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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
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LIBERTY TECHNOLOGIES, INC.
(Name of Subject Company)
LIBERTY TECHNOLOGIES, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)
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531281103
(CUSIP Number of Class of Securities)
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R. NIM EVATT
PRESIDENT AND CHIEF EXECUTIVE OFFICER
555 NORTH LANE
LEE PARK
CONSHOHOCKEN, PENNSYLVANIA 19428
(610) 834-0330
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
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With a copy to:
JAMES D. ROSENER, ESQ.
PEPPER HAMILTON LLP
1235 WESTLAKES DRIVE
SUITE 400
BERWYN, PENNSYLVANIA 19312
(610) 640-7817
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Liberty Technologies, Inc., a
Pennsylvania corporation (the "Company"), and the address of the principal
executive offices of the Company is 555 North Lane, Lee Park, Conshohocken,
Pennsylvania 19428. The title of the class of equity securities to which this
statement relates is the common stock, par value $.01 per share (the "Common
Stock" or the "Shares"), of the Company.
ITEM 2. TENDER OFFER OF PURCHASER
This statement relates to the tender offer by LTI Merger, Inc., a
Pennsylvania corporation ("Purchaser"), and a wholly owned subsidiary of Crane
Co., a Delaware corporation ("Crane"), disclosed in a Tender Offer Statement on
Schedule 14D-1, dated August 14, 1998 (the "Schedule 14D-l"), to purchase all
of the issued and outstanding Shares, at a price of $3.50 per Share, net to the
seller in cash (the "Offer Price"), upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 14, 1998 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with the Offer to Purchase and all amendments and supplements thereto,
constitute the "Offer").
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of August 11, 1998 (the "Merger Agreement"), by and among Crane, Purchaser
and the Company. The Merger Agreement provides, among other things, that as
soon as practicable after the satisfaction or waiver of the conditions set
forth in the Merger Agreement, Purchaser will be merged with and into the
Company (the "Merger"), and the Company will continue as the surviving
corporation (the "Surviving Corporation"). A copy of the Merger Agreement is
filed herewith as Exhibit (c)(1) and is incorporated herein by reference.
As set forth in the Schedule 14D-1, the principal executive offices of
Crane and Purchaser are c/o Crane Co., 100 First Stamford Place, Stamford,
Connecticut 06902.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Certain contracts, agreement, arrangements and understandings between
the Company and certain of its directors and executive officers are described
in an "Information Statement Pursuant to Section 14(f) of the Securities
Exchange Act of 1934 and Rule 14f-1 Thereunder" (the "Information Statement")
dated the date hereof, which is attached hereto as Annex II and incorporated
herein by reference in its entirety.
Except as described in this Item 3(b) or under the captions "Executive
Compensation," "Option/SAR Grants in 1997," "Aggregated Option Exercises in
1997 and Year-End Option Values," "Employment Agreements," "Board of
Directors," "Compensation and Benefits Committee Interlocks and Insider
Participation" and "Certain Transactions" in pages 6 through 11 of the
Company's Proxy Statement, dated May 1, 1998, which pages are filed as Exhibit
(c)(2) to this Schedule 14D-9 and incorporated herein by reference, as of the
date hereof, there are no material contracts, agreements, arrangements or
understandings, or any actual or potential conflicts of interest between the
Company or its affiliates and (i) its executive officers, directors or
affiliates or (ii) Crane, Purchaser or their respective officers, directors or
affiliates.
ARRANGEMENTS WITH CRANE, PURCHASER OR THEIR AFFILIATES
Confidentiality Agreement
The following is a summary of certain material provisions of the
Confidentiality Agreement dated March 18, 1998 between the Company and Crane
(the "Confidentiality Agreement"). This summary does not purport to be complete
and is qualified in its entirety by reference to the complete text of the
Confidentiality Agreement, a copy of which is filed as Exhibit (c)(3) hereto
and is incorporated herein by reference.
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The Confidentiality Agreement contains customary provisions pursuant to
which, among other matters, Crane agreed to keep confidential all non-public,
confidential or proprietary information furnished to it by the Company relating
to the Company, subject to certain exceptions (the "Confidential Information"),
and to use the Confidential Information solely for the purpose of evaluating a
possible transaction involving the Company and Crane. Crane has agreed that,
until December 31, 1999, without the prior approval of the Company, neither it
nor any of its affiliates, will, among other things, purchase, offer or agree
to purchase any securities or assets of the Company, enter, or agree to enter
into any acquisition or other business combination relating to the Company, or
make, or induce any other entity to make or negotiate or otherwise deal with
others for a tender or exchange offer of Common Stock of the Company, solicit
proxies, votes or consents other than for nominees selected by the Board of
Directors of the Company (the "Board of Directors" or "Company Board"), and
proposals recommended by the Company's Board of Directors, or otherwise seek to
acquire control of the Company.
Crane further agreed that, for a period of one year from the date of the
Confidentiality Agreement, it will not, without the prior written consent of
the Company, directly or indirectly solicit for employment any person employed
by the Company or any of its subsidiaries identified by Crane as a result of
its investigation of the Company.
The Merger Agreement
The following is a summary of certain material provisions of the Merger
Agreement. This summary does not purport to be complete and is qualified in its
entirety by reference to the complete text of the Merger Agreement, a copy of
which is filed as Exhibit (c)(1) hereto and is incorporated herein by
reference. Capitalized terms not otherwise defined below shall have the
meanings set forth in the Merger Agreement.
The Merger Agreement provides that, without the prior written consent of
the Company, the Purchaser may not (i) decrease the amount offered per Share or
change the form of consideration payable in the Offer, (ii) decrease the number
of Shares sought to be purchased in the Offer, (iii) impose additional
conditions to the Offer, or (iv) amend any other term of the Offer in any
manner adverse to the holders of Shares. If at any Expiration Date, any of the
conditions to the Offer are not satisfied or waived by the Purchaser, the
Purchaser may extend the Offer from time to time. Subject to the terms of the
Offer and the Merger Agreement and the satisfaction of all the conditions to
the Offer as of any Expiration Date, the Purchaser will accept for payment and
pay for all Shares validly tendered and not withdrawn pursuant to the Offer as
soon as practicable after such Expiration Date of the Offer, provided that, if
all of the conditions to the Offer are satisfied and more than 65% but less
than 80% of the outstanding shares of Company Common Stock on a fully diluted
basis (including shares of Company Common Stock issuable upon exercise of
outstanding Options) have been validly tendered and not withdrawn in the Offer,
the Purchaser will have the right, in its sole discretion, to extend the Offer
from time to time for up to a maximum of ten additional business days in the
aggregate, provided the Purchaser agrees to waive the conditions set forth in
paragraphs (c), (f) and (g) of Annex II of the Merger Agreement.
The Company has represented to Crane in the Merger Agreement that the
Board of Directors of the Company, at a meeting duly called and held, has (i)
determined that each of the transactions contemplated by the Merger Agreement,
including each of the Offer and the Merger, is fair to and in the best
interests of the Company and its shareholders, (ii) approved the Offer, the
Merger, the Stock Option Agreement and the Shareholder Agreements, (iii)
recommended acceptance of the Offer and approval of the Merger Agreement by the
Company's shareholders, and (iv) taken all other action necessary to render
Section 2538 and Subchapter F of Chapter 25 of the PBCL and the Rights
inapplicable to the Offer and the Merger. Such recommendation and approval may
be withdrawn, modified or amended only to the extent permitted by the Merger
Agreement. The Company further represented that, prior to the execution of the
Merger Agreement, Legg Mason delivered to the Company Board its written opinion
that the consideration to be received by the holders of Shares pursuant to the
Offer and the Merger is fair to the Company's shareholders from a financial
point of view.
The Merger Agreement provides that Crane, upon the payment by the
Purchaser for Shares pursuant to the Offer representing at least such number of
Shares as shall satisfy the Minimum Condition, and from
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time to time thereafter, is entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board as is equal to the
product of the total number of directors on the Company Board (determined after
giving effect to the directors so elected pursuant to this provision)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by Crane or its affiliates bears to the total number of Shares then
outstanding. The Company shall, upon request of Crane, promptly take all
actions (but specifically excluding the calling of a shareholders' meeting)
necessary to cause Crane's designees to be so elected, including, if necessary,
amending the By-laws of the Company (to the extent permitted to be amended by
the Board of Directors) and seeking the resignations of one or more existing
directors; provided, however, that prior to the time the Merger becomes
effective (the "Effective Time"), the Company Board shall always have not less
than two members who were directors of the Company on the date of the Merger
Agreement ("Current Directors") and, in Crane's sole discretion, up to five
Current Directors. If the number of Current Directors is reduced prior to the
Effective Time below the number of Current Directors so specified by Crane due
to the death or resignation of one or more of the Current Directors, then the
remaining director or directors who is or are Current Directors shall be
entitled to designate by majority action of the remaining Current Directors or
action of the sole remaining Current Director, one or more persons, as the case
may be, that has not been designated by, and is not an Affiliate of, Crane to
fill such vacancy or vacancies and who shall be deemed to be Current Directors
for all purposes of the Merger Agreement. Following the election or appointment
of Crane's designees and prior to the Effective Time, any amendment or
termination of the Merger Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Crane or the Purchaser or waiver of any of the Company's rights thereunder,
will require the concurrence of a majority of the directors of the Company then
in office who are Current Directors (or in the case where there are two or
fewer directors who are Current Directors, the concurrence of one director who
is a Current Director).
The Merger. The Merger Agreement provides that, at the Effective Time, the
Purchaser will be merged with and into the Company. Following the Merger, the
separate corporate existence of the Purchaser will cease and the Company will
continue as the Surviving Corporation.
The Second Amended and Restated Articles of Incorporation of the Company,
in the form attached to the Merger Agreement as Exhibit 1, will be the articles
of incorporation of the Surviving Corporation, until thereafter changed or
amended as provided therein or by applicable law. The By-Laws of the Company in
effect at the Effective Time will be the by-laws of the Surviving Corporation
until thereafter changed or amended as provided therein or by applicable law.
Subject to applicable law, the officers and directors of the Purchaser
immediately prior to the Effective Time will be the officers and directors,
respectively, of the Surviving Corporation and will hold office until the
earlier of their resignation or removal or until their respective successors
are duly elected and qualified.
By virtue of the Merger and without any action on the part of the holders
thereof, at the Effective Time, each Share issued and outstanding immediately
prior to the Effective Time (other than (i) any Shares held by Crane, the
Purchaser, any wholly owned subsidiary of Crane or the Purchaser, or held in
the treasury of the Company, which Shares, by virtue of the Merger and without
any action on the part of the holder thereof, will be canceled and retired and
will cease to exist with no payment being made with respect thereto and (ii)
Dissenting Shares) will be canceled and retired and will be converted into the
right to receive the Merger Consideration in cash, payable to the holder
thereof, without interest thereon, upon surrender of the certificate formerly
representing such Share. At the Effective Time, each share of common stock of
the Purchaser issued and outstanding immediately prior to the Effective Time
will, by virtue of the Merger and without any action on the part of the holder
thereof, be converted into and become one validly issued, fully paid and
non-assessable share of common stock of the Surviving Corporation.
The Merger Agreement provides that, prior to the Effective Time, the
Company will take all actions necessary to cause (i) each unexpired and
unexercised Option that has an exercise price less than the Per Share Amount to
be automatically converted at the Effective Time into an amount equal to the
difference
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between the Per Share Amount and the exercise price of the Option, multiplied
by the number of shares of Company Common Stock issuable immediately prior to
the Effective Time upon exercise of the Option (without regard to vesting
periods or restrictions on exercisability) and (ii) each unexpired and
unexercised Option that has an exercise price equal to or greater than the Per
Share Amount to be canceled so that no Option shall have any force or effect on
or after the Effective Time.
The Company has agreed pursuant to the Merger Agreement that, if required
by applicable law in order to consummate the Merger, as soon as practicable
following the acceptance for payment and payment for Shares by the Purchaser
pursuant to the Offer, it will (i) convene a special meeting of its
shareholders for the purpose of considering and taking action upon the Merger
Agreement; (ii) prepare and file with the Securities and Exchange Commission
(the "Commission") a preliminary proxy statement relating to the Merger
Agreement, and use its reasonable efforts (x) to obtain and furnish the
information required to be included by the Commission therein and to cause a
definitive proxy statement (the "Proxy Statement") to be mailed to its
shareholders and (y) to obtain the necessary approvals of the Merger and the
Merger Agreement by its shareholders; and (iii) subject to certain provisions
of the Merger Agreement, include in the Proxy Statement the recommendation of
the Company Board that shareholders of the Company vote in favor of the
approval of the Merger and the Merger Agreement. Crane has agreed in the Merger
Agreement that (x) it will vote, or cause to be voted, all of the Shares then
owned by it, the Purchaser or any of its other subsidiaries in favor of
approval of the Merger and the Merger Agreement and, (y) following consummation
of the Offer, it shall use its best efforts to cause the Company to take the
actions described in clauses (i), (ii) and (iii) of this paragraph, if such
actions are required by applicable law to consummate the Merger.
Representations and Warranties of the Company. The Merger Agreement
contains customary representations and warranties with respect to the Company,
including, among other things, (i) with respect to the organization, corporate
powers and qualifications of the Company and each of its subsidiaries; (ii)
with respect to the capitalization of the Company and its subsidiaries; (iii)
that the execution and delivery of the Merger Agreement and the Stock Option
Agreement by the Company and the consummation by the Company of the
transactions contemplated thereby have been duly and validly authorized and
approved by the Company Board and that no other corporate proceedings on the
part of the Company are necessary to authorize or approve the Merger Agreement
or the Stock Option Agreement or to consummate the transactions contemplated
thereby (other than, with respect to the Merger, the approval of the Merger by
the affirmative vote of the holders of at least a majority of the votes cast by
holders of Shares entitled to vote thereon, to the extent required by
applicable law); (iv) with respect to the absence of conflicts, violations or
breaches resulting from the execution and delivery of the Merger Agreement or
the Stock Option Agreement or consummation of the transactions contemplated
thereby, of any provision of the Amended and Restated Articles of Incorporation
or the By-laws of the Company, under any note, bond, mortgage, indenture,
lease, contract, agreement, instrument or obligation to which the Company or
any of its subsidiaries is a party or by which their assets are bound, or of
any permit, concession, franchise, license, judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Company or any of its
subsidiaries or their assets; (v) with respect to required consents, approvals,
orders or authorizations of, or registration, declaration or filing with, any
Governmental Authority (as defined below) by or with respect to the Company or
any of its subsidiaries in connection with the execution and delivery of the
Merger Agreement or the Stock Option Agreement or the consummation of the
transactions contemplated thereby; (vi) with respect to the accuracy of the
documents filed by the Company with the Commission; (vii) with respect to the
Company's financial statements and its financial condition; (viii) with respect
to indebtedness, indemnification obligations and liabilities of the Company and
its subsidiaries; (ix) with respect to the absence of certain changes or events
since June 30, 1998, including that there has been no Material Adverse Effect
(as defined below) with respect to the Company and its subsidiaries taken as a
whole; (x) with respect to certain tax matters regarding the Company and its
subsidiaries; (xi) with respect to the absence of certain transactions between
the Company and any of its affiliates and the absence of certain payments by
the Company or any of its affiliates; (xii) with respect to Required
Authorizations (as defined below) that must be given or obtained in connection
with the Merger Agreement or the Stock Option Agreement; (xiii) with respect to
the absence of certain litigation with respect to the Company; (xiv) with
respect to compliance by the
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Company and its subsidiaries with applicable laws and regulations; (xv) with
respect to contracts to which the Company or any of its subsidiaries is a
party; (xvi) with respect to real property leases to which the Company or any
of its subsidiaries is party; (xvii) with respect to personal property owned or
leased by the Company or any of its subsidiaries; (xviii) with respect to
patents, trademarks and other intellectual property of the Company and its
subsidiaries; (xix) with respect to environmental matters affecting the Company
or any of its subsidiaries or their respective properties; (xx) with respect to
products and services liabilities of the Company and its subsidiaries; (xxi)
with respect to insurance maintained by the Company and its subsidiaries;
(xxii) with respect to employment and related agreements to which the Company
or any of its subsidiaries is a party; (xxiii) with respect to certain labor
matters; (xxiv) with respect to the Company's employee benefit plans; (xxv)
with respect to the absence of discussions or negotiations regarding any
Acquisition Proposal involving the Company; (xxvi) with respect to the accuracy
and completeness of the information supplied by the Company in connection with
the Offer and the Proxy Statement; (xxvii) with respect to the vote of
shareholders of the Company required to approve the Merger; (xxviii) with
respect to certain provisions of the PBCL or other state takeover statutes
being inapplicable to the transactions contemplated by the Merger Agreement,
the Stock Option Agreement and the Shareholder Agreements; (xxix) with respect
to certain amendments made to the Rights Agreement in conjunction with the
Merger Agreement, the Stock Option Agreement and the Shareholder Agreements;
and (xxx) with respect to the absence of brokerage or finders fees or
commissions payable in connection with the Merger Agreement and the
transactions contemplated thereby (other than with respect to fees payable to
Legg Mason); and (xxxi) the accuracy and completeness of representations and
warranties made by the Company in the Merger Agreement and related documents.
