9.4. Procedures for Indemnification...................... 51
SECTION 9.5. Third Party Claims.................................. 52
SECTION 9.6. Rights and Remedies Exclusive....................... 54
SECTION 9.7. Survival............................................ 54
SECTION 9.8. Time Limitations.................................... 54
SECTION 9.9. Limitations as to Amount Payable by
Comtech Indemnitors............................... 55
SECTION 9.10. Limitations as to Amount Payable by Restor
and Surviving Corporation..........................55
SECTION 9.11. Subrogation......................................... 56
SECTION 9.12. Appointment of Comtech Indemnitors Representative....56
SECTION 9.13. Payment............................................. 57
ARTICLE 10. MISCELLANEOUS PROVISIONS.............................. 57
SECTION 10.1. Notices............................................. 57
SECTION 10.2. Disclosure Letters and Exhibits..................... 58
SECTION 10.3. Assignment; Successors in Interest.................. 58
SECTION 10.4. Number; Gender...................................... 58
SECTION 10.5. Captions............................................ 58
SECTION 10.6. Controlling Law; Jurisdiction;
Integration; Amendment.............................59
<PAGE>
SECTION 10.7. Knowledge........................................... 59
SECTION 10.8. Severability........................................ 59
SECTION 10.9. Counterparts........................................ 59
SECTION 10.10. Enforcement of Certain Rights....................... 59
SECTION 10.11. Waiver.............................................. 60
SECTION 10.12. Fees and Expenses................................... 60
SECTION 10.13. Attorneys' Fees..................................... 61
EXHIBITS
Exhibit 2.1(b) Escrow Agreement
Exhibit 5.13 Irrevocable Proxy
Exhibit 5.17 Affiliate Letter
Exhibit 6.2(h) Employment Agreement
Exhibit 6.2(j) Lock-up Letter
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 22, 1996, (the
"Agreement"), by and among RESTOR INDUSTRIES, INC., a Delaware corporation
("Restor"), RESTOR-COMTECH, INC., a Delaware corporation and a wholly owned
subsidiary of Restor ("Merger Sub"), COMTECH SUNRISE, a California corporation
("Comtech"), MICHAEL R. JOE, an individual resident of the State of California
("Mr. Joe"), MICHAEL G. RAMLOGAN, an individual resident of the State of Florida
("Mr. Ramlogan"), and DANIEL P. LUBARSKY, an individual resident of the State of
California ("Mr. Lubarsky"). (Mr. Joe, Mr. Ramlogan and Mr. Lubarsky are
hereinafter referred to collectively as the "Signing Shareholders" and
individually, without distinction, as a "Signing Shareholder").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Restor, Merger Sub and
Comtech each have approved this Agreement and the merger (the "Merger") of
Comtech with and into Merger Sub upon the terms and conditions contained herein
and in accordance with the General Corporation Law of the State of Delaware
("DGCL") and the California General Corporation Law (the "CGCL"); and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Merger and also to set forth certain
conditions thereto.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
ARTICLE 1.
THE MERGER
Section 1.1. Surviving Corporation. Subject to the provisions of this
Agreement, the DGCL and the CGCL, at the Effective Time (as hereinafter
defined), Comtech shall be merged with and into Merger Sub and the separate
corporate existence of Comtech shall cease. Merger Sub shall be the surviving
corporation in the Merger (hereinafter sometimes called the "Surviving
Corporation") and shall continue its corporate existence under the laws of the
State of Delaware. The Merger shall have the effects set forth in Section 259 of
the DGCL and Section 1107 of the CGCL.
Section 1.2. Certificate of Incorporation. The Certificate of Incorporation
of Merger Sub shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter duly amended in accordance with its terms and the
DGCL.
Section 1.3. Bylaws. The Bylaws of Merger Sub shall be the Bylaws of the
Surviving Corporation until thereafter duly amended in accordance with their
terms and the DGCL.
<PAGE>
Section 1.4. Directors. The directors of the Surviving Corporation shall
consist of the directors of Merger Sub immediately prior to the Effective Time,
such directors to hold office from the Effective Time until their respective
successors are duly elected and qualified.
Section 1.5. Officers. The officers of the Surviving Corporation shall
consist of the officers of Merger Sub immediately prior to the Effective Time,
such officers to hold office from the Effective Time until their respective
successors are duly elected and qualified.
Section 1.6. Effective Time. The parties hereto shall cause a Certificate
of Merger meeting the requirements of the DGCL (the "Certificate of Merger") to
be properly executed and filed on the Closing Date (as hereinafter defined) with
the Secretaries of State of the States of Delaware and California. The Merger
shall become effective as of the date of the filing of a properly executed
Certificate of Merger. The date and time when the Merger becomes effective is
herein referred to as the effective time (the "Effective Time").
ARTICLE 2.
CONVERSION OF SHARES
Section 2.1. Comtech Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder thereof:
(a) Subject to Section 2.2, all of the shares of the
common stock of Comtech ("Comtech Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into the
right to receive the following (the "Merger Consideration"): (i) an
aggregate of 447,059 shares (the "Restor Shares") of Restor common
stock, $.01 par value per share (the "Restor Common Stock"), of which
235,294 Restor Shares will be issued to the shareholders of Comtech
(each a "Shareholder" and, collectively, the "Shareholders") within
five (5) business days following the Closing and of which 211,765
Restor Shares will be deposited and held in escrow pursuant to Section
2.1(b) below (the "Escrow Shares"); plus (ii) cash in the aggregate
amount of One Million Dollars ($1,000,000), provided that any
Shareholder may elect to receive additional Restor Shares in lieu of
cash having a value equal to $1.40 per share for each $1.00 of cash
foregone where the value of such additional Restor Shares shall be
equal to $8.50; plus (iii) up to an aggregate of One Million Eight
Hundred Thousand Dollars ($1,800,000) payable pursuant to Section
2.1(c) below (the "Contingent Consideration"). At the Closing, each
Shareholder shall be entitled to that portion of the aggregate Merger
Consideration payable with respect to the Comtech Stock provided by
<PAGE>
this Section 2.1(a) that equals such Shareholder's proportionate
interest as set forth after such Shareholder's name in column C (the
"Proportionate Interest") of Exhibit 2.1(a) attached hereto, a copy of
which shall be delivered by Comtech to Restor within five (5) business
days of the date hereof. By way of example only, assuming that there
are 3 million shares of Comtech Stock outstanding as of the Closing
Date (as hereinafter defined) and that shareholder #1 owns 1% of such
shares, then shareholder #1 would receive 2,353 Restor Shares plus
$10,000 if no election is made and would receive 4,000 Restor Shares if
an election is made (i.e., 20,000 shares of Comtech Stock / 8.50 =
2,353 shares; and 10,000 shares of Comtech Stock x 1.4 / 8.50 = 1,647
shares).
(b) The Escrow Shares shall be deposited with the Escrow Agent
(as hereinafter defined) within five (5) business days of the Closing
to be held and distributed pursuant to the terms of the Escrow
Agreement by and between Restor, Merger Sub, the Shareholders and
Cauthen & Feldman, as the escrow agent (the "Escrow Agent"),
substantially in the form attached hereto as Exhibit 2.1(b) (the
"Escrow Agreement").
(c) The Contingent Cash Consideration shall be payable in
installments on the payment dates specified below (each a "Payment
Date") based upon the "Pre-Tax Net Income" (as defined below) of the
Surviving Corporation for the performance period set forth below (each
a "Performance Period") which corresponds with such Payment Date, with
the aggregate amount of each installment to be determined by reference
to the schedule set forth below:
Performance Period Payment
Date
January 1, 1996 to and including December 31, 1996 (the February 15, 1997
"First Performance Period")
January 1, 1997 to and including December 31, 1997 (the February 15, 1998
"Second Performance Period")
January 1, 1998 to and including December 31, 1998 (the February 15, 1999
"Third Performance Period")
<PAGE>
The aggregate amount of the Contingent Consideration installment
payable by Restor to the Shareholders on the Payment Date for the First
Performance Period will be as set forth in Payment Table No. 1 below.
Payment Table No. 1
Pre-Tax Net Income Payment Amount
- ------------------ --------------
Less than $500,000 None
$500,000 to and including $562,499 $100,000
$562,500 to and including $624,999 $200,000
$625,000 to and including $687,499 $300,000
$687,500 to and including $749,999 $400,000
$750,000 and above $500,000
The aggregate amount of the Contingent Consideration installment
payable by Restor to the Shareholders on the Payment Date for the
Second Performance Period will be as set forth in Payment Table No. 2
below.
Payment Table No. 2
Pre-Tax Net Income Payment Amount
- ------------------ --------------
Less than $600,000 None
$600,000 to and including $749,999 $130,000
$750,000 to and including $899,999 $260,000
$900,000 to and including $1,099,999 $390,000
$1,100,000 to and including $1,249,999 $520,000
$1,250,000 and above $650,000
The aggregate amount of the Contingent Consideration installment
payable by Restor to the Shareholders on the Payment Date for the Third
Performance Period will be as set forth in Payment Table No. 3 below.
<PAGE>
Payment Table No. 3
Pre-Tax Net Income Payment Amount
- ------------------ --------------
Less than $600,000 None
$600,000 to and including $799,999 $130,000
$800,000 to and including $999,999 $260,000
$1,000,000 to and including $1,249,999 $390,000
$1,250,000 to and including $1,499,999 $520,000
$1,500,000 and above $650,000
Notwithstanding the foregoing, if (1) the Pre-Tax Net Income of
the Surviving Corporation is both (a) greater than $300,000, but less
than $750,000, with respect to the First Performance Period and (b)
greater than $1,250,000 with respect to the Second Performance Period,
then Restor will pay to the Shareholders on the Payment Date for the
Second Performance Period, in lieu of the Payment Amount otherwise
payable pursuant hereto, the Alternate Payment Amount set forth in
Alternate Payment Table No. 1 below less the Payment Amount paid to the
Shareholders with respect to the First Performance Period; or (2) the
Pre-Tax Net Income of the Surviving Corporation is both (a) greater
than $750,000 with respect to the First Performance Period and (b)
greater than $500,000 with respect to the Second Performance Period,
then Restor will pay to the Shareholders on the Payment Date for the
Second Performance Period, in lieu of the Payment Amount otherwise
payable pursuant hereto, the Alternate Payment Amount set forth in
Alternate Payment Table No. 2 below less the Payment Amount paid to the
Shareholders with respect to the First Performance Period. In addition,
notwithstanding the foregoing, if (1) the Pre-Tax Net Income of the
Surviving Corporation is both (a) greater than $500,000, but less than
$1,250,000, with respect to the Second Performance Period and (b)
greater than $1,500,000 with respect to the Third Performance Period,
then Restor will pay to the Shareholders on the Payment Date for the
Third Performance Period, in lieu of the Payment Amount otherwise
payable pursuant hereto, the Alternate Payment Amount set forth in
Alternate Payment Table No. 3 below less the Payment Amount paid to the
<PAGE>
Shareholders with respect to the Second Performance Period; or (2) the
Pre-Tax Net Income of the Surviving Corporation is both (a) greater
than $1,250,000 with respect to the Second Performance Period and (b)
greater than $500,000 with respect to the Third Performance Period,
then Restor will pay to the Shareholders on the Payment Date which
corresponds to the Third Performance Period in lieu of the Payment
Amount otherwise payable pursuant hereto the Payment Amount set forth
in Alternate Payment Table No. 4 below less the Payment Amount paid to
the Shareholders with respect to the Second Performance Period.
Alternate Payment Table No. 1
Cumulative Pre-Tax Net
Income for First and Second Alternate
Performance Periods Payment Amount
- ------------------- --------------
Less than $1,850,000 None
$1,850,000 to and including $1,924,999 $750,000
$1,925,000 to and including $1,999,999 $850,000
$2,000,000 to and including $2,074,999 $950,000
$2,075,000 to and including $2,149,999 $1,050,000
$2,150,000 and above $1,150,000
Alternate Payment Table No. 2
Cumulative Pre-Tax Net
Income for First and Second Alternate
Performance Periods Payment Amount
- --------------------------- --------------
Less than $1,350,000 None
$1,350,000 to and including $1,499,999 $630,000
$1,500,000 to and including $1,649,999 $760,000
$1,650,000 to and including $1,849,999 $890,000
$1,850,000 to and including $1,999,999 $1,020,000
$2,000,000 and more $1,150,000
<PAGE>
Alternate Payment Table No. 3
Cumulative Pre-Tax Net
Income for Second and Third Alternate
Performance Periods Payment Amount
- --------------------------- --------------
Less than $2,220,000 None
$2,220,000 to and including $2,399,999 $780,000
$2,400,000 to and including $2,579,999 $910,000
$2,580,000 to and including $2,819,999 $1,040,000
$2,820,000 to and including $2,999,999 $1,170,000
$3,000,000 and above $1,300,000
Alternate Payment Table No. 4
Cumulative Pre-Tax Net
Income for Second and Third Alternate
Performance Periods Payment Amount
- -------------------------- --------------
Less than $1,850,000 None
$1,850,000 to and including $2,049,999 $780,000
$2,050,000 to and including $2,249,999 $910,000
$2,250,000 to and including $2,499,999 $1,040,000
$2,500,000 to and including $2,749,999 $1,170,000
$2,750,000 and above $1,300,000
(1) Restor will determine whether to pay the Contingent
Consideration based upon the books and records of the Surviving
Corporation (which will be maintained in accordance with generally
accepted accounting principles) as soon as practicable after the end of
each Performance Period, and Restor will promptly deliver to Mr. Joe,
as representative of the Shareholders, a letter setting out in
reasonable detail the computations made and expressing its opinion that
the conditions for the payment of the Contingent Consideration have
been satisfied in accordance with the requirements hereof. The term
<PAGE>
"Surviving Corporation" shall include the Surviving Corporation and its
subsidiaries as well as any business or businesses conducted by Restor,
or by any subsidiary or affiliated corporations of Restor, which
represent a succession to and a continuation of the business or
businesses conducted by the Surviving Corporation and Comtech, as the
same may be expanded from time to time. The computations set forth in
such letter from Restor will be final and binding on all parties unless
Mr. Joe will have notified Restor in writing within thirty (30) days
after receipt of such letter that he disagrees with such computations.
In the event Mr. Joe gives Restor such notice of dispute within such
30-day period, Mr. Joe and Restor will use their best efforts to settle
the dispute within 30 days after the giving of such notice. Any dispute
unresolved after such 30-day period shall be submitted to a national
public accounting firm satisfactory to Mr. Joe and to Restor, or, in
the absence of agreement on such firm, to a panel of three public
accounting firms, one designated by Mr. Joe, one designated by Restor
and one jointly designated by the other two firms. Such independent
public accountants will deliver to the parties a letter setting out its
or their computations with respect to the payment of the Contingent
Consideration and expressing its opinion that its computations have
been accurately made in accordance with the requirements hereof, and
such computations will be final and binding on the parties. The
decision of such accounting firm or such panel of accounting firms, as
the case may be, with respect to such dispute shall be final and
binding on the parties hereto. The cost of any such computations by the
independent public accountants will be paid by the Shareholders if its
or their computations result in the Contingent Consideration being the
same as or less than that set forth in the letter from Restor, or by
Restor if such computations result in the Contingent Consideration
being greater than that set forth in such letter. Restor will pay to
the Shareholders the amount of Contingent Consideration set forth in
its letter at the time of delivery of such letter and any additional
amount computed by the independent public accountants (if such
computations are made) will be paid to the Shareholders promptly after
delivery of the accountants' report. The Shareholders will promptly
return to Restor any amount of the Contingent Consideration paid to
them that is in excess of the Contingent Consideration computed by the
independent public accountants if its or their computations is less
than that set forth in the letter from Restor.
(2) Notwithstanding anything herein to the contrary, the
Contingent Consideration may be paid at the option of Restor in the
form of cash or Restor Shares where the value of such shares is
determined by reference to the arithmetic average of the daily closing
<PAGE>
price per share, rounded to four decimal places, of the Restor Shares
as reported on the NASDAQ SmallCap Market, if such shares are included
therein, or on the NASDAQ National Market System, if such shares are
included therein, for each of the twenty (20) consecutive trading days
ending (and including) the trading day that occurs two trading days
prior to (and not including) the Payment Date.
(3) For purposes hereof, "Pre-Tax Net Income" means the income
of the Surviving Corporation, computed on the accrual basis of
accounting in accordance with generally accepted accounting principles
consistently applied (and consistent with the accounting principles
applied by Comtech in respect of the Surviving Corporation in its prior
fiscal years) except that the following provisions shall govern the
computation of Pre-Tax Net Income for purposes of this Section:
(i) Any extraordinary nonrecurring items of income, gain, loss
or expense shall be excluded from such computation.
(ii) Any loss, charge or expense not related to the ordinary
business operations of the Surviving Corporation shall be
excluded.
(iii) Any loss, charge or expense related to the ordinary
business operations of the Surviving Corporation initiated by
Restor or any of its affiliates (other than the Surviving
Corporation) shall be excluded from such computation unless Mr.
Joe initiates or consents in writing to the transaction giving
rise to, or the payment or assumption of the obligation to pay,
such loss, charge or expense.
(iv) Any charge or expense for the amortization of goodwill of
the Surviving Corporation arising out of the Merger, or that the
purchase price thereof is in excess of the net worth thereof,
shall be excluded from such computation.
(v) In the event of an election with respect to the Surviving
Corporation pursuant to Section 338 of the Internal Revenue Code
of 1986, as amended (the "Code"), such computation shall be made
as though no such election had been made.
(vi) Any payments, charges or expenses for allocation of home
office, executive, general and administrative expenses or other
payments, charges or expenses of Restor and/or its affiliates
shall be excluded from such computation, except that there shall
<PAGE>
be included for purposes of such computation any expenses incurred
in connection with services rendered or goods provided to the
Surviving Corporation by Restor or its affiliates that relate
directly to the business of the Surviving Corporation, which goods
and services shall be charged at their negotiated fair market
value.
(vii) The deduction for salary paid or payable to Mr. Joe
shall be limited to the amount of salary paid to him in accordance
with the terms of his Employment Agreement (as hereinafter
defined), plus cash bonuses actually paid and accepted by Mr. Joe,
and there shall be no deduction for any other compensation paid or
payable to him which he rejects in advance thereof.
(viii) Any interest expenses or charges shall be excluded from
such computation to the extent they relate to funds furnished to
the Surviving Corporation in replacement of any cash owned by
Comtech at the Closing Date ("Present Funds") withdrawn from the
Surviving Corporation (by way of loans, dividends or otherwise) by
Restor or any affiliate thereof. For the purposes of such
computation, interest shall be credited to and deemed earned by
the Surviving Corporation at a rate equal to the interest rate
actually paid or payable by Restor for its short-term borrowings
on the date of any such withdrawal of Present Funds (the "Restor
Rate") on any Present Funds withdrawn (by way of loans, dividends
or otherwise) from the Surviving Corporation by Restor or any
affiliate thereof and not replaced as provided herein, such
interest to be computed on a daily basis. For the purposes of such
computation, interest shall be deducted and deemed paid to Restor
or such affiliate by the Surviving Corporation at the Restor Rate
on any amounts in excess of the Present Funds loaned to the
Surviving Corporation by Restor or such affiliate, such interest
to be computed on a daily basis.
(ix) All available accounting elections (including, without
limitation, those relating to methods of depreciation, useful
lives of depreciable items, the capitalizing of charges and the
setting up of reserves) shall be made in a manner consistent with
the accounting principles applied by Comtech in respect of the
Surviving Corporation in prior fiscal years to the extent
permitted by generally accepted accounting principles.
(x) No deduction shall be made for expenses for research and
development to the extent such expenses exceed by more than 10%
the average of such expenses by Comtech and or Surviving
Corporation for the previous three years.
<PAGE>
(xi) Revenues earned from the operations and assets held by
the Surviving Corporation as of the date of the Closing (as
hereinafter defined) shall be credited to the Surviving
Corporation for purposes of determining Pre-Tax Net Income
regardless of the entity in which the revenue is earned during the
Performance Periods.
(xii) Except as otherwise expressly provided above, all
amounts determined in accordance with subparagraphs (i) through
(xiii) of this Section 2.1(c)(3) shall be determined in accordance
with generally accepted accounting principles consistently
applied.
(d) Each share of common stock, par value $.01 per share,
of Merger Sub that is issued and outstanding immediately prior to the
Effective Time shall remain outstanding and shall be unchanged after
the Merger, all of which shares shall be issued to Restor and shall
thereafter constitute the only outstanding shares of capital stock of
the Surviving Corporation.
(e) Each share of the Comtech Stock issued and
outstanding immediately prior to the Effective Time that is then held
in the treasury of Comtech shall be canceled and retired and all rights
in respect thereof shall cease to exist, without any conversion thereof
or payment of any consideration therefor.
(f) Each warrant, stock option or other right, if any, to
purchase shares of Comtech Stock issued and outstanding immediately
prior to the Effective Time shall be canceled (whether or not such
warrant, option or other right is then exercisable).
Section 2.2. Fractional Shares. No scrip or fractional shares of Restor
Stock shall be issued in the Merger. In lieu thereof, if a Shareholder would
otherwise have been entitled to a fractional share of Restor Stock hereunder,
then such Shareholder shall be entitled, after the later of (a) the Effective
Time or (b) the surrender of his Certificate(s) (as hereinafter defined) that
represent such shares of Comtech Stock, to receive from Restor an amount in cash
in lieu of such fractional share, based on a value per share of Restor Common
Stock equal to $8.50.
<PAGE>
Section 2.3. Exchange of Comtech Stock.
(a) From and after the Effective Time, upon exchange of a
certificate or certificates which immediately prior thereto represents
outstanding shares of Comtech Stock (the "Certificate" or
"Certificates") a Shareholder shall be entitled to receive, upon
surrender to Restor of a Certificate or Certificates duly endorsed in
blank, (i) one or more certificates as requested by such Shareholder
(properly issued, executed and countersigned, as appropriate)
representing that number of whole shares of Restor Stock to which such
Shareholder shall have become entitled pursuant to the provisions of
Section 2.1(a)(i), and (ii) a check representing the aggregate cash
consideration to which such Shareholder shall have become entitled
pursuant to Section 2.1(a)(ii) and, as to any fractional share, Section
2.2, and the Certificate or Certificates so surrendered shall forthwith
be canceled. No interest will be paid or accrued on the cash payable
upon the surrender of any Certificate. No portion of the consideration
to be received pursuant to Sections 2.1 and 2.2 upon exchange of a
Certificate (whether a certificate representing shares of Restor Stock
or by check representing any cash payable hereunder) may be issued or
paid to a person other than the person in whose name the Certificate
surrendered in exchange therefor is registered. From the Effective Time
until surrender in accordance with the provisions of this Section 2.3,
each Certificate shall represent for all purposes only the right to
receive the consideration provided in Sections 2.1 and 2.2. All
payments in respect of shares of Comtech Stock that are made in
accordance with the terms hereof shall be deemed to have been made in
full satisfaction of all rights pertaining to such securities.