For purposes of the Merger Agreement, Governmental Authority means any
nation or government, any state, province or other political subdivision
thereof, and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of a government with jurisdiction over the matter
in question.
For purposes of the Merger Agreement, Material Adverse Effect means a
material adverse effect on the business, assets (including intangible assets),
condition (financial or otherwise), or results of operations of the Company and
its subsidiaries taken as a whole; provided, however, that for purposes of the
Merger Agreement, (a) a decline in the market price of the Company Common Stock
shall not, in and of itself, constitute a Material Adverse Effect and (b)
operating losses shall not constitute a Material Adverse Effect unless such
operating losses exceed $1,000,000 in any consecutive four week period from and
after June 30, 1998 and, provided further, that such operating losses shall be
determined on the basis of accounting and financial management practices
consistent with the Company's past practices.
For purposes of the Merger Agreement, Required Authorizations shall mean,
with respect to any person, (i) all consents, authorizations, approvals or
other orders or actions of, or filings or registrations with, any federal,
state, local or foreign governmental authority or agency and (ii) all notices,
permits, approvals, consents, qualifications, waivers or other actions of third
parties under any lease, note, mortgage, indenture, agreement or other
instrument (or, in the case of the Company, under any Contract, Employment
Agreement or any Governmental Approval) or under any other third-party
franchise, license or permit, other than any such consents, authorizations,
approvals, permits, qualifications, waivers, orders, registrations, filings,
applications or other actions, the absence of which would not reasonably be
expected to have a Material Adverse Effect with respect to such person and its
subsidiaries, taken as a whole.
Representations and Warranties of Crane and the Purchaser. The Merger
Agreement contains customary representations and warranties by Crane and the
Purchaser, including, among other things, (i) with respect to the organization,
corporate powers and qualifications of Crane and the Purchaser; (ii) that each
of Crane and the Purchaser has the necessary corporate power and authority to
execute and deliver the Merger Agreement and to consummate the transactions
contemplated thereby; (iii) with respect to the absence of conflict between the
terms and provisions of the Merger Agreement and the transactions contemplated
thereby with any laws, regulations, agreements, contracts or other instruments
and obligations; (iv) the accuracy and completeness of information supplied by
Crane or the Purchaser for inclusion in the Schedule 14D-9 or the Proxy
Statement; and (v) with respect to the ownership by Crane or Purchaser of
Company Common Stock.
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Certain Covenants. The Merger Agreement obligates the Company, from the
date of the Merger Agreement until the consummation of the Offer, to conduct
its (and its subsidiaries') operations only in the ordinary and usual course of
business consistent with past practice and to use its reasonable efforts to
preserve intact their business organizations, to keep available the services of
their present officers and key employees and to preserve the goodwill of those
having business relationships with them. The Merger Agreement also contains
specific covenants as to certain activities of the Company prior to the
consummation of the Offer, which provide that the Company will (and will cause
its subsidiaries to):
(i) preserve and maintain its corporate existence and all of its rights,
privileges and franchises reasonably necessary or desirable in the normal
conduct of its business, except to the extent contemplated by any
transactions specifically permitted by the Merger Agreement;
(ii) not acquire any stock or other interest in, nor (except in the
ordinary course of business) purchase any assets of, any corporation,
partnership, association or other business organization or entity or any
division thereof (except any stock or assets distributed to the Company or
any of its subsidiaries as part of any bankruptcy or other creditor
settlement or pursuant to a plan of reorganization), nor agree to do any of
the foregoing;
(iii) not sell, lease, assign, transfer or otherwise dispose of any of
its assets (including, without limitation, patents, trade secrets or
licenses), nor suffer to exist or create any Lien on any of its assets,
except as permitted by the Merger Agreement or in the ordinary course of
business and except that the Company and each of its subsidiaries may sell
or otherwise dispose of any assets which are obsolete;
(iv) not incur any indebtedness, other than as a result of borrowings or
drawdowns, the issuance of letters of credit for the account of the Company
and the incurrence of interest, letter of credit reimbursement obligations
and other obligations under the terms of the Silicon Valley Bank Loan ,
which indebtedness shall be incurred only for working capital purposes;
(v) not (x) alter, amend or repeal any provision of the Amended and
Restated Articles of Incorporation of the Company or Bylaws of the Company
or the certificate of incorporation or by-laws of any subsidiary of the
Company, (y) change the number of its directors (other than as a result of
the death, retirement or resignation of a director), (z) form or acquire
any subsidiaries not existing as of the date of the Merger Agreement, (xx)
enter into, modify or terminate any contracts, real property leases or
personal property leases or agree to do so, (yy) enter into, modify or
terminate any employment agreement or hire any personnel other than
temporary personnel not eligible to participate in any benefit plans or
programs of the Company, or (zz) declare, pay, commit to or incur any
obligation of any kind for the payment of any bonus, additional salary or
compensation or retirement, termination, welfare or severance benefits or
change in control benefits payable or to become payable to any of its
employees or such other persons, except for such matters as are required
pursuant to the terms of any existing employment agreement or benefit plan;
(vi) maintain its books, accounts and records in the usual, ordinary and
regular manner and in material compliance with all applicable laws;
(vii) pay and discharge all taxes imposed upon it or upon its income or
profits, or upon any property belonging to it, prior to the date on which
penalties attach thereto, except to the extent that the Company is
currently contesting, in good faith and by proper proceedings, the payment
of such taxes and the Company maintains appropriate reserves with respect
thereto;
(viii) not settle any tax claim against the Company or any of its
subsidiaries or any litigation (net of applicable insurance proceeds) in
excess of $10,000;
(ix) meet in all material respects its obligations under all contracts,
real property leases and personal property leases and not become in default
thereunder;
(x) maintain in all material respects its business and assets in good
repair, order and condition, reasonable wear and tear excepted, and
maintain insurance upon such business and assets at least comparable in
amount and kind to that in effect on the date hereof;
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(xi) maintain in all material respects its present relationships and
goodwill with suppliers, brokers, manufacturers, representatives,
distributors, customers and others having business relations with it
(provided that it may pursue overdue accounts and otherwise exercise lawful
remedies in its customary fashion);
(xii) not declare, set aside, make or pay any dividends or other
distributions with respect to its capital stock, including, without
limitation, in the case of the Company, the Company Common Stock, or
purchase or redeem any shares of its capital stock, including, without
limitation, in the case of the Company, the Company Common Stock, or agree
to take any such action;
(xiii) not authorize or make any single capital expenditure in excess of
$5,000 or make any capital expenditure if the aggregate of the amount of
such capital expenditure together with the amounts of all other capital
expenditures since the date of the Merger Agreement shall exceed $25,000;
(xiv) not violate any law or regulation applicable to it nor violate any
order, injunction or decree applicable to the conduct of its business;
(xv) not increase the number of shares authorized or issued and
outstanding of its capital stock, including, without limitation, in the
case of the Company, the Company Common Stock, nor grant or make any
pledge, option, warrant, call, commitment, right or agreement of any
character relating to its capital stock, including, without limitation, in
the case of the Company, the Company Common Stock, nor issue or sell any
shares of its capital stock, including, without limitation, in the case of
the Company, the Company Common Stock, or securities convertible into such
capital stock, or any bonds, promissory notes, debentures or other
corporate securities or become obligated so to sell or issue any such
securities or obligations, except, in any case, issuance of shares of the
Company Common Stock (i) pursuant to the exercise of outstanding options,
warrants or other rights or (ii) pursuant to the Stock Option Agreement;
(xvi) not make any change to its accounting methods, principles or
practices, except as may be required by generally accepted accounting
principles;
(xvii) not expend any money pursuant to, or incur expenses related to
performance under, the Development Contract with Norwegian Oil Companies,
Saga Petroleum ASA, Phillips Petroleum Co., Statoil and Norsk Hydro
Produksjon in excess of $100,000 in the aggregate;
(xviii) not waive any right of substantial value or cancel any debt owed
to the Company or any subsidiary or claim against any person or entity; and
(xix) not authorize, or commit or agree to take, any of the foregoing
actions;
provided, however, that if the Company requests in writing that Crane consent
to the taking of any affirmative action on the part of the Company the taking
of which would require such consent pursuant to this section of the Merger
Agreement and the failure to grant such consent within four business days of
receipt by Crane of such request is the sole cause of the occurrence of a
Material Adverse Effect, then such Material Adverse Effect shall not be an
Event for purposes of Section 14 of this Offer to Purchase nor shall Crane be
permitted to terminate the Merger Agreement solely due to the occurrence of
such Material Adverse Effect.
The Merger Agreement also provides that the Company will not, and will not
permit any of its subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of its representations and
warranties set forth in the Merger Agreement that are qualified as to
materiality becoming untrue, (ii) any of its representations and warranties
that are not so qualified becoming untrue in any material respect or (iii)
subject to certain of the Company's rights under the Merger Agreement, any of
the conditions to the Merger set forth in the Merger Agreement that are within
the Company's control not being satisfied.
Advice of Changes. The Merger Agreement provides that the Company shall
promptly advise Crane orally and in writing of (i) any representation or
warranty made by it contained in the Merger
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Agreement that is qualified as to materiality becoming untrue or inaccurate in
any respect or any such representation or warranty that is not so qualified
becoming untrue or inaccurate in any material respect, (ii) the failure by it
to comply with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under the Merger Agreement or
(iii) any change or event having, or which could reasonably be expected to
have, a Material Adverse Effect on the Company and its subsidiaries taken as a
whole or on the truth of its representations and warranties or the ability of
the conditions to the Merger set forth in the Merger Agreement to be satisfied.
Upon such notification, Crane and Purchaser shall have the option either to
terminate the Merger Agreement or to waive any right to consider any of the
foregoing in connection with a determination as to whether any of the Events
specified in subparagraphs (c), (f) or (g) of Section 14 of Annex II of the
Merger Agreement has occurred.
No Solicitation. The Merger Agreement provides that the Company shall not,
nor shall it permit any of its subsidiaries to, nor shall it authorize or
permit any of its directors, officers or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to, directly or indirectly through another person,
(i) solicit or initiate (including by way of furnishing information), or take
any other action to facilitate, any inquiries or the making of any proposal
that constitutes any Acquisition Proposal (as defined below) or (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal; provided, however, that if, at any time prior to the acceptance for
payment of shares of Company Common Stock pursuant to the Offer, the Board of
Directors of the Company determines in good faith, based on the advice of
outside counsel, that it is required to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law, the
Company may, in response to an Acquisition Proposal that was not solicited by
it, and subject to compliance with Section 5.02(c) of the Merger Agreement
described below (regarding informing Crane of the existence and terms of such
Acquisition Proposal), (x) furnish information with respect to the Company and
its subsidiaries to any person pursuant to a customary confidentiality
agreement (as determined by the Company after consultation with its outside
counsel) and (y) participate in negotiations regarding such Acquisition
Proposal. For purposes of the Merger Agreement, "Acquisition Proposal" means
any inquiry, proposal or offer from any person relating to any direct or
indirect acquisition or purchase of 20% or more of the assets of the Company
and its subsidiaries or 20% or more of any class of equity securities of the
Company or any of its subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its subsidiaries, or any
merger, consolidation, business combination, share exchange, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries, other than the transactions contemplated by the Merger
Agreement.
The Merger Agreement provides that, except as expressly permitted by the
terms of the preceding paragraph, neither the Board of Directors of the Company
nor any committee thereof shall (i) (unless, prior to the acceptance for
payment of shares of Company Common Stock pursuant to the Offer, it determines
in good faith, based upon the advice of outside counsel, that it is required to
do so in order to comply with its fiduciary duties to the Company's
shareholders under applicable law) withdraw or modify, or propose publicly to
withdraw or modify, in a manner adverse to Crane, the approval or
recommendation by such Board of Directors or such committee of the Offer
(including by amendment of the Schedule 14D-9), the Merger or the Merger
Agreement, (ii) approve or recommend, or propose publicly to approve or
recommend, any Acquisition Proposal or (iii) cause the Company to enter into
any letter of intent, agreement in principle, acquisition agreement or other
similar agreement (each, an "Acquisition Agreement") related to any Acquisition
Proposal. Notwithstanding the foregoing, in the event that prior to the
acceptance for payment of Shares pursuant to the Offer the Company receives a
Superior Proposal (as defined below), the Board of Directors of the Company
may, if it determines in good faith, based on the advice of outside counsel,
that it is required to do so in order to comply with its fiduciary duties to
the Company's shareholders under applicable law, (x) withdraw or modify its
approval or recommendation of the Offer, the Merger or the Merger Agreement or
(y) approve or recommend such Superior Proposal and terminate the Merger
Agreement (and concurrently with or after such termination, if it so chooses,
cause the Company to enter into an Acquisition Agreement with respect to any
Superior Proposal) but only at a time that is after the third business day
following Crane's receipt of written notice from the Company advising Crane
that the Board of Directors of the Company has
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received a Superior Proposal, specifying the terms and conditions of such
Superior Proposal and identifying the person making such Superior Proposal. For
purposes of the Merger Agreement, a "Superior Proposal" means any proposal or
offer made by a third party to acquire, directly or indirectly, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock then outstanding or
a substantial portion of the assets of the Company and its subsidiaries and
otherwise on terms which the Board of Directors of the Company determines in
its good faith judgment, based upon the advice of its financial advisors, to be
more favorable to the Company's shareholders than the Offer and the Merger and
for which financing is either not a contingency, or, if a contingency, is then
committed and available.
In addition to the obligations of the Company set forth in the two
immediately preceding paragraphs, the Company is to as promptly as practicable
advise Crane of any Acquisition Proposal, the material terms and conditions of
such Acquisition Proposal and the identity of the person making such request or
Acquisition Proposal. The Company will keep Crane reasonably informed of the
status and details (including amendments) of any such Acquisition Proposal.
None of the foregoing provisions of the Merger Agreement shall prohibit
the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any disclosure to the Company's shareholders if, in the good faith judgment of
the Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its fiduciary duties to the
Company's shareholders under applicable law; provided, however, that neither
the Company nor its Board of Directors nor any committee thereof shall, except
as permitted by such provisions, withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to this Agreement or the Offer or
the Merger or approve or recommend, or propose publicly to approve or
recommend, an Acquisition Proposal.
Access to Information. The Merger Agreement provides that, until the
earlier of the termination of the Merger Agreement and the Effective Time, the
Company will give Crane and the Purchaser and their representatives reasonable
access, during normal business hours, to the offices and other facilities and
to the books and records of the Company and its subsidiaries.
Required Authorizations. The Merger Agreement provides that Crane, the
Purchaser and, subject to the provisions of the Merger Agreement discussed
under the heading "No Solicitation", above ("Section 5.02"), the Company, shall
each, and subject to Section 5.02, the Company shall cause each of its
subsidiaries to, as promptly as practicable, take all reasonable actions
necessary to obtain all Required Authorizations (if any) required to be given
or obtained by it, respectively, to permit Crane and the Purchaser, on the one
hand, and the Company, on the other, to consummate the transactions
contemplated by the Merger Agreement and the Stock Option Agreement and to
realize the respective benefits to each party contemplated thereby; provided
that Crane shall not be required to take any action to comply with any legal
requirement or agree to the imposition of any order of any Governmental
Authority that would (i) prohibit or restrict the ownership or operation by
Crane of any portion of the business or assets of Crane or the Company (or any
of their respective subsidiaries), (ii) compel Crane or the Company (or any of
their respective subsidiaries) to dispose of or hold separate any portion of
its or the Company's business or assets, or (iii) impose any limitation on the
ability of Crane or the Company or any of their respective affiliates or
subsidiaries to own or operate the business and operations of the Company and
its subsidiaries, and provided further that the Company and its subsidiaries
are not to incur fees and expenses in excess of $25,000 in the aggregate in
order to obtain certain such Required Authorizations without the prior written
consent of Crane.
Crane, the Purchaser and, subject to Section 5.02, the Company, are to
each cooperate with the others in filing in a timely manner any applications,
requests, reports, registrations or other documents, including, without
limitation, all reports and documents required to be filed by or under the
Exchange Act (including, without limitation, the Offer documents, the Schedule
14D-9 and the Proxy Statement), with any Governmental Authority having
jurisdiction with respect to the transactions contemplated by the Merger
Agreement and in consulting with and seeking favorable action from any
Governmental Authority.