(b) In the case of any lost, mislaid, stolen or destroyed
Certificate, the Shareholder may be required, as a condition precedent
to delivery to the Shareholder of the consideration described in
Sections 2.1 and 2.2, to deliver to Restor a bond in such reasonable
sum or a satisfactory indemnity agreement as Restor may direct as
indemnity against any claim that may be made against Restor or the
Surviving Corporation with respect to the Certificate alleged to have
been lost, mislaid, stolen or destroyed.
(c) After the Effective Time, there shall be no transfers
on the stock transfer books of the Surviving Corporation of the shares
of Comtech Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for transfer, they shall be
canceled and exchanged for the consideration described in Sections 2.1
and 2.2.
<PAGE>
(d) Any shares of Restor Stock or cash due former shareholders
of Comtech pursuant to Sections 2.1 and 2.2 hereof that remains
unclaimed by such former shareholders for six months after the
Effective Time shall be held by Restor, and any former holder of
Comtech Stock who has not theretofore complied with Section 2.3 (a)
shall thereafter look only to Restor for issuance of the number of
shares of Restor Stock and other consideration to which such holder has
become entitled pursuant to the provisions of Sections 2.1 and 2.2;
provided, however, that neither Restor nor any party hereto shall be
liable to a former holder of shares of Comtech Stock for any amount
required to be paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF COMTECH
With such exceptions, if any, as may be set forth in a letter (the
"Comtech Disclosure Letter") to be delivered by Comtech to Restor on or before
May 3, 1996, Comtech hereby represents and warrants to Restor as follows:
Section 3.1. Organization. Comtech is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California and has all requisite corporate power and authority to own, lease and
operate its respective properties and to carry on its business as now being
conducted. Comtech is duly qualified to transact business, and is in good
standing, as a foreign corporation or branch of a foreign corporation in each
jurisdiction where the character of its activities requires such qualification,
except where the failure to so qualify would not have a material adverse effect
on its assets, liabilities, results of operations, financial condition, business
or prospects. Comtech has heretofore made available to Restor accurate and
complete copies of its Articles of Incorporation and Bylaws, as currently in
effect, and has made available to Restor its respective minute books and stock
records. The Comtech Disclosure Letter contains a true and correct list of the
jurisdictions in which it is qualified to do business as a foreign corporation
or branch of a foreign corporation.
Section 3.2. Authorization. Comtech and the Signing Shareholders each have
full power and authority to execute and deliver this Agreement and to perform
their respective obligations hereunder and to consummate the Merger and
the other transactions contemplated hereby. Subject to the approval
<PAGE>
of the Shareholders, the execution and delivery of this Agreement by Comtech and
the performance by Comtech of its obligations hereunder and the consummation of
the Merger and the other transactions provided for herein have been duly and
validly authorized by all necessary corporate action on its part. The Board of
Directors of Comtech has approved the execution, delivery and performance of
this Agreement and the consummation of the Merger and the other transactions
contemplated hereby. The Shareholders have approved this Agreement, the Merger
and the transactions contemplated hereby in accordance with the requirements of
the CGCL and the Articles of Incorporation and Bylaws of Comtech. This Agreement
has been duly executed and delivered by Comtech and the Signing Shareholders,
and it constitutes the valid and binding agreement of Comtech and the Signing
Shareholders, enforceable against each of them in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforceability of creditors' rights generally, general equitable principles
and the discretion of courts in granting equitable remedies.
Section 3.3. Absence of Restrictions and Conflicts. The execution, delivery
and performance of this Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement and the fulfillment of and
compliance with the terms and conditions of this Agreement do not and will not,
with the passing of time or the giving of notice or both, violate or conflict
with, constitute a breach of or default under, result in the loss of any
material benefit under, or permit the acceleration of any obligation under, (i)
any term or provision of the Articles of Incorporation or Bylaws of Comtech,
(ii) any Comtech Material Contract (as hereinafter defined), (iii) any judgment,
decree or order of any court or governmental authority or agency to which
Comtech or any Signing Shareholder is a party or by which Comtech or any such
person or any of their respective properties is bound, or (iv) any statute, law,
regulation or rule applicable to Comtech, so as to have in the case of
subsections (ii) through (iv) above, a material adverse effect on the assets,
liabilities, results of operations, financial condition, business or prospects
of Comtech. Except for the filing and recordation of the Certificate of Merger
and certain filings with the California Department of Corporations, no consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental agency or public or regulatory unit, agency, body or
authority with respect to Comtech or any Signing Shareholder is required in
connection with the execution, delivery or performance of this Agreement by
Comtech or any such person or the consummation of the transactions contemplated
by this Agreement by Comtech, the failure to obtain which would have a material
adverse effect upon the assets, liabilities, results of operations, financial
condition, business or prospects of Comtech.
<PAGE>
Section 3.4. Capitalization; Ownership of Comtech Stock.
(a) Capitalization. The authorized capital stock of
Comtech consists of 5,000,000 shares of common stock, of which, as of
the date hereof, there are 2,785,620 shares issued and outstanding and
542,833 reserved for issuance upon exercise of outstanding options to
purchase such stock. Each share of capital stock of Comtech which is
outstanding as of the date hereof is duly authorized, validly issued,
fully paid and nonassessable and free of preemptive rights. Except as
set forth in the Disclosure Letter, there are no shares of capital
stock of Comtech outstanding, and there are no subscriptions, options,
convertible securities, calls, rights, warrants or other agreements,
claims or commitments of any nature whatsoever obligating Comtech to
issue, transfer, deliver or sell, or cause to be issued, transferred,
delivered or sold, additional shares of the capital stock or other
securities of Comtech or obligating Comtech to grant, extend or enter
into any such agreement or commitment. Comtech does not own an equity
interest in any corporation, partnership or other entity.
(b) Ownership. The Shareholders are the record and beneficial
owners of all shares of Comtech Stock to be exchanged pursuant to
Section 2.3 and their relative share ownership is set forth in the
Disclosure Letter, and, at the Closing, the Shareholders will own all
such shares free and clear of any liens, claims, options, charges,
encumbrances or rights of others.
Section 3.5. Financial Statements. Comtech has made available to Restor the
unaudited balance sheets of Comtech as of May 31, 1993, 1994 and 1995, and the
related statements of operations, stockholders' equity and cash flows for the
fiscal years then ended, including the notes thereto, and will make available on
or before May 3, 1996 the unaudited balance sheet of Comtech as of December 31,
1995 and the related statement of operations, stockholders' equity and cash flow
for the seven-month period then ended, including the notes thereto. All of the
foregoing financial statements are hereinafter collectively referred to as the
"Comtech Financial Statements" and the balance sheet as of December 31, 1995 is
hereinafter referred to as the "1995 Balance Sheet". The Comtech Financial
Statements have been prepared from, and are in accordance with, the books and
records of Comtech and present fairly the financial position and results of
operations of Comtech as of the dates and for the periods indicated, in each
case, in conformity with generally accepted accounting principles, consistently
applied. As of the Closing Date, Comtech shall have no liability or obligation
of any nature whatsoever, whether accrued, absolute, contingent or otherwise,
other than (x) current liabilities and obligations which are recurring
in nature, (y) liabilities and obligations reflected and
<PAGE>
adequately provided for on the 1995 Balance Sheet and (z) liabilities and
obligations arising in the ordinary course of business of Comtech, or in
connection with the transactions contemplated hereby, since the date of the 1995
Balance Sheet. The Comtech Disclosure Letter sets forth a true and complete list
of all loss contingencies (within the meaning of Statement of Financial
Accounting Standards No. 5) of Comtech exceeding $5,000 in the case of any
single loss contingency or $10,000 in the case of all loss contingencies.
Section 3.6.Absence of Certain Changes.
(a)Certain Financial Matters; Property; Dividends. Since the date of
the 1995 Balance Sheet, there has not been (i) any material adverse
change in the assets, liabilities, results of operations, financial
condition, business or prospects of Comtech, (ii) any damage,
destruction, loss or casualty to property or assets of Comtech, whether
or not covered by insurance, which property or assets are material to
its operations or business, (iii) any declaration, setting aside or
payment of any dividend or distribution (whether in cash, stock or
property) in respect of the capital stock of Comtech, or any redemption
or other acquisition by Comtech of any of the capital stock of Comtech
or any split, combination or reclassification of shares of capital
stock declared or made by Comtech, or (iv) any agreement to do any of
the foregoing.
(b)Other Changes. Since the date of the 1995 Balance Sheet, there
have not been (i) any losses suffered, (ii) any material assets
mortgaged, pledged or made subject to any lien, charge or other
encumbrance, (iii) any material liability or obligation (absolute,
accrued or contingent) incurred or any material bad debt, contingency
or other reserve increase suffered, except, in each such case, in the
ordinary course of business and consistent with past practice, (iv) any
material claims, liabilities or obligations (absolute, accrued or
contingent) paid, discharged or satisfied, other than the payment,
discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of claims, liabilities and obligations
reflected or reserved against in the Comtech Financial Statements or
incurred in the ordinary course of business and consistent with past
practice since the date of the Comtech Financial Statements, (v) any
material guarantees, checks, notes or accounts receivable written off
as uncollectible, except write-offs in the ordinary course of business
and consistent with past practice, (vi) any write down of the value of
any asset or investment on Comtech's books or records, except for
depreciation and amortization taken in the ordinary course of business
and consistent with past practice, (vii) any cancellation of any
<PAGE>
material debts or waiver of any material claims or rights of
substantial value, or sale, transfer or other disposition of any
material properties or assets (real, personal or mixed, tangible or
intangible) of substantial value, except, in each such case, in
transactions in the ordinary course of business and consistent with
past practice and which in any event do not exceed $2,500 in the
aggregate, (viii) any single capital expenditure or commitment in
excess of $2,500 for additions to property or equipment, or aggregate
capital expenditures and commitments in excess of $5,000 for additions
to property or equipment, (ix) any material transactions entered into
other than in the ordinary course of business, (x) any agreements to do
any of the foregoing, or (xi) any other events, developments or
conditions of any character that have had or are reasonably likely to
have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of Comtech.
Section 3.7. Legal Proceedings. There are no suits, actions, claims,
proceedings or investigations pending or, to the best knowledge of Comtech,
threatened against, relating to or involving Comtech (or any of its officers or
directors) before any court, arbitrator or administrative or governmental body,
which, if finally determined adversely, are reasonably likely, individually or
in the aggregate, to have a material adverse effect on the assets, liabilities,
results of operations, financial condition, business or prospects of Comtech.
All pending or threatened suits, actions, claims, proceedings or investigations
relating to or involving Comtech (or any of its officers or directors) before
any court, arbitrator or administrative or governmental body are adequately
provided for in the 1995 Balance Sheet in accordance with generally accepted
accounting principles. Comtech is not subject to any judgment, decree,
injunction, rule or order of any court nor is Comtech subject to any
governmental restriction applicable to it, which is reasonably likely (a) to
have a material adverse effect on its assets, liabilities, results of
operations, financial condition, business or prospects, or (b) to cause a
material limitation on the ability of Restor to operate the business of Comtech
after the Closing.
Section 3.8. Compliance with Law. Comtech has all material authorizations,
approvals, licenses and orders of and from all governmental and regulatory
officers and bodies necessary to carry on its business as it is currently being
conducted, to own or hold under lease the properties and assets it owns or holds
under lease and to perform all of its obligations under the agreements to which
it is a party, and Comtech has been and is in compliance with all applicable
laws, regulations and administrative orders of any country, state or
municipality or of any subdivision thereof to which its business or its
employment of labor or its use or occupancy of properties or any part thereof
<PAGE>
are subject, the failure to obtain or the violation of which would have a
material adverse effect upon its assets, liabilities, results of operations,
financial condition, business or prospects.
Section 3.9. Comtech Material Contracts. The Comtech Disclosure Letter
contains a correct and complete list of the following (hereinafter referred to
as the "Comtech Material Contracts"):
(a) all bonds, debentures, notes, mortgages, indentures or
guarantees to which Comtech is a party or by which any of its
properties or assets (real, personal or mixed, tangible or intangible)
is bound;
(b) all leases to which Comtech is a party or by which any of
its properties or assets (real, personal or mixed, tangible or
intangible) is bound;
(c) all loans and credit commitments to Comtech which are
outstanding, together with a brief description of such commitments and
the name of each financial institution granting the same;
(d) all contracts or agreements which limit or restrict Comtech
from engaging in any business in any jurisdiction or limit or restrict
others from competing with Comtech in any jurisdiction;
(e) all agreements and documentation evidencing currently
outstanding loans or advances made by Comtech to or on behalf of its
customers; and
(f) all existing contracts and commitments (other than those
described in subparagraphs (a), (b), (c), (d) or (e) of this Section
3.9, the Comtech Customer Contracts (as hereinafter defined)), and the
Comtech Benefit Plans (as hereinafter defined) to which Comtech is a
party or by which its properties or assets may be bound involving an
annual commitment or annual payment by any party thereto of more than
$5,000 individually, or which have a fixed term extending more than
twelve (12) months from the date hereof and which involve a total
commitment or payment by any party thereto of more than $10,000.
True and complete copies of all Comtech Material Contracts,
including all amendments thereto, have been made available to Restor. The
Comtech Material Contracts are valid and enforceable in accordance with their
respective terms with respect to Comtech and valid and enforceable in accordance
with their respective terms with respect to any other party thereto, in each
<PAGE>
case to the extent material to the business and operations of Comtech, and
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforceability of creditors' rights generally, general equitable principles
and the discretion of courts in granting equitable remedies. Except for events
or occurrences, the consequences of which, individually or in the aggregate,
would not have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of Comtech, there is not
under any of the Comtech Material Contracts any existing breach, default or
event of default by Comtech or event that with notice or lapse of time or both
would constitute a breach, default or event of default by Comtech, nor does
Comtech know of, and Comtech has not received notice of, or made a claim with
respect to, any breach or default by any other party thereto.
Section 3.10. Comtech Customer Contract. The Comtech Disclosure Letter sets
forth a true and complete list of all agreements or contracts pursuant to which
Comtech provides goods or services to its customers (the "Comtech Customer
Contracts"). Comtech does not provide goods or services to its customers
pursuant to verbal or oral agreements or contracts. The Comtech Disclosure
Letter sets forth a true and complete list of all customers of Comtech which the
management of Comtech reasonably believes in good faith may terminate their
contracts with Comtech or may assert a claim for damages against Comtech as a
result of a default by Comtech of its obligations under such contract or for any
other reason, other than customer terminations arising in the ordinary course of
business consistent with past practices and which do not in any event in the
aggregate involve annual revenues of $5,000 or more. The execution, delivery and
performance of this Agreement by Comtech and the Signing Shareholders and the
consummation of the transactions contemplated hereby by Comtech and the Signing
Shareholders will not, with the passing of time or giving of notice or both,
violate or conflict with or constitute a default under or give rise to a
termination right under any Comtech Customer Contract except such violations,
conflicts and defaults which in the aggregate would not have a material adverse
effect on the assets, liabilities, results of operations, financial condition,
business or prospects of Comtech.
Section 3.11. Tax Returns; Taxes. Comtech has duly filed all federal,
state, local and foreign tax returns required to be filed by it and has duly
paid or made adequate provision for the payment of all taxes which are due and
payable pursuant to such returns or pursuant to any assessment with respect to
taxes in such jurisdictions, whether or not in connection with such returns,
except for incidental interest and penalties which may be due and payable, but
which are not material in amount. The liability for taxes reflected in the 1995
Balance Sheet is sufficient for the payment of all unpaid taxes, whether or not
disputed, that are accrued or applicable for the period ended December 31, 1995,
<PAGE>
and for all years and periods ended prior thereto. All deficiencies asserted as
a result of any examinations by the Internal Revenue Service ("IRS") or any
other taxing authority have been paid, fully settled or adequately provided for
in the 1995 Balance Sheet. There are no pending claims asserted for taxes of
Comtech or outstanding agreements or waivers extending the statutory period of
limitation applicable to any tax return of Comtech for any period. Comtech has
made all estimated income tax deposits and all other required tax payments or
deposits and has complied for all prior periods in all material respects with
the tax withholding provisions of all applicable federal, state, local, foreign
and other laws. Comtech has made available to Restor true, complete and correct
copies of its federal income tax returns for the last three (3) taxable years
and made available such other tax returns requested by Restor.
Section 3.12. Officers, Directors and Employees. The Comtech Disclosure
Letter contains a true and complete list of all of the officers and directors of
Comtech, specifying their office and annual rate of compensation, and a true and
complete list of all of the employees of Comtech as of the date hereof with whom
Comtech has a written employment agreement or to whom Comtech has made verbal or
oral commitments which are binding on Comtech or who have an annual rate of
compensation in excess of $30,000.
Section 3.13. Comtech Employee Benefit Plans
(a)Definition of Benefit Plans. For purposes of this Section 3.13, the
term "Comtech Benefit Plan" means any plan, program, arrangement, fund,
policy, practice or contract which, through which or under which
Comtech or a Comtech ERISA Affiliate (as hereinafter defined) provides
benefits or compensation to or on behalf of employees or former
employees of Comtech or an Comtech ERISA Affiliate (as hereinafter
defined), whether formal or informal, whether or not written, including
but not limited to the following:
(1) Arrangements -- any bonus, incentive compensation, stock
option, deferred compensation, commission, severance pay, golden
parachute or other compensation plan or rabbi trust;
(2) ERISA Plans -- any "employee benefit plan" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), including, but not limited to, any
multi-employer plan (as defined in Section 3(37) and Section
4001(a)(3) of ERISA), defined benefit plan, profit sharing plan,
money purchase pension plan, 401(k) plan, savings or thrift plan,
stock bonus plan, employee stock ownership plan, or any plan,
fund, program, arrangement or practice providing for medical
(including post-retirement medical), hospitalization, accident,
sickness, disability, or life insurance benefits; and
<PAGE>
(3) Other Employee Fringe Benefits -- any stock purchase,
vacation, scholarship, day care, prepaid legal services, dependent
care, telephone, automobile, dependent travel or other fringe
benefit plans, programs, arrangements, contracts or practices.
(b)Comtech ERISA Affiliate. For purposes of this Section 3.13, the term
"Comtech ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with Comtech is treated as a single
employer under Section 414(b), (c), (m) or (o) of the Code.
(c)Identification of Benefit Plans. Except as described in the Comtech
Disclosure Letter, Comtech does not maintain, nor has it at any time
established or maintained, nor has it at any time been obligated to
make, or otherwise made, contributions to or under or otherwise
participated in any Comtech Benefit Plan.
(d)MEPPA Liability/Post-Retirement Medical Benefits. Except as described
in the Comtech Disclosure Letter, neither Comtech nor any Comtech
ERISA Affiliate maintains, nor has at any time established or
maintained, nor has at any time been obligated to make, or made,
contributions to or under any multi-employer plan. Except as described
in the Comtech Disclosure Letter, Comtech does not maintain, nor has
it at any time established or maintained, nor has it at any time been
obligated to make, or made, contributions to or under (i) any plan
which provides post-retirement medical or health benefits with respect
to employees of Comtech; (ii) any organization described in Sections
501(c)(9) or 501(c)(20) of the Code; (iii) any defined benefit pension
plan or money purchase pension plan subject to Title IV of ERISA; or
(iv) any plan which provides retirement benefits in excess of the
limitations in Sections 401(a)(17), 401(k), 401(m), 402(g) or 415 of
the Code. There is no lien upon any property of Comtech or any Comtech
ERISA Affiliate outstanding pursuant to Section 412(n) of the Code in
favor of any Comtech Benefit Plan. No assets of Comtech or any Comtech
ERISA Affiliate have been provided as security for any Comtech Benefit
Plan pursuant to Section 401(a)(29) of the Code.
(e)Documentation. Comtech has made available to Restor a true and
complete copy of the following documents, if applicable, with respect
to each Comtech Benefit Plan identified in the Comtech Disclosure
Letter: (i) all documents, including any insurance contracts and trust
<PAGE>
agreements, setting forth the terms of the Comtech Benefit Plan, or if
there are no such documents evidencing the Comtech Benefit Plan, a
full description of the Comtech Benefit Plan; (ii) the ERISA summary
plan description and any other summary of plan provisions provided to
participants or beneficiaries for each such Comtech Benefit Plan;
(iii) the annual reports filed for the most recent three (3) plan
years and most recent financial statements or periodic accounting of
related plan assets with respect to each Comtech Benefit Plan; (iv)
the most recent favorable determination letter, opinion or ruling from
the IRS for each Comtech Benefit Plan, the assets of which are held in
trust, to the effect that such trust is exempt from federal income
tax; and (v) each opinion or ruling from the Department of Labor or
the Pension Benefit Guaranty Corporation ("PBGC") with respect to such
Comtech Benefit Plans.
(f)Qualified Status. Except as described in the Comtech Disclosure
Letter, each Comtech Benefit Plan that is funded through a trust or
insurance contract has at all times satisfied in all respects, by its
terms and in its operation, all applicable requirements for an
exemption from federal income taxation under Section 501(a) of the
Code. Neither Comtech nor any Comtech ERISA Affiliate maintains a
Comtech Benefit Plan which meets the requirements of Section 401(a) of
the Code (each a "401 Plan"). Any determination letter issued by the
IRS to the effect that any such 401 Plan qualifies under Section
401(a) of the Code and that the related trust is exempt from taxation
under Section 501(a) of the Code remains in effect and has not been
revoked. Each such 401 Plan, if any, currently complies in form with
the requirements under Section 401(a) of the Code, other than changes
required by statutes, regulations and rulings for which amendments are
not yet required. Each such 401 Plan, if any, has been administered
according to its terms (except for those terms which are inconsistent
with the changes required by statutes, regulations and ruling for
which changes are not yet required to be made, in which case any such
401 Plan has been administered in accordance with the provisions of
those statutes, regulations and rulings) and in accordance with the
requirements of Section 401(a) of the Code. Each such 401 Plan, if
any, has been tested for compliance with, and has satisfied the
requirements of, Section 401(k)(3) and 401(m)(2) of the Code for each
plan year ending prior to the Effective Date.
(g)Compliance. Except as described in the Comtech Disclosure Letter, each
Comtech Benefit Plan maintained by Comtech or a Comtech ERISA
Affiliate has at all times been maintained, by its terms and in
operation, in accordance with all applicable laws in all material
respects, including
<PAGE>
(to the extent applicable) Code Section 4980B. There has been no
failure to comply with applicable ERISA or other requirements
concerning the filing of reports, documents and notices with the
Secretary of Labor and Secretary of Treasury or the furnishing of such
documents to participants or beneficiaries that could subject any
Comtech Benefit Plan, Comtech, any Comtech ERISA Affiliate, Restor or
any of its affiliates to any material civil or any criminal sanction.
(h)Legal Actions. There are no actions, audits, suits or claims known to
the Shareholder which are pending or threatened against any Comtech
Benefit Plan, any fiduciary of any of Comtech Benefit Plans with
respect to the Comtech Benefit Plans or against the assets of any of
the Comtech Benefit Plans, except claims for benefits made in the
ordinary course of the operation of such plans.
(i)Funding. Comtech and each Comtech ERISA Affiliate has made full and
timely payment of all amounts required to be contributed under the
terms of each Comtech Benefit Plan and applicable law or required to
be paid as expenses under such Comtech Benefit Plan, and no excise
taxes are assessable as a result of any nondeductible or other
contributions made or not made to a Comtech Benefit Plan. No event or
condition exists with respect to any Comtech Benefit Plan subject to
Title IV of ERISA which could be deemed a "Reportable Event" (as .
defined in Title IV of ERISA) with respect to which the thirty (30)
day notice requirement has not been waived which could result in a
material liability to Comtech, and no condition exists which would
subject Comtech to a material fine under Section 4071 of ERISA. The
assets of all Comtech Benefit Plans which are required under
applicable laws to be held in trust are in fact held in trust, and the
assets of each such Comtech Benefit Plan equal or exceed the
liabilities of each such plan. The liabilities of each other plan are
properly and accurately reported on the financial statements and
records of Comtech. The assets of each Comtech Benefit Plan are
reported at their fair market value on the books and records of each
plan.
(j)Liabilities. Neither Comtech nor any Comtech ERISA Affiliate is
subject to any material liability, tax or penalty whatsoever to any
person whomsoever as a result of Comtech's or any Comtech ERISA
Affiliate's engaging in a prohibited transaction under ERISA or the
Code, and the Shareholder has no knowledge of any circumstances which
reasonably might result in any such material liability, tax or penalty
as a result of a breach of fiduciary duty under ERISA. The termination
of or withdrawal from any Comtech Benefit Plan maintained by Comtech
or a Comtech ERISA Affiliate which is subject to Title IV of ERISA or
any
<PAGE>
other Comtech Benefit Plan immediately after the Effective Time will
not subject Restor, the Surviving Corporation, Merger Sub or any
Comtech ERISA Affiliate to any additional contribution requirement or
to any other liability, tax or penalty whatsoever (excluding any
liability, tax or penalty attributable solely to the fact that such
termination or withdrawal would violate the permanency requirement of
Section 401 (a) of the Code or an excise tax under Code Section 4980).
Neither the execution nor the performance of the transactions
contemplated by this Agreement will create, accelerate or increase any
obligations under any Comtech Benefit Plan. Neither Comtech nor any
Comtech ERISA Affiliate has any obligation to any retired or former
employee, or any current employee upon retirement, under any Comtech
Benefit Plan.
(k)Amendment/New Plans. From the date of this Agreement to the Effective
Time, no amendment shall be made to any Comtech Benefit Plan, no
commitment shall be made to amend any Comtech Benefit Plan and no
commitment shall be made to continue any Comtech Benefit Plan or to
adopt any new Comtech Benefit Plan for the benefit of any employees of
Comtech or any Comtech ERISA Affiliate absent the express written
consent of Restor.
(l)Excess Parachute Payments. No payment required to be made to any
employee associated with Comtech as a result of the transactions
contemplated hereby under any contract or otherwise will, if made,
constitute an "excess parachute payment" within the meaning of Section
280G of the Code or be nondeductible under Section 162(m) of the Code.
(m)No Acceleration of Liability Under Benefit Plans. The consummation of
the transactions contemplated hereby will not accelerate or increase
any liability under any Comtech Benefit Plan because of an
acceleration or increase of any of the rights or benefits to which
employees of Comtech or any Comtech ERISA Affiliate may be entitled
thereunder.
(n)Statutory Benefits. Except as described in the Comtech Disclosure
Letter, Comtech has, on a timely basis, made all payments,
withholdings and filings of any kind required of it by, and has
otherwise complied in all material respects with, any applicable law,
regulation or administrative order concerning pension, health,
welfare, unemployment, workers' compensation or similar benefits
administered by any governmental, regulatory or public body.
Section 3.14. Labor Relations. Comtech is in compliance in all material
respects with all federal, state and foreign laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
<PAGE>
is not engaged in any unfair labor or unlawful employment practice. There is no
unlawful employment practice discrimination charge involving Comtech pending
before the Equal Employment Opportunity Commission ("EEOC"), EEOC-recognized
state "referral agency" or any other governmental agency. There is no unfair
labor practice charge or complaint against Comtech pending before the National
Labor Relations Board ("NLRB"). There is no labor strike, dispute, slowdown or
stoppage actually pending or, to the best knowledge of Comtech, threatened
against or involving or affecting Comtech, and no NLRB representation question
exists respecting any of its employees. No grievance or arbitration proceeding
is pending against Comtech and no written claim therefor exists. There is no
collective bargaining agreement that is binding on Comtech.
Section 3.15. Insurance. Comtech has heretofore provided to Restor a true
and complete list of its current insurance coverages, including names of
carriers, amounts of coverage and premiums therefor. Comtech has been and is
insured with respect to its properties and the conduct of its business in such
amounts and against such risks as are reasonable in relation to its business and
will use its reasonable efforts to maintain such insurance at least through the
Effective Time. Comtech has made available to Restor true and complete copies of
all insurance policies covering Comtech, its properties, assets, employees
and/or operations.
Section 3.16. Title to Properties and Related Matters. Comtech has, to
the best knowledge of the Shareholders, good and valid title to or valid
leasehold interests in its properties reflected in the 1995 Balance Sheet or
acquired after the date thereof (other than properties sold or otherwise
disposed of in the ordinary course of business), and all of such properties are
held free and clear of all title defects, liens, encumbrances and restrictions,
except, with respect to all such properties, (a) mortgages and liens securing
debt reflected as liabilities on the 1995 Balance Sheet and (b)(i) liens for
current taxes and assessments not in default, (ii) mechanics', carriers',
workmen's, materialmen's, repairmen's, statutory or common law liens either not
delinquent or being contested in good faith, and (iii) encumbrances, covenants,
rights of way, building or use restrictions, easements, exceptions, variances,
reservations and other similar matters or limitations, if any, which do not have
a material adverse effect on Comtech's use of the property affected.
Notwithstanding the immediately preceding sentence, Comtech makes no
representation or warranty in this Section 3.16 or otherwise regarding the
validity of title to any such properties in which Comtech has only a leasehold
interest.
Section 3.17. Environmental Matters. Except for a residential condominium
which Comtech owned, but no longer owns, in Newark, California, Comtech
does not own, nor has at any time owned, any real property. There has been no
material release of a hazardous substance, as that term is defined in the
<PAGE>
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. ss. 9601(14), or any petroleum product by Comtech into the environment at
any property ever owned, leased or used by the Comtech (the "Premises"),
including, without limitation, any such release in the soil or groundwater
underlying the Premises and, to the best knowledge of Comtech, there has been no
such release by any other party at any of the Premises. Comtech has from time to
time disposed of small amounts of hazardous substances (as defined above) in a
manner believed by Comtech to be in compliance with Environmental Laws. Comtech
has not received notice of any violation of any Environmental Law nor has it
been advised of any claim or liability pursuant to any Environmental Law brought
by any domestic or foreign governmental agency or private party. There are no
Environmental Liabilities (as defined below) of Comtech that, individually or in
the aggregate, have had or would reasonably be expected to have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of Comtech. As used in this Agreement,
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and governmental restrictions, whether now or
hereafter in effect, relating to human health, the environment or to emissions,
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment, including without limitation ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants, Hazardous Substances or wastes or the
clean-up or other remediation thereof. "Environmental Liabilities" with respect
to any person means any and all liabilities of or relating to such person or any
of its Subsidiaries (including any entity which is, in whole or in part, a
predecessor of such Person or any of its Subsidiaries), whether vested or
unvested, contingent or fixed, actual or potential, known or unknown, which (i)
arise under or relate to matters covered by Environmental Laws and (ii) relate
to actions occurring or conditions existing on or prior to the Closing Date.
"Hazardous Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including petroleum, its derivatives, by-products and other
hydrocarbons, or any substance having any constituent elements displaying any of
the foregoing characteristics, including, without limitation, any substance
regulated under Environmental Laws.
Section 3.18. Patents, Trademarks, Trade Names. The Comtech Disclosure
Letter sets forth a true and complete list of: (a) all material patents,
trademarks and trade names (including all federal, state and foreign
registrations pertaining thereto) and all material copyright registrations owned
<PAGE>
by Comtech (collectively, the "Proprietary Intellectual Property"); and (b) all
patents, trademarks, trade names, copyrights and all technology and processes
used by Comtech in its business which are material to its business and are used
pursuant to a license or other right granted by a third party (collectively, the
"Licensed Intellectual Property" and, together with the Proprietary Intellectual
Property, herein referred to as "Intellectual Property"). A true and complete
list of all such licenses with respect to Licensed Intellectual Property is set
forth in the Comtech Disclosure Letter. Each of the federal, state and foreign
registrations pertaining to the Proprietary Intellectual Property is valid and
in full force and effect. All required filings in association with such
registrations have been properly made and all required fees have been paid.
Comtech owns, or has the right to use pursuant to valid and effective
agreements, all Intellectual Property, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights, except for such
defects in title or other matters which in the aggregate would not have a
material adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of Comtech. No claims are pending
against Comtech by any person with respect to the use of any Intellectual
Property or challenging or questioning the validity or effectiveness of any
license or agreement relating to the same, and the current use by Comtech of the
Intellectual Property does not infringe on the rights of any third party. The
Comtech Disclosure Letter sets forth a list of all jurisdictions in which
Comtech is operating under a trade name, and each jurisdiction in which any such
trade name is registered.
Section 3.19. Transactions with Affiliates. No shareholder or director of
Comtech, or any person with whom any such shareholder or director has any
direct or indirect relation by blood, marriage or adoption, or any entity in
which any such person 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) has any interest in (i) any contract, arrangement or
understanding with, or relating to, the business or operations of Comtech, (ii)
any loan, arrangement, understanding, agreement or contract for or relating to
indebtedness of Comtech, or (iii) any property (real, personal or mixed,
tangible or intangible) used, or currently intended to be used, in the business
or operations of Comtech.
Section 3.20. Brokers, Finders and Investment Bankers. Neither Comtech nor
any of its officers, directors or employees has employed any broker, finder or
investment banker or incurred any liability for any investment banking fees,
financial advisory fees, brokerage fees or finders' fees in connection with the
transactions contemplated herein.
<PAGE>
Section 3.21. Disclosure. No representation, warranty or covenant made by
Comtech in this Agreement, the Comtech Disclosure Letter or any Exhibit attached
hereto contains an untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein not misleading.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF RESTOR
With such exceptions, if any, as may be set forth in a letter (the
"Restor Disclosure Letter") to be delivered by Restor to Comtech on or before
May 3, 1996, Restor hereby represents and warrants to Comtech as follows:
Section 4.1. Organization. Restor is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Restor is duly qualified to transact business, and is in good standing, as a
foreign corporation in each jurisdiction where the character of its activities
requires such qualification, except where the failure to so qualify would not
have a material adverse effect on the assets, liabilities, results of
operations, financial condition, business or prospects of Restor.
Section 4.2. Authorization. Each of Restor and Merger Sub has full
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement and to consummate the Merger and
the other transactions contemplated hereby. The execution and delivery of this
Agreement by Restor and Merger Sub, subject only to the performance by Restor
and Merger Sub of their respective obligations hereunder and the consummation of
the Merger and the other transactions provided for herein, have been duly and
validly authorized by all necessary corporate action on the part of each of
Restor and Merger Sub. The Boards of Directors of each of Restor and Merger Sub
have approved the execution, delivery and performance of this Agreement and the
consummation of the Merger and the other transactions provided for herein. This
Agreement has been duly executed and delivered by each of Restor and Merger Sub
and constitutes the valid and binding agreement of Restor and Merger Sub,
enforceable against each of Restor and Merger Sub in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforceability of creditors' rights generally, general equitable principles
and the discretion of courts in granting equitable remedies.
<PAGE>
Section 4.3. Absence of Restrictions and Conflicts. The execution, delivery
and performance of this Agreement, the consummation of the Merger and the other
transactions contemplated by this Agreement, and the fulfillment of and
compliance with the terms and conditions of this Agreement do not and will not,
with the passing of time or the giving of notice or both, violate or conflict
with, constitute a breach of or default under, result in the loss of any
material benefit under, or permit the acceleration of any obligation under, (i)
any term or provision of the Articles of Incorporation or Bylaws of Restor, (ii)
any contract material to the business and operations of Restor, (iii) any
judgment, decree or order of any court or governmental authority or agency to
which Restor is a party or by which Restor or any of its properties is bound, or
(iv) any statute, law, regulation or rule applicable to Restor, so as to have,
in the case of subsections (ii) through (iv) above, a material adverse effect on
the assets, liabilities, results of operations, financial condition, business or
prospects of Restor. Except for filing and recordation of the Certificate of
Merger, no consent, approval, order or authorization of, or registration,
declaration or filing with, any government agency or public or regulatory unit,
agency, body or authority with respect to Restor is required in connection with
the execution, delivery or performance of this Agreement by Restor or Merger Sub
or the consummation of the transactions contemplated by this Agreement by Restor
or Merger Sub, the failure to obtain which would have a material adverse effect
upon the assets, liabilities, results of operations, financial condition,
business or prospects of Restor.
Section 4.4. Capitalization of Restor. The authorized capital stock of
Restor consists of 20,000,000 shares of common stock, $.01 par value per share,
of which 12,658,930 shares were issued and outstanding as of March 31, 1996, and
500,000 shares of non-voting Class B common stock, $.01 par value per share, of
which no shares were issued and outstanding as of March 31, 1996. The Restor
Disclosure Letter sets forth a full, true and complete list of the shareholdings
of, and options, warrants and similar rights owned by, all officers, directors
and 5% stockholders of Restor shown on the books and records of Restor at March
31, 1996. All shares of Restor Stock outstanding as of the date hereof are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights. The shares of Restor Stock to be issued in the Merger will be validly
issued, fully paid, nonassessable and free of preemptive rights.
Section 4.5. Financial Statements. Restor has made available to Comtech the
audited consolidated balance sheets of Restor and its subsidiaries as of
December 31, 1993, 1994 and 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for the fiscal years then ended,
including the notes thereto. All of the foregoing financial statements are
hereinafter collectively referred to as the "Restor Financial Statements" and
the balance sheet as of December 31, 1995 is hereinafter referred to as the
<PAGE>
"1995 Restor Balance Sheet." The Restor Financial Statements have been prepared
from, and are in accordance with, the books and records of Restor and present
fairly the financial position and results of operations of Restor as of the
dates and for the periods indicated, in each case, in conformity with generally
accepted accounting principles, consistently applied. As of the Closing Date,
Restor shall have no liability or obligation of any nature whatsoever, whether
accrued, absolute, contingent or otherwise, other than (x) current liabilities
and obligations which are recurring in nature and not overdue on their terms,
(y) liabilities and obligations reflected and adequately provided for on the
1995 Restor Balance Sheet and (z) liabilities and obligations arising in the
ordinary course of business of Restor, or in connection with the transactions
contemplated hereby, since the date of the 1995 Restor Balance Sheet.
Section 4.6. Absence of Certain Changes.
(a) Certain Financial Matters; Property; Dividends. Since the date of
the 1995 Restor Balance Sheet, there has not been (i) any material
adverse change in the assets, liabilities, results of operations,
financial condition, business or prospects of Restor, (ii) any damage,
destruction, loss or casualty to property or assets of Restor, whether
or not covered by insurance, which property or assets are material to
its operations or business, (iii) any declaration, setting aside or
payment of any dividend or distribution (whether in cash, stock or
property) in respect of the capital stock of Restor, or any redemption
or other acquisition by Restor of any of the capital stock of Restor or
any split, combination or reclassification of shares of capital stock
declared or made by Restor, or (iv) any agreement to do any of the
foregoing.
(b) Other Changes. Since the date of the 1995 Restor Balance Sheet,
there have not been (i) any losses suffered, (ii) any material assets
mortgaged, pledged or made subject to any lien, charge or other
encumbrance, (iii) any material liability or obligation (absolute,
accrued or contingent) incurred or any material bad debt, contingency
or other reserve increase suffered, except, in each such case, in the
ordinary course of business and consistent with past practice, (iv) any
material claims, liabilities or obligations (absolute, accrued or
contingent) paid, discharged or satisfied, other than the payment,
discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of claims, liabilities and obligations
reflected or reserved against in the Restor Financial Statements or
incurred in the ordinary course of business and consistent with past
practice since the date of the Restor Financial Statements, (v) any
<PAGE>
material guarantees, checks, notes or accounts receivable written off
as uncollectible, except write-offs in the ordinary course of business
and consistent with past practice, (vi) any write down of the value of
any asset or investment on Restor's books or records, except for
depreciation and amortization taken in the ordinary course of business
and consistent with past practice, (vii) any cancellation of any
material debts or waiver of any material claims or rights of
substantial value, or sale, transfer or other disposition of any
material properties or assets (real, personal or mixed, tangible or
intangible) of substantial value, except, in each such case, in
transactions in the ordinary course of business and consistent with
past practice ,(viii) any material transactions entered into other than
in the ordinary course of business, (ix) any agreements to do any of
the foregoing, or (x) any other events, developments or conditions of
any character that have had or are reasonably likely to have a material
adverse effect on the assets, liabilities, results of operations,
financial condition, business or prospects of Restor and its
subsidiaries taken as a whole.
Section 4.7. Legal Proceedings. There are no suits, actions, claims,
proceedings or investigations pending or, to the best knowledge of Restor,
threatened against, relating to or involving Restor (or any of its officers or
directors) before any court, arbitrator or administrative or governmental body,
which, if finally determined adversely, are reasonably likely, individually or
in the aggregate, to have a material adverse effect on the assets, liabilities,
results of operations, financial condition, business or prospects of Restor. All
pending or threatened suits, actions, claims, proceedings or investigations
relating to or involving Restor (or any of its officers or directors) before any
court, arbitrator or administrative or governmental body are adequately provided
for in the 1995 Restor Balance Sheet in accordance with generally accepted
accounting principles. Restor is not subject to any judgment, decree,
injunction, rule or order of any court nor is Restor subject to any governmental
restriction applicable to it, which is reasonably likely (a) to have a material
adverse effect on the assets, liabilities, results of operations, financial
condition, business or prospects of Restor and its subsidiaries taken as a
whole.
Section 4.8. Compliance with Law. Restor has all material authorizations,
approvals, licenses and orders of and from all governmental and regulatory
officers and bodies necessary to carry on its business as it is currently being
conducted, to own or hold under lease the properties and assets it owns or holds
under lease and to perform all of its obligations under the agreements to which
it is a party, and Restor has been and is in compliance with all applicable
laws, regulations and administrative orders of any country, state
<PAGE>
or municipality or of any subdivision thereof to which its business or its
employment of labor or its use or occupancy of properties or any part thereof
are subject, the failure to obtain or the violation of which would have a
material adverse effect upon its assets, liabilities, results of operations,
financial condition, business or prospects of Restor and its subsidiaries taken
as a whole.
Section 4.9. Tax Returns; Taxes. Restor has duly filed all federal, state,
local and foreign tax returns required to be filed by it and has duly paid
or made adequate provision for the payment of all taxes which are due and
payable pursuant to such returns or pursuant to any assessment with respect to
taxes in such jurisdictions, whether or not in connection with such returns. The
liability for taxes reflected in the 1995 Restor Balance Sheet is sufficient for
the payment of all unpaid taxes, whether or not disputed, that are accrued or
applicable for the period ended December 31, 1995, and for all years and periods
ended prior thereto. All deficiencies asserted as a result of any examinations
by the IRS or any other taxing authority have been paid, fully settled or
adequately provided for in the 1995 Restor Balance Sheet. There are no pending
claims asserted for taxes of Restor or outstanding agreements or waivers
extending the statutory period of limitation applicable to any tax return of
Restor for any period. Restor has made all estimated income tax deposits and all
other required tax payments or deposits and has complied for all prior periods
in all material respects with the tax withholding provisions of all applicable
federal, state, local, foreign and other laws.
Section 4.10. Restor SEC Reports. Restor has heretofore made available to
Comtech Restor's Annual Reports on Form 10-K for the years ended December 31,
1993, 1994 and 1995 (the "Restor SEC Reports"). As of their respective dates,
the Restor SEC Reports did not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. Since January 1, 1993, Restor has filed all forms, reports
and documents with the Securities and Exchange Commission required to be filed
by it pursuant to the Securities Act of 1933, as amended (the "Securities Act"),
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations promulgated thereunder, each of which complied as to
form, at the time such form, document or report was filed, in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act and the applicable rules and regulations promulgated thereunder.
<PAGE>
Section 4.11.Transactions with Affiliates. Except as disclosed in the
Restor SEC Reports, no executive officer or director of Restor, or any person
with whom any such executive officer or director has any direct or indirect
relation by blood, marriage or adoption, or any entity in which any such person
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) has any interest in (i) any contract, arrangement or understanding
with, or relating to, the business or operations of Restor, (ii) any loan,
arrangement, understanding, agreement or contract for or relating to
indebtedness of Restor, or (iii) any property (real, personal or mixed, tangible
or intangible) used, or currently intended to be used, in the business or
operations of Restor.
Section 4.12. Disclosure. No representation, warranty or covenant made by
Restor in this Agreement, the Restor Disclosure Letter or any Exhibit hereto
contains any untrue statement of a material fact or omits to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
ARTICLE 5.
CERTAIN COVENANTS AND AGREEMENTS
SECTION 5.1. Conduct of Business by Comtech. From the date hereof to the
Effective Time, Comtech will, except as required in connection with the
Merger and the other transactions contemplated by this Agreement and except as
otherwise disclosed in the Comtech Disclosure Letter or consented to in writing
by Restor:
(i) Carry on its businesses in the ordinary course in
substantially the same manner as heretofore conducted and not engage in
any new line of business or enter into any agreement, transaction or
activity or make any commitment except those in the ordinary course of
business and not otherwise prohibited under this Section 5.1;
(ii) Neither change nor amend its Articles of Incorporation o
Bylaws;
(iii) Sell or grant options, warrants or rights to purchase or
subscribe to, or enter into any arrangement or contract with respect to
the issuance or sale of any of its capital stock of Comtech or rights
or obligations convertible into or exchangeable for any shares of its
capital stock and not alter the terms of any of its presently
outstanding options, warrants or other equity securities or make any
changes (by split-up, combination, reorganization or otherwise) in its
capital structure;
<PAGE>
(iv)Not declare, pay or set aside for payment any dividend or
other distribution in respect of its capital stock or other equity
securities, except for distributions of dividends to its shareholders
in the ordinary course of business consistent with past practice, and
not redeem, purchase or otherwise acquire any shares of its capital
stock or other securities or rights or obligations convertible into or
exchangeable for any shares of its capital stock or other securities or
obligations convertible into such, or any options, warrants or other
rights to purchase or subscribe to any of the foregoing;
(v) Not acquire or enter into an agreement to acquire, by merger,
consolidation or purchase of stock or assets, any business or entity;
(vi) Use its reasonable efforts to preserve intact its corporate
existence, goodwill and business organizations, to keep its officers
and employees available to Restor and to preserve its relationships
with customers, suppliers and others having business relations with it;
(vii) Not (A) create, incur or assume any long-term debt
(including obligations in respect of capital leases) or any short-term
debt for borrowed money, (B) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person, except in the
ordinary course of business and consistent with past practice, (C) make
any loans or advances to any other person, except in the ordinary
course of business and consistent with past practice, (D) make any
capital contributions to, or investments in, any person, except in the
ordinary course of business and consistent with past practices with
respect to investments, (E) make any capital expenditure involving in
excess of $5,000 in the case of any single expenditure or $10,000 in
the case of all capital expenditures, or (F) purchase or commit to
purchase more than $300,000 of inventory in the aggregate;
(viii) Not enter into, modify or extend in any manner the terms of
any employment, severance or similar agreements with officers and
directors nor pay or become obligated to pay any bonuses to, or grant
any increase in the compensation of, officers, directors or employees,
whether now or hereafter payable, including any such payment or
increase pursuant to any option, bonus, stock purchase, pension,
profit-sharing, deferred compensation, retirement or other plan,
arrangement, contract or commitment; provided, however, that it shall
be permitted hereunder to (i) pay employee bonuses of up to $63,000 in
the aggregate, and (ii) grant increases in the compensation payable to
employees (but not executives or directors) in the ordinary course of
<PAGE>
business consistent with its 1996 budget and which do not in the case
of any specific employee involve an increase in compensation in excess
of twenty percent (20%) of such employee's 1995 compensation and which
in the aggregate do not involve an annualized compensation expense
increase of $10,000 or more;
(ix)Perform in all material respects all of its obligations under
all Comtech Material Contracts (except those being contested in good
faith) and not enter into, assume or amend any contract or commitment
that would be a Comtech Material Contract other than contracts to
provide services entered into in the ordinary course of business;
(x) Use its reasonable efforts to maintain in full force and
effect and in the same amounts policies of insurance comparable in
amount and scope of coverage to that now maintained by it;
(xi)Use its reasonable efforts to continue to collect its accounts
receivable and pay its accounts payable in the ordinary course of
business and consistent with past practices; and
(xii) Prepare and file all federal, state, local and foreign
returns for taxes and other tax reports, filings and amendments thereto
required to be filed by it, and allow Restor, at its request, to review
all such returns, reports, filings and amendments at Comtech's offices
prior to the filing thereof, which review shall not interfere with the
timely filing of such returns.