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Subject to Section 5.02, the Company is to, and is to cause each of its
subsidiaries to, take all reasonable action necessary to obtain all approvals
or consents of any person needed in order that certain contracts continue in
full force and effect under the same terms and conditions currently in effect
following consummation of the transactions contemplated by the Merger
Agreement; provided, however, that the receipt of any approval or consent under
any contracts pursuant to the requirement stated in this paragraph is not a
condition precedent to the obligations of Crane or Purchaser under the Merger
Agreement.
Subject to Section 5.02, the Company and its Board of Directors are to (i)
take all reasonable action necessary to ensure that no state takeover statute
or similar statute or regulation in effect on the date of the Merger Agreement
is or becomes applicable to the Offer, the Merger, the Merger Agreement, the
Stock Option Agreement, the Shareholder Agreements or any of the other
transactions contemplated by the Merger Agreement and (ii) if any such state
takeover statute or similar statute or regulation becomes applicable to the
Offer, the Merger, the Merger Agreement, the Stock Option Agreement, the
Shareholder Agreements or any other transaction contemplated by the Merger
Agreement, take all reasonable action necessary to ensure that the Offer, the
Merger, the Stock Option Agreement, the Shareholder Agreements and the other
transactions contemplated by the Merger Agreement may be consummated as
promptly as practicable on the terms contemplated by the Merger Agreement and
otherwise to minimize the effect of such statute or regulation on the Merger
and the other transactions contemplated by the Merger Agreement.
Financial Statements of the Company. As soon as practicable but in any
event within 30 days after the end of each calendar month commencing with July
1998, through the consummation of the Offer or earlier termination of the
Merger Agreement in accordance with its terms, the Company is to deliver to
Crane unaudited consolidated balance sheets of the Company and its subsidiaries
as at the end of such calendar month and as at the end of the comparative month
of the preceding year, together with unaudited summaries of consolidated
earnings of the Company and its subsidiaries for such calendar month and the
comparative calendar month of the preceding year. As soon as practicable but in
any event within 30 days after the end of each fiscal quarter of the Company,
commencing with June 30, 1998, and within 60 days after the end of the fiscal
year ended December 31, 1998, as the case may be, through the consummation of
the Offer or earlier termination of the Merger Agreement, the Company is to
deliver to Crane unaudited consolidated and consolidating balance sheets of the
Company and its subsidiaries as at the end of such fiscal quarter and as at the
end of the comparative fiscal quarter of the preceding year, together with the
related unaudited statements of consolidated income and cash flows for the
fiscal quarters then ended.
Employee Matters. The Merger Agreement includes Crane's agreement (a) that
on and after the consummation of the Offer and until the date that is 18 months
after the Effective Time, Crane shall cause the Company, and, on and after the
Effective Time, the Surviving Corporation, to honor the severance policy of the
Company and the employment agreements that are identified in the Company
Disclosure Schedule, (b) to give the employees of the Company full credit for
purposes of eligibility and vesting under any employee benefit plans or
arrangements maintained by Crane, the Company or any subsidiary of Crane for
such employees' service with the Company or any of its subsidiaries to the same
extent recognized by the Company immediately prior to the consummation of the
Offer, (c) to waive all limitations as to pre-existing conditions, exclusions
or waiting periods with respect to participation and coverage requirements
applicable to the Company employees under any welfare benefit plans that such
employees may be eligible to participate in after the consummation of the Offer
and (d) to provide employees of the Company, and, after the Effective Time, the
Surviving Corporation, with employee benefits comparable to those provided by
Crane (or any of its subsidiaries) to similarly situated employees of Crane (or
any of its subsidiaries).
Rights Agreement. The Merger Agreement provides that the Board of
Directors of the Company will take all further action reasonably requested in
writing by Crane (including redeeming the Rights immediately prior to the
Effective Time or amending the Rights Agreement) in order to render the Rights
inapplicable to the Offer, the Merger and the other transactions contemplated
by the Merger Agreement.
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Indemnification; Directors' and Officers' Insurance. The Merger Agreement
provides that for six years after the Effective Time, Crane shall, or shall
cause the Company to, indemnify, defend and hold harmless any person who is, or
has been at any time prior to the date of the Merger Agreement, or who becomes
prior to the Effective Time, a director or an officer (an "Indemnified Person")
of the Company or any of its subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and expenses),
judgments, fines, losses and amounts paid in settlement in connection with any
actual or threatened action, suit, claim, proceeding or investigation (each a
"Claim") to the extent that any such Claim is based on, or arises out of: (i)
the fact that such Indemnified Person is or was a director or an officer of the
Company or any of its subsidiaries or is or was serving at the request of the
Company or any of its subsidiaries as a director or an officer of another
corporation, partnership, joint venture, trust or other enterprise; or (ii) the
Merger Agreement or any of the transactions contemplated hereby, in each case
to the extent that any such Claim pertains to any matter or fact arising,
existing or occurring prior to or at the Effective Time, regardless of whether
such Claim is asserted or claimed prior to, at or after the Effective Time, to
the full extent permitted under the PBCL, the Amended and Restated Articles of
Incorporation of the Company and the Company's By-laws; provided, however, that
neither Crane nor the Company shall be required to indemnify any Indemnified
Person in connection with any proceeding (or portion thereof) involving any
Claim initiated by such Indemnified Person unless the initiation of such
proceeding (or portion thereof) was authorized by the Board of Directors of
Crane or unless such proceeding is brought by an Indemnified Person to enforce
rights to indemnification under the Merger Agreement. If any Indemnified Person
becomes involved in any Claim, after the consummation of the Offer, Crane
shall, or shall cause the Company to, periodically advance to such Indemnified
Person its legal and other expenses (including the cost of any investigation
and preparation incurred in connection therewith), subject to the providing by
such Indemnified Person of an undertaking to reimburse all amounts so advanced
in the case of a final nonappealable determination by a court of competent
jurisdiction that such Indemnified Person is not entitled to be indemnified
therefor.
The Merger Agreement also provides that Crane or the Company shall
maintain the Company's existing directors' and officers' liability insurance
policy ("D&O Insurance") for a period of not less than six years after the
Effective Time; provided, however, that Crane may substitute therefor policies
of substantially similar coverage (including pursuant to Crane's own policy)
and amounts containing terms no less advantageous to such former directors or
officers; provided further that, subject to the preceding proviso, if the
existing D&O Insurance expires or is canceled during such period, Crane or the
Surviving Corporation shall use their best efforts to obtain substantially
similar D&O Insurance; and provided further that neither Crane nor the
Surviving Corporation shall be required to pay an annual premium for D&O
Insurance in excess of 200% of the last annual premium paid prior to the date
of the Merger Agreement, but in such case shall purchase as much coverage as
possible for such amount.
Public Announcement. The Merger Agreement provides that Crane and the
Company will consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any press release or other
public statements with respect to the transactions contemplated by the Merger
Agreement, including the Offer and the Merger, and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable law, court process or by obligations
pursuant to any listing agreement with any national securities exchange.
Shareholder Litigation. The Merger Agreement provides that the Company
shall give Crane the opportunity to participate, at no expense to the Company,
in the defense or settlement of any shareholder litigation against the Company
and its directors relating to the transactions contemplated by the Merger
Agreement. No such settlement is to be agreed to without Crane's consent;
provided, however, that if a failure to so consent is the sole cause of the
occurrence of a Material Adverse Effect, then such Material Adverse Effect
shall not be an Event for purposes of Section 14 of Annex II of the Merger
Agreement nor shall Crane be permitted to terminate the Merger Agreement solely
due to the occurrence of such Material Adverse Effect.
Conditions to Consummation of the Merger. Pursuant to the Merger
Agreement, the respective obligations of Crane, the Purchaser and the Company
to consummate the Merger are subject to the satisfaction, at or before the
Effective Time, of each of the following conditions: (i) the shareholders of
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the Company shall have duly approved the transactions contemplated by the
Merger Agreement, if required by applicable law; (ii) any waiting period (and
any extension thereof) under the HSR Act applicable to the Merger shall have
expired or terminated; (iii) no judgment, decree, statute, law, ordinance,
rule, regulation, temporary restraining order, preliminary or permanent
injunction or other order enacted, entered, promulgated, enforced or issued by
any court of competent jurisdiction or other Governmental Authority or other
legal restraint or prohibition preventing the consummation of the Merger shall
be in effect; provided, however, that each of the parties shall have used all
reasonable efforts to prevent the entry of any such restraints and to appeal as
promptly as possible any such restraints that may be entered; and (iv) the
Purchaser shall have accepted for payment and paid for Shares pursuant to the
terms and conditions of the Offer.
Termination. The Merger Agreement may be terminated at any time prior to
the Effective Time, notwithstanding approval thereof by the shareholders of the
Company: (i) by the mutual written consent of Crane and the Company; (ii) by
either Crane or the Company:
(a) if the Offer is terminated or withdrawn pursuant to its terms without
any Shares being purchased thereunder; provided, however, that neither
Crane nor the Company may so terminate the Merger Agreement if such party
shall have materially breached the Merger Agreement;
(b) if the Offer has not been consummated on or before October, 31, 1998;
or
(c) if any Governmental Authority shall have issued an order, decree,
ruling or injunction or taken any other action permanently enjoining,
restraining or otherwise prohibiting acceptance for payment of Shares
pursuant to the Offer or the consummation of the Merger and such order,
decree, ruling, injunction or other action shall have become final and
nonappealable;
(iii) by the Company if Crane or the Purchaser shall not have accepted for
payment and paid for shares of Company Common Stock pursuant to the Offer in
violation of the terms hereof and of the Merger Agreement; provided, however,
that the Company may not so terminate the Merger Agreement if the Company shall
have materially breached the Merger Agreement;
(iv) by the Company in accordance with Section 5.02 of the Merger
Agreement prior to the acceptance for payment of Shares pursuant to the Offer;
provided that it has complied with all provisions of that Section;
(v) by Crane prior to the purchase of Shares pursuant to the Offer if (i)
the Board of Directors of the Company or any committee thereof shall have
withdrawn or modified in a manner adverse to Crane its approval or
recommendation of the Offer (including by amendment of the Schedule 14D-9), the
Merger or the Merger Agreement, or approved or recommended any Superior
Proposal or (ii) the Board of Directors of the Company or any committee thereof
shall have resolved to take any of the foregoing actions; or
(vi) by Crane or the Purchaser pursuant to Section 5.01(c) of the Merger
Agreement (regarding advice of certain changes).
In the event of any such termination of the Merger Agreement by either the
Company or Crane, the Merger Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Crane, the Purchaser
or the Company, except as to certain provisions and to the extent that such
termination results from the willful and material breach by a party of any of
its representations, warranties, covenants or agreements set forth in the
Merger Agreement.
The Merger Agreement may be amended by the parties at any time before or
after the Company Shareholder Approval; provided, however, that after any such
approval, there shall not be made any amendment that by law requires further
approval by the shareholders of the Company without the further approval of
such shareholders. The Merger Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties.
At any time prior to the Effective Time, a party may (a) extend the time
for the performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations and
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warranties of the other parties contained in the Merger Agreement or in any
document delivered pursuant to the Merger Agreement or (c) with certain
exceptions, waive compliance by the other parties with any of the agreements or
conditions contained in the Merger Agreement. Any agreement on the part of a
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to the Merger Agreement to assert any of its rights under the Merger Agreement
or otherwise shall not constitute a waiver of such rights.
A termination of the Merger Agreement, an amendment of the Merger
Agreement or an extension or waiver by any party to the Merger Agreement shall,
in order to be effective, require action by its Board of Directors or, with
respect to any amendment to the Merger Agreement, to the extent permitted by
applicable law, a duly authorized committee of its Board of Directors.
Fees and Expenses. Except as provided below, all fees and expenses
incurred in connection with the Merger Agreement and the transactions
contemplated thereby are to be paid by the party incurring such fees or
expenses, whether or not the Merger is consummated.
The Company is to reimburse Crane for out-of-pocket expenses incurred by
Crane relating to the transactions contemplated by the Merger Agreement prior
to termination (including, but not limited to, fees and expenses of Crane's
counsel, accountants and financial advisors), if (i) the Merger Agreement shall
have been terminated pursuant to the provisions of the Merger Agreement
described in paragraphs (iv) or (v) under the heading "Termination" above, (ii)
the Company enters into an Acquisition Agreement with a party other than Crane
or any of its affiliates within one year of the date of such termination and
(iii) the transaction contemplated by such Acquisition Agreement is consummated
within 18 months of the date of such termination. Such reimbursement is to be
paid in same-day funds within one business day after the consummation of the
transaction contemplated by any such Acquisition Agreement.
The Stock Option Agreement. Following is a brief summary of the Stock
Option Agreement, a copy of which has been filed as Exhibit (c)(4) to this
Schedule 14D-9 and incorporated herein by reference. Such summary is qualified
in its entirety by reference to the Stock Option Agreement.
Pursuant to the Stock Option Agreement, Crane has the irrevocable right
(the "Stock Option"), under certain circumstances, to acquire from the Company
up to 997,633 shares of Company Common Stock (the "Option Shares"), or
approximately 19.9% of the outstanding Company Common Stock on the date of the
Merger Agreement, including the associated Rights, at a price of $2.75 per
share. The exercise price is payable in cash. The Stock Option Agreement could
have the effect of making an acquisition of the Company by a third party more
costly because of the need to acquire in any such transaction the Option Shares
issued under the Stock Option Agreement.
The Stock Option may be exercised by Crane, in whole or in part, at any
time or from time to time after the termination of the Merger Agreement
pursuant to the provisions of the Merger Agreement described in clause (iv) or
clause (v) under the heading "Termination", above (an "Exercise Event"). The
Stock Option shall terminate upon the earlier of (i) the consummation of the
Offer, (ii) the termination of the Merger Agreement pursuant to its terms
(other than a termination following an Exercise Event), or (iii) 365 days
following any termination of the Merger Agreement following an Exercise Event
(or, if at the expiration of such 365-day period, the Stock Option cannot be
exercised by reason of any applicable judgment, decree, order, law, regulation
or waiting period, 15 days after such impediment to exercise shall have been
removed or such waiting period has expired).
If, at any time during the period after the occurrence of an Exercise
Event and before termination of the Stock Option, Crane sends to the Company a
notice indicating Crane's election to exercise its rights to receive the cash
value of any Stock Option, then the Company is to pay to Crane, in exchange for
the cancellation of the Stock Option with respect to such number of Option
Shares as Crane specifies in such notice, an amount in cash equal to such
number of Option Shares multiplied by the difference between (i) the average
closing price per share of Company Common Stock for the 10 trading days
commencing on the 12th trading day immediately preceding the date of the notice
and (ii) the per share exercise price of the Stock Option.
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In the event of any change in Company Common Stock or in the number of
outstanding shares of Company Common Stock by reason of a stock dividend,
split-up, recapitalization, combination, exchange of shares or similar
transaction or any other change in the corporate or capital structure of the
Company, the type and number of shares or securities to be issued upon exercise
of the Stock Option shall be adjusted appropriately and proper provision shall
be made in agreements governing such transaction, so that Crane shall receive
upon exercise of the Stock Option the number and class of shares or other
securities or property that Crane would have received in respect of the Option
Shares if the Stock Option had been exercised immediately prior to such event
or the record date therefor.
The Stock Option Agreement further provides that at any time and from time
to time after payment for and delivery of the Option Shares upon exercise of
the Stock Option, Crane may make a written request for registration of all or
part of its Option Shares under and in accordance with the provisions of the
Securities Act of 1933, as amended. Such registration may be, at Crane's
option, a shelf registration or a registration involving an underwritten
offering.
The Shareholder Agreements. Following is a summary of the Shareholder
Agreements, the form of which has been filed as Exhibit (c)(5) to this Schedule
14D-9 and incorporated herein by reference. Such summary is qualified in its
entirety by reference to the full text of the form of Shareholder Agreement.
Pursuant to the Shareholder Agreements, each of Atalanta Selective Fund
Number Six Limited Partnership, Stephen A. Wells Profit Sharing Plan, Stephen
A. Wells, Wells Resources, Inc., Dan Kirkland Wells Foundation, R. Nim Evatt,
Robert L. Leon, Susan Leon and Roland K. Bullard, II (each, a "Shareholder")
has agreed, among other things, that, (i) until the earlier of the date on
which the Offer is terminated or withdrawn or the date on which the Merger
Agreement is terminated in accordance with its terms, the Shareholder will
tender, and not withdraw, his Shares pursuant to the Offer, and (ii) until the
earlier of the Effective Time, the date on which the Merger Agreement is
terminated in accordance with its terms or the purchase of all of the Shares
owned by such Shareholder pursuant to the Offer (the earliest of such dates
being the "Expiration Date"), the Shareholder will vote, or grant his consent
with respect to, all of his shares of Company Common Stock (x) in favor of the
approval of the Merger Agreement and the Merger and any other transaction
contemplated by the Merger Agreement or the Stock Option Agreement, as such
Merger Agreement or Stock Option Agreement may be modified or amended from time
to time, and (y) against any action, omission or agreement which would impede
or interfere with, or have the effect of discouraging, the Merger, including,
without limitation, any Acquisition Proposal other than the Merger.