In connection with the continued operation of Comtech's business
between the date of this Agreement and the Effective Time, Comtech shall confer
in good faith on a regular and frequent basis with one or more representatives
of Restor designated in writing to report on operational matters of materiality
and the general status of ongoing operations. Comtech acknowledges that Restor
does not and will not waive any rights it may have under this Agreement as a
result of such consultations.
Section 5.2. Inspection and Access to Information; Confidentiality.
(a)Inspection and Access. Between the date of this Agreement and the
Effective Time, Comtech will provide Restor and its accountants,
investment bankers, counsel and other authorized representatives full
access, during reasonable business hours and under reasonable
circumstances to any and all of its premises, properties, contracts,
commitments, books, records and other information (including tax
returns filed and those in preparation) and will cause its respective
<PAGE>
officers to furnish to the other party and its authorized
representatives any and all financial, technical and operating data and
other information pertaining to its business, as each other party shall
from time to time reasonably request.
(b)Confidentiality. Restor shall, and shall use its best efforts to
cause its authorized representatives to, hold in strict confidence, and
not disclose to any person without the prior written consent of
Comtech, or use in any manner except in connection with the
transactions contemplated hereby, all information obtained from Comtech
in connection with the transactions completed hereby, except that such
information may be disclosed (i) where necessary to any regulatory
authorities or governmental agencies, (ii) if required by court order
or decree, (iii) if it is ascertainable or obtained from public or
published information, (iv) if it is or becomes known to the public
other than through disclosure by such party, (vi) if the recipient can
demonstrate it was in its possession prior to disclosure thereof in
connection with the Agreement, (vii) if the recipient can demonstrate
it was independently developed by it, or (viii) if the disclosing party
is advised in writing by counsel that it is legally required to make
such disclosure.
Section 5.3. No Solicitation; Acquisition Proposals. From the date hereof
until the Effective Time or until this Agreement is terminated or abandoned as
provided in Article 8, Comtech shall not directly or indirectly: (a) solicit or
initiate (including by way of furnishing any information) discussions with; or
(b) enter into negotiations or agreements with, or furnish any information to,
any corporation, partnership, person or other entity or group (other than
Restor, its subsidiaries or their authorized representatives pursuant to this
Agreement) concerning any proposal for a merger, sale of substantial assets,
sale of shares of stock or securities or other takeover or business combination
transaction (the "Acquisition Proposal") involving Comtech, and Comtech shall
instruct its officers, directors, advisors and other financial and legal
representatives and consultants not to take any action contrary to the foregoing
provisions of this sentence. Comtech will notify Restor promptly in writing if
Comtech becomes aware that any inquiries or proposals are received by, any
information is requested from, or any negotiations or discussions are sought to
be initiated with Comtech with respect to an Acquisition Proposal. Comtech shall
immediately cease any existing activities, discussions or negotiations with any
third parties which may have been conducted on or prior to the date hereof with
respect to an Acquisition Proposal and shall direct and use reasonable efforts
to cause its officers, advisors and representatives not to engage in any such
activities, discussions or negotiations.
<PAGE>
Section 5.4. Reasonable Efforts; Further Assurances; Cooperation. Subject
to the other provisions of this Agreement, the parties hereto shall each
use their reasonable, good faith efforts to perform their obligations herein and
to take, or cause to be taken, or do, or cause to be done, all things necessary,
proper or advisable under applicable law to obtain all regulatory approvals and
satisfy all conditions to the obligations of the parties under this Agreement
and to cause the Merger and the other transactions contemplated herein to be
effected on or prior to May 15, 1996 in accordance with the terms hereof and
shall cooperate fully with each other and their respective officers, directors,
employees, agents, counsel, accountants and other designees in connection with
any steps required to be taken as a part of their respective obligations under
this Agreement, including, without limitation:
(i) Comtech and Restor shall promptly make their respective
filings and submissions and shall take, or cause to be taken, all
actions and do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to obtain any required
approval of any federal, state or local governmental agency or
regulatory body with jurisdiction over the transactions contemplated by
this Agreement.
(ii)In the event any claim, action, suit, investigation or other
proceeding by any governmental body or regulatory authority is
commenced which questions the validity or legality of the Merger or any
of the other transactions contemplated hereby or seeks damages in
connection therewith, the parties agree to cooperate and use all
reasonable efforts to defend against such claim, action, suit,
investigation or other proceeding and, if an injunction or other order
is issued in any such action, suit or other proceeding, to use all
reasonable efforts to have such injunction or other order lifted, and
to cooperate reasonably regarding any other impediment to the
consummation of the transactions contemplated by this Agreement.
(iii) Each party shall give prompt written notice to the other of
(A) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty of
Comtech or Restor, as the case may be, contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the
date hereof to the Effective Time or that will or may result in the
failure to satisfy any of the conditions specified in Article 6 hereof
and (B) any failure of Comtech or Restor, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied
with or satisfied by any of them hereunder.
<PAGE>
(iv)Without the prior written consent of Restor, Comtech will not
terminate any employee if such termination would result in the payment
of any amounts pursuant to "change in control" provisions of any
employment agreement or arrangement.
Section 5.5. Public Announcements. The timing and content of all
announcements regarding any aspect of this Agreement or the Merger to the
financial community, government agencies, employees or the general public shall
be mutually agreed upon in advance (unless Restor or Comtech are advised by
counsel that any such announcement or other disclosure not mutually agreed upon
in advance is required to be made by law and then only after making a reasonable
attempt to comply with the provisions of this Section 5.5).
Section 5.6. Supplements to Disclosure Letters. From time to time prior to
the Effective Time, Comtech and Restor will each promptly supplement or amend
the respective disclosure letters which will be delivered pursuant to this
Agreement with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in any such disclosure letter or which is necessary to
correct any information in any such disclosure letter which has been rendered
inaccurate thereby. No supplement or amendment to any such disclosure letter
shall have any effect for the purpose of determining satisfaction of the
conditions set forth in Sections 6.2 or 6.3 of this Agreement.
Section 5.7. Noncompetition. Each Signing Shareholder who is not employed
by the Surviving Corporation or Restor immediately after the Closing agrees
that, from the Closing Date until the end of three (3) years following the
Closing Date (a "Noncompete Period"), and each Signing Shareholder who is
employed by the Surviving Corporation immediately after the Closing agrees that,
from the Closing Date until three (3) years following the termination of such
Signing Shareholder's employment for whatever reason (also, a "Noncompete
Period"), unless acting in accordance with Restor's prior written consent and
except as an employee of, or consultant to or director of, the Surviving
Corporation or of Restor, will not (directly or indirectly), own, manage,
operate, join, control, finance or participate in the ownership, management,
operation, control or financing of, or be connected as an officer, director,
employee, principal, agent, representative, consultant, investor, owner,
partner, manager, joint venturer or otherwise with, or permit his name to be
used by or in connection with, or lease, sell or permit to use any real property
or interest therein owned by such person to, any business or enterprise engaged
in the business of designing, manufacturing, distributing, selling, marketing,
installing, repairing or refurbishing T1 Multiplexes, digital loop carriers or
other access intelligent loop equipment, telephone switching systems, wireless
<PAGE>
data and video communications systems and equipment, and circuit boards and
electromechanical assemblies, in any county in the state of California or any
other state of the United States or in any other country in North America or in
any country in Central America or South America; provided, however, that the
provisions of this Section 5.7 shall not be deemed to prohibit the ownership by
any such Person of not more than five percent (5%) of any corporation,
partnership, limited liability company or other entity. Each Signing Shareholder
acknowledges that (i) the provisions of this Section 5.7 are reasonable and
necessary to protect the legitimate interest of Restor and the business and
goodwill of Comtech acquired by Restor hereby, (ii) any violation of this
Section 5.7 will result in irreparable injury to Restor and the Surviving
Corporation and that damages at law would not be reasonable or adequate
compensation to Restor and for a violation of this Section 5.7, and (iii) Restor
and the Surviving Corporation shall be entitled to have the provisions of this
Section 5.7 specifically enforced by preliminary and permanent injunctive relief
without the necessity of proving actual damages and without posting bond or
other security as well as to an equitable accounting of all earnings, profits
and other benefits, including, without limitation, future earnings estimated
upon a basis of seven (7) years as the anticipated average tenure of a customer
with the Surviving Corporation, arising out of any violation of this Section
5.7. In the event that the provisions of this Section 5.7 should ever be deemed
to exceed the time, geographic, product or any other limitations permitted by
applicable law, then such provisions shall be deemed reformed to the maximum
extent permitted by applicable law.
Section 5.8. No Interference. Each Signing Shareholder agrees, individually
and not on behalf of any other person, that, prior to the third anniversary
of the Closing Date, he will not (directly or indirectly): (i) hire or offer
employment to any employee of Comtech whose employment is continued by the
Surviving Corporation or Restor after the Closing Date; or (ii) solicit, induce
or influence any customer, supplier, lender, lessor or any other person that
then has, or at the Closing Date had, a business relationship with Restor or any
of its subsidiaries or Comtech, to discontinue or otherwise change any such
relationships.
Section 5.9. Continuation of Business. Restor and Surviving Corporation
each agree to continue the historic business of Comtech or use a significant
portion of Comtech's historic business assets to the extent necessary to fulfill
the continuity requirements for reorganizations under Section 368 of the Code as
described in Treas. Reg. ss. 1.368-1(d).
Section 5.10. Indemnity for Lease. Restor shall indemnify, defend and hold
Mr. Joe harmless from and against any and all demands, claims, actions or
causes of action, assessments, losses, diminution in value, damages (including
<PAGE>
special and consequential damages), liabilities, costs, and expenses, including,
without limitation, interest, penalties, cost of investigation and defense, and
reasonable attorneys' and other professional fees and expenses,asserted against
him in connection with, arising out of or relating to his personal guarantee of
the lease by Comtech of the premises at 4569 Las Positas Road, Suite D,
Livermore, California, with respect to matters accruing after the Closing.
Section 5.11. Certain Securities Law Matters. As soon as practicable after
execution of this Agreement, Restor shall prepare and file, and Comtech
shall cooperate in the preparation and filing of, a permit under Section 25121
of the California Corporate Securities Law of 1968 (the "Securities Law") with
respect to the issuance of the Restor Shares to be issued hereunder and to seek
approval hereof at a hearing held pursuant to Section 25142 of the Securities
Law.
Section 5.12. Shareholder Matters. Comtech (i) shall call a special meeting
of its shareholders to be held as soon as practicable after the date hereof for
the purpose of voting upon this Agreement and the Merger and, through its Board
of Directors, recommend to its shareholders approval of this Agreement and the
Merger at such meeting, or (ii) in the alternative, shall obtain the approval of
this Agreement and the Merger pursuant to action taken by unanimous written
consent of its shareholders in accordance with the requirements of the
California Corporations Code.
Section 5.13. Irrevocable Proxies. Concurrent with the execution of this
Agreement, Comtech has delivered to Restor irrevocable proxies substantially in
the form of Exhibit 5.13 hereto from the Signing Shareholders.
Section 5.14. Management of Surviving Corporation. Mr. Joe shall, from the
Closing Date until the end of the Third Performance Period (or until such
earlier time as he shall have voluntarily resigned or his employment has been
terminated for good cause), be a director and the principal executive officer of
the Surviving Corporation, and Restor shall cause him to be so elected. Subject
to the ultimate control and responsibility of the Board of Directors of the
Surviving Corporation and of Restor as the sole stockholder, until the end of
the Third Performance Period Mr. Joe shall have the right to manage the business
and affairs of the Surviving Corporation and shall participate directly in the
formulation, and shall direct the execution, of both short- and long-term
corporate plans, including, without limitation, the hiring, retention or
termination of employees, the setting of compensation and fringe benefits of
employees other than himself, the expansion of the business and the making of
commitments for capital expenditures out of the cash flow of the Surviving
Corporation. Restor shall cooperate with Mr. Joe in maintaining and
<PAGE>
increasing the Surviving Corporation's profitability, but this Agreement shall
not be construed as a commitment on the part of Restor to invest in or make
available to the Surviving Corporation any particular amount of additional
capital, or to incur any particular expense or obligation on behalf of the
Surviving Corporation, whether or not Restor is to be reimbursed by the
Surviving Corporation for any such expense or obligation. Notwithstanding the
foregoing, if the Pre-Tax Income of the Surviving Corporation (i) is less than
$500,000 for the First Performance Period or (ii) is less than $600,000 for
either the Second Performance Period or the Third Performance Period, then
Restor may request Mr. Joe's resignation as President, Chief Operating Officer
and/or a director of the Surviving Corporation and appoint another person or
persons to such position, or positions, and, in such event, Mr. Joe shall resign
from the requested position or positions, whereupon this Section 5.14 shall
become null and void and of no further force or effect.
Section 5.15. Access to Books and Records. During the Payout Period Mr. Joe
shall have free and unrestricted access to the financial books and records of
the Surviving Corporation.
Section 5.16. Indemnification Against Certain Liabilities. Restor agrees
that all rights to indemnification and all limitations of liability
existing in favor of the officers and directors of Comtech ("Indemnified
Parties") as provided in its articles of incorporation and bylaws as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect, without any
amendment thereto, for a period of not less than six (6) years from the
Effective Time; provided, however, that all rights to any indemnification in
respect of any claim asserted or made within such period shall continue until
the final disposition of such claim.
Section 5.17. Agreement of Affiliates. Comtech shall use all reasonable
efforts to cause each person who is an "affiliate" of Comtech for purposes
of Rule 145 under the Securities Act to deliver at the Closing a written
agreement substantially in the form of Exhibit 5.17. Regardless of whether each
such affiliate has provided such agreement, Restor shall be entitled to place
restrictive legends upon certificates for shares of Restor Common Stock issued
to such affiliates pursuant to this Agreement to enforce the provisions of this
Section 5.17.
ARTICLE 6.
OTHER MATTERS
Section 6.1. Conditions to Each Party's Obligations. The respective
obligations of each party to effect the Merger shall be subject to the
<PAGE>
fulfillment at or prior to the Closing of the following condition: at the
Effective Time there shall be no effective injunction, writ or preliminary
restraining order or any order of any nature issued by a court or governmental
agency of competent jurisdiction to the effect that the Merger may not be
consummated as herein provided, no proceeding or lawsuit shall have been
commenced by any governmental or regulatory agency for the purpose of obtaining
any such injunction, writ or preliminary restraining order and no written notice
shall have been received from any such agency indicating an intent to restrain,
prevent, materially delay or restructure the transactions contemplated by this
Agreement.
Section 6.2. Conditions to Obligations of Restor and Merger Sub. The
obligations of Restor and Merger Sub to effect the Merger shall be subject to
the fulfillment at or prior to the Closing of each of the following additional
conditions:
(a) Representations and Warranties. The representations and
warranties of Comtech set forth in Article 3 of this Agreement shall
be true and correct as of the date of this Agreement and as of the
Effective Time as though made on and as of the Effective Time.
(b) Performance of Obligations of Comtech. Comtech shall have
performed in all material respects all covenants and agreements
required to be performed by it under this Agreement.
(c) Opinion of Counsel. Restor shall have received an opinion
from counsel for Comtech, dated the Closing Date, in form and
substance reasonably satisfactory to Restor, substantially to the
effect that:
(i) Comtech is validly organized, existing, in good
standing and authorized to do business in the state of its
incorporation and has all requisite corporate power and authority to
own and operate its properties and to carry on its business as
currently conducted and is duly qualified to do business in each other
state in which the failure to so qualify would have a material adverse
effect on its operations in such state.
(ii) The Signing Shareholders and Comtech have full
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
(iii) The officers of Comtech who have executed this
Agreement have the authority to so execute this Agreement on behalf of
Comtech.
<PAGE>
(iv) The Signing Shareholders and Comtech have taken
all requisite action to authorize, approve and carry out this Agreement
and the transactions on the part of the Signing Shareholders
contemplated hereby, and this Agreement constitutes a legal, valid and
binding agreement of the Signing Shareholders and Comtech enforceable
against each of them in accordance with its terms, except that no
opinion need be expressed as to the enforceability of Sections 5.7 or
5.8 of this Agreement and except as such enforcement may be limited by
(A) bankruptcy, insolvency, reorganization, moratorium, and other laws
and legal and equitable principles of general application affecting the
rights or remedies of creditors, including, without limitation,concepts
of materiality, reasonableness, good faith and fair dealing, and (B)
the fact that specific performance and other equitable remedies
provided therein are discretionary with the courts and may not be
enforceable.
(v) The execution, delivery and performance of this
Agreement by the Signing Shareholders and Comtech and the consummation
of the transactions on the part of the Signing Shareholders and Comtech
contemplated by this Agreement will not result in any breach,
violation, default or acceleration of the obligations of the
Shareholders or Comtech under any judgment, decree, order, lease,
license, contract or other agreement which is applicable to the
Shareholders or Comtech and of which such counsel has actual knowledge.
(vi) Except as may be required by applicable federal
and state securities laws, as to which no opinion need be expressed,
the consummation of the transactions on the part of the Signing
Shareholders or Comtech contemplated by this Agreement does not
require the consent, approval, authorization or order, giving of
notice to, or the registration with, any court or any Federal, state,
or other governmental authority, agency or instrumentality or any
other person of which such counsel has actual knowledge.
(vii) To such counsel's actual knowledge, (A) no
action or proceeding against the Signing Shareholders or Comtech is
pending before any court, or before or by any governmental body, to
restrain, prohibit, invalidate or obtain damages with respect to or
otherwise question or attack the transactions contemplated by this
Agreement, and (B) the Signing Shareholders are not involved in any
litigation which might have an adverse effect on Comtech.
(viii) Comtech's authorized capital stock consists of
5,000,000 shares of common stock of which, as of the date of the
Agreement therewith, 2,785,620 shares issued are outstanding and
542,833 reserved for issuance upon exercise of outstanding options to
<PAGE>
purchase such stock. All outstanding shres of capital stock of Comtech
have been duly authorized and validly issued and are fully paid and
nonassessable.
(d) Authorization of Merger. All corporate action necessary by
Comtech to authorize the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken.
(e) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body required in connection with
the execution, delivery and performance of this Agreement shall have
been obtained or made, except for filing of the Certificate of Merger
and any other documents required to be filed after the Effective Time
and except where the failure to have obtained or made any such
consent. authorization, order, approval, filing or registration would
not have a material adverse effect on the business of Comtech or
Restor, following the Effective Time.
(f) Certificates. Comtech shall furnish Restor with a
certificate of its appropriate officers as to compliance with the
conditions set forth in Sections 6.2(a), (b) and (d).
(g) Material Contracts. Restor shall have received consents
to assignment of all Comtech Material Contracts and Comtech Customer
Contracts or written waivers of the provisions of any Comtech Material
Contracts or Comtech Customer Contracts requiring the consents or
waivers of third parties as set forth in the Comtech Disclosure
Letter, except such required consents and waivers the failure of which
to obtain would not in the aggregate have a material adverse effect on
the assets, liabilities, results of operations, financial condition,
business or prospects of Comtech following the Effective Time.
(h) Employment Agreement. Mr. Joe shall have executed and
delivered an employment agreement in the form attached hereto as
Exhibit 6.2(h) (the "Employment Agreement").
(i) Resignation Letters. Each of the officers and directors
of Comtech shall have tendered to Restor resignation letters in form
and substance reasonably acceptable to Restor on or prior to the
Closing Date, such resignations to be effective immediately following
the Closing Date.
<PAGE>
(j) Lock-Up Agreement. Each of the Shareholders shall have
duly executed and delivered a lock-up agreement in the form attached
hereto as Exhibit 6.2(j) (the "Lock-Up Agreement").
(k) Repayment of Shareholder Loans. All loans from (or any
other amounts advanced by) Comtech to the Shareholders shall have been
repaid in full.
(l) Escrow Agreement. Each of the Shareholders and the Escrow
Agent shall have duly executed and delivered the Escrow Agreement.
(m) Due Diligence. Restor shall have completed its review of
the books, records, properties, business and affairs of Comtech, which
review shall be satisfactory to Restor in its sole discretion.
(n) Fairness Hearing.A hearing that satisfies the requirements
of Section 3(a)(10) of the Securities Act of 1933 shall have been held
under Section 25142 of the Securities Law, and a permit approving
issuance of the Restor Securities hereunder (including a finding that
the terms and conditions of the issuance of the Restor Shares hereunder
are fair, just and equitable) shall have been issued by the California
Commissioner of Corporations in connection therewith.
(o) Dissenting Shareholders. Holders of not more than five
percent(5%) of the outstanding shares of Comtech Stock shall have filed
written notice with Comtech that they intend to demand payment for
their shares.
Section 6.3. Conditions to Obligations of Comtech. The obligations of
Comtech to effect the Merger shall be subject to the fulfillment at or prior to
the Closing of each of the following additional conditions:
(a) Representations and Warranties. The representations and
warranties of Restor set forth in Article 4 of this Agreement shall be
true and correct as of the date of this Agreement and as of the
Effective Time as though made on and as of the Effective Time.
(b) Performance of Obligations by Restor. Restor shall have
performed in all material respects all covenants and agreements
required to be performed by it under this Agreement.
(c) Authorization of Merger. All corporate action necessary
by Restor and Merger Sub to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
<PAGE>
(d) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body required in connection with
the execution, delivery and performance of this Agreement shall have
been obtained or made, except for filing of the Certificate of Merger,
and any other documents required to be filed after the Effective Time
and except where the failure to have obtained or made any such
consent, authorization, order, approval, filing or registration would
not have a material adverse effect on the business of Comtech
following the Effective Time.