At the request of Crane, each Shareholder will execute, in accordance with
the provisions of the PBCL, and deliver to Crane an irrevocable proxy and
irrevocably appoint Crane or its designees his attorney and proxy to vote or
give consent with respect to all of his shares of Company Common Stock for the
purposes set forth above. Any such proxy will terminate on the Expiration Date.
Each Shareholder Agreement contains the agreement of the Shareholder that,
among other things, he will: (a) until the date that is six months after the
Expiration Date, not, and will not agree to, sell, transfer, pledge,
hypothecate, encumber, assign, tender or otherwise dispose of any of his shares
of Company Common Stock other than pursuant to the Merger Agreement, unless and
until such transferee executes and delivers to Crane a joinder to the
Shareholder Agreement pursuant to which such transferee shall agree that, for
all purposes of the Shareholder Agreement, (i) such transferee shall be deemed
to be the Shareholder thereunder and (ii) all shares of the Company Common
Stock transferred to such transferee pursuant to this provision shall be deemed
to be "Shares" under the Shareholder Agreement; (b) other than as contemplated
by the Shareholder Agreement, until the Expiration Date, not grant any powers
of attorney or proxies or consents in respect of any of his shares of Company
Common Stock, deposit any of his shares of Company Common Stock into a voting
trust, enter into a voting agreement with respect to any of his shares of
Company Common Stock or otherwise restrict the ability of the holder of any of
his shares of Company Common Stock freely to exercise all voting rights with
respect thereto; and (c) until the Expiration Date, not initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or
implementation of any Acquisition Proposal or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal.
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Pursuant to each Shareholder Agreement, Crane has the irrevocable right
(the "Shareholder Stock Option"), at any time or from time to time if the
Company enters into an Acquisition Agreement with a party other than Crane or
any of its affiliates within six months after the Expiration Date, to acquire
from each Shareholder all or any portion of the shares of Company Common Stock
owned by each Shareholder, including the associated Rights, at a price of $3.50
per share. The exercise price is payable in cash.
In the event (a) of any stock dividend, stock split, merger,
recapitalization, reclassification, combination, exchange of shares or the like
of the capital stock of the Company on, or affecting the shares to be issued
upon exercise of the Shareholder Stock Option or (b) that the Shareholder shall
become the beneficial owner of any additional shares of Company Common Stock or
other securities entitling the holder thereof to vote or give consent with
respect to the matters set forth in the Shareholder Agreement, then such
additional shares of Company Common Stock and other securities shall become
shares subject to the Shareholder Stock Option and the terms of the Shareholder
Agreement shall otherwise apply to the shares of capital stock or other
instruments or documents held by the Shareholder immediately following the
effectiveness of the events described in clause (a) or the Shareholder becoming
the beneficial owner thereof as described in clause (b), as though, in either
case, they were shares subject to the Shareholder Agreement.
Each Shareholder Agreement contains the Shareholder's representations and
warranties relating to, among other things, (a) the execution, delivery and
enforceability of his Shareholder Agreement, (b) the ownership of his shares of
Company Common Stock, and (c) the absence of encumbrances on his shares of
Company Common Stock.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors
The Board of Directors of the Company has approved the Merger Agreement,
the Offer and the Merger, and has determined that each of the Offer and the
Merger is fair to and in the best interests of the Company's shareholders, and
recommends that the Company's shareholders accept the Offer and tender their
Shares in the Offer.
A letter to the Company's shareholders communicating the recommendation of
the Board of Directors and a press release announcing the execution of the
Merger Agreement are filed herewith as Exhibits (a)(1) and (a)(2),
respectively, and are incorporated herein by reference.
(b) Background; Reasons for the Recommendation of the Board of Directors
The Company, founded in 1984, develops, manufactures, markets and sells
diagnostic and condition monitoring systems and provides related services to
customers in the worldwide power, process and industrial markets. In November
1996 and in connection with its press release announcing its results of
operations for the nine months ended September 30, 1996, the Company announced
that it would commence a review of possible strategic alternatives for all of
its businesses. In December 1996, as part of that review of strategic
alternatives, the Company's Board of Directors conducted a review of each of
the Company's businesses (i) to assess strategic alternatives for each such
business, (ii) to identify areas of business focus to preserve financial and
human resource capital available to the Company, (iii) to evaluate each
business areas's opportunities and threats, and (iv) to assess the financial
strength and liquidity needs of the Company. That review identified the need
for greater focus by management on specific product business niches and, in
particular, three market areas -- (1) condition monitoring products and related
services, (2) digital radiography using the Company's RADView product line, and
(3) international power and process industries through strategic alliances.
In October 1997, the Company concluded the sale of the Company's
nondestructive testing and evaluation services business (the "NDE Business") to
a newly formed subsidiary of General Electric Company ("GE"). At the time, the
Company believed that a sale of the NDE Business would generate capital to be
used in the development of the Company's product businesses. The Company used a
portion of the net proceeds from the sale of the NDE Business to repay all of
its outstanding debt.
16
<PAGE>
After the sale of the NDE Business, the Company continued to experience
operating losses in the fourth quarter of 1997. In addition, the Company's
actual operating performance did not achieve the Company's internal
projections. During this period, the Company Board continued to review possible
strategic alternatives for the Company and its businesses, but did not yet
decide to sell the Company.
During late February and early March 1998, Mr. David P. Kollock, a
financial advisor to Crane based in Philadelphia, met with Mr. Roland K.
Bullard, II a director of Company, Messrs. Anthony Moffa and Richard Tuft,
non-management founders of the Company with substantial holdings of shares of
Company Common Stock, and Mr. Richard Difieux, a director of the Company, each
of whom indicated interest in discussing a possible transaction with Crane. On
March 10, Mr. Kollock and Mr. R.S. Evans, Chairman and Chief Executive Officer
of Crane, met with Mr. Stephen Wells, a director and substantial shareholder of
the Company, who also expressed interest in a possible transaction.
On March 18, 1998, the Company entered into a confidentiality agreement
with Crane regarding certain information that would be provided by the Company
to Crane during the course of Crane's due diligence review of the Company in
connection with a possible negotiated transaction with the Company. On March
19, the Company management made presentations to Crane and Crane began
preliminary due diligence. On April 2 and 3, Crane conducted a more detailed
due diligence review of the Company.
At about the same time, the Company entered into a confidentiality
agreement with another potential acquiror who also began conducting a due
diligence review of the Company.
On April 21, 1998, April 23, 1998 and April 24, 1998 the Company Board met
to establish a committee to evaluate its alternatives with respect to the
interest expressed by the other acquiror in entering into a transaction with
the Company and to discuss such alternatives. During the month of April 1998,
Mr. Kollock had a number of discussions with Mr. Wells concerning a possible
transaction.
On April 29, 1998, the other potential acquiror delivered a non-binding
written indication of interest to the Company to purchase the Company at a
price equal to $5.50 per share payable in shares of this acquiror's common
stock, subject to, among other conditions, satisfactory due diligence. On May
5, 1998, Crane delivered a non-binding written indication of interest to the
Company to purchase the Company (excluding the Company's RADView business) at a
price equal to $4.25 per share payable in shares of Crane common stock or $4.50
per share in cash, subject to satisfactory due diligence, definitive
documentation and approval by the respective Boards of Directors of Crane and
the Company and the Company's shareholders, and the receipt of any necessary
governmental approvals. The Company advised Crane that the Company Board
decided to explore other possible alternatives.
On May 7, 1998, the Company Board met to discuss the terms and structure
of the non-binding written proposals it had recently received from Crane and
the other potential acquiror.
On May 12, 1998, the Company issued a press release reporting financial
results for the quarter ended March 31, 1998 that reflected decreased revenues
and earnings as compared to the first quarter of 1997. The press release
further stated that the Company Board "is considering strategic alternatives to
enhance shareholder value, and that such alternatives may include the sale or
restructuring of all or part of the Company." On May 22, 1998, Mr. Evans
advised Mr. Wells that he was withdrawing Crane's May 5 proposal. At about the
same time, the other potential acquiror reduced its indicated price to $4.00
per share in cash. This other potential acquiror later withdrew its proposal
and made no further proposals.
On June 8, 1998, the Company issued a press release reporting "a
restructuring of the Company in an effort to reduce operating expenses and to
provide additional focus to their key accounts and markets."
On June 25, 1998, Mr. Evans and Mr. Kollock met with Mr. Wells to explore
renewal of Crane's interest in a possible transaction with the Company.
During the period from June 29 through July 1, 1998, Crane conducted
additional due diligence with respect to the Company.
On July 13, 1998 Crane submitted a revised non-binding written indication
of interest to purchase the Company at a price equal to $3.25 per share in
cash, to be structured as a tender offer with a subsequent merger to acquire
Shares not purchased in the tender offer.
17
<PAGE>
On July 16, 1998, the Company Board met to discuss Crane's new proposal
and possible alternatives to this proposal. After this Board meeting and
following discussions among Mr. Wells and Mr. Evans and Mr. David Smith,
Crane's Chief Financial Officer on July 17, 1998, Crane agreed to increase the
purchase price to $3.50 per share.
Between July 22, 1998 and August 10, 1998, Crane and the Company and their
respective professional advisors negotiated the Merger Agreement, the Stock
Option Agreement, the form of Shareholder Agreement, and the First Amendment to
Amended and Restated Rights Plan.
On July 30, 1998, the Company received a non-binding written indication of
interest from another potential acquiror to purchase the Company at a price
equal to $3.85 per share in cash, subject to, among other things, satisfactory
due diligence, which the potential acquiror advised could take up to 60 days.
The Company Board met on July 30, 1998 to consider this proposal. After
extensive discussions, the Company Board concluded that the transaction
proposed by this potential acquiror was too preliminary and conditional in
nature to risk jeopardizing the Crane proposal by delaying continued
negotiation of the Crane transaction. Accordingly, the Company Board decided
that it was in the Company's and its shareholders' best interest to continue
discussions with Crane and to not pursue the proposal made by this potential
acquiror unless the potential acquiror committed to complete its due diligence
and negotiation of definitive documentation within the time frame in which the
Company expected the Crane transaction to be finalized. Company management
communicated this timing requirement to the potential acquiror. The potential
acquiror took no further action with respect to its proposal.
On August 10, 1998, the Company Board authorized representatives of the
Company to execute the Merger Agreement, the Stock Option Agreement and the
First Amendment to Amended and Restated Rights Plan. On August 11, 1998, the
Merger Agreement, the Stock Option Agreement, the First Amendment to Amended
and Restated Rights Agreement and the Shareholder Agreements were executed and
delivered, and the transaction was announced publicly on the morning of August
12, 1998. The press release announcing the execution of the Merger Agreement
and the terms of the Offer and Merger is filed as Exhibit (a)(2) to this
Schedule 14D-9 and is incorporated herein by reference.
In approving the Offer, the Merger, the Merger Agreement, the Stock Option
Agreement, the First Amendment to Amended and Restated Rights Agreement and the
transactions contemplated thereby, the Board considered a number of factors,
including:
1. The Company Board's view that a sale of the Company at this time is in
the best interest of the Company and its shareholders in light of: (a) the
Company's history of operating losses and net losses since 1994; (b) the
results of the second quarter ended June 30, 1998; (c) the Company's
prospects for the third quarter ending September 30, 1998 and thereafter;
(d) the Company's history of not achieving its internal projections and the
Company Board's uncertainty with respect to the achievability of the
Company's current short-term and long-term internal projections; (e) the
Company Board's view that additional equity, which would likely be dilutive
to the Company's existing shareholders, or a sale of assets would be
necessary to sustain the Company's independence; and (f) the recent current
market price for the Company Common Stock.
2. The terms and conditions of the Merger Agreement (including, without
limitation, the $3.50 per share cash amount to be paid by Crane), which the
Company Board views as favorable to the Company's shareholders.
3. The opinion of Legg Mason Wood Walker, Incorporated ("Legg Mason")
presented to the Company Board on August 10, 1998, to the effect that the
consideration to be paid to the Company's shareholders in the proposed
acquisition by Crane pursuant to the Merger Agreement and the related
documents is fair from a financial point of view. In considering such
opinion, the Company Board and Special Committee (defined below) of the
Company Board were aware that upon delivery thereof, Legg Mason became
entitled to certain fees described in Item 5 below in connection with its
engagement by the Company.
4. The presentation of Legg Mason in connection with such opinion, as to
various financial and other considerations deemed relevant to the Board's
evaluation of the Offer and the Merger
18
<PAGE>
including (i) a review of the historical financial performance of the
Company; (ii) a review and analysis of the historical and current market
prices and trading patterns of the Shares; (iii) the market price of the
Shares in relation to the market prices and financial data of other
companies engaged in similar businesses as the Company; (iv) a review and
analysis of prices and premiums paid in, and other terms of, other
comparable recent acquisition transactions; (v) a discounted cash flow
analysis of the Company; and (vi) an analysis of the value of the Company
in the event of a liquidation of its assets.
5. The Company's shareholders will realize the entire value of the
purchase price without the risk of post-closing indemnification
obligations.
6. The Company Board's ability to withdraw or modify its approval or
recommendation of the Offer, the Merger and any of the other transactions
contemplated by the Merger Agreement if necessary for the Company Board to
comply with its fiduciary duties.
7. The Company Board's ability to approve and recommend a Superior
Proposal (as defined in the Merger Agreement) if necessary for the Company
Board to comply with its fiduciary duties.
8. Crane's ability to conclude the transaction expeditiously and without
any financing contingency.
9. Crane's agreement (i) to give to those of the Company's or any of its
subsidiaries' employees who remain in the employ of Crane or the Company
after completion of the Offer (collectively, the "Remaining Company
Employees") full credit for purposes of eligibility and vesting under all
employee benefit plans or arrangements maintained by Crane or any of its
subsidiaries for such Remaining Company Employees' service with the Company
or any of its subsidiaries to the same extent recognized by the Company
immediately prior to the consummation of the Offer, (ii) to provide the
Remaining Company Employees with benefits comparable to those provided by
Crane or any of its subsidiaries to similarly situated employees of Crane
or any of its subsidiaries and (iii) to honor the Company's existing
severance policy and separate employees severance agreements for a period
of 18 months after the completion of the Merger for those of the Company's
or any of its subsidiaries' employees who do not remain in the employ of
the Crane or the Company after completion of the Offer.
10. The Company Board's view that the proposed acquisition will benefit
the Company's customers by, among other things, assuring the continued
availability of those Company products that are continued by Crane after
the acquisition and of related after-sales service.
11. The Company Board's view that it is unlikely that there will be,
within the foreseeable future, any offer to acquire the Company which is
superior to Crane's offer and which can be closed within the time frame of
Crane's proposed acquisition.
The foregoing discussion of factors considered and given weight by the
Company Board is not intended to be exhaustive. In view of the variety of
factors considered in connection with its evaluation of the Offer and the
Merger, the Company Board did not find it practicable to, and did not, quantify
or otherwise assign relative weights to the specific factors considered in
reaching its determinations and recommendations. In addition, individual
members of the Company Board may have given different weights to different
factors in reaching their own respective determinations.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
Pursuant to the terms of a letter agreement dated July 16, 1998 (the
"Engagement Letter"), a special committee (the "Special Committee") of the
Board of Directors of the Company retained Legg Mason to assist the Special
Committee as its financial advisor in evaluating the terms of the Offer and to
render an opinion as to the fairness, from a financial point of view, of the
consideration to be received by the shareholders of the Company pursuant to the
Offer. A copy of Legg Mason's opinion is attached to this Schedule 14D-9 as
Annex I, filed herewith as Exhibit (c)(3) and incorporated herein by reference.
The Company has agreed to pay Legg Mason a fee of $100,000 and to reimburse
Legg Mason for all reasonable out-of-pocket expenses incurred in carrying out
its duties under the engagement. Pursuant to
19
<PAGE>
the Engagement Letter, the Company has agreed to indemnify Legg Mason and its
directors, officers, agents, employees affiliates, and controlling persons for
certain costs, expenses and liabilities, including liabilities under federal
securities laws, to which it might be subjected arising out of its engagement
as financial advisor.
Except as disclosed herein, neither the Company nor any person acting on
its behalf has employed, retained or compensated any person to make
solicitations or recommendations to the Company's shareholders with respect to
the Offer or the Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Except with respect to an immaterial periodic purchase of Shares by
the Company's employee stock purchase plan, no transactions in the Shares have
been effected during the past 60 days by the Company or, to the best of the
Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company.