(e) Opinion of Counsel. Comtech shall have received an
opinion from counsel for Restor and the Surviving Corporation,dated
the Closing Date, in form and substance reasonably satisfactory to
Comtech, substantially to the effect that:
(i) Restor is validly organized, existing, in good
standing and authorized to do business in the state of its
incorporation and has all requisite corporate power and authority to
own and operate its properties and to carry on its business as
currently conducted and is duly qualified to do business in each other
state in which the failure to so qualify would have a material adverse
effect on its operations in such state.
(i) Surviving Corporation is validly organized,
existing, in good standing and authorized to do business in the state
of its incorporation and has all requisite corporate power and
authority to own and operate its properties and to carry on its
business as currently conducted and is duly qualified to do business in
each other state in which the failure to so qualify would have a
material adverse effect on its operations in such state.
(ii) Restor has full power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby.
(ii) Surviving Corporation has full power and authority
to enter into this Agreement and to consummate the transactions
contemplated hereby.
(iii) The officers of Restor and the Surviving
Corporation who have executed this Agreement have the authority to so
execute this Agreement on behalf of Restor and the Surviving
Corporation.
<PAGE>
(iv) Restor and the Surviving Corporation have taken
all requisite action to authorize, approve and carry out this Agreement
and the transactions contemplated hereby, and this Agreement
constitutes a legal, valid and binding agreement of Restor and the
Surviving Corporation enforceable against each of them in accordance
with its terms, except as such enforcement may be limited by (A)
bankruptcy, insolvency, reorganization, moratorium, and other laws and
legal and equitable principles of general application affecting the
rights or remedies of creditors, including, without limitation,concepts
of materiality, reasonableness, good faith and fair dealing, and (B)
the fact that specific performance and other equitable remedies
provided therein are discretionary with the courts and may not be
enforceable.
(v) The execution, delivery and performance of this
Agreement by Restor and the Surviving Corporation and the consummation
of the transactions on the part of Restor or Surviving Corporation
contemplated by this Agreement will not result in any breach,
violation, default or acceleration of the obligations of Restor or
Surviving Corporation under any judgment, decree, order, lease,
license, contract or other agreement which is applicable to Restor or
Surviving Corporation and of which such counsel has actual knowledge.
(vi) Except as may be required by applicable federal
and state securities laws, as to which no opinion need be expressed,
the consummation of the transactions on the part of Restor or
Surviving Corporation contemplated by this Agreement does not require
the consent, approval, authorization or order, giving of notice to, or
the registration with, any court or any Federal, state, or other
governmental authority, agency or instrumentality or any other person
of which such counsel has actual knowledge.
(vii) To such counsel's actual knowledge, no action
or proceeding against Restor or Surviving Corporation is pending
before any court, or before or by any governmental body, to restrain,
prohibit, invalidate or obtain damages with respect to or otherwise
question or attack the transactions contemplated by this Agreement.
(viii) Restor's authorized capital stock consists of
20,000,000 shares of common stock of which 12,558,229 shares were
outstanding as of December 31, 1995, all of which, to such counsel's
actual knowledge, have been duly authorized and validly issued and are
fully paid and nonassessable.
(ix) Surviving Corporation's authorized capital stock
consists of 1,000 shares of common stock, $.01 par value per share, of
which 100 shares are outstanding, all of which have been duly
authorized and validly issued and are fully paid and nonassessable.
<PAGE>
(f) Certificates. Restor shall furnish Comtech with a
certificate of its appropriate officers as to compliance with the
conditions set forth in Sections 6.3(a), (b) and (c).
(g) Employment Agreement. Restor shall have executed and
delivered the Employment Agreement.
(h) Escrow Agreement. Restor and the Escrow Agent shall have
duly executed and delivered the Escrow Agreement.
ARTICLE 7.
CLOSING
The consummation of the transactions contemplated by this Agreement are
herein referred to as the "Closing." The "Closing Date" shall be the date on
which the Closing occurs. The Closing shall occur on the first business day
following the day on which the last of the conditions (other than those
conditions which by their terms are to occur only at the Closing) shall have
been satisfied or, if permissible, waived, or such later date as the parties may
agree. The Closing shall take place at the offices of Bianchi, Engel, Keegin &
Talkington, San Rafael, California, or at such other place as Comtech and Restor
shall agree in writing.
ARTICLE 8.
TERMINATION
Section 8.1. Termination and Abandonment. This Agreement may be terminated
at any time prior to the Closing Date:
(i) by mutual agreement of the Boards of Directors of Comtech,
Merger Sub and Restor;
(ii) by Comtech, if (A) the conditions set forth in Sections
6.1 and 6.3 hereof shall not have been complied with or performed and
such noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by Restor
on or before June 30, 1996, or (B) Comtech determines in its sole
good faith judgment, within five (5) days of the date of the
delivery of the Restor Disclosure Letter, that the exceptions set
forth therein are materially adversely different from the
representations and warranties of Restor in Article 4 hereof, provided
that Comtech shall inform Restor upon such termination as to the
reasons for its determination; and
(iii) by Restor or Merger Sub, if (A) the conditions set forth
in Sections 6.1 and 6.2 hereof shall not have been complied with or
performed and such noncompliance or nonperformance shall not have been
<PAGE>
cured or eliminated (or by its nature cannot be cured or eliminated) by
Comtech on or before June 30, 1996, or (B) Restor determines in its
sole good faith judgment, within five (5) days of the date of the
delivery of the Comtech Disclosure Letter, that the exceptions set
forth therein are materially adversely different from the
representations and warranties of Comtech in Article 3 hereof, provided
that Restor shall inform Comtech upon such termination as to the
reasons for its determination, or (C) Restor determines in its sole
good faith judgment, within five (5) days of the date of the delivery
of the 1995 Balance Sheet, that the financial condition or results of
operations of Comtech as of and for the seven-month period ended
December 31, 1995 are materially adversely different from the financial
condition or results of operations of Comtech as of and for the fiscal
year ended May 31, 1995, or (D) Restor shall be obligated to pay in
excess of Three Hundred Thousand Dollars ($300,000) in cash pursuant to
Section 2.1(a)(ii) hereof.
Section 8.2. Specific Performance and Other Remedies. The parties hereto
each acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement made by it herein. the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that in the event
that either party violates or fails or refuses to perform any covenant or
agreement made by such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
Section 8.3. Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 8, this Agreement shall forthwith become
void and there shall be no liability on the part of any party or its respective
officers, directors or stockholders, except for obligations under Section 5.3,
Section 5.7 and this Section 8.3, all of which shall survive the termination.
Notwithstanding the foregoing, nothing contained herein shall relieve any party
from liability for any breach of any covenant or agreement in this Agreement.
ARTICLE 9.
INDEMNIFICATION
Section 9.1. Definitions. For the purposes of this Article 9:
(i) "Comtech Indemnitors" shall mean the Signing Shareholders.
<PAGE>
(ii) "Comtech Indemnitors Representative" shall mean Michael
R. Joe.
(iii) "Comtech Indemnitees" shall mean the shareholders of
Comtech, of record and beneficially, as of the date hereof, and their
respective agents, representatives, employees, heirs,devisees,legatees,
successors and assigns.
(iv) "Indemnification Claim" shall mean a claim for
indemnification hereunder.
(v) "Indemnitee" or "Indemnitees" shall mean one or more, as
the case may be, of the Restor Indemnitees and the Comtech
Indemnitees, without distinction.
(vi) "Indemnitor" or "Indemnitors" shall mean one or more, as
the case may be, of the Restor Indemnitors and the Comtech
Indemnitors, without distinction.
(vii) "Indemnitors Representative" shall mean Restor or Mr.
Joe, without distinction, as the case may be.
(viii) "Losses" shall mean any and all demands, claims,
actions or causes of action, assessments, losses, damages (including
special and consequential damages), liabilities, costs and expenses,
including, without limitation, interest, penalties, cost of
investigation and defense, and reasonable attorneys' and other
professional fees and expenses in excess in any one instance of
$5,000.
(ix) "Restor Indemnitees" shall mean Restor, the Surviving
Corporation, and their respective agents, representatives, employees,
officers, directors, shareholders, controlling persons and affiliates
(other than the Shareholders).
(x) "Restor Indemnitors" shall mean Restor and the Surviving
Corporation, jointly and severally.
(xi) "Restor Indemnitors Representative" shall mean Restor.
(xii) "Third Party Claim" shall mean any claim, suit or
proceeding (including, without limitation, a binding arbitration or an
audit by any taxing authority) that is instituted against an Indemnitee
by a person or entity other than an Indemnitor and which, if prosecuted
successfully, would result in a Loss for which such Indemnitee is
entitled to indemnification hereunder.
Section 9.2. Agreement of Comtech Indemnitors to Indemnify. Subject to the
terms and conditions of this Article 9, the Comtech Indemnitors, who shall
be jointly liable proportionately on the basis on which the number of their
respective shares of Comtech owned by them of record on March 31, 1996, bears to
<PAGE>
the total number of Comtech stock held by the Signing Shareholders, and not
jointly and severally, such that each individual Indemnitor's liability under
this Section 9.2 shall never exceed such proportionate amount of the respective
Indemnitee's Losses for which indemnity is sought hereunder, to indemnify,
defend and hold harmless Restor Indemnitees, and each of them, from, against,
for and in respect of any and all Losses asserted against, or paid, suffered or
incurred by, a Restor Indemnitee and resulting from, based upon or arising out
of:
(i) the inaccuracy, untruth or incompleteness of any
representation or warranty of Comtech contained in or made pursuant to this
Agreement or the Comtech Disclosure Letter, in each case as supplemented or
amended by the Comtech Disclosure Letter, as amended from time to time prior to
the Effective Time, or in or made pursuant to any Exhibit furnished by Comtech
or the Comtech Indemnitors in connection herewith regardless of whether the same
was deliberate, reckless, negligent, innocent or unintentional; or
(ii)a breach of or failure to perform any covenant,undertaking
,condition or agreement of Comtech or the Comtech Indemnitors made in this
Agreement regardless of whether the same was deliberate, reckless, negligent,
innocent or unintentional; provided, however, that no such Comtech Indemnitor
shall be liable for any indemnification of any Restor Indemnitee under this
Article 9 for a breach or violation of, or default under, Section 5.7 or Section
5.8 of this Agreement by another Signing Shareholder.
Section 9.3. Agreement of Restor Indemnitors to Indemnify. Subject to the
terms and conditions of this Article 9, the Restor Indemnitors, jointly and
severally, agree to indemnify, defend and hold harmless the Comtech Indemnitees,
and each of them, from, against, for and in respect of any and all Losses
asserted against, or paid, suffered or incurred by, each Comtech Indemnitee and
resulting from, based upon, arising out of or in connection with:
(i) the inaccuracy, untruth, or incompleteness of any
representation or warranty of any Restor Indemnitor, contained in or
made pursuant to this Agreement or the Restor Disclosure Letter, in
each case as supplemented or amended by the Restor Disclosure Letter,
as amended from time to time prior to the Effective Time, or in or
made pursuant to any Exhibit furnished by the Restor Indemnitors,
or either of them,in connection herewith regardless of whether the same
was deliberate, reckless, negligent, innocent or unintentional; or
(ii) a breach of or failure to perform any covenant,
undertaking, condition or agreement of the Restor Indemnitors, or
either of them, made in this Agreement or in any Exhibit to this
Agreement regardless of whether the same was deliberate, reckless,
negligent, innocent or unintentional.
<PAGE>
Section 9.4.Procedures for Indemnification. The obligations and liabilities
of the parties with respect to an Indemnification Claim shall be subject
to the following terms and conditions:
(i) An Indemnification Claim shall be made by a Restor
Indemnitee by delivery of a written notice to the Comtech Indemnitors
Representative requesting indemnification from the Comtech Indemnitors
and specifying the basis on which indemnification is sought and the
amount of asserted Losses and, in the case of a Third Party Claim,
containing (by attachment or otherwise) such other information as such
Indemnitee shall have concerning such Third Party Claim.
(ii) An Indemnification Claim shall be made by a Comtech
Indemnitee by delivery of a written notice to the Restor Indemnitors
Representative requesting indemnification and specifying the basis on
which indemnification is sought and the amount of asserted Losses and,
in the case of a Third Party Claim, containing (by attachment or
otherwise) such other information as such Indemnitee shall have
concerning such Third Party Claim.
(iii) If the Indemnification Claim involves a Third Party
Claim, the procedures set forth in Section 9.5 hereof shall also be
observed by the Indemnitee and the Indemnitors Representative.
(iii) If the Indemnification Claim involves a matter other
than a Third Party Claim, the Indemnitors Representative shall have
thirty (30) days to object to such Indemnification Claim by delivery
of a written notice of such objection to such Indemnitee specifying in
reasonable detail the basis for such objection. Failure to timely so
object shall constitute a final and binding acceptance of the
Indemnification Claim by the Indemnitors Representative on behalf of
all the subject Indemnitors, and the Indemnification Claim shall be
paid in accordance with subsection (iv) hereof.
(iv)Upon determination of the amount of an Indemnification
Claim, whether by agreement between the Indemnitors Representative and
the Indemnitee or otherwise, the Indemnitors shall pay the amount of
such Indemnification Claim within ten (10) days of the date such
amount is determined.
Section 9.5. Third Party Claims. The obligations and liabilities of the
parties hereunder with respect to a Third Party Claim shall be subject to the
following terms and conditions:
<PAGE>
(i) The Indemnitee shall give the applicable Indemnitors
Representative written notice of a Third Party Claim promptly after
receipt by the Indemnitee of notice thereof, and the Indemnitors
Representative, on behalf of the Indemnitors,may undertake the defense,
compromise and settlement thereof by representatives of its own
choosing reasonably acceptable to the Indemnitee. The failure of the
Indemnitee to notify the Indemnitors Representative of such claim shall
not relieve the Indemnitors of any liability that they may have with
respect to such claim except to the extent the Indemnitors
Representative demonstrates that the defense of such claim is
prejudiced by such failure. The assumption of the defense, compromise
and settlement of any such Third Party Claim by the Indemnitors
Representative shall be an acknowledgment of the obligation of the
Indemnitors to indemnify the Indemnitee with respect to such claim
hereunder. If the Indemnitee desires to participate in,but not control,
any such defense, compromise and settlement, it may do so at its sole
cost and expense. If, however, the Indemnitors Representative fails
or refuses to undertake the defense of such Third Party Claim
within ten (10) days after written notice of such claim has been given
to the Indemnitors Representative by the Indemnitee, the Indemnitee
shall have the right to undertake the defense,compromise and settlement
of such claim with counsel of its own choosing. In the circumstances
described in the immediately preceding sentence, the Indemnitee shall,
promptly upon its assumption of the defense of such claim, make an
Indemnification Claim as specified in Section 9.3 which shall be
deemed an Indemnification Claim that is not a Third Party Claim for the
purposes of the procedures set forth herein.
(ii) If, in the reasonable opinion of the Indemnitee,any Third
Party Claim or the litigation or resolution thereof involves an issue
or matter which could have a material adverse effect on the business,
operations, assets, properties or prospects of the Indemnitee
(including, without limitation, the administration of the tax returns
and responsibilities under the tax laws of the Indemnitee), the
Indemnitee shall have the right to control the defense, compromise and
settlement of such Third Party Claim undertaken by the Indemnitors
Representative, and the reasonable costs and expenses of the
Indemnitee in connection therewith shall be included as part of the
indemnification obligations of the Indemnitors hereunder. If the
Indemnitee shall elect to exercise such right, the Indemnitors
Representative shall have the right to participate in, but not
control, the defense, compromise and settlement of such Third Party
Claim at its sole cost and expense.
(iii) No settlement of a Third Party Claim involving the
asserted liability of the Indemnitors under this Article 9 shall be
made without the prior written consent by or on behalf of the
Indemnitors Representative, which consent shall not be unreasonably
withheld or delayed. Consent shall be presumed in the case of
settlements of $10,000 or less where the Indemnitors Representative
has not responded within five (5) business days of notice of a
<PAGE>
proposed settlement. If the Indemnitors Representative assumes the
defense of such a Third Party Claim, (A) no compromise or settlement
thereof may be effected by the Indemnitors Representative without the
Indemnitee's consent unless (i) there is no finding or admission of
any violation of law or any violation of the rights of any person and
no effect on any other claim that may be made against the Indemnitee,
(ii) the sole relief provided is monetary damages that are paid in
full by the Indemnitors, and (iii) the compromise or settlement
includes, as an unconditional term thereof, the giving by the claimant
or the plaintiff to the Indemnitee of a release, in form and substance
satisfactory to the Indemnitee, from all liability in respect of such
Third Party Claim, and (B) the Indemnitee shall have no liability with
respect to any compromise or settlement thereof effected without its
consent.
(iv) In connection with the defense, compromise or settlement
of any Third Party Claim, the parties to this Agreement shall execute
such powers of attorney as may reasonably be necessary or appropriate
to permit participation of counsel selected by any party hereto and,
as may reasonably be related to any such claim or action, shall
provide access to the counsel, accountants and other representatives
of each party during normal business hours to all properties,
personnel, books, tax records, contracts, commitments and all other
business records of such other party and will furnish to such other
party copies of all such documents as may reasonably be requested
(certified, if requested).
Section 9.6. Rights and Remedies Exclusive. Except as expressly provided in
Sections 5.3, 5.7 and 5.8 hereof and except to the extent the same shall have
been the result of common-law fraud, intentional omission or deliberate
concealment by or on behalf of an Indemnitor, the rights of the Indemnitees
under this Article 9 shall be the exclusive rights and remedies of the
Indemnitees for any breach of the representations and warranties on the part of
any Indemnitor; provided, however, that this Section 9.5 does not limit the
rights of any party under any of the Exhibits hereto.
Section 9.7. Survival. Subject to Section 9.8 hereof, all representations,
warranties and agreements contained in this Agreement or in any certificate,
schedule or exhibit delivered pursuant to this Agreement, in each case as
supplemented or amended by the respective Indemnitors' Disclosure Letter, as
amended from time to time prior to the Effective Time, shall survive the Closing
notwithstanding any investigation conducted with respect thereto or any
knowledge acquired as to the accuracy or inaccuracy of any such representation
or warranty.
<PAGE>
Section 9.8. Time Limitations. If the Closing occurs, the Indemnitor shall
have no liability under Section 9.2, unless on or before the second anniversary
of the Closing Date the Indemnitor is given notice asserting an Indemnification
Claim with respect thereto; provided, however, that an Indemnification Claim
based upon a breach of the representations and warranties of Comtech contained
in (i) Sections 3.4(b) and 3.16 may be made at any time except as limited by
law, (ii) Section 3.11 may be made at any time prior to the expiration of the
applicable statutes of limitations relative to the liability relating thereto;
and (iii) Section 3.17 may be made at any time prior to the fifth anniversary of
the Closing Date and provided, further, that an Indemnification Claim based upon
a breach of the representations and warranties of Restor and Surviving
Corporation contained in Section 4.9 may be made at any time prior to the
expiration of the applicable statutes of limitations relative to the liability
relating thereto.
Section 9.9. Limitations as to Amount Payable by Comtech Indemnitors. The
Comtech Indemnitors shall have no liability with respect to the matters
described in Section 9.2 until the total of all Losses with respect thereto
exceeds $25,000, in which event the Comtech Indemnitors shall be obligated to
indemnify the Indemnitees as provided in this Article 9 for all such Losses.
Except as provided below in this Section 9.9, the maximum amount of any claim
against the Comtech Indemnitors shall be the aggregate amount of cash,
Contingent Consideration and Restor Shares which shall have been paid and
delivered to the Shareholders (at the Closing by or through Restor as Contingent
Consideration and out of the Escrow) through the date of the last of any such
Loss plus the aggregate amount of cash, Contingent Consideration and Restor
Shares which shall thereafter become payable of deliverable to the Shareholders
under the Contingent Consideration provisions of Section 2.1(c) hereof and the
Escrow Agreement. Satisfaction of any such claim by the Restor Indemnitees shall
be made first by a redemption of the Restor Shares which shall have been issued
to the Restor Indemnitors (or which have become issuable under the terms of the
Escrow Agreement) where the value of such shares is determined by reference to
the arithmetic average of the daily closing price per share, rounded to four
decimal places, of the Restor Shares as reported on the NASDAQ SmallCap Market,
if such shares are included therein, or on the NASDAQ National Market System, if
such shares are included therein, for each of the twenty (20) consecutive
trading days ending (and including) the trading day that occurs two trading days
prior to (and not including) date of such payment; and to the extent that any
such claim is in excess of the value of such Shares, it shall be satisfied by
cash payments in an amount not to exceed the amount of cash previously paid by
Restor to the Shareholders hereunder. The limitations set forth above in this
Section 9.9 with respect to the aggregate amount of claims made against the
Comtech Indemnitors (but not the method of satisfying such claims pursuant to
the preceding sentence hereof) shall not apply to any intentional
misrepresentation or breach of warranty by or on behalf of Comtech or any
<PAGE>
intentional failure to perform or comply with any covenant or agreement of
Comtech, and Comtech shall be liable for all Losses with respect thereto;
however, in no event shall the aggregate liability of the Comtech Indemnitors
under any portion or sentence of this Article 9 exceed the aggregate of
$4,800,000 in value of Restor Shares and cash.
Section 9.10. Limitations as to Amount Payable by Restor and Surviving
Corporation. The Restor Indemnitors shall have no liability with respect to the
matters described in Section 9.2 until the total of all Losses with respect
thereto exceeds $25,000, in which event the Restor Indemnitors shall be
obligated to indemnify the Indemnitees as provided in this Article 9 for all
such Losses up to an aggregate of $2,000,000.
Section 9.11. Subrogation. Upon payment in full of any Indemnification
Claim, whether such payment is effected by set-off or otherwise, or the payment
of any judgment or settlement with respect to a Third Party Claim, the
Indemnitors shall be subrogated to the extent of such payment to the rights of
the Indemnitee against any person or entity with respect to the subject matter
of such Indemnification Claim or Third Party Claim.
Section 9.12. Appointment of Comtech Indemnitors Representative. Each
Comtech Indemnitor constitutes and appoints the Comtech Indemnitors
Representative as his true and lawful attorney-in-fact to act for and on behalf
of such Comtech Indemnitor in all matters relating to or arising out of this
Article 9 and the liability or asserted liability of such Comtech Indemnitor
hereunder, including specifically, but without limitation, accepting and
agreeing to the liability of such Comtech Indemnitor with respect to any
Indemnification Claim, objecting to any Indemnification Claim, disputing the
liability of such Comtech Indemnitor, or the amount of such liability, with
respect to any Indemnification Claim and prosecuting and resolving such dispute
as herein provided, accepting the defense, compromise and settlement of any
Third Party Claim on behalf of such Comtech Indemnitor or refusing to accept the
same, settling and compromising the liability of such Comtech Indemnitor
hereunder, instituting and prosecuting such actions (including arbitration
proceedings) as the Comtech Indemnitors Representative shall deem appropriate in
connection with any of the foregoing, retaining counsel, accountants, appraisers
and other advisers in connection with any of the foregoing, all for the account
of the Comtech Indemnitor, such Comtech Indemnitor agreeing to be fully bound by
the acts, decisions and agreements of the Comtech Indemnitor Representative
taken and done pursuant to the authority herein granted. Each Comtech Indemnitor
hereby agrees to indemnify and to save and hold harmless the Comtech Indemnitors
Representative from any liability incurred by the Comtech Indemnitors
<PAGE>
Representative based upon or arising out of any act, whether of omission or
commission, of the Comtech Indemnitors Representative pursuant to the authority
herein granted, other than acts, whether of omission or commission, of the
Comtech Indemnitors Representative that constitute gross negligence or willful
misconduct in the exercise by the Comtech Indemnitors Representative of the
authority herein granted. The death or incapacity of any Comtech Indemnitor
shall not terminate the authority and agency of the Comtech Indemnitors
Representative. In the event of the resignation of a Comtech Indemnitors
Representative, the resigning Comtech Indemnitors Representative shall appoint a
successor either from among the Comtech Indemnitors or who shall otherwise be
acceptable to Restor and who shall agree in writing to accept such appointment,
and the resigning Comtech Indemnitors Representative's resignation shall not be
effective until such a successor shall exist. If a Comtech Indemnitors
Representative should die or become incapacitated, his successor shall be
appointed within thirty (30) days of his death or incapacity by a majority of
the Comtech Indemnitors, and such successor either shall be a Shareholder or
shall otherwise be acceptable to Restor. The choice of a successor Comtech
Indemnitors Representative appointed in any manner permitted above shall be
final and binding upon all of the Comtech Indemnitors. The decisions and actions
of any successor Comtech Indemnitors Representative shall be, for all purposes,
those of a Comtech Indemnitors Representative as if originally named herein.
Section 9.13. Payment. In the event that any Indemnitor is required to make
any payment under this Article 9, such party shall promptly pay the Indemnitee
the amount so determined. If there should be a dispute as to the amount or
manner of determination of any indemnity obligation owed under this Article 9,
the Indemnitor shall nevertheless pay when due such portion, if any, of the
obligation as shall not be subject to dispute. The difference, if any, between
the amount of the obligation ultimately determined as properly payable under
this Article 9 and the portion, if any, theretofore paid shall bear interest as
provided below. If all or part of any indemnification obligation under this
Agreement is not paid when due, then the Indemnitor shall pay the Indemnitee
interest on the unpaid amount of the obligation for each day from the date the
amount became due until payment in full, payable on demand, at the fluctuating
rate per annum which at all times shall be the lowest rate of interest generally
charged from time to time by Morgan Guaranty Trust Company of New York and
publicly announced by such bank as its so-called "prime rate."
ARTICLE 10.
MISCELLANEOUS PROVISIONS
Section 10.1. Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by the party making the same, shall specify the
Section hereunder pursuant to which it is given or being made, and shall be
<PAGE>
deemed given or made on the date delivered if delivered in person or on the
third (3rd) business day after it is mailed if mailed by registered or certified
mail (return receipt requested) (with postage and other fees prepaid) as
follows:
To Restor, Merger Sub or the Surviving Corporation:
Restor Industries, Inc.
4501 Vineland Road
Orlando, Florida 32811
Attn: Mr. Mark A. Gergel
with a copy to:
Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Steven E. Fox, Esq.
To Comtech or the Signing Shareholders:
Comtech Sunrise, Inc.
4569 Las Positas Road, Suite D
Livermore, California 94550
Attn: Mr. Michael R. Joe
with a copy to:
Bianchi, Engel, Keegin & Talkington
1000 Fourth Street, Suite 600
San Rafael, California 94901-3182
Attn: Stafford W. Keegin, Esq.
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing.
Section 10.2. Disclosure Letters and Exhibits. The Comtech Disclosure
Letter and the Restor Disclosure Letter and all Exhibits hereto are hereby
incorporated into this Agreement and are hereby made a part hereof as if set out
in full in this Agreement.
Section 10.3. Assignment; Successors in Interest. No assignment or transfer
by Restor, Merger Sub or Comtech of their respective rights and obligations
hereunder prior to the Closing shall be made except with the prior written
consent of the other parties hereto. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their permitted successors
and assigns, and any reference to a party hereto shall also be a reference to a
permitted successor or assign.
<PAGE>
Section 10.4. Number; Gender. Whenever the context so requires, the
singular number shall include the plural and the plural shall include the
singular, and the gender of any pronoun shall include the other genders.
Section 10.5. Captions. The titles, captions and table of contents
contained in this Agreement are inserted herein only as a matter of convenience
and for reference and in no way define, limit, extend or describe the scope of
this Agreement or the intent of any provision hereof. Unless otherwise specified
to the contrary, all references to Articles and Sections are references to
Articles and Sections of this Agreement and all references to Exhibits are
references to Exhibits to this Agreement and the Comtech Disclosure Letter and
the Restor Disclosure Letter.
Section 10.6. Controlling Law; Jurisdiction; Integration; Amendment. This
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of Delaware without reference to Delaware's choice of
law rules and each of the parties hereto hereby consents to personal
jurisdiction in any federal or state court in the State of Delaware. This
Agreement and the documents executed pursuant hereto supersede all negotiations,
agreements and understandings among the parties with respect to the subject
matter hereof and constitutes the entire agreement among the parties hereto,
this Agreement may not be amended, modified or supplemented except by written
agreement of the parties hereto.
Section 10.7. Knowledge. As used in this Agreement, (i) the terms "the best
knowledge of Comtech," "known to Comtech" or words of similar import used herein
with respect to Comtech shall mean the actual knowledge of any of the Signing
Shareholders, together with the knowledge a reasonable business person would
have obtained after making reasonable inquiry and after exercising reasonable
diligence with respect to the matters at hand; and (ii) the terms "the best
knowledge of Restor," "known to Restor" or words of similar import used herein
with respect to Restor shall mean the actual knowledge of any senior executive
officer of Restor, together with the knowledge a reasonable business person
would have obtained after making reasonable inquiry and after exercising
reasonable diligence with respect to the matters at hand.
Section 10.8. Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
<PAGE>
Section 10.9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement or the terms hereof to produce or
account for more than one of such counterparts.
Section 10.10. Enforcement of Certain Rights. Nothing expressed or implied
in this Agreement is intended, or shall be construed, to confer upon or give any
person, firm or corporation other than the parties hereto, and their successors
or assigns, any rights, remedies, obligations or liabilities under or by reason
of this Agreement, or result in such person, firm or corporation being deemed a
third party beneficiary of this Agreement.
Section 10.11. Waiver. At any time prior to the Effective Time, the parties
hereto, by or pursuant to action taken by their respective Boards of Directors
in the case of Restor, Merger Sub and Comtech, may, to the extent legally
permitted: (a) extend the time for the performance of any of the obligations or
other acts of any other party; (b) waive any inaccuracies in the representations
or warranties of any other party contained in this Agreement or in any document
or certificate delivered pursuant hereto; (c) waive compliance or performance by
any other party with any of the covenants, agreements or obligations of such
party contained herein; and (d) waive the satisfaction of any condition that is
precedent to the performance by the party so waiving of any of its obligations
hereunder. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. A waiver by one party of the performance of any covenant,
agreement, obligation, condition, representation or warranty shall not be
construed as a waiver of any other covenant, agreement, obligation, condition,
representation or warranty. A waiver by any party of the performance of any act
shall not constitute a waiver of the performance of any other act or an
identical act required to be performed at a later time.
Section 10.12. Fees and Expenses. Each party hereto shall pay its own fees,
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby, including, but not limited to, the fees, costs
and expenses of its financial advisors, accountants and counsel; provided,
however, that the Shareholders shall pay all of such fees, costs and expenses
incurred by Comtech in excess of Twenty Thousand Dollars ($20,000), none of
which shall be paid by Comtech or out of any of its assets.
<PAGE>
Section 10.13. Attorneys' Fees. If any party to this Agreement shall bring
any action, suit, counterclaim, appeal, arbitration, or mediation for any relief
against the other, declaratory or otherwise, to enforce the terms hereof or to
declare rights hereunder (collectively, an "Action"), the losing party shall pay
to the prevailing party a reasonable sum for attorneys' fees and costs (at the
prevailing party's attorneys' then-prevailing rates as increased from time to
time by the giving of advance written notice by such counsel to such party)
incurred in bringing and prosecuting such Action and/or enforcing any judgment,
order, ruling, or award (collectively, a "Decision") granted therein, all of
which shall be deemed to have accrued on the commencement of such Action and
shall be paid whether or not such Action is prosecuted to a Decision. Any
Decision entered in such Action shall contain a specific provision providing for
the recovery of attorneys' fees and costs incurred in enforcing such Decision.
The court or arbitrator may fix the amount of reasonable attorneys' fees and
costs on the request of either party. For the purposes of this paragraph,
attorneys' fees shall include, without limitation, fees incurred in the
following: (1) post-judgment motions and collection actions; (2) contempt
proceedings; (3) garnishment, levy, and debtor and third party examinations; (4)
discovery; and (5) bankruptcy litigation. "Prevailing party" within the meaning
of this paragraph includes, without limitation, a party who agrees to dismiss an
Action on the other party's payment of the sums allegedly due or performance of
the covenants allegedly breached, or who obtains substantially the relief sought
by it.
IN WITNESS WHEREOF, the parties hereto have duly executed and sealed this
Agreement or have caused this Agreement to be duly executed under seal on its
behalf by an officer or representative thereto duly authorized, all as of the
date first above written.
_____________________________(SEAL)
MICHAEL R. JOE
_____________________________(SEAL)
MICHAEL G. RAMLOGAN
_____________________________(SEAL)
DANIEL P. LUBARSKY
<PAGE>
COMTECH SUNRISE, INC.
By: ______________________________
Its:______________________________
Attest:___________________________
Its:______________________________
[CORPORATE SEAL]
RESTOR INDUSTRIES, INC.
By:_______________________________
Its:______________________________
Attest:___________________________
Its:______________________________
[CORPORATE SEAL]
RESTOR-COMTECH, INC.
By:_______________________________
Its:______________________________
Attest:___________________________
Its:______________________________
[CORPORATE SEAL]
<PAGE>
EXHIBIT NO. 2.1(b)
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into as of
the 18th day of June, 1996, by and among RESTOR INDUSTRIES, INC. a Delaware
corporation ("Restor"), RESTOR-COMTECH, INC., a Delaware corporation (the "the
Surviving Corporation"), CAUTHEN & FELDMAN, P.A., a Florida professional
association (the "Escrow Agent"), and each of the shareholders of Comtech
Sunrise, Inc. listed on Schedule 1 hereto (each such person a "Shareholder" and,
collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, the Shareholders are all of the shareholders of Comtech
Sunrise, Inc., a California corporation ("Comtech");
WHEREAS, certain of the parties hereto, among others, have entered into
an Agreement and Plan of Merger dated as of April 22, 1996, a copy of which is
attached hereto as Exhibit A and incorporated herein by reference (the "Merger
Agreement"), pursuant to which, among other things, Comtech will be merged with
and into the Surviving Corporation, a wholly-owned subsidiary of Restor, with
the separate corporate existence of Comtech then terminating (the "Merger"); and
WHEREAS, Section 2.1(a) of the Merger Agreement requires Restor to
deliver 211,765 shares (the "Escrow Shares") of its common stock, $.01 par value
per share, to the Escrow Agent, to hold and distribute such shares pursuant to
the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter set forth, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Escrow Deposit. Within five (5) business days of the
execution hereof, Restor shall cause to be delivered to the Escrow Agent, to be
held and distributed as hereinafter provided, a stock certificate issued in the
names of the Shareholders representing the Escrow Shares, and each of the
Shareholders shall deliver to the Escrow Agent a stock power duly endorsed in
blank with signature guarantee with respect to the Escrow Shares.
2. Property Distributed in Respect of Escrow Shares. During
the term hereof, the Escrow Agent shall receive all of the money, securities,
rights or property distributed in respect of the Escrow Shares, including any
such property distributed as dividends, such property to be held and
administered as herein provided (the "Share Proceeds").
3. Voting and Transfer of Escrow Shares. For so long as the
Escrow Shares are held by the Escrow Agent, the Shareholders shall be entitled
to exercise any and all voting or consensual rights and powers relating to or
pertaining to the Escrow Shares so held by the Escrow Agent. No Shareholder
shall transfer the Escrow Shares, or any interest therein, during the term of
this Agreement, except under the laws of descent and distribution.
4. Fees of Escrow Agent. The Escrow Agent shall be entitled
to a fee (the "Escrow Fee") based upon its normal hourly billing rate as
compensation for its services hereunder. The Escrow Fee shall be payable by
Restor upon demand therefor from the Escrow Agent.
5. Distribution of Escrow Shares.
(a) Upon receipt of the certificates provided in Section 7 below, the
Escrow Agent shall distribute the Escrow Shares held by it under this Agreement
in the aggregate amounts (each a "Release Amount") (together with the pro rata
portion of the Share Proceeds, if any, allocable thereto) based upon the Pre-Tax
Net Income (as defined in the Merger Agreement) of the Surviving Corporation on
the release dates set forth below (each a "Release Date") for the performance
period set forth below (each a "Performance Period") which corresponds with such
Release Date.
Performance Period Release Date
- ------------------------------------------------------- ------------
January 1, 1996 to and including December 31, 1996 (the February 15, 1997
"First Performance Period")
January 1, 1997 to and including December 31, 1997 (the February 15, 1998
"Second Performance Period")
January 1, 1998 to and including December 31, 1998 (the February 15, 1999
"Third Performance Period")
The aggregate number of Escrow Shares to be released to the
Shareholders on the Release Date which corresponds to the First Performance
Period will be as set forth in Release Table No. 1 below.
<PAGE>
Release Table No. 1
Pre-Tax Net Income Release Amount
(Number of Shares)
Less than $500,000 None
$500,000 to and including $562,499 11,765
$562,500 to and including $624,999 23,529
$625,000 to and including $687,499 35,294
$687,500 to and including $749,999 47,058
$750,000 and more 58,823
The aggregate number of Escrow Shares to be released to the
Shareholders on the Release Date which corresponds to the Second Performance
Period will be as set forth in Release Table No. 2 below.
Release Table No. 2
Pre-Tax Net Income Release Amount
(Number of Shares)
Less than $600,000 None
$600,000 to and including $749,999 15,294
$750,000 to and including $899,999 30,588
$900,000 to and including $1,099,999 45,883
$1,100,000 to and including $1,249,999 61,177
$1,250,000 and more 76,471
The aggregate number of Escrow Shares to be released to the
Shareholders on the Release Date which corresponds to the Third Performance
Period will be as set forth in Release Table No. 3 below.
Release Table No. 3
Pre-Tax Net Income Release Amount
(Number of Shares)
Less than $600,000 None
$600,000 to and including $799,999 15,294
$800,000 to and including $999,999 30,588
$1,000,000 to and including $1,249,999 45,883
$1,250,000 to and including $1,499,999 61,177
$1,500,000 and more 76,471
(b) Notwithstanding the foregoing, if (1) the Pre-Tax Net Income of the
Surviving Corporation is (a) greater than $300,000, but less than $750,000, with
respect to the First Performance Period and (b) greater than $1,250,000 with
respect to the Second Performance Period, then the number of Escrow Shares to be
released to the Shareholders on the Release Date for the Second Performance
Period, in lieu of the Release Amount otherwise releasable pursuant hereto,
shall be equal to the Alternate Release Amount set forth in Alternate Release
Table No. 1 below less the Release Amount released to the Shareholders with
respect to the First Performance Period; or (2) the Pre-Tax Net Income of the
Surviving Corporation is (a) greater than $750,000 with respect to the First
Performance Period and (b) greater than $500,000 with respect to the Second
Performance Period, then the number of Escrow Shares to be released to the
Shareholders on the Release Date for the Second Performance Period, in lieu of
the Release Amount otherwise releasable pursuant hereto, shall be equal to the
Alternate Release Amount set forth in Alternate Release Table No. 2 below less
the Release Amount released to the Shareholders with respect to the First
Performance Period. In addition, notwithstanding the foregoing, if (1) the
Pre-Tax Net Income of the Surviving Corporation is (a) greater than $500,000,
but less than $1,250,000, with respect to the Second Performance Period and (b)
greater than $1,500,000 with respect to the Third Performance Period, then the
number of Escrow Shares to be released to the Shareholders on the Release Date
for the Third Performance Period, in lieu of the Release Amount otherwise
payable pursuant hereto, shall be equal to the Alternate Release Amount set
forth in Alternate Release Table No. 3 below less the Release Amount released to
the Shareholders with respect to the Second Performance Period; or (2) the
Pre-Tax Net Income of the Surviving Corporation is (a) greater than $1,250,000
with respect to the Second Performance Period and (b) greater than $500,000 with
respect to the Third Performance Period, then the number of Escrow Shares to be
released to the Shareholders on the Release Date for the Third Performance
Period, in lieu of the Release Amount otherwise releasable pursuant hereto,
shall be equal to the Release Amount set forth in Alternate Payment and Release
Table No. 4 below less the Release Amount released to the Shareholders with
respect to the Second Performance Period.
<PAGE>
Alternate Release Table No. 1
Cumulative Pre-Tax Net Income for First Alternate
and Second Performance Periods Release Amount
(Number of Shares)
Less than $1,850,000 None
$1,850,000 to and including $1,924,999 88,236
$1,925,000 to and including $1,999,999 100,000
$2,000,000 to and including $2,074,999 111,765
$2,075,000 to and including $2,149,999 123,529
$2,150,000 and more 135,294
Alternate Release Table No. 2
Cumulative Pre-Tax Net Income for First Alternate
and Second Performance Periods Release Amount
(Number of Shares)
Less than $1,350,000 None
$1,350,000 to and including $1,499,999 74,117
$1,500,000 to and including $1,649,999 89,411
$1,650,000 to and including $1,849,999 104,706
$1,850,000 to and including $1,999,999 120,000
$2,000,000 and more 135,294
Alternate Release Table No. 3
Cumulative Pre-Tax Net Income for Alternate
Second and Third Performance Periods Release Amount
(Number of Shares)
Less than $2,220,000 None
$2,220,000 to and including $2,399,999 91,765
$2,400,000 to and including $2,579,999 107,059
$2,580,000 to and including $2,819,999 122,354
$2,820,000 to and including $2,999,999 137,648
$3,000,000 and more 152,942
Alternate Release Table No. 4
Cumulative Pre-Tax Net Income for Alternate
Second and Third Performance Periods Release Amount
(Number of Shares)
Less than $1,850,000 None
$1,850,000 to and including $2,049,999 91,765
$2,050,000 to and including $2,249,999 107,059
$2,250,000 to and including $2,499,999 122,354
$2,500,000 to and including $2,749,999 137,648
$2,750,000 and more 152,942
6. Appointment of Shareholder Representative. Each Shareholder
constitutes and appoints Michael R. Joe (the "Shareholder Representative") as
his or her true and lawful attorney-in-fact to act for and on behalf of such
Shareholder in all matters relating to or arising out of this Agreement, such
Shareholder agreeing to be fully bound by the acts, decisions and agreements of
the Shareholder Representative taken and done pursuant to the authority herein
granted. Each Shareholder hereby agrees to indemnify and to save and hold
harmless the Shareholder Representative from any liability incurred by the
Shareholder Representative based upon or arising out of any act, whether of
omission or commission, of the Shareholder Representative pursuant to the
authority herein granted, other than acts, whether of omission or commission, of
the Shareholder Representative that constitute gross negligence or willful
misconduct in the exercise by the Shareholder Representative of the authority
herein granted. The death or incapacity of any Shareholder shall not terminate
the authority and agency of the Shareholder Representative. In the event of the
resignation of the Shareholder Representative, the resigning Shareholder
Representative shall appoint a successor either from among the Shareholders or
who shall otherwise be acceptable to Restor, the Surviving Corporation and the
Escrow Agent, and who shall agree in writing to accept such appointment, and the
resigning Shareholder Representative's resignation shall not be effective until
such a successor shall exist. If the Shareholder Representative should die or
become incapacitated, his successor shall be appointed within thirty (30) days
of his death or incapacity by a majority of the Shareholders, and such successor
either shall be a Shareholder or shall otherwise be acceptable to Restor, the
Surviving Corporation and the Escrow Agent. The choice of a successor
Shareholder Representative appointed in any manner permitted above shall be
final and binding upon all of the Shareholders. The decisions and actions of any
successor Shareholder Representative shall be, for all purposes, those of the
Shareholder Representative as if originally named herein.
<PAGE>
7. Certificates of Instruction.
(a) Within forty (40) days of the end of each Performance Period, Restor
and the Shareholder Representative shall deliver to the Escrow Agent a
Certificate of Instruction setting forth the Pre-Tax Net Income of the Surviving
Corporation for each such Performance Period and, in the event that Pre-Tax Net
Income equals an amount for such Performance Period which permits the release of
Escrow Shares in accordance with Section 5 above, directing the Escrow Agent to
release to the Shareholders the number of Escrow Shares (together with the pro
rata portion of the Share Proceeds, if any) determined in accordance with
Section 5 above. In the event there is a disagreement or dispute with respect to
the determination of "Pre-Tax Net Income," Restor and the Shareholder
Representative may provide Escrow Agent with one or more supplemental
Certificates of Instruction with respect to any resolution of such disagreement
or dispute.
Upon receipt of the Certificate of Instruction, the Escrow Agent shall
cause promptly the certificate representing the Escrow Shares to be broken down
into seventeen (17) certificates, one of which will represent the Escrow Shares
to remain subject to the terms of this escrow and one of each of the other
sixteen (16) certificates will be issued to each Shareholder for that number of
the Escrow Shares to be released multiplied by the Proportionate Interest (as
set forth in Column C of Schedule 1 hereto) of each such Shareholder, and
thereafter on the Release Date the Escrow Agent shall deliver to the
Shareholders the certificates representing the Escrow Shares (together with the
pro rata portion of the Share Proceeds, if any) to be released to the
Shareholders as provided herein.
(b) If, on 5:00 p.m. Eastern Standard Time on February 28, 1999, or on such
later date which is ten (10) days following the date on which a final
determination shall have been made pursuant to sub-subsection 2.1(c)(1) of the
Merger Agreement with respect to Restor's Pre-Tax Net Income and Restor and the
Shareholder Representative shall have provided Escrow Agent with a Certificate
of Instruction in respect of such final determination, the Escrow Agent
continues to hold any of the Escrow Shares, then the Escrow Agent shall deliver
any such shares (together with any Share Proceeds in the Escrow Agent's
possession) to Restor, and this Agreement shall thereupon be terminated.
8. Duties of the Escrow Agent. The acceptance by the Escrow
Agent of its duties under this Agreement is subject to the following terms and
conditions, which the parties to this Agreement hereby agree shall fully govern
and control with respect to the Escrow Agent's rights, duties, liabilities and
immunities:
(a) The Escrow Agent shall be protected in acting upon
any written notice, request, waiver, consent, receipt
or other paper or document which the Escrow Agent
believes in good faith emanates from both Restor and
the Shareholder Representative of the parties hereto,
not only as to its due execution and the validity and
effectiveness of its provisions, but also as to the
truth and accuracy of any information contained
therein. The Escrow Agent is also relieved from the
necessity of satisfying itself as to the authority of
the persons executing this Agreement in a
representative capacity.