(b) To the best knowledge of the Company, all of its executive officers,
directors, affiliates and subsidiaries currently intend to tender pursuant to
the Offer all Shares held of record or beneficially owned by them (other than
Shares issuable upon exercise of stock options and Shares, if any, which if
tendered could cause such persons to incur liability under the provisions of
Section 16(b) of the Exchange Act).
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth in this Schedule 14D-9, the Company is not engaged
in any negotiation in response to the Offer which relates to or would result in
(i) an extraordinary transaction, such as a merger or reorganization, involving
the Company or any subsidiary of the Company; (ii) a purchase, sale or transfer
of a material amount of assets by the Company or any subsidiary of the Company;
(iii) a tender offer for or other acquisition of securities by or of the
Company; or (iv) any material change in the present capitalization or dividend
policy of the Company.
Except as described in Item 3(b) and Item 4 above (the provisions of which
are hereby incorporated by reference), there are no transactions, board
resolutions, agreements in principle or signed contracts in response to the
Offer which relate to or would result in one or more of the matters referred to
in paragraph (a) of this Item 7.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached hereto as Annex II is being furnished
to the Company's shareholders in connection with the possible designation by
Crane, pursuant to the Merger Agreement, of certain persons to be appointed to
the Company Board other than at a meeting of the Company's shareholders, and
such information is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
<TABLE>
<S> <C> <C>
(a) Exhibit (a)(1) Letter to Shareholders of the Company dated August 14, 1998.*
Exhibit (a)(2) Press Release issued by the Company on August 12, 1998.
Exhibit (a)(3) Opinion of Legg Mason dated August 10, 1998 (attached hereto as Annex I).*
(c) Exhibit (c)(1) Agreement and Plan of Merger dated as of August 11, 1998 among Crane,
Purchaser and the Company.
Exhibit (c)(2) Pages 6 through 11 of the Company's Proxy Statement dated May 1, 1998,
relating to its annual meeting of shareholders.
Exhibit (c)(3) Confidentiality Agreement dated March 18, 1998 between the Company and
Crane.
Exhibit (c)(4) Stock Option Agreement dated as of August 11, 1998 between the Company
and Crane.
Exhibit (c)(5) Form of Shareholder Agreement between Crane and certain shareholders of
the Company.
</TABLE>
- ----------
* Included in copies of the Schedule 14D-9 mailed to shareholders.
20
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 14, 1998
LIBERTY TECHNOLOGIES, INC.
By: /s/ R. NIM EVATT
----------------------------------------
Name: R. Nim Evatt
Title: President and Chief Executive Officer
21
<PAGE>
[LEGG MASON LOGO] CORPORATE FINANCE ANNEX I
Legg Mason Wood Walker, Incorporated
Suite 1100, 1735 Market Street, Philadelphia, PA 19103
215-496-8300 Fax: 215-568-2031
August 10, 1998
The Board of Directors
Liberty Technologies, Inc.
555 North Lane, Lee Park
Conshohocken, PA 19428
Members of the Board:
We have been advised that Liberty TEchnologies, Inc. ("Liberty")
proposes to enter into an Agreement and Plan of Merger (the "Agreement") with
Crane Co. ("Purchaser"), a draft of which dated August 6, 1998 was reveiwed by
us. Pursuant to the Agreement, Purchaser will make a tender offer to purchase
all the issued and outstanding capital stock of Liberty for a purchase price of
$3.50 per share in cash (the "Transaction"). The terms and conditions of the
Transaction are more fully set forth in the Agreement.
You have requested our opinion, as investment bankers (the "Opinion"),
as to the fairness to the shareholders of Liberty from a financial point of
view, of the consideration to be received by the shareholders of Liberty in th
Transaction. We have not participated in negotiations or otherwise advised the
Board of Directors of Liberty in connection with the Transaction and have not
acted on behalf of Liberty in connection with any other transaction or proposed
transaction. We will receive a fee for providing this Opinion.
In arriving at our Opinion set forth below, we have, among other
things: (i) reviewed the Agreement; (ii) reviewed certain audited and unaudited
financial statements of Liberty; (iii) reveiwed certain internal information,
primarily financial in nature, concerning Liberty prepared by management of
Liberty; (iv) discussed the past and current operations and financial condition
and prospects of Liberty with management of Liberty; (v) reviewed forecast
financial statements of Liberty prepared and furnished to us by the management
of Liberty; (vi) reveiwed certain publicly available financial and stock market
data relating to selected public companies that we considered relevant to our
analysis; (vii) reveiwed certain publicly available information concerning the
terms of selected merger and acquisition transactions that we condidered
relavent to our inquiry; and (viii) conducted such other financial studies,
analysis and investigations and considered such other information as we deemed
appropiate.
In connection with our reveiw, we have assumed and relied upon the
accuracy and completeness of all financial and other information supplied to us
by Liberty, and all publicly available information, and we have not
independently verified such information. We also have relied upon the management
of Liberty for the financial projections (and the assumptions and bases therein)
provided to us for Liberty, and we have assumed that such projections were
<PAGE>
LEGG MASON WOOD WALKER, INCORPORATED
Liberty Technologies, Inc.
Page 2
prepared on bases reflecting the best currently available estimates and
judgement of management as to future operating performance of Liberty. Liberty
does not publicly disclose internal management projections of the type provided
to Legg Mason. Such projections were not prepared with the expectation of public
disclosure. The projections were based on numerous variables and assumptions
that are inherently uncertain, including without limitation, factors related to
general economic and competitive conditions. Accordingly, actual results could
vary significantly from those set forth in such projections.
We have not been requested to make, and we have not made, an
independent appraisal or evaluation of the assets, properties, facilities or
liabilites of Liberty and we have not been furnished with any such appraisals or
evaluations.
Our Opinion is necessarily based on share prices and economic and other
conditions and circumstances as in effect on, and the information made available
to us as of August 10, 1998. It is understood that subsequent developments may
affect the conclusions reached in the Opinion and that we do not have any
obligation to update, revise or reaffirm our Opinion. In arriving at our
Opinion, we were not authorized to solicit, and did not solicit, third party
indications of interest from any party with respect to an acquisition of
Liberty, its assets, or any part thereof. Our Opinion does not address nor
should it be construed to address the relative merits of the Transaction or any
alternative business strategies that may be available to Liberty. We have
assumed that the Transaction described above will be consummated on the terms
and conditions described in the form of the Agreement reviewed by us.
It is understood that this letter is directed solely to Liberty's
Board of Directors and does not constitute a recommendation either of the
Transaction or to any shareholder of Liberty as to how such shareholder should
vote on or otherwise respond to the Transaction. This letter is not to be
quoted or referred to, in whole or in part, in any registration statement,
prospectus or proxy statement, or in any other document used in connection with
the offering or sale of securities, nor shall this letter be used for any other
purposes, without the prior written consent of Legg Mason Wood Walker,
Incorporated, provided that this Opinion may be included in its entirety in any
filing made by Liberty with the Securities and Exchange Commission with respect
to the Transaction.
Based upon and subject to the foregoing, we are of the opinion that, as
of August 10, 1998, the consideration to be received by the shareholders of
Liberty in the Transaction is fair, from a financial point of view, to such
shareholders.
Very truly yours,
/s/ LEGG MASON WOOD WALKER, INCORPORATED
LEGG MASON WOOD WALKER, INCORPORATED
2
<PAGE>
ANNEX II
LIBERTY TECHNOLOGIES, INC.
555 NORTH LANE
LEE PARK
CONSHOHOCKEN, PA 19428
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about August 14, 1998 as
part of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Liberty Technologies, Inc., a Pennsylvania corporation
(the "Company"), to the holders of record of shares of common stock, par value
$0.01 per share, of the Company (the "Shares" or "Common Stock"). You are
receiving this Information Statement in connection with the possible election
of persons designated by Crane Co., a Delaware corporation ("Crane"), to a
majority of the seats on the Board of Directors of the Company (the "Board" or
"Board of Directors").
Pursuant to an Agreement and Plan of Merger (the "Merger Agreement"),
dated as of August 11, 1998, by and among Crane, LTI Merger, Inc., a
Pennsylvania corporation and a wholly owned subsidiary of Crane (the
"Purchaser"), and the Company, the Purchaser has commenced a tender offer (the
"Offer") for all of the issued and outstanding Shares at a price of $3.50 per
Share, net to the seller in cash, and following consummation of the Offer, the
Purchaser will be merged with and into the Company (the "Merger"), with the
Company surviving as a wholly owned subsidiary of Crane. The Offer is currently
scheduled to expire on September 11, 1998, at which time, if the Offer is not
extended and all conditions of the Offer have been satisfied or waived,
Purchaser is obligated to purchase all Shares validly tendered pursuant to the
Offer and not withdrawn.
The Merger Agreement provides that, promptly after the purchase of and
payment for a majority of the outstanding Shares pursuant to the Offer, Crane
will be entitled to designate such number of directors as will give Crane
representation on the Board proportionate to its ownership interest in the
Shares, rounded up to the next whole number. The Merger Agreement requires the
Company to take all actions necessary (other than the calling of a shareholders
meeting) to cause the Crane designees (the "Crane Designees") to be elected to
the Board under the circumstances described therein. This Information Statement
is being mailed to shareholders of the Company pursuant to Section 14(f) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Rule
14f-1 promulgated thereunder.
IN THE EVENT THAT CRANE OR PURCHASER DOES NOT ACQUIRE ANY SHARES PURSUANT
TO THE OFFER, OR TERMINATES THE OFFER, OR IF THE MERGER AGREEMENT IS TERMINATED
PURSUANT TO ITS TERMS BY CRANE, PURCHASER OR THE COMPANY PRIOR TO THE ELECTION
OR APPOINTMENT OF THE CRANE DESIGNEES, NEITHER CRANE NOR PURCHASER WILL HAVE
ANY RIGHT UNDER THE MERGER AGREEMENT TO HAVE THE CRANE DESIGNEES ELECTED OR
APPOINTED TO THE COMPANY'S BOARD OF DIRECTORS.
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Schedule 14D-9.
The information contained in this Information Statement concerning Crane,
the Purchaser and the Crane Designees has been furnished to the Company by
Crane. The Company assumes no responsibility for the accuracy or completeness
of such information.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each issued and outstanding Share is entitled to one vote. As of
August 14, 1998, 5,013,233 Shares were issued and outstanding and 1,154,000
Shares were reserved for issuance upon the exercise of certain options
outstanding.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth, as of August 14, 1998, certain information
regarding the beneficial ownership of the Company's Common Stock by each
shareholder known to the Company to be the beneficial owner of more than 5% of
the Common Stock, each of the Company's directors and the named executive
officers, and all directors and executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-----------------------
NAME AND ADDRESS OF
BENEFICIAL OWNER(1) NUMBER PERCENT
- ------------------------------------ ------------ --------
<S> <C> <C>
L. Mark Newman ..................... 485,300 9.7%
Atalanta Selective Fund Number Six
Limited Partnership
The Kauffman Fund, Inc.(2) ......... 305,000 6.1%
140 East 45th Street, 43rd Floor
New York, New York 10017
Stephen A. Wells(3) ................ 297,900 5.9%
P.O. Box 549
Little River, TX 76554
R. Nim Evatt(4) .................... 328,860 6.5%
Robert L. Leon(5) .................. 273,012 5.4%
Daniel G. Clare(6) ................. 55,000 1.1%
Richard J. Defieux(7) .............. 17,500 *
Edison Venture Fund, L.P.
997 Lenox Drive #3
Lawrenceville, NJ 08648
James D. Rosener(8) ................ 17,500 *
Pepper Hamilton LLP
1235 Westlakes Drive, Suite 400
Berwyn, PA 19312
Roland K. Bullard, II(9) ........... 22,000 *
All executive officers and directors
as a group (8 persons)(10) ......... 1,497,072 27.1%
</TABLE>
- ----------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) The address of Messrs. Leon, Evatt, Clare, and Bullard is c/o Liberty
Technologies, Inc., 555 North Lane, Conshohocken, PA 19428.
(2) As reported in a Schedule 13G dated December 31, 1997 and filed with the
Securities and Exchange Commission.
(3) Includes 127,500 shares owned by Stephen A. Wells; 129,400 shares owned
by Wells Resources, Inc.; 1,000 shares owned by Stephen A. Wells Profit
Sharing Plan and 30,000 shares owned by Dan Kirkland Wells Foundation.
Also includes stock options granted by the Company which are currently
exercisable or exercisable within 60 days of August 14, 1998 to purchase
10,000 shares of Common Stock.
(4) Includes stock options granted by the Company which are currently
exercisable or exercisable within 60 days of August 14, 1998 to purchase
325,000 shares of Common Stock.
(5) Includes 969 shares owned by Susan Leon, Mr. Leon's spouse, and stock
options granted by the Company which are currently exercisable or
exercisable within 60 days of August 14, 1998 to purchase 70,000 shares
of Common Stock.
(6) Represents stock options granted by the Company which are currently
exercisable or exercisable within 60 days of August 14, 1998 to purchase
55,000 shares of Common Stock.
2
<PAGE>
(7) Represents stock options granted by the Company which are currently
exercisable or exercisable within 60 days of August 14, 1998 to purchase
17,500 shares of Common Stock.
(8) Represents stock options granted by the Company which are currently
exercisable or exercisable within 60 days of August 14, 1998 to purchase
17,500 shares of Common Stock.
(9) Includes stock options granted by the Company which are currently
exercisable or exercisable within 60 days of August 14, 1998 to purchase
10,000 shares of Common Stock.
(10) Includes stock options granted by the Company which are currently
exercisable or exercisable within 60 days of August 14, 1998 to purchase
515,000 shares of Common Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires the Company's directors and
executive officers, and persons who own more than ten percent of the Common
Stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of the Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent shareholders are required under regulations promulgated by the
Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms which they file. To the Company's knowledge, based solely
on a review of copies of such reports furnished to the Company, during the
fiscal year ended December 31, 1997, there were late filings of Form 5 to
report option grants to Daniel G. Clare, Richard J. Defieux, John A. Hinds, and
James D. Rosener. All Section 16(a) filing requirements were satisfied.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Certain information concerning the current directors and executive
officers of the Company as of August 14, 1998 is set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ----------------------------------- ----- ---------------------------------------
<S> <C> <C>
R. Nim Evatt(1) ................... 56 President, Chief Executive Officer and
Chairman of the Board
Robert L. Leon .................... 58 Director
Richard J. Defieux(1)(2) .......... 47 Director
James D. Rosener(1)(2) ............ 42 Director
Stephen A. Wells(1)(2) ............ 54 Director
Roland K. Bullard, II ............. 54 Director
L. Mark Newman .................... 58 Director
</TABLE>
- ----------
(1) Member of the Compensation and Benefits Committee
(2) Member of the Audit Committee
R. NIM EVATT has been a director of the Company since October 1991 and
Chairman of the Board since April 1992. He joined the Company as Executive Vice
President and Chief Operating Officer in April 1991 and was elected President
and Chief Executive Officer in October 1991. From 1988 to 1990, Mr. Evatt was
President of ICC Technologies, Inc., a company that develops, manufactures and
markets co-generation and desiccant cooling systems.
ROBERT L. LEON co-founded the Company in 1984 and served as Vice President
and Chief Technical Officer from its inception until his retirement in January
1996. Mr. Leon has been a director of the Company from its inception until 1990
and from 1991 until the present. Mr. Leon is currently employed by the Company
on a part-time basis.
RICHARD J. DEFIEUX has been a director of the Company since October 1987.
Mr. Defieux is a General Partner of Edison Partners, L.P., which is the General
Partner of Edison Venture Fund, L.P., a private
3
<PAGE>
venture capital firm. Prior to joining Edison in 1987, he was a General Partner
of Princeton/Montrose Partners, a venture capital firm. Mr. Defieux serves as a
member of the Board of Strategic Diagnostics Inc. and a number of private
companies in which the Edison Venture Funds have invested.
JAMES D. ROSENER has been a director of the Company since December 1994.
He is a partner with the firm of Pepper Hamilton LLP where he has practiced law
since 1986. Mr. Rosener serves on the Boards of Directors of Bonney Forge
Corporation, Aonix Inc., Cedar Investments, Inc. and two U.S. affiliates of
Seton Healthcare Group plc., a U.K. based public company.
STEPHEN A. WELLS has been a director of the Company since October 1997. He
is president of Wells Resources, Inc., a private company with oil and gas and
ranching interests and has held such position since 1983. From 1993 until 1996,
Mr. Wells was President and Chief Executive Officer of Coastwide Energy
Services, Inc., a public company in the oil and gas industry. Mr. Wells
presently serves on the Board of Directors of CONEMSCO, Inc. and Energy
Consolidation, Inc.