<PAGE>
(b) The Escrow Agent shall not be liable for any error of judgment, or for
any act done or step taken or omitted by it in good faith, or for any mistake of
fact or law, or for anything that it may do or refrain from doing in connection
herewith, except for its own gross negligence or willful misconduct.
(c) The Escrow Agent may consult with, and obtain advice from, independent
legal counsel selected by the Escrow Agent in the event of any question as to
any of the provisions hereof or its duties hereunder (the cost of obtaining such
advice being borne, jointly and severally by Restor and the Surviving
Corporation on the one hand and the Shareholders on the other hand), and it
shall incur no liability and shall be fully protected in acting in accordance
with the opinion and instructions of such counsel.
(d) The Escrow Agent shall have no duties except those set forth herein,
and the Escrow Agent shall not be subject to, or obliged to recognize, any other
agreement between, or direction or instruction of, any of the parties hereto
unless signed by Restor and the Shareholder Representative. The Escrow Agent
shall not be bound by any notice of a claim, demand or objection with respect to
the Escrow Shares or any waiver, modification, termination or rescission of this
Agreement, unless received by it in writing signed by Restor and the Shareholder
Representative, and, if its duties herein are materially increased, unless it
shall have given its consent thereto.
(e) The Escrow Agent's acceptance of the appointment as Escrow Agent
hereunder shall not prevent it from representing any party hereto in any dispute
over disbursement of, or conflicting claims to, the Escrow Shares, or otherwise.
If any dispute arises over disbursement of, or conflicting claims to, the Escrow
Shares, then the Escrow Agent may interplead such contested Escrow Shares into a
court of proper jurisdiction of its choosing, including, but not limited to, the
Circuit Court of Lake County, Florida, and thereupon the Escrow Agent shall be
fully and completely discharged of its duties as escrow agent with respect to
such contested Escrow Shares and Share Proceeds.
9. Indemnification and Expense Reimbursement of the Escrow
Agent. Restor, the Surviving Corporation and the Shareholders jointly and
severally agree to indemnify, defend and hold harmless the Escrow Agent from any
and all costs, expenses, damages or liability of any kind whatsoever (including
reasonable legal fees) arising by virtue of its services as escrow agent
hereunder, except for liabilities due to the Escrow Agent's gross negligence or
willful misconduct, and to reimburse the Escrow Agent for all costs and expenses
incurred by the Escrow Agent in connection with the performance of its duties
hereunder.
10. Notice. All notices and other communications hereunder
shall be in writing and shall be deemed given if (a) delivered by hand, (b)
mailed by registered or certified mail (return receipt requested) or (c)
telecommunicated and immediately confirmed both orally and in writing, to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and shall be deemed given on the date on
which so hand-delivered or so telecommunicated or on the third business day
following the date on which so mailed, if deposited in a regularly-maintained
receptacle for United States mail:
<PAGE>
11. If to Escrow Agent:
Cauthen & Feldman, P.A.
215 North Joanna Avenue
Tavares, Florida 32778-3200
Attn: William H. Cauthen, Esq.
Telecopier: 904-343-7759
Telephone: 904-343-2225
If to the Shareholders:
In c/o Mr. Michael R. Joe
Comtech Sunrise, Inc.
4569 Las Positas Road, Suite D
Livermore, California 94550
Telecopier: 510-443-1135
Telephone: 510-443-1133
With a copy to:
Bianchi, Engel, Keegin & Talkington
1000 Fourth Street
Suite 600
San Rafael, California 94901-3182
Attn: Stafford W. Keegin, Esq.
Telecopier: (415) 456-1921
Telephone: (415) 456-4000
If to Restor or the Surviving Corporation:
Name of Addressee
4501 Vineland Road
Orlando, Florida 32811
Attn: Mr. Mark A. Gergel
Telecopier: 407-841-0942
Telephone: 407-843-7031
With a copy to:
Rogers & Hardin
2700 Cain Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Steven E. Fox, Esq.
Telecopier: 404-525-2224
Telephone: 404-522-4700
11. Execution in Counterparts. This Agreement may be executed by facsimile,
and may be executed in several counterparts, each of which shall be an original,
and all of which shall constitute one and the same instrument.
12. Applicable Law. This Agreement shall be construed and governed
exclusively by the laws of the State of Delaware, without giving effect to its
principles of conflicts of laws.
13. Amendment. This Agreement may be amended or modified only in a writing
signed by all parties hereto.
<PAGE>
14. Attorneys' Fees. If any party to this Agreement shall
bring any action, suit, counterclaim, appeal, arbitration, or mediation for any
relief against the other, declaratory or otherwise, to enforce the terms hereof
or to declare rights hereunder (collectively, an "Action"), the losing party
shall pay to the prevailing party a reasonable sum for attorneys' fees and costs
(at the prevailing party's attorneys' then-prevailing rates as increased from
time to time by the giving of advance written notice by such counsel to such
party) incurred in bringing and prosecuting such Action and/or enforcing any
judgment, order, ruling, or award (collectively, a "Decision") granted therein,
all of which shall be deemed to have accrued on the commencement of such Action
and shall be paid whether or not such Action is prosecuted to a Decision. Any
Decision entered in such Action shall contain a specific provision providing for
the recovery of attorneys' fees and costs incurred in enforcing such Decision.
The court or arbitrator may fix the amount of reasonable attorneys' fees and
costs on the request of either party. For the purposes of this paragraph,
attorneys' fees shall include, without limitation, fees incurred in the
following: (1) post-judgment motions and collection actions; (2) contempt
proceedings; (3) garnishment, levy, and debtor and third party examinations; (4)
discovery; and (5) bankruptcy litigation. "Prevailing party" within the meaning
of this paragraph includes, without limitation, a party who agrees to dismiss an
Action on the other party's payment of the sums allegedly due or performance of
the covenants allegedly breached, or who obtains substantially the relief sought
by it.
IN WITNESS WHEREOF, the parties hereto have duly executed and sealed
this Agreement or have caused this Agreement to be duly executed under seal on
its behalf by an officer or representative thereto duly authorized, all as of
the date first above written.
CAUTHEN & FELDMAN, P.A.
By:______________________
Its:_____________________
RESTOR INDUSTRIES, INC.
By:______________________
Its:_____________________
RESTOR-COMTECH, INC.
By:______________________
Its:_____________________
(SEAL)
MICHAEL R. JOE, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
(SEAL)
_____________________, Individually
<PAGE>
SCHEDULE 1
Column A Column B Column C
Name and Address of Number of Shares Owned Proportionate Interest
Shareholder
<PAGE>
EXHIBIT NO. 5.13
IRREVOCABLE PROXY
This Irrevocable Proxy is given by the undersigned
_____________________ ("Shareholder"), in favor of Restor Industries, Inc., a
Delaware corporation ("Restor"), as of the 22nd day of April, 1996.
WHEREAS, Restor and Comtech Sunrise, Inc., a California corporation
("Comtech"), have entered into an Agreement and Plan of Merger of even date
herewith (the "Merger Agreement") (capitalized terms used but not defined herein
shall have the same meaning assigned to such terms in the Merger Agreement),
pursuant to which Restor proposes to acquire the entire equity interest in
Comtech by means of a merger (the "Merger") of Comtech with and into
Restor-Comtech, Inc., a wholly owned subsidiary of Restor;
WHEREAS, Shareholder owns, as of the date hereof, _______ shares of
Comtech Stock (the "Existing Shares" which, together with any shares of Comtech
Stock acquired after the date hereof and prior to the termination hereof, are
hereinafter collectively referred to as the "Shares"); and
WHEREAS, Restor has entered into the Merger Agreement in reliance on
Shareholder's agreement to support the Merger, including the granting of
Shareholder's Irrevocable Proxy hereunder.
NOW, THEREFORE, with respect to the Merger Agreement and the
transactions contemplated thereby and in accordance with the California
Corporations Code, Shareholder hereby irrevocably makes, constitutes and
appoints Restor to act as Shareholder's true and lawful proxy and
attorney-in-fact in the name and on behalf of Shareholder, with full power to
appoint a substitute or substitutes. Shareholder further directs Restor, and
Restor hereby agrees, to vote all of the Shares which are entitled to vote at
any meeting of the shareholders of Comtech (whether annual or special and
whether or not an adjourned meeting), or by written consent in the place and
stead of Shareholder, in favor of the Merger as set forth in the Merger
Agreement. By giving this proxy, Shareholder hereby revokes any other proxy
granted by Shareholder at any time with respect to the Shares, agrees not to
grant any other proxies with respect to the subject matter hereof, and waives
any right that the Shareholder may have to dissent from the Merger and obtain
payment of the fair value of the Shares under the California Corporations Code.
THE PROXY GRANTED HEREBY IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE. The
proxy granted hereby shall not be terminated by any act of shareholder or by
operation of law, by lack of appropriate power of authority, or by the
occurrence of any other event or events and shall be binding upon all
beneficiaries, heirs at law, legatees, distributees, successors, assigns and
legal representatives of Shareholder. Shareholder agrees to use all good faith
efforts to cause any record owner of the Shares of which Shareholder is the
beneficial owner to grant to Restor a proxy of the same effect as that contained
herein. Shareholder shall perform such further acts and execute such further
documents as may be required to vest in Restor the sole power to vote the Shares
during the term of the proxy granted herein. The proxy granted herein shall
expire on the earlier of (i) the date on which Restor and Shareholder mutually
consent in writing to terminate this Irrevocable Proxy, (ii) the date of the
Closing (as defined in the Merger Agreement), or (iii) the termination of the
Merger Agreement in accordance with the terms thereof.
IN WITNESS WHEREOF, Shareholder has executed and delivered this
Irrevocable Proxy as of the date set forth above.
--------------------------
(Name)
--------------------------
(Signature)
<PAGE>
EXHIBIT NO. 5.17
AFFILIATE AGREEMENT
Restor Industries, Inc.
4501 Vineland Road
Orlando, Florida 32811
Gentlemen:
The undersigned is a shareholder of Comtech Sunrise, Inc. ("Target"), a
corporation organized under the laws of the State of California, and will become
a shareholder of Restor Industries, Inc. ("Purchaser") pursuant to the
transactions described in the Agreement and Plan of Merger, dated as of April
22, 1996 (the "Agreement"), by and between Target, Purchaser and others. Under
the terms of the Agreement, Target will be merged into Restor-Comtech, Inc., a
wholly-owned subsidiary of Purchaser (the "Merger"), and the shares of the
common stock of Target ("Target Common Stock") will be converted into and
exchanged for shares of the $0.01 par value common stock of Purchaser
("Purchaser Common Stock"). This Affiliate Agreement represents an agreement
between the undersigned and Purchaser regarding certain rights and obligations
of the undersigned in connection with the shares of Purchaser to be received by
the undersigned as a result of the Merger.
In consideration of the Merger and the mutual covenants contained
herein, the undersigned and Purchaser hereby agree as follows:
1. Affiliate Status. The undersigned understands and agrees
that as to Target the undersigned is an "affiliate" under Rule 145(c) as defined
in Rule 405 of the Rules and Regulations of the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended ("1933 Act"),
and the undersigned anticipates that the undersigned will be such an "affiliate"
at the time of the Merger.
2. Covenants and Warranties of Undersigned.
The undersigned represents, warrants and agrees that:
(a) The Purchaser Common Stock received by the undersigned as
a result of the Merger will be taken for his or her own account and not for
others, directly or indirectly, in whole or in part.
(b) Purchaser has informed the undersigned that any
distribution by the undersigned of Purchaser Common Stock has not been
registered under the 1933 Act and that shares of Purchaser Common Stock received
pursuant to the Merger can only be sold by the undersigned (i) following
registration under the 1933 Act, or (ii) in conformity with the volume and other
requirements of Rule 145(d) promulgated by the SEC as the same now exist or may
hereafter be amended, or (iii) to the extent some other exemption from
registration under the 1933 Act might be available. The undersigned understands
that Purchaser is under no obligation to file a registration statement with the
SEC covering the disposition of the undersigned's shares of Purchaser Common
Stock.
3. Restrictions on Transfer.
(a) The undersigned understands and agrees that stop transfer
instructions with respect to the shares of Purchaser Common Stock received by
the undersigned pursuant to the Merger will be given to Purchaser's Transfer
Agent and that there will be placed on the certificates for such shares, or
shares issued in substitution thereof, a legend stating in substance:
"The shares represented by this certificate may not be sold,
transferred or otherwise disposed of except or unless (i) covered by an
effective registration statement under the Securities Act of 1933, as
amended, (ii) in accordance with (x) Rule 145(d) (in the case of shares
issued to an individual who is not an affiliate of Purchaser) or (y)
Rule 144 (in the case of shares issued to an individual who is an
affiliate of Purchaser) of the Rules and Regulations of such Act, or
(iii) in accordance with a legal opinion satisfactory to counsel for
Purchaser that such sale or transfer is otherwise exempt from the
registration requirements of such Act."
<PAGE>
(b) Such legend will also be placed on any certificate
representing Purchaser securities issued subsequent to the original issuance of
the Purchaser Common Stock pursuant to the Merger as a result of any stock
dividend, stock split, or other recapitalization as long as the Purchaser Common
Stock issued to the undersigned pursuant to the Merger has not been transferred
in such manner to justify the removal of the legend therefrom. In addition, if
the provisions of Rules 144 and 145 are amended to eliminate restrictions
applicable to the Purchaser Common Stock received by the undersigned pursuant to
the Merger, or at the expiration of the restrictive period set forth in Rule
145(d), Purchaser, upon the request of the undersigned, will cause the
certificates representing the shares of Purchaser Common Stock issued to the
undersigned in connection with the Merger to be reissued free of any legend
relating to the restrictions set forth in Rules 144 and 145(d) upon receipt by
Purchaser of an opinion of its counsel to the effect that such legend may be
removed.
4. Understanding of Restrictions on Dispositions. The
undersigned has carefully read the Agreement and this Affiliate Agreement and
discussed their requirements and impact upon his or her ability to sell,
transfer, or otherwise dispose of the shares of Purchaser Common Stock received
by the undersigned in connection with the Merger, to the extent he or she
believes necessary, with his or her counsel or counsel for Target.
5. Filing of Reports by Purchaser. Purchaser agrees for a
period of three years after the effective date of the Merger, to file on a
timely basis all reports required to be filed by it pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended, so that the public information
provisions of Rule 145(d) promulgated by the SEC as the same are presently in
effect will be available to the undersigned in the event the undersigned desires
to transfer any shares of Purchaser Common Stock issued to the undersigned
pursuant to the Merger.
6. Transfer Under Rule 145(d). If the undersigned desires to
sell or otherwise transfer the shares of Purchaser Common Stock received by him
or her in connection with the Merger at any time during the restrictive period
set forth in Rule 145(d), the undersigned will provide the necessary
representation letter to the Transfer Agent for Purchaser Common Stock, together
with such additional information as the Transfer Agent may reasonably request.
If Purchaser's counsel concludes that such proposed sale or transfer complies
with the requirements of Rule 145(d), Purchaser shall cause such counsel to
provide such opinions as may be necessary to Purchaser's Transfer Agent so that
the undersigned may complete the proposed sale or transfer.
7. Acknowledgments. The undersigned recognizes and agrees that
the foregoing provisions also apply with respect to Target Common Stock held by,
and Purchaser Common Stock issued in connection with the Merger to, (a) the
undersigned's spouse, (b) any relative of the undersigned or of the
undersigned's spouse who has the same home as the undersigned, (c) any trust or
estate in which the undersigned, the undersigned's spouse, and any such relative
collectively own at least a 10% beneficial interest or of which any of the
foregoing serves as trustee, executor or in any similar capacity, and (d) any
corporation or other organization in which the undersigned, the undersigned's
spouse and any such relative collectively own at least 10% of any class of
equity securities or of the equity interest. The undersigned further recognizes
that, in the event that the undersigned is a director or executive officer of
Purchaser or becomes a director or executive officer of Purchaser upon
consummation of the Merger, among other things, any sale of Purchaser Common
Stock by the undersigned within a period of less than six months following the
effective time of the Merger may subject the undersigned to liability pursuant
to Section 16(b) of the Securities Exchange Act of 1934, as amended.
<PAGE>
8. Miscellaneous. Subject to Exhibit 6.2(j) of the Agreement,
this Affiliate Agreement is the complete agreement between Purchaser and the
undersigned concerning the subject matter hereof. Any notice required to be sent
to any parry hereunder shall be sent by registered or certified mail, return
receipt requested, using the addresses set forth herein or such other address as
shall be furnished in writing by the parties. This Affiliate Agreement shall be
governed by the laws of the State of Georgia.
This Affiliate Agreement is executed as of the _____ day of
_________________, 1996.
Very truly yours,
----------------------------
Signature
----------------------------
Print Name
----------------------------
Address
----------------------------
Telephone No.
AGREED TO AND ACCEPTED as of
____________________, 1996
RESTOR INDUSTRIES, INC.
By:_________________________
Its:_____________________
<PAGE>
EXHIBIT NO. 6.2(h)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into this
18th day of June, 1996, between and among MICHAEL R. JOE, a resident of the
State of California ("Employee"), and RESTOR-COMTECH, INC., a Delaware
corporation ("Company").
W I T N E S S E T H:
WHEREAS, execution of this Agreement is contemplated by that certain
Plan and Agreement of Merger dated even date herewith (the "Merger Agreement"),
whereby Comtech Sunrise, Inc. ("Comtech") will be merged with and into the
Company, a Delaware corporation and a wholly-owned subsidiary of Restor
Industries, Inc. ("Restor");
WHEREAS, the covenants and agreements of Employee herein are made as
an inducement to the merger of Comtech into the Company; and
WHEREAS, the Company and Employee each desire to enter into this
Agreement, pursuant to which Employee will be employed by the Company on the
terms and conditions hereinafter set forth, and to make certain other
agreements;
NOW, THEREFORE, in consideration of the premises and of the promises
and agreements hereinafter set forth, the parties hereto, intending to be
legally bound, do hereby agree as follows:
Section 1. Employment. Subject to the terms hereof, the Company hereby
employs Employee, and Employee hereby accepts such employment. Employee shall
devote his Full Time and best efforts to rendering services on behalf of the
Company. As used herein, "Full Time" shall mean working during normal business
hours to accomplish his duties and responsibilities with appropriate timeliness,
and such term shall not preclude Employee's devoting incidental time to the
management of his personal affairs during normal business hours nor shall it
preclude his participating in other affairs during non-business hours.
Employment. Subject to the terms hereof, the Company hereby employs Employee,
and Employee hereby accepts such employment. Employee shall devote his Full Time
and best efforts to rendering services on behalf of the Company. As used herein,
"Full Time" shall mean working during normal business hours to accomplish his
duties and responsibilities with appropriate timeliness, and such term shall not
preclude Employee's devoting incidental time to the management of his personal
affairs during normal business hours nor shall it preclude his participating in
other affairs during non-business hours.
Section 2. Position, Authority and Duties.
(a) Position. Employee shall serve as President and Chief
Operating Officer of the Company and, as such, Employee shall report directly to
the President of Restor. The Company shall also elect Employee to serve as a
director of the Company, and Employee consents to serve, without additional
compensation, as such. Employee's duties, responsibilities and perquisites of
office shall be consistent with such position.
(b) Authority. Subject to the ultimate control and
responsibility of the Board of Directors of the Company and of Restor as its
sole stockholder, until the end of the Term, as defined in Section 3 hereof,
Employee shall have the right to manage the business and affairs of the Company
and shall participate directly in the formulation of, and shall direct the
execution of both short- and long-term corporate plans, including, without
limitation, the hiring, retention or termination of employees, the setting of
compensation and fringe benefits of employees other than himself, the expansion
of the business and the making of commitments for capital expenditures out of
cash flow of the Company. Restor shall cooperate with Employee in seeking to
maintain and increase the Company's profitability, but this Agreement shall not
be construed as a commitment on the part of Restor to invest in or make
available to the Company any additional capital, or to incur any expense or
obligation on behalf of the Company, whether or not Restor is to be reimbursed
by the Company for any such expense or obligation.
<PAGE>
(c) Required Resignation of Position. Notwithstanding Sections
2(a) and 2(b) hereof, in the event the Company shall fail to achieve the Pre-Tax
Net Income shown for the respective one-year periods set forth in the table
below, Restor may request Mr. Joe's resignation as President, Chief Operating
Officer and/or a director of the Company and appoint another person or persons
to such position, or positions, and, in such event, Mr. Joe shall resign from
the requested position or positions and the powers and authorities granted Mr.
Joe pursuant to Sections 2(a) and 2(b) hereof shall terminate.
Year Ended: Minimum Pre-Tax Net Income:
December 31, 1996 $500,000
December 31, 1997 $600,000
December 31, 1998 $600,000
For purposes of this Section 2(c), the determination of Pre-Tax Net Income shall
be subject to the same protocols set forth in Section 2.1(c) of the Merger
Agreement between and among the Company, Restor, Comtech Sunrise, Inc. and
certain shareholders thereof, dated as of April 22, 1996. Except as set forth in
this Section 2(c), any such resignation by Mr. Joe shall not otherwise change
any of Mr. Joe's rights under this Agreement and any failure of the Company to
achieve such Pre-Tax Net Income shall not constitute Cause under subparagraph
(iii) of Section 3 hereof.
(c) Location. Employee's office shall be located in or within
reasonable commuting distance of Livermore, California, and Employee shall not
be required to relocate as a condition of his continued employment by the
Company.
Section 3. Term. The employment of Employee hereunder shall commence on the
date hereof (the "Effective Date") and shall continue until the earlier of (a)
December 31, 1998 (the "Term") or (b) the occurrence of any of the following
events: Term. The employment of Employee hereunder shall commence on the date
hereof (the "Effective Date") and shall continue until the earlier of (a)
December 31, 1998 (the "Term") or (b) the occurrence of any of the following
events:
(i) the death or Total Disability of Employee ("Total
Disability" meaning the failure of Employee to perform his normal
required services hereunder at his office for a period of three (3)
consecutive months, by reason of Employee's mental or physical
disability as so determined by a licensed physician selected by the
Company satisfactory to Employee);
(ii) the mutual written agreement of the parties hereto to
terminate Employee's employment hereunder; or
(iii) the Company's termination of Employee's employment
hereunder, upon thirty (30) days' prior written notice to Employee, for
"Cause." For the purposes of this Agreement, "Cause" for termination of
Employee's employment shall exist (a) if Employee is convicted of (from
which no appeal may be taken), or pleads guilty to, any act of fraud,
misappropriation or embezzlement, or any felony, (b) if, in the sole
determination of the Board of Directors of the Company, Employee has
engaged in conduct or activities materially damaging to the business of
the Company (it being understood, however, that neither conduct nor
activities pursuant to Employee's exercise of his good faith business
judgment nor unintentional physical damage to any property of the
Company by Employee shall be a ground for such a determination by the
Board of Directors of the Company) after written notice with
specificity as to the conduct or activities complained of and a
reasonable opportunity is given to Employee to cure the same, or (c) if
Employee has failed without reasonable cause to devote his Full Time
and best efforts to the business of the Company and, after notice from
the Company of such failure, Employee at any time thereafter again so
fails.
<PAGE>
Section 4. Compensation and Benefits.
4.1 Salary and Other Compensation.
(a) Salary. For the term of his employment hereunder, Employee shall be
paid a salary by the Company at the annual rate of Sixty Thousand Dollars
($60,000) through March 31, 1997 and at the annual rate of One Hundred Thousand
Dollars ($100,000) thereafter, payable bi-weekly in accordance with the payroll
payment practices from time to time adopted by the Company (his "Base Salary").
In addition, Employee shall be entitled to that portion of a Forty Thousand
Dollar bonus which the amount of Pre-Tax Net Income of Restor between $2,000,000
and $5,000,000, if any, bears to $3,000,000 (the "Make-up Bonus") during the
calendar years which end during the term of this Agreement. If the Pre-Tax Net
Income of Restor is less than $2,000,000 in any such calendar year, none of such
$40,000 shall be due and payable. If the Pre-Tax Net Income of Restor exceeds
$5,000,000 in any such calendar year, the full $40,000 shall be due and payable.
(For example, if the Pre-Tax Net Income of Restor were $3,500,000 in any such
calendar year, the Make-up Bonus payable with respect to that calendar year
would be $20,000 [($3,500,000 - $2,000,000 = $1,500,000) divided by $3,000,000 x
$40,000 = $20,000]). The Make-up Bonus, if any, shall be due and payable by the
Company within thirty days of the date on which Restor's year-end audit for the
year in question is completed by the certified public accountants then servicing
Restor. The Company's Board of Directors shall (without the participation of
Employee), not less regularly than annually, review Employee's Base Salary with
a view to increasing the same as a result of, and to the extent justified by,
Employee's performance during the preceding calendar year, any increase in the
cost of living, the performance and financial condition of the Company and such
other criteria as it deems appropriate; provided, however, Employee agrees that,
notwithstanding the foregoing, his Base Salary shall remain at $60,000 through
March 31, 1997.
(b) Bonuses. In addition, Employee shall be eligible to participate (in an
amount not to exceed thirty (30%) of Employee's Base Salary in any year) in the
incentive and bonus programs of Restor to the same extent as others who hold
positions and responsibilities comparable to that of Employee so participate.
(c) Non-Qualified Stock Options. In addition, upon execution of this
Agreement, the Company (i) shall grant Employee the right to designate employees
of the Company, including Employee, as grantees of incentive stock options to
purchase 75,000 shares of the Stock for a purchase price equal to the fair
market value of such shares on such date pursuant to Restor's incentive stock
option plan, vesting at the rate of 18,750 shares on each of the first four
anniversaries of the date of this Agreement; and (ii) shall grant Employee
non-qualified options to purchase 20,000 shares of the common stock, $.01 par
value (the "Stock"), of Restor, for a purchase price of $8.00 per share, vesting
in the following amounts upon the occurrence of the following respective events:
Vest Achievement
60% 15% vesting for each calendar quarter during
1996 that Restor's pre-tax net income
exceeds $400,000; if this income test is not
met for any particular quarter(s), the
vesting for those quarter(s) may also be
earned if pre-tax income for 1996 exceeds
$1.6 million.
5% Restor's common stock is relisted on The
NASDAQ National Market System.
10% Restor achieves 25% internal sales growth
during calendar 1996 (i.e. sales
exceed $37.5 million).
15% During 1996, Restor and the Company
implement management information systems
that provide for timely and accurate
information, a streamlined reporting
process, reports that meet or exceed
internal and external customer expectations,
and efficient integration of new
acquisitions.
10% The Company increases its gross sales in
calendar 1996 by 25% over the gross sales
of Comtech Sunrise, Inc. in calendar 1995.
<PAGE>
4.2 Insurance.
(a) Life and Other Insurance. The Company shall, at its expense, provide or
arrange for and keep in effect, during the term of Employee's employment
hereunder, so long as he is insurable, such group term life insurance, travel
accident, accidental death and dismemberment insurance and long and short term
disability insurance, or their equivalents, as is provided from time to time for
executives of Restor holding positions and responsibilities comparable to those
of Employee.
(b) Medical Insurance. During the term of Employee's employment hereunder,
the Company shall, at its expense, provide or arrange for and keep in effect,
hospitalization, major medical and similar medical and health insurance for
Employee and his family, to the same extent as is provided from time to time for
executives of Restor holding positions and responsibilities comparable to those
of Employee.
4.3 Vacation. Employee shall be entitled to the same number
of days of paid vacation during each year of his employment hereunder as is
allowed to other executives of Restor holding positions and responsibilities
comparable to those of Employee.
4.4 Retirement Benefits. During the term of his employment
hereunder, Employee shall have the same right as other executives of Restor
holding positions and responsibilities comparable to those of Employee to
participate in all profit-sharing, pension and other retirement plans as are
now, or as may hereafter be, established by Restor.
4.5 Out-of-Pocket Expenses. The Company shall reimburse
Employee for all reasonable out-of-pocket expenses incurred by Employee in
connection with the performance of his duties hereunder upon presentation of
appropriate vouchers therefor.
Section 5. Termination.
(a) Termination by Employee. Employee may terminate his
employment hereunder (i) for "Good Reason" as defined in this Section 5(a), or
(ii) for "Health Reasons" as defined in this Section 5(a). For purposes of this
Agreement "Good Reason" shall mean (A) any assignment to Employee, without his
consent, of any duties materially different from those contemplated by, or any
material limitation of the powers of Employee in any respect not contemplated
by, Section 2 hereof, (B) any removal of Employee from or any failure to
re-elect Employee to any of the positions indicated in Section 2 hereof, except
as permitted by Section 2 hereof or except in connection with termination of
Employee's employment for Cause or Total Disability, (C) a reduction in
Employee's Base Salary, or any other material failure by the Company to comply
with Section 4 hereof, (D) any material failure by the Company to comply with
subparagraph (iii) of Section 3 hereof, or (E) failure of the Company to obtain
the assumption of the agreement to perform this Agreement by a successor as
contemplated in Section 7(a) hereof. For purposes of this Agreement, "Health
Reasons" shall mean if Employee's health should become impaired to an extent
that makes the continued performance of his duties hereunder hazardous to his
physical or mental health or his life, provided that Employee shall have
furnished the Company with a written statement from a qualified doctor to such
effect and provided, further, that at the Company's request and expense Employee
shall submit to an examination by a doctor selected by the Company and such
doctor shall have concurred in the conclusion of Employee's doctor.
(b) Notice of Termination. Any termination of Employee's
employment by the Company or by Employee (other than termination for death
pursuant to subparagraph (i) of Section 3) shall be communicated by written
Notice of Termination to the other party hereto. For purposes of this Agreement,
a "Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee's employment under the provision so indicated.
(c) Date of Termination. "Date of Termination" shall mean (i)
if Employee's employment is terminated by his death, the date of his death, (ii)
if Employee's employment is terminated for Total Disability pursuant to
subparagraph (i) of Section 3 hereof, thirty (30) days after Notice of
Termination is given (provided that Employee shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period), (iii) if Employee's employment is terminated for Cause pursuant to
subparagraph (iii) of Section 3 hereof, the date specified in the Notice of
Termination, and (iv) if Employee's employment is terminated for any other
reason, the date on which a Notice of Termination is given; provided, however,
that, in all instances, if within thirty (30) days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined, either
by mutual written agreement of the parties, by a final judgment order or decree
of a court of competent jurisdiction (the time for appeal therefrom having
expired and no appeal having been perfected).
<PAGE>
(d) Exclusive Provisions. Employee may not be terminated by
the Company and Employee may not terminate his employment hereunder except as
provided in this Section 5.
Section 6. Compensation Upon Termination or During Disability.
(a) Upon Termination under Section 1. If Employee's employment
shall be terminated upon the expiration of the term of this Agreement as set
forth in Section 1 hereof, the Company shall pay Employee his full Base Salary
through the Date of Termination at the rate in effect at that time.
(b) In the Event of Death. If Employee's employment shall be
terminated by reason of his death, the Company shall pay to such person as he
shall designate in a notice filed with the Company, or, if no such person shall
be designated, to his estate as a lump sum death benefit, his full Base Salary
to the date of his death in addition to any payments Employee's spouse,
beneficiaries or estate may be entitled to receive pursuant to any pension or
employee benefit plan or life insurance policy presently maintained by the
Company, and such payments shall fully discharge the Company's obligations
hereunder.
(c) In the Event of Physical or Mental Illness. During any
period that Employee fails to perform his duties hereunder as a result of
incapacity due to physical or mental illness, Employee shall continue to receive
his full Base Salary and bonus payments until Employee's employment is
terminated for Total Disability pursuant to subparagraph (i) of Section 3
hereof, or until Employee terminates his employment for Health Reasons pursuant
to Subsection 5(a)(ii) hereof, whichever first occurs. After termination,
Employee shall be paid 100% of his Base Salary at the rate in effect at the time
Notice of Termination is given less, in each case, any disability payments
otherwise payable by or pursuant to plans provided by the Company and actually
paid to Employee in substantially equal monthly installments over the remaining
term hereof, and the Company shall have no further obligations to Employee under
this Agreement.
(d) Cause. If Employee's employment shall be terminated for
Cause, the Company shall pay Employee his full Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given and
the Company shall have no further obligations to Employee under this Agreement.
(e) Wrongful Termination or Termination by Executive for Good
Reason. If (A) in breach of this Agreement, the Company shall terminate
Employee's employment other than in the manner allowed pursuant to Section 3
hereof (a purported termination pursuant to Section 3 hereof which is disputed
and finally determined not to have been proper shall be a termination by the
Company in breach of this Agreement) or (B) Employee shall terminate his
employment for Good Reason, then:
(i) the Company shall pay Employee his full Base Salary
through the Date of Termination at the rate in effect at the time Notice of
Termination is given and the amount, if any, with respect to any year then ended
which pursuant to the Plan would have accrued to Employee on the basis of the
Company's performance but which has not yet been paid to him; and
(ii) in lieu of any further salary payments to Employee for
periods subsequent to the Date of Termination, the Company shall pay as
severance pay to Employee in substantially equal monthly installments until the
third anniversary of the Effective Date an amount equal to the product of (A) an
amount equal to the sum of (i) the annual Base Salary at the highest rate in
effect during the twelve (12) months immediately preceding the Date of
Termination plus (ii) the highest annual bonus payments paid or accrued pursuant
to this Agreement, multiplied by (B) a fraction, the numerator of which shall be
the number of whole months remaining and the denominator of which shall be
twelve (12); and
(iii) all stock options granted to the Employee under Section
4.1(c) hereof shall become immediately exercisable and shall become immediately
vested, provided that any options granted under subpart (ii) of Section 4.1(c)
shall vest and become exercisable hereunder only upon the occurrence of the
events (and in the amounts) set forth therein.
(f) Mitigation. Employee shall not be required to mitigate the
amount of any payment provided for in this Section 6 by seeking other employment
or otherwise, nor shall the amount of any payment provided for in this Section 6
be reduced by any compensation earned by Employee as the result of employment by
another employer after the Date of Termination.
<PAGE>
Section 7. Successors; Binding Agreement.
(a) Successor Companies. The Company shall require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company, by agreement in form and substance reasonably satisfactory to Employee,
to expressly assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Employee to compensation from the Company in the
same amount and on the same terms as he would be entitled to hereunder if he
terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which executes and delivers the
Agreement provided for in this Section 7(a) or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(b) Executive's Estate and Heirs. This Agreement and all
rights of Employee hereunder shall inure to the benefit of and be enforceable by
Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If Employee should die
while any amounts would still be payable to him hereunder if he had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's devisee, legatee, or
other designee or, if there be no such designee, to Employee's estate.
Section 8. Miscellaneous.
8.1 Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon Employee, his executor, administrator, heirs,
personal representatives and assigns, and upon the Company and its successors
and assigns; provided, however, that the obligations and duties of Employee may
not be assigned or delegated.
8.2 Governing Law. This Agreement shall be deemed to be made
in, and in all respects shall be interpreted, construed and governed by and
in accordance with, the laws of the State of Delaware, without giving effect to
principles of conflicts of laws.
8.3 Invalid Provisions. The parties herein hereby agree that
the agreements, provisions and covenants contained in this Agreement are
severable and divisible, that none of such agreements, provisions or covenants
depends upon any other provision, agreement or covenant for its enforceability,
and that each such agreement, provision and covenants constitutes an enforceable
obligation between the Company and Employee. Consequently, the parties hereto
agree that neither the invalidity nor the unenforceability of any agreement,
provision or covenant of this Agreement shall affect the other agreements,
provisions or covenants hereof, and this Agreement shall remain in full force
and effect and be construed in all respects as if such invalid or unenforceable
agreement, provision or covenant were omitted.
8.4 Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
8.5 Notices. All communications provided for hereunder shall
be in writing and shall be deemed to be given when delivered in person or
deposited in the United States mail, first class, registered mail, return
receipt requested, with proper postage prepaid, and
(a) If to Employee, addressed to:
Mr. Michael R. Joe
1445 Alpine Court
Tracy, California 95376
(b) If to the Company or Restor, addressed to:
[Name of addressee]
4501 Vineland Road
Orlando, Florida 32811
Attn: Vice President and Chief Financial
Officer
or at such other place or places or to such other person or persons as shall be
designated in writing by the parties hereto in the manner provided above for
notices.
<PAGE>
8.6 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same instrument.
8.7 Waiver of Breach. The waiver by the Company of a breach of
any provision, agreement or covenant of this Agreement by Employee shall not
operate or be construed as a waiver of any prior or subsequent breach of the
same or any other provision, agreement or covenant by Employee.
8.8 Entire Agreement. This Agreement is intended by the
parties hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement thereof
notwithstanding any representation or statements to the contrary heretofore
made; provided, however, that nothing herein shall affect the validity of
Section 5.7 or 5.8 of the Merger Agreement. This Agreement may be modified only
by a written instrument signed by each of the parties hereto.
8.9 Attorneys' Fees. If any party to this Agreement shall
bring any action, suit, counterclaim, appeal, arbitration, or mediation for any
relief against the other, declaratory or otherwise, to enforce the terms hereof
or to declare rights hereunder (collectively, an "Action"), the losing party
shall pay to the prevailing party a reasonable sum for attorneys' fees and costs
(at the prevailing party's attorneys' then-prevailing rates as increased from
time to time by the giving of advance written notice by such counsel to such
party) incurred in bringing and prosecuting such Action and/or enforcing any
judgment, order, ruling, or award (collectively, a "Decision") granted therein,
all of which shall be deemed to have accrued on the commencement of such Action
and shall be paid whether or not such Action is prosecuted to a Decision. Any
Decision entered in such Action shall contain a specific provision providing for
the recovery of attorneys' fees and costs incurred in enforcing such Decision.
The court or arbitrator may fix the amount of reasonable attorneys' fees and
costs on the request of either party. For the purposes of this paragraph,
attorneys' fees shall include, without limitation, fees incurred in the
following: (1) post-judgment motions and collection actions; (2) contempt
proceedings; (3) garnishment, levy, and debtor and third party examinations; (4)
discovery; and (5) bankruptcy litigation. "Prevailing party" within the meaning
of this paragraph includes, without limitation, a party who agrees to dismiss an
Action on the other party's payment of the sums allegedly due or performance of
the covenants allegedly breached, or who obtains substantially the relief sought
by it.
IN WITNESS WHEREOF, Employee has executed this Agreement, and the
Company has caused this Agreement to be duly executed by its duly authorized
officers and has caused its proper corporate seal to be affixed hereto, and the
parties have caused this Agreement to be delivered, all on the day and year
first written above.
------------------------------
MICHAEL R. JOE
RESTOR-COMTECH, INC.
[CORPORATE SEAL]
By: _____________________
Its: _____________________
Attest:____________________
<PAGE>
EXHIBIT NO. 6.2(j)
June 18, 1996
Restor Industries, Inc.
4501 Vineland Road
Orlando, Florida 32811
Gentlemen:
1. Reference is made to that certain Agreement and Plan of Merger
dated as of April 22, 1996, between and among Restor Industries, Inc. ("Restor"
or the "Company"), Restor Comtech, Inc. ("Merger Sub"), Comtech Sunrise, Inc.
("Comtech") and certain other parties (the "Merger Agreement"), pursuant to
which Comtech will be merged with and into Merger Sub, a wholly-owned subsidiary
of Restor (the "Merger").
2. As an inducement to Restor to effect the Merger and as contemplated
by the Merger Agreement, the undersigned (sometimes hereinafter referred to as
"Seller") hereby agrees that, until the 180th day following the date hereof, the
undersigned will not, without Restor's prior written consent, offer, sell,
contract to sell or otherwise dispose of, directly or indirectly, any shares of
Restor common stock, $.01 par value per share (the "Restor Shares"), issued to
the undersigned in connection with the Merger or any security convertible into
or exchangeable or exercisable therefor, either publicly or privately. The
undersigned further agrees that Restor may note such restrictions on the books
and records of Restor relative to stock transfers. The provisions hereof shall
be binding upon the undersigned and the assigns, heirs, and personal
representatives of the undersigned.
3. In connection with the undersigned's acquisition of the Restor
Shares, the undersigned hereby represents and warrants to Restor as follows:
(a) The Seller has sufficient knowledge and experience in financial
and business matters to be able to evaluate the risks and merits of the
investment represented by the Restor Shares. The Seller is aware that the
business of the Company involves significant and material economic variables and
risks that could adversely affect the Seller's investment in the Restor Shares.
The Seller is able to bear the economic risks of such investment, including the
risk of losing all of such investment, and the Seller has no need for liquidity
with respect to such investment. The Seller is a resident of the State of
___________ and is over twenty-one years of age.
(b) The Seller understands that no prospectus, offering circular or
other offering statement containing information with respect to the Company and
the Restor Shares or with respect to the Company's business is being issued and
the Seller has made its own inquiry and analysis with respect to the Company,
the Restor Shares, the Company's business and other material factors affecting
the investment in the Restor Shares.
(c) The Restor Shares were not offered to the Seller by means of
publicly disseminated advertisements or sales literature, or as a part of a
general solicitation, nor is the Seller aware of any offers made to other
persons by such means. The Seller acknowledges that it has either been supplied
with or has had access to information to which a reasonable investor would
attach significance in making an investment decision, including, without
limitation, copies of the Company's Prospectus dated December 18, 1995 included
in its Registration Statement on Form S-3 (Registration No. 33-80053) filed with
the Securities and Exchange Commission on December 6, 1995, the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, and the Company's
Preliminary Proxy Statement for the Annual Meeting of Stockholders to be held on
May 26, 1996, and a description of the Company's capital stock (attached hereto
as Exhibit 1 and incorporated herein by this reference), and the Seller has had
the opportunity to ask questions and receive answers from knowledgeable
individuals concerning the Company, its business and the Restor Shares so that
as a reasonable investor, the Seller has been able to make an informed decision
with respect to the purchase of the Restor Shares.
(d) In determining to acquire the Restor Shares, the Seller has relied
solely on the results of Seller's own independent investigation with respect to
the Restor Shares, the Company and upon the representations and statements of
the Company set forth herein and in the Merger Agreement. Such representations
and statements by the Company constitute the sole and exclusive representations,
warranties, covenants and statements of the Company or any of its officers,
directors, stockholders or other affiliates to the Seller in connection with
this investment, and the Seller understands, acknowledges and agrees that all
other representations, warranties, covenants and statements of any kind or
nature, whether oral or contained in any writing other than this Agreement and
in the Merger Agreement are specifically disclaimed by the Company.
<PAGE>
(e) The Seller understands (i) that the Restor Shares are being issued
in reliance upon the exemption from registration provided by Section 3(a)(10)
under the Securities Act and are not being registered under the securities or
Blue Sky laws and regulations of any state and (ii) cannot be sold, transferred
or otherwise disposed of except in accordance with the Securities Act and
applicable state securities or Blue Sky laws.
Sincerely,
------------------------------
Name of Shareholder
------------------------------
Signature
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference of our report dated May 23,
1996 relating to the financial statements of Comtech Sunrise, Inc. in the
Prospectus constituting part of Restor Industries, Inc.'s Registration
Statements on Forms S-3 and S-8. We also consent to the reference to us under
the heading "Experts" in each such Prospectus.
/s/ Tedder, Grimsley & Company, P.A.
- ------------------------------------
Tedder, Grimsley & Company, P.A.
June 18, 1996
<PAGE>
EXHIBIT NO. 99
[GRAPHIC OMITTED] RESTOR NEWS RELEASE
INDUSTRIES, INC.
SUMMARY: RESTOR INDUSTRIES, INC. AGREES TO
ACQUIRE COMTECH SUNRISE, INC.
CONTACT: Steven A. Odom Chairman & CEO
Hensley E. West President & COO
Mark A. Gergel Vice President & CFO
(407) 843-7031
FOR IMMEDIATE RELEASE
ORLANDO, FLORIDA -- FEBRUARY 22, 1996 -- RESTOR INDUSTRIES, INC. (NASDAQ:
REST), announced today it has executed a letter of intent to acquire Comtech
Sunrise, Inc. ("Sunrise") for a combination of cash and Restor common stock.
Sunrise, based in Livermore, California, designs, manufactures and markets
intelligent telecommunications products under the trade names of Sunrise
Technology and Sunrise Sierra. The transaction is subject to, among other
things, the satisfactory completion by Restor of its due diligence
investigation of Sunrise and the preparation and execution of a definitive
agreement by March 20, 1996.
Hensley E. West, President and Chief Operating Officer said, "The acquisition
of Sunrise is in line with our strategy to expand Restor's products, services
and technical expertise in order to provide comprehensive product and service
solutions to an increasing number of companies offering telecommunications,
data and video services. Sunrise designs, manufactures and markets intelligent
T1 multiplexers, digital loop carriers and other access intelligent equipment
to telephone companies and large private network carriers. In addition to
voice and data products, Sunrise also sells specialized multiplexers and
access devices to the military and telemetry market place and designs custom
interfaces for unique telecommunications applications".
"We are pleased that Michael Joe, President and CEO of Sunrise, and his staff
of industry professionals will continue to manage Sunrise as a wholly-owned
subsidiary of Restor. Sunrise began operations in 1988, and sold approximately
$3 million of products and services in its latest fiscal year. We are
optimistic that Restor's financial strength, extensive U.S. and Latin American
telecommunications customer base, large inventory of telecommunications
switching and wireless transmission equipment and broad range of electronic
manufacturing and repair services will complement Sunrise's existing business
and provide additional growth and profit improvement opportunities for both
companies. As a result of the acquisition, Mr. Joe will become a stockholder
in Restor and will play a key role in supporting Restor's overall strategic
and financial objectives".
Restor Industries, Inc. is a value-added provider of low cost, high quality
systems, products and services to the global telecommunications marketplace.
The Company's products and services include the sale of telephone switching
systems and related circuit boards; manufacture, sale, installation and repair
of wireless data and video communications systems and equipment;
refurbishment, repair and upgrade of telecommunications equipment and the sale
of related parts; and contract manufacturing of circuit boards and
electro-mechanical assemblies. The Company conducts its operations from
facilities in Orlando, Florida; Lakeland, Florida; Dallas, Texas; Scottsdale,
Arizona and South Bend, Indiana.