ROLAND K. BULLARD, II has been a director of the Company since January
1998. He is a founding partner of Strategic Performance, Inc. Mr. Bullard is
Chairman of the Philadelphia Advisory Board of Directors of First Union
National Bank. Prior to the acquisition of First Fidelity Bancorporation by
First Union National Bank in January, 1996, Mr. Bullard was Senior Executive
Vice President of First Fidelity Bancorporation, a member of the Board of
Directors, and a member of the Office of the Chairman. Upon joining First
Fidelity Bancorporation in May of 1991, Mr. Bullard was named President of
Fidelity Bank, N.A., which was renamed First Fidelity Bank, N.A., Pennsylvania,
in 1993.
L. MARK NEWMAN has been a director of the Company since January 1998. He
is the Chief Executive Officer of Atalanta Investment Company, Inc. and
Atalanta Capital Corporation and has held such position at each company since
1979 and 1969, respectively. Mr. Newman is also a member of the New York
Society of Security Analysts.
RIGHT TO DESIGNATE DIRECTORS; THE CRANE DESIGNEES
The Merger Agreement provides that, subject to compliance with applicable
law, promptly upon the payment by the Purchaser for Shares which represent at
least a majority of the outstanding Shares (on a fully diluted basis) pursuant
to the Offer, Crane will be entitled to designate such number of directors,
rounded up to the next whole number, on the Board of Directors as is equal to
the product of the total number of directors on the Board (determined after
giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Shares beneficially owned by Crane
or its affiliates bears to the total number of Shares then outstanding. The
Company will, upon request of Crane, promptly take all actions (but
specifically excluding the calling of a shareholders meeting) necessary to
cause the Crane Designees to be so elected, including, if necessary, amending
the By-laws of the Company to the extent permitted to be amended by the Board
and seeking the resignations of one or more existing directors. Notwithstanding
the foregoing, until the effective time of the Merger, the Board of Directors
will always have not less than two members who were directors of the Company on
the date of the Merger Agreement ("Current Directors") and, in Crane's sole
discretion, up to five Current Directors.
4
<PAGE>
Set forth below is certain information with respect to the initial Crane
Designees:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT,
MATERIAL POSITIONS HELD
NAME AND PRINCIPAL BUSINESS ADDRESS AGE DURING THE PAST 5 YEARS
- ------------------------------------- ----- -------------------------------------------------------
<S> <C> <C>
R.S. Evans 53 Chairman and Chief Executive Officer of Crane Co.;
100 First Stamford Place Chairman and Chief Executive Officer of Medusa
Stamford, CT 06902 Corporation to June 1998; Director of Crane Co.,
Southdown, Inc., Fansteel, Inc. and HBD Industries,
Inc.
Paul Baldetti 39 Group Vice President--Fluid Handling Systems of
3201 Walnut Avenue Crane since August 1998; President, Crane Valves
Long Beach, CA 90807 Engineered Products since April 1996; President,
Crane Pumps & Systems, Inc. (and its predecessor
Burks Pumps, Inc.) from 1988 to April 1996.
Robert Barch 57 President of Dynalco Controls division of Crane's
3690 N.W. 53 Street Mark Controls Corp. since May 1994; Group Vice
Ft. Lauderdale, FL 33309 President of Mark Controls Corp. from February
1991 to May 1994.
L. Hill Clark 53 President and Chief Operating Officer of Crane since
100 First Stamford Place October 1995; Executive Vice President of Crane
Stamford, CT 06902 from January 1994 to October 1995; Group Vice
President--Fluid Handling Systems of Crane from
September 1993 to January 1994; President of Crane's
Lear Romec Division from May 1990 to September
1993; previously held positions within Allied Signal
Inc., a diversified manufacturing company.
Augustus I. duPont 46 Vice President, General Counsel and Secretary of
100 First Stamford Place Crane since January 1996; Vice President, General
Stamford, CT 06902 Counsel and Secretary of Reeves Industries, Inc.*, a
manufacturer of apparel textiles and industrial coated
fabrics from May 1994 to December 1995; Vice
President, General Counsel and Secretary of Sprague
Technologies, Inc., a manufacturer of electronic
components from May 1987 to December 1993.
Kirk Kelhofer 38 Vice President and General Manager of Crane
2825 Cobb International Boulevard Nuclear, Inc. since April 1997; Managing Director,
Kennesaw, GA 30152 ITI MOVATS Incorporated (a subsidiary of
Westinghouse Electric Co.) from November 1996 to
April 1997; from January 1991 to November 1996,
held various positions within ITI MOVATS
Incorporated.
Jaoquin Oliu 40 President of Dynalco Controls division of Crane's
Mark Controls Corp. since January 1998; Vice
President Operations of Dynalco Controls from
March 1995 to December 1997; Engineering Manager
of Dynalco Controls from February 1989 to March
1995.
David S. Smith 41 Vice President-Finance and Chief Financial Officer of
100 First Stamford Place Crane since March 1994; Vice President-Corporate
Stamford, CT 06902 Development of Crane from March 1991 to March
1994.
</TABLE>
- ----------
* Reeves Industries, Inc. filed a petition and Plan of Reorganization for a
consensual debt restructuring Chapter 11 of the United States Bankruptcy
Code on November 21, 1997.
5
<PAGE>
Crane has advised the Company that each of the initial Crane Designees has
consented to serve on the Board of Directors and that, to the best of its
knowledge, none of the Crane Designees (i) has a family relationship with any
of the directors or executive officers of the Company, (ii) beneficially owns
any securities (or rights to acquire securities) of the Company, (iii) has been
involved in any transactions with the Company, has been indebted to the
Company, or has any business relationships with the Company or any of its
directors, executive officers or affiliates, of the type required to be
disclosed pursuant to Rule 14f-1 under the Exchange Act or, (iv) has been the
subject of any civil regulatory proceeding or any criminal proceeding.
GENERAL INFORMATION ABOUT BOARD OF DIRECTORS
The Board of Directors held seven meetings during 1997, of which one was
telephonic, and took action by unanimous written consent in lieu of a formal
meeting on five occasions. Each director attended in person or by telephonic
conference each Board meeting held during 1997 while such person was a member
of the Board.
The Board of Directors has an Audit Committee and a Compensation and
Benefits Committee.
The Audit Committee, composed of Messrs. Defieux, Hinds, Wells and
Rosener, met once during 1997. Mr. Hinds, who submitted his letter of
resignation from the Company's Board of Directors on March 4, 1998, was present
at such meeting. Its principal functions include making recommendations to the
Board regarding the annual selection of independent public accountants and
review of the recommendations of the independent public accountants as a result
of their audit of the Company.
The Compensation and Benefits Committee (the "Compensation Committee"),
composed of Messrs. Evatt, Defieux, Wells, Hinds and Rosener, met six times
during 1997. Mr. Hinds, who resigned from the Company's Board of Directors as
of March 4, 1998, was present at all such meetings. All of the members of the
Compensation Committee serve with respect to its compensation function. Messrs.
Defieux and Wells serve with respect to grants of stock options to executive
officers. Messrs. Defieux, Evatt, Wells and Rosener serve with respect to
grants to any other persons. Mr. Wells, who became a Director in October, 1997,
participated in the December meeting. The Compensation Committee's principal
functions are to exercise the power of the Board in approving compensation and
benefits objectives, practices and policies for all employees, setting
compensation for the officers of the Company and making determinations with
respect to the granting of stock options under the Company's 1992 Stock Option
Plan, including the relevant terms thereof.
Employee directors are not compensated for their services as members of
the Board. Compensation of outside directors is determined by action of the
Compensation Committee or the whole Board after receiving the recommendations
of the Chief Executive Officer. Currently, non-employee directors are paid
$1,250 per meeting attended. Each non-employee director has been granted an
option to purchase 10,000 shares of Common Stock on the later to occur of
October 1, 1993 and the date that such director is first elected to the Board.
In addition, each non-employee director is entitled to receive an annual grant
of a stock option under the Company's 1992 Stock Option Plan to purchase 2,500
shares of Common Stock, such option to be granted, priced and fully vested on
the date that is the anniversary of the commencement of such director's
service.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to its
officers for the years ended December 31, 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
--------------------------- -----------------------------
OTHER ANNUAL ALL OTHER
SALARY BONUS COMPENSATION(1) OPTIONS/ COMPENSATION(2)
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) SARS (#) ($)
- ----------------------------- ------ --------- ------- ----------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
R. Nim Evatt 1997 206,772 -- -- -- 2,375
Chief Executive 1996 194,500 -- -- 25,000 2,375
Officer; President 1995 180,153 -- -- 55,000 2,310
Daniel G. Clare 1997 140,000 -- -- 10,000 1,842
Chief Financial Officer; 1996 131,176 -- -- 15,000 1,767
Vice President 1995 90,600 -- -- 25,000 486
</TABLE>
- ----------
(1) Would include perquisites and other personal benefits paid for by the
Company, such as automobile payments, long-term disability and life
insurance premiums and relocation expenses. The value of such personal
benefits for each of the named executive officers was less than the
minimum required to be reported, the lesser of $50,000 or 10% of annual
salary and bonus.
(2) Represents allocations to accounts of executive officers under the
Company's Retirement Savings Plan, which is intended to qualify under
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as
amended (the "401(k) Plan"). Employees of the Company who have completed
at least one-half year of service with the Company are eligible to make
contributions to the 401(k) Plan on a pre-tax basis in accordance with
certain limitations set forth in the 401(k) Plan or defined in the Code.
The Company matches 25% of each employee's pre-tax contributions, up to a
maximum matching contribution of 1.5% of such participant's annual
compensation. The pre-tax contributions by participants and the earnings
thereon are at all times fully vested. The Company's contribution vests
to the employee at a rate of 50% for each year of service with the
Company. A participant's vested benefit under the 401(k) Plan may be
distributed to the participant upon his retirement, death, disability or
termination of employment or upon reaching age 59 1/2.
The following table presents information concerning stock options granted
to the named executive officers in 1997:
OPTION/SAR GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
---------------------------------------------- -------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------- -------------- -------------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Daniel G. Clare 10,000(1) 7% $ 2.750 5/13/07 $17,295 $43,828
</TABLE>
- ----------
(1) Options under this grant vest over four years on the annual anniversary
of the option grant date in increments of 25% of total shares granted.
These options expire May, 2007.
7
<PAGE>
The following table presents information concerning the exercise of stock
options by any of the named executive officers during 1997 and stock option
values for unexercised stock options held by each of the named executive
officers as of the end of 1997:
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF UNEXERCISED OPTIONS VALUE OF IN-THE-MONEY
SHARES AT YEAR END OPTIONS/SARS AT YEAR END
ACQUIRED ON VALUE ------------------------------- ------------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------- ------------- ------------ ------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
R. Nim Evatt -- -- 265,500 29,500 $96,135 $ 0
Daniel G. Clare -- -- 16,250 33,750 $ 0 $4,370
</TABLE>
- ----------
(1) Represents the product of the number of shares acquired on exercise,
multiplied by the difference between (i) the per share fair market value
of the Common Stock on the date of exercise and (ii) the exercise price
per share.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Evatt dated April 1,
1991. Mr. Evatt is employed at will under his agreement and, if terminated
without cause, is entitled to one-half of his then current base salary for a
period of two years from the time notice is given, reduced by any period during
which the agreement's noncompetition provision, which runs for two years after
employment terminates, is violated. The Company entered into an employment
agreement with Mr. Leon, dated December 28, 1995, which provides for, in
effect, a phased-in retirement for the former executive officer with a gradual
reduction of time commitments and responsibilities, as well as compensation,
over the term of the agreement. Mr. Leon's agreement has a three year term from
January 1, 1996 through December 31, 1998 and includes covenants not to compete
during the term.
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is charged with
reviewing and approving the Company's compensation objectives, practices and
policies for all employees, setting the specific compensation for the Chief
Executive Officer and other executive officers of the Company and making
determinations with respect to the granting of stock options under the
Company's 1992 Stock Option Plan, including the relevant terms thereof.
For the fiscal year ended December 31, 1997, the Compensation Committee
continued to implement compensation policies, plans and programs that were
developed during 1995 which align the financial interests of the Company's
senior management, in their management capacities, with those of its
shareholders. The Compensation Committee believes that (1) executive
compensation should be meaningfully related to the performance of the Company
and the value created for shareholders; (2) compensation programs should
support both short and long-term goals and objectives of the Company; (3)
compensation programs should reward individuals for outstanding contributions
to the Company's success; and (4) short and long-term compensation policies
play a significant role in attracting and retaining well qualified executives.
In setting annual compensation for executive officers, the Compensation
Committee reviews a number of criteria relating to the performance of the
Company generally and of each executive officer specifically (other than the
Chief Executive Officer) during the prior fiscal year and evaluates its
expectation as to each such individual's future contributions to the Company.
With respect to the Chief Executive Officer, such review is conducted by the
three non-employee directors of the Company who serve on the Compensation
Committee.
8
<PAGE>
The salaries of the executive officers for 1997 were based on an
evaluation of individual job performance and the performance of the Company as
a whole. In making its decision on salary levels, the Compensation Committee
did not use any predetermined formula or assign any particular weight to any
individual criteria. The Compensation Committee also has discretion to pay
bonus compensation, although there is no formalized incentive payment plan or
program and no annual bonuses were paid to executive officers for 1997.
The Compensation Committee believes that it is essential for executives,
as well as other employees, of the Company, to own significant amounts of
Common Stock, through the granting of stock options which generally vest over a
four year period, thereby better aligning the long-term interest of executives
with that of the Company's shareholders. The Compensation Committee believes
that stock options provide incentive to executives by giving them a strong
economic interest in maximizing stock price appreciation and enhancing their
performance in attaining long-term Company objectives. The Compensation
Committee believes that such modification will further align the long-term
interest of the Company's executives and other employees to that of the
Company's shareholders. The Company also uses initial option grants to induce
qualified senior management candidates to accept offers of employment.
Beginning in 1994, Section 162(m) of the Internal Revenue Code of 1986, as
amended, limits the deductibility of compensation in excess of $1 million paid
to the Company's Chief Executive Officer and to any of the other four
highest-paid executive officers unless such compensation qualifies as
"performance-based," as defined in Section 162(m) and the regulations
thereunder. The Company is assessing, and generally will seek to implement
steps to eliminate or minimize, the impact of this provision on its
compensation plans and policies and to assure future deductibility of senior
executive compensation, to the extent that so qualifying does not compromise
the Compensation Committee's flexibility in designing effective, competitive
compensation plans and is not inconsistent with the Company's fundamental
compensation policies. The effect of Section 162(m) did not limit the
deductibility of any compensation paid to any of the "covered employees" of the
Company between 1994 and 1997.
The Compensation and Benefits Committee
R. Nim Evatt
Richard J. Defieux
James D. Rosener
Stephen A. Wells
The above report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Information Statement into
any filing under the Securities Act of 1933, as amended, or the Exchange Act
and shall not otherwise be deemed filed under such Acts.
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors currently consists of
R. Nim Evatt, Richard J. Defieux, Stephen A. Wells and James D. Rosener. Mr.
Evatt is the Chairman of the Board, Chief Executive Officer and President of
the Company. Mr. Defieux is an affiliate of one of the two venture capital
funds that together were controlling shareholders of the Company prior to its
initial public offering, each of which had a right to designate one board
member at such time, which right terminated upon the closing of the initial
public offering. See also "Certain Transactions."
9
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return (assuming $100 invested
at the opening of the market on March 31, 1993, the date that the Company's
Common Stock began trading on the Nasdaq National Market, and the reinvestment
of dividends paid during the period) of the Common Stock with the Nasdaq Stock
Market -- U.S. Companies Index and the Nasdaq Stock Market-Laboratory Apparatus
and Analytical, Optical, Measuring and Controlling Instruments Index (SIC Code
382). The Company does not make nor endorse any predictions as to future stock
performance.
Liberty Technologies, Inc. Nasdaq Stock Market NASDAQ Stocks (Peer)
3/31/93 100 100 100
12/31/93 104.11 112.678 107.158
12/30/93 41.096 110.14 119.105
12/29/95 54.795 155.767 174.02
12/31/96 35.616 191.587 243.751
12/31/97 25.342 235.157 278.589
The graph set forth above shall not be deemed incorporated by reference by
any general statement incorporating by reference this Information Statement
into any filing under the Securities Act of 1933, as amended, or the Exchange
Act and shall not otherwise be deemed filed under such Acts.
CERTAIN TRANSACTIONS
James D. Rosener, a director of the Company, is a partner of the law firm
of Pepper Hamilton LLP, which is general counsel to and provides various legal
services for the Company.
August 14, 1998 LIBERTY TECHNOLOGIES, INC.
10
<PAGE>
[LIBERTY TECH LOGO]
August 14, 1998
To the Shareholders of
Liberty Technologies, Inc.:
We are pleased to inform you that on August 11, 1998, Liberty
Technologies, Inc. ("Liberty" or the "Company") entered into an Agreement and
Plan of Merger (the "Merger Agreement") with Crane Co. ("Crane") and LTI
Merger, Inc. ("Purchaser"), a wholly owned subsidiary of Crane, pursuant to
which Purchaser has today commenced a tender offer (the "Offer") to purchase
all of the outstanding shares of common stock, $.01 par value per share (the
"Shares"), of the Company for $3.50 per Share in cash. Under the terms of the
Merger Agreement, following the successful completion of the Offer, Purchaser
will be merged (the "Merger") with and into the Company and all Shares not
purchased in the Offer (other than Shares held by Crane, Purchaser or the
Company) will be converted into the right to receive $3.50 per Share in cash.
Your Board of Directors of the Company has approved the Merger Agreement,
the Offer and the Merger and has determined that each of the Offer and the
Merger is fair to, and in the best interests of, Liberty's shareholders. The
Board recommends that the Company's shareholders accept the Offer and tender
their Shares in the Offer.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors described in the attached Schedule 14D-9
that is being filed today with the Securities and Exchange Commission,
including, among other things, the opinion of Legg Mason Wood Walker,
Incorporated ("Legg Mason"), the Company's financial advisor, that the
consideration to be received by the holders of Shares in the Offer is fair,
from a financial point of view, to the shareholders of Liberty. A copy of Legg
Mason's opinion is attached to the Schedule 14D-9 as Annex I thereto.
In addition to the attached Schedule 14D-9 relating to the Offer, also
enclosed is the Offer to Purchase, dated August 14, 1998, of Purchaser,
together with related materials, including a Letter of Transmittal to be used
for tendering your Shares. These documents set forth the terms and conditions
of the Offer and the Merger and provide instructions as to how to tender your
Shares. We urge you to read the enclosed materials carefully.
Sincerely,
/s/ R. Nim Evatt
R. Nim Evatt
PRESIDENT, CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
555 North Lane Conshohocken, PA 19428-2208 USA Phone: (610) 834-0330
Fax: (610) 834-0346 http://www.libertytech.com
<PAGE>
[LIBERTY TECHNOLOGIES, INC. LOGO]
For Immediate Release
Contact: Nim Evatt
(610) 834-0330
LIBERTY TECHNOLOGIES, INC.
ANNOUNCES SECOND QUARTER RESULTS AND APPROVAL OF DEFINITIVE
AGREEMENT TO BE ACQUIRED BY CRANE CO.
CONSHOHOCKEN, PA (August 12, 1998)... Liberty Technologies, Inc.
(NASDAQ:LIBT) today announced that its Board of Directors has approved a
definitive merger agreement, signed yesterday with Crane Co. (NYSE:CR),
providing for Crane's acquisition of all of the outstanding shares of Liberty
Technologies at $3.50 per share. There are 5,013,233 shares outstanding.
The merger agreement provides for a cash tender offer by LTI Merger
Inc., a Crane subsidiary, for all of the outstanding Liberty Technologies'
share at $3.50 per share. The consummation of the tender offer will conditioned
upon, among other things, there being duly tendered and not withdrawn at least
a majority of the then outstanding shares. It is contemplated that the tender
offer will commence on Monday, August 17, 1998. Any shares not tendered and
purchased pursuant to the tender offer will be acquired in a subsequent merger
transaction at the same $3.50 cash price.
In connection with the merger agreement, Liberty Technologies granted
Crane Co. an option to purchase up to 997,663 shares of newly issued shares of
stock at $2.75 per share, exercisable for one year after the termination of the
merger agreement upon the occurrence of certain events. Liberty Technologies'
Board of Directors also approved amendments to Liberty's shareholder rights
plan to render the plan inapplicable to the Crane acquisition. In addition,
Liberty Technologies shareholders representing approximately 19.6% of the
outstanding shares of Liberty Technologies' stock signed agreements with Crane
Co. whereby such shareholders agreed, among other things, to tender their
shares to Crane Co. pursuant to the tender offer.
Liberty Technologies, which is headquartered in Conshohocken,
Pennsylvania, develops, manufactures, markets and sells valve, motor, engine
and compressor condition monitoring products and related services to customers
in the nuclear power generation and industrial process markets
-more-
<PAGE>
2) Liberty Technologies, Inc. Contact: Nim Evatt
1998 Second Quarter Financial Results (610) 834-0330
and Approval of Definitive Agreement to be Acquired by Crane Co.
worldwide. Liberty's technology and markets are very complementary with Crane's
Nuclear Valve business, which provides valves, valve diagnostic equipment, and
related services to the nuclear power industry, and with Crane's Dynalco
Controls business which provides sensors, instrumentation, control products and
automation systems for use in industrial engine applications.
In addition, Liberty Technologies, Inc. today reported financial
results for the second quarter ended June 30, 1998.
Total revenues were $4,054,000 in the second quarter compared with
$5,427,000 in the same quarter a year ago. The change was attributed primarily
to lower sales of condition monitoring and RADView (registered trademark)
products. Loss from continuing operations and net loss for the second quarter
of 1998 was $1,328,000, or $0.26 per share, compared with loss from continuing
operations of $864,000, or $0.17 per share, and net income of $193,000, or
$0.04 per share, in the same quarter a year ago. The loss for 1998 included
$199,000 in severance costs.
For the first half of the year, revenues were $8,431,000 compared to
$11,953,000 in the first half of 1997. The first half of 1997 included a large
shipment of valve diagnostic equipment to the Company's joint venture partner,
Electricite de France. There was no such corresponding sale in the first half of
1998. Year-to-date loss from continuing operations and net loss for the first
half of 1998 was $2,002,000, $0.40 per share, compared to a loss from
continuing operations of $891,000, or $0.18 per share, and net loss of $20,000,
$0.00 per share, in 1997. Decreased gross profits as a result of the lower
sales were offset partially by lower operating expenses, the elimination of
interest costs resulting from the elimination of borrowings against the
Company's line of credit and the recording of an income tax benefit in 1998.
At June 30, 1998, Liberty's working capital was $6,747,000 with
essentially no debt.
-more-
<PAGE>
3) Liberty Technologies, Inc. Contact: Nim Evatt
1998 Second Quarter Financial Results (610) 834-0330
and Approval of Definitive Agreement to be Acquired by Crane Co.
LIBERTY TECHNOLOGIES, INC.
(000's, except per share amount)
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Three months Six months
ended June 30 ended June 30
(unaudited) (unaudited)
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenue $ 4,054 $ 5,427 $ 8,431 $11,953
Gross Profit 838 2,708 2,663 5,954
Operating loss (2,320) (685) (3,569) (733)
Loss from continuing operations before taxes,
minority interest & discontinued operations (2,291) (897) (3,482) (996)
Income tax benefit (893) -- (1,359) --
Minority interest in loss of joint venture 70 33 121 105
Loss from continuing operations, net of tax (1,328) (864) (2,002) (891)
Income from discontinued operations, net of tax -- 1,057 -- 871
Net income (loss) $(1,328) $ 193 $(2,002) $ (20)
======= ======= ======= =======
Basic and diluted income (loss) per share
Continued operations $ (0.26) $ (0.17) $ (0.40) $ (0.18)
Discontinued operations -- 0.21 -- 0.18
------- ------- ------- -------
$ (0.26) $ 0.04 $ (0.40) $ 0.00
======= ======= ======= =======
Weighted average shares outstanding 5,010 5,064 5,014 5,000
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 1998 December 31, 1997
------------- -----------------
(unaudited)
<S> <C> <C>
Working Capital $ 6,747 $ 9,816
Total assets 15,007 18,434
Long-Term debt 220 245
Shareholders' equity 11,109 13,125
</TABLE>
-more-
<PAGE>
4) Liberty Technologies, Inc. Contact: Nim Evatt
1998 Second Quarter Financial Results (610) 834-0330
and Approval of Definitive Agreement to be Acquired by Crane Co.
This press release may contain certain statements of a forward-looking
nature relating to future events or future financial performance of the
Company. Prospective and current investors are cautioned that such statements
are only predictions and that actual events or results may differ materially.
In evaluating such statements, prospective and current investors should
specifically consider the various factors which could cause actual results to
differ from those indicated by such forward-looking statements including,
without limitation, the timely development, production and acceptance of new
products; changes in product/service revenue mix: continued acceptance in the
marketplace, competition and buying patterns of customers; and the absence of a
significant order backlog. Further information on the factors that could effect
the Company's financial results are included in the Company's SEC filings.
###
<PAGE>
[LETTERHEAD]
August 10, 1998
The Board of Directors
Liberty Technologies, Inc.
555 North Lane, Lee Park
Conshohocken, PA 19428
Members of the Board:
We have been advised that Liberty Technologies, Inc. ("Liberty")
proposes to enter into an Agreement and Plan of Merger (the "Agreement") with
Crane Co. ("Purchaser"), a draft of which dated August 6, 1998 was reviewed by
us. Pursuant to the Agreement, Purchaser will make a tender offer to purchase
all the issued and outstanding capital stock of Liberty for a purchase price of
$3.50 per share in cash (the "Transaction"). The terms and conditions of the
Transaction are more fully set forth in the Agreement.
You have requested our opinion, as investment bankers (the "Opinion"),
as to the fairness to the shareholders of Liberty from a financial point of
view, of the consideration to be received by the shareholders of Liberty in the
Transaction. We have not participated in negotiations or otherwise advised the
Board of Directors of Liberty in connection with the Transaction and have not
acted on behalf of Liberty in connection with any other transaction or proposed
transaction. We will receive a fee for providing this Opinion.
In arriving at our Opinion set forth below, we have, among other
things: (i) reviewed the Agreement; (ii) reviewed certain audited and unaudited
financial statements of Liberty; (iii) reviewed certain internal information,
primarily financial in nature, concerning Liberty prepared by management of
Liberty; (iv) discussed the past and current operations and financial condition
and prospects of Liberty with management of Liberty; (v) reviewed forecast
financial statements of Liberty prepared and furnished to us by the management
of Liberty; (vi) reviewed certain publicly available financial and stock market
data relating to selected public companies that we considered relevant to our
analysis; (vii) reviewed certain publicly available information concerning the
terms of selected merger and acquisition transactions that we considered
relevant to our inquiry; and (viii) conducted such other financial studies,
analyses and investigations and considered such information as we deemed
appropriate.
In connection with our review, we have assumed and relied upon the
accuracy and completeness of all financial and other information supplied to us
by Liberty, and all publicly available information, and we have not
independently verified such information. We also have relied upon the
management of Liberty for the financial projections (and the assumptions and
bases therein) provided to us for Liberty, and we have assumed that such
projections were
<PAGE>
Liberty Technologies, Inc.
Page 2
prepared on bases reflecting the best currently available estimates and
judgment of management as to the future operating performance of Liberty.
Liberty does not publicly disclose internal management projections of the type
provided to Legg Mason. Such projections were not prepared with the expectation
of public disclosure. The projections were based on numerous variables and
assumptions that are inherently uncertain, including without limitation,
factors related to general economic and competitive conditions. Accordingly,
actual results could vary significantly from those set forth in such
projections.
We have not been requested to make, and we have not made, an
independent appraisal or evaluation of the assets, properties, facilities or
liabilities of Liberty and we have not been furnished with any such appraisals
or evaluations.
Our Opinion is necessarily based on share prices and economic and other
conditions and circumstances as in effect on, and the information made
available to us as of August 10, 1998. It is understood that subsequent
developments may affect the conclusions reached in the Opinion and that we do
not have any obligation to update, revise or reaffirm our Opinion. In arriving
at our Opinion, we were not authorized to solicit, and did not solicit, third
party indications of interest from any party with respect to an acquisition of
Liberty, its assets, or any part thereof. Our Opinion does not address nor
should it be construed to address the relative merits of the Transaction or any
alternative business strategies that may be available to Liberty. We have
assumed that the Transaction described above will be consummated on the terms
and conditions described in the form of the Agreement reviewed by us.
It is understood that this letter is directed soley to Liberty's Board
of Directors and does not constitute a recommendation either of the Transaction
or to any shareholder of Liberty as to how such shareholder should vote on or
otherwise respond to the Transaction. This letter is not to be quoted or
referred to, in whole or in part, in any registration statement, prospectus
or proxy statement, or in any other document used in connection with the
offering or sale of securities, nor shall this letter be used for any other
purposes, without the prior written consent of Legg Mason Wood Walker,
Incorporated, provided that this Opinion may be included in its entirety in any
filing made by Liberty with the Securities and Exchange Commission with respect
to the Transaction.
Based upon and subject to the foregoing, we are of the opinion that,
as of August 10, 1998, the consideration to be reviewed by the shareholders of
Liberty in the Transaction is fair, from a financial point of view, to such
shareholders.
Very truly yours,
/s/ Legg Mason Wood Walker, Incorporated
LEGG MASON WOOD WALKER, INCORPORATED
<PAGE>
AGREEMENT AND PLAN OF MERGER
Dated as of August 11, 1998
among
CRANE CO.,
LTI MERGER, INC.
and
LIBERTY TECHNOLOGIES, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER AND THE MERGER..................................2
SECTION 1.01. The Offer.................................................2
SECTION 1.02. Company Actions...........................................3
SECTION 1.03. Directors.................................................4
SECTION 1.04. The Merger................................................5
SECTION 1.05. Closing...................................................5
SECTION 1.06. Effective Time............................................5
SECTION 1.07. Effects of the Merger.....................................5
SECTION 1.08. Articles of Incorporation and By-laws.....................6
SECTION 1.09. Directors of the Surviving Corporation....................6
SECTION 1.10. Officers of the Surviving Corporation.....................6
SECTION 1.11. Shareholders' Meeting.....................................6
ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS..............................7
SECTION 2.01. Effect on Capital Stock...................................7
SECTION 2.02. Exchange of Certificates..................................8
SECTION 2.03. Treatment of Stock Options...............................10
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY............10
SECTION 3.01. Organization, Standing and Corporate Power...............10
SECTION 3.02. Subsidiaries.............................................10
SECTION 3.03. Capital Structure........................................10
SECTION 3.04. Authority; Noncontravention..............................11
SECTION 3.05. SEC Filings; Financial Statements........................12
SECTION 3.06. Indebtedness; Absence of Undisclosed Liabilities.........13
SECTION 3.07. Absence of Certain Changes or Events.....................14
SECTION 3.08. Tax Matters..............................................14
SECTION 3.09. Certain Transactions; Certain Payments...................15
SECTION 3.10. Required Authorizations..................................15
SECTION 3.11. Litigation...............................................15
SECTION 3.12. Compliance with Law; Regulatory Compliance...............16
SECTION 3.13. Contracts................................................17
SECTION 3.14. Real Property............................................17
SECTION 3.15. Personal Property........................................18
SECTION 3.16. Intellectual Property Rights.............................18
SECTION 3.17. Environmental Matters....................................19
SECTION 3.18. Products Liability.......................................20
SECTION 3.19. Insurance................................................20
SECTION 3.20. Employment and Change in Control Agreements..............20
i
<PAGE>
SECTION 3.21. Labor Relations..........................................21
SECTION 3.22. Employee Benefit Plans...................................22
SECTION 3.23. No Existing Discussions..................................23
SECTION 3.24. Information Supplied.....................................23
SECTION 3.25. Voting Requirements......................................23
SECTION 3.26. State Statutes...........................................24
SECTION 3.27. Rights Agreement.........................................24
SECTION 3.28. Brokers..................................................24
SECTION 3.29. Disclosure...............................................24
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF CRANE..................24
SECTION 4.01. Organization, Standing and Corporate Power...............25
SECTION 4.02. Authority; Noncontravention..............................25
SECTION 4.03. Information Supplied.....................................26
SECTION 4.04. Share Ownership..........................................26
ARTICLE V COVENANTS................................................26
SECTION 5.01. Conduct of Business by the Company.......................26
SECTION 5.02. No Solicitation..........................................29
SECTION 5.03. Access to Information; Confidentiality...................31
SECTION 5.04. Required Authorizations..................................31
SECTION 5.05. Financial Statements of the Company......................32
SECTION 5.06. Employee Matters.........................................33
SECTION 5.07. Rights Agreement.........................................33
SECTION 5.08. Continuance of Existing Indemnification Rights...........33
SECTION 5.09. Public Announcements.....................................35
SECTION 5.10. Shareholder Litigation...................................35
SECTION 5.11. Financial Disclosure.....................................35
ARTICLE VI CONDITIONS PRECEDENT.....................................35
SECTION 6.01. Conditions to Each Party's Obligation To Effect
the Merger...............................................35
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................36
SECTION 7.01. Termination..............................................36
SECTION 7.02. Effect of Termination....................................37
SECTION 7.03. Fees and Expenses........................................37
SECTION 7.04. Amendment................................................37
SECTION 7.05. Extension; Waiver........................................38
SECTION 7.06. Procedure for Termination, Amendment, Extension
or Waiver................................................38
ARTICLE VIII GENERAL PROVISIONS.......................................38
SECTION 8.01. Nonsurvival of Representations and Warranties............38
SECTION 8.02. Notices..................................................38
SECTION 8.03. Definitions..............................................39
SECTION 8.04. Interpretation...........................................39
SECTION 8.05. Counterparts.............................................40
ii
<PAGE>
SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries...........40
SECTION 8.07. Governing Law............................................40
SECTION 8.08. Assignment...............................................40
SECTION 8.09. Severability.............................................40
Exhibit 1 Second Amended and Restated Articles of Incorporation
of the Company
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 11, 1998, among CRANE
CO., a Delaware corporation ("Crane" or "Parent"), LTI MERGER, INC., a
Pennsylvania corporation and wholly owned subsidiary of Crane (the "Purchaser"
or "Merger Sub"), and LIBERTY TECHNOLOGIES, INC., a Pennsylvania corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Crane, the Purchaser
and the Company have approved the acquisition of the Company by Crane upon the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Crane proposes to cause
the Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the outstanding
shares of common stock, par value $.01 per share, of the Company ("Company
Common Stock" or "Shares"), including the associated preferred stock purchase
rights (the "Rights") issued under the Amended and Restated Rights Agreement,
dated October 6, 1997, between the Company and StockTrans, Inc., as rights
agent (the "Rights Agreement"), at a purchase price of $3.50 per share (such
amount, or any greater amount to be paid per share of Company Common Stock in
the Offer, being referred to as the "Per Share Amount"), net to the seller in
cash, upon the terms and subject to the conditions set forth in this Agreement
and in the Offer, and the Board of Directors of the Company has approved the
Offer and is recommending that the Company's shareholders accept the Offer and
tender their shares of Company Common Stock pursuant to the Offer; and
WHEREAS, also in furtherance of such acquisition, the respective
Boards of Directors of Crane, Purchaser and the Company have approved the
merger of Purchaser with and into the Company (the "Merger") upon the terms and
subject to the conditions set forth in this Agreement and in accordance with
the provisions of the Pennsylvania Business Corporation Law, as amended (the
"PBCL"), whereby each issued and outstanding share of Company Common Stock
other than shares owned by the Company or by Crane, the Purchaser or any wholly
owned subsidiary of the Company, Crane or the Purchaser and other than
Dissenting Shares, will be converted into the right to receive the Per Share
Amount; and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Crane's willingness to enter
into this Agreement, Crane has entered into (i) a Stock Option Agreement (the
"Stock Option Agreement") with the Company pursuant to which the Company has
granted Crane an option to acquire shares of Company Common Stock and (ii)
Shareholder Agreements (the "Shareholder Agreements") with certain shareholders
of the Company pursuant to which, among other things, such shareholders have
agreed to tender their Shares pursuant to the Offer and have granted to Crane
an option to otherwise purchase such Shares;
<PAGE>
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties, intending to
be legally bound, agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Article VII hereof and none of the
events set forth in Annex II hereto (the "Tender Offer Conditions") shall have
occurred, as promptly as practicable but in no event later than the fifth
business day from the date of this Agreement, Crane shall cause the Purchaser
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (including the rules and regulations promulgated
thereunder, the "Exchange Act")) an offer to purchase all outstanding shares of
Company Common Stock, together with associated Rights (all references herein to
shares of Company Common Stock in the context of the Offer being deemed to
include such Rights) at the Per Share Price, shall, after affording the Company
a reasonable opportunity to review and comment thereon, file all necessary
documents with the Securities and Exchange Commission (the "SEC") in connection
with the Offer (the "Offer Documents") and shall consummate the Offer, subject
to the terms and conditions thereof. The obligation of the Purchaser to accept
for payment or pay for any shares of Company Common Stock tendered pursuant to
the Offer will be subject only to the satisfaction of the conditions set forth
in Annex II hereto.
(b) Without the prior written consent of the Company, the
Purchaser shall not decrease the Offer price or change the form of
consideration payable in the Offer, decrease the number of shares of Company
Common Stock sought to be purchased in the Offer, impose additional conditions
to the Offer or amend any other term of the Offer in any manner adverse to the
holders of shares of Company Common Stock. The Offer shall remain open until
the date that is 20 business days (as such term is defined in Rule 14d-1(c)(6)
under the Exchange Act) after the commencement of the Offer (the "Expiration
Date"), unless the Purchaser shall have extended the period of time for which
the Offer is open pursuant to, and in accordance with, the two succeeding
sentences or as may be required by applicable law, in which event the term
"Expiration Date" shall mean the latest time and date as the Offer, as so
extended, may expire. If at any Expiration Date, any of the Tender Offer
Conditions are not satisfied or waived by the Purchaser, the Purchaser may
extend the Offer from time to time. Subject to the terms of the Offer and this
Agreement and the satisfaction of all the Tender Offer Conditions as of any
Expiration Date, the Purchaser will accept for payment and pay for all shares
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after such Expiration Date of the Offer consistent with applicable law,
provided that, if all of the Tender Offer Conditions are satisfied and more
than 65% but less than 80% of the outstanding shares of Company Common Stock on
a fully diluted basis (including shares of Company Common Stock issuable upon
exercise of outstanding options to acquire shares of Company Common Stock) have
been validly tendered and not withdrawn in the Offer, the Purchaser shall have
the right, in its sole discretion, to extend the Offer from time to time for up
to a maximum of 10 additional business days in the aggregate for all such
extensions provided the Purchaser agrees to waive the conditions set forth in
paragraphs (c), (f) and (g) of Annex II.
2
<PAGE>
(c) Crane and the Purchaser represent that the Offer Documents
will comply in all material respects with the provisions of applicable federal
securities laws and, on the date filed with the SEC and on the date first
published, sent or given to the Company's shareholders, shall not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading,
except that no representation is made by Crane or the Purchaser with respect to
information derived from the Company SEC Reports or supplied by the Company in
writing expressly for inclusion in the Offer Documents. Each of Crane and the
Purchaser, on the one hand, and the Company, on the other hand, agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect and each of Crane and the Purchaser further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to shareholders of the Company, in each case, as and to
the extent required by applicable federal securities laws.
SECTION 1.02. Company Actions. (a) The Company shall, after affording
Crane a reasonable opportunity to review and comment thereon, file with the SEC
and mail to the holders of shares of Company Common Stock, as promptly as
practicable on the date of the filing by Crane and the Purchaser of the Offer
Documents, a Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") reflecting
the recommendation of the Board of Directors of the Company that holders of
shares of Company Common Stock tender their shares pursuant to the Offer and
shall disseminate the Schedule 14D-9 as required by Rule 14d-9 promulgated
under the Exchange Act. The Schedule 14D-9 will set forth, and the Company
hereby represents, that the Board of Directors of the Company, at a meeting
duly called and held, has (i) determined by vote of its directors that each of
the transactions contemplated hereby, including each of the Offer and the
Merger, is fair to and in the best interests of the Company and its
shareholders, (ii) approved the Offer, the Merger, the Stock Option Agreement
and the Shareholder Agreements, (iii) recommended acceptance of the Offer and
approval of this Agreement by the Company's shareholders, and (iv) taken all
other action necessary to render Section 2538 and Subchapter F of Chapter 25 of
the PBCL and the Rights inapplicable to the Offer and the Merger. Such
recommendation and approval may be withdrawn, modified or amended only to the
extent permitted by Section 5.02(b). The Company further represents that, prior
to the execution hereof, Legg Mason Wood Walker, Inc. has delivered to the
Board of Directors of the Company its written opinion that, as of August 10,
1998, the consideration to be received by the holders of shares of Company
Common Stock pursuant to the Offer and the Merger is fair to the Company's
shareholders from a financial point of view. The Company hereby consents to the
inclusion in the Offer Documents of the recommendation of the Board of
Directors of the Company described in this Section 1.02(a).
(b) The Company represents that the Schedule 14D-9 will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's shareholders, shall not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading, except that no
representation is
3
<PAGE>
made by the Company with respect to information supplied by Crane or the
Purchaser in writing expressly for inclusion in the Schedule 14D-9. Each of the
Company, on the one hand, and Parent and the Purchaser, on the other hand,
agrees promptly to correct any information provided by either of them for use
in the Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to the holders of shares of Company Common
Stock, in each case, as and to the extent required by applicable federal
securities law.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with mailing labels, security position listings, any
available non-objecting beneficial owner lists and any available listing or
computer list containing the names and addresses of the record holders of
shares of Company Common Stock as of the most recent practicable date and shall
furnish the Purchaser with such additional available information (including,
but not limited to, updated lists of holders of shares of Company Common Stock
and their addresses, mailing labels and lists of security positions and
non-objecting beneficial owner lists) and such other assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to
the Company's record and beneficial shareholders. Subject to the requirements
of applicable law, and except for such steps as are necessary to disseminate
the Offer Documents and any other documents necessary to consummate the Merger,
Crane, the Purchaser and their affiliates, associates, agents and advisors,
shall keep such information confidential and use the information contained in
any such labels, listings and files only in connection with the Offer and the
Merger and, should the Offer terminate or if this Agreement shall be
terminated, will deliver to the Company all copies of such information then in
their possession.
SECTION 1.03. Directors. (a) Subject to compliance with applicable
law, promptly upon the payment by the Purchaser for shares of Company Common
Stock which represent at least a majority of the Company Common Stock (on a
fully diluted basis) pursuant to the Offer and from time to time thereafter,
Crane shall be entitled to designate such number of directors, rounded up to
the next whole number, on the Board of Directors of the Company as is equal to
the product of the total number of directors on the Board of Directors of the
Company (determined after giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of shares
of Company Common Stock beneficially owned by Crane or its affiliates bears to
the total number of shares of Company Common Stock outstanding, and the Company
shall, upon request of Crane, promptly take all actions (but specifically
excluding the calling of a shareholders meeting) necessary to cause Crane's
designees to be so elected, including, if necessary, amending the By-laws of
the Company to the extent permitted to be amended by the Board of Directors and
seeking the resignations of one or more existing directors; provided, however,
that prior to the Effective Time, the Board of Directors of the Company shall
always have not less than two members who are directors of the Company on the
date hereof ("Current Directors") and, in Crane's sole discretion, up to five
Current Directors. If the number of Current Directors is reduced prior to the
Effective Time below the number of Current Directors so specified by Crane due
to the death or resignation of one or more of the Current Directors, then the
remaining director or directors who is or are Current Directors shall be
entitled to designate, by majority action of the remaining Current Directors or
action of the sole remaining Current Director, one or more persons, as the case
may
4
<PAGE>
be, that has not been designated by, and is not an Affiliate of, Crane to fill
such vacancy or vacancies and who shall be deemed to be Current Directors for
all purposes of this Agreement.
(b) The Company's obligations to appoint Crane's designees to the
Board of Directors of the Company shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03 and shall include in the Schedule 14D-9
such information with respect to the Company and its officers and directors as
is required under such Section and Rule in order to fulfill its obligations
under this Section 1.03. Crane will supply promptly, and in any event no later
than the date the appointment of such directors is effective, any information
with respect to itself and its officers, directors and affiliates required by
such Section and Rule to the Company.
(c) Following the election or appointment of Crane's designees
pursuant to this Section 1.03 and prior the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Crane
or the Purchaser or waiver of any of the Company's rights hereunder, will
require the concurrence of a majority of the directors of the Company then in
office who are Current Directors (or in the case where there are two or fewer
directors who are Current Directors, the concurrence of one director who is a
Current Director).
SECTION 1.04. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the PBCL, Merger Sub shall
be merged with and into the Company at the Effective Time. Following the
Effective Time, the separate corporate existence of Merger Sub shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation") and shall succeed to and assume all the rights and obligations of
Merger Sub in accordance with the PBCL.
SECTION 1.05. Closing. The closing of the Merger (the "Closing") will
take place at 10:00 a.m. on a date to be specified by the parties (the "Closing
Date"), which shall be as soon as practicable after satisfaction or waiver of
the conditions set forth in Section 6.01, at the offices of Pepper Hamilton LLP
in Philadelphia, Pennsylvania unless another time, date or place is agreed to
in writing by the parties hereto.
SECTION 1.06. Effective Time. Subject to the provisions of this
Agreement, on the Closing Date, the parties shall file articles of merger (the
"Articles of Merger") executed in accordance with the relevant provisions of
the PBCL and shall make all other filings or recordings required under the
PBCL. The Merger shall become effective at such time as the Articles of Merger
are duly filed with the Pennsylvania Secretary of State, or at such subsequent
time as Crane and the Company shall agree and as is specified in the Articles
of Merger (the time the Merger becomes effective being hereinafter referred to
as the "Effective Time").
SECTION 1.07. Effects of the Merger. The Merger shall have the effects
specified in Section 1929 of the PBCL.
5
<PAGE>
SECTION 1.08. Articles of Incorporation and By-laws. (a) The Second
Amended and Restated Articles of Incorporation of the Company attached hereto
as Exhibit 1 shall be the articles of incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or by
applicable law.
(b) The By-laws of the Company as in effect at the Effective Time
shall be the by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
SECTION 1.09. Directors of the Surviving Corporation. The directors of
Merger Sub immediately prior to the Effective Time shall be the directors of
the Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be. The Company will obtain such resignations as may be necessary to effect
the foregoing.
SECTION 1.10. Officers of the Surviving Corporation. The officers of
Merger Sub immediately prior to the Effective Time shall be the officers of the
Surviving Corporation, until the earlier of their resignation or removal or
until their respective successors are duly elected and qualified, as the case
may be.
SECTION 1.11. Shareholders' Meeting. (a) If required by applicable law
in order to consummate the Merger, as soon as practicable following the
acceptance for payment of and payment for shares of Company Common Stock by the
Purchaser pursuant to the Offer, the Company, acting through the Board of
Directors of the Company, shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its shareholders (the "Company Shareholders Meeting")
for the purpose of considering and taking action upon this
Agreement;
(ii) prepare and file with the SEC a preliminary proxy
statement relating to this Agreement, and use its reasonable
efforts (x) to obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter
defined) and cause a definitive proxy statement (the "Proxy
Statement") to be mailed to its shareholders and (y) to obtain
the necessary approvals of the Merger and this Agreement by its
shareholders; and
(iii) subject to Section 5.02, include in the Proxy
Statement the recommendation of the Board of Directors of the
Company that shareholders of the Company vote in favor of the
approval of the Merger and this Agreement.
(b) Crane agrees that it will vote, or cause to be voted, all of
the shares of Company Common Stock then owned by it, the Purchaser or any of
its other Subsidiaries in favor of the approval of the Merger and of this
Agreement. Following the consummation of the Offer, if required by applicable
law in order to consummate the Merger, Crane shall use its best efforts to
cause the Company to take the actions set forth in Section 1.11(a).
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ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
SECTION 2.01. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of Common Stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Stock Owned by Crane or
the Purchaser. Each share of Company Common Stock that is owned by the Company
or by Crane or the Purchaser or any wholly owned subsidiary of the Company,
Crane or the Purchaser shall automatically be canceled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each issued and
outstanding share of Company Common Stock (other than shares to be canceled in
accordance with Section 2.01(b) and other than Dissenting Shares) shall be
converted into the right to receive the Per Share Amount in cash, without
interest (the "Merger Consideration").
(d) Shares of Dissenting Shareholders. Notwithstanding anything
in this Agreement to the contrary, any issued and outstanding share of Company
Common Stock held by a person (a "Dissenting Shareholder") who shall have
demanded and perfected a right to receive payment of the fair value of his or
her shares pursuant to Subchapter D of Chapter 15 of the PBCL ("Dissenting
Shares") shall not be converted as described in Section 2.01(c), unless such
holder fails to comply with the provisions of Subchapter D of Chapter 15 of the
PBCL or withdraws or otherwise loses his right to receive such fair value
payment. If, after the Effective Time, such Dissenting Shareholder fails to
comply with the provisions of Subchapter D of Chapter 15 of the PBCL or
withdraws or loses his right to receive such fair value payment, such
Dissenting Shareholder's shares of Company Common Stock shall no longer be
considered Dissenting Shares for the purposes of this Agreement and shall
thereupon be deemed to have been converted into and to have become exchangeable
for, at the Effective Time, the right to receive for each such share the Merger
Consideration, without interest. The Company shall give Crane (i) prompt notice
of any demands to receive payment of fair value of shares of Company Common
Stock received by the Company and (ii) the opportunity to participate in and
direct all negotiations and proceedings with respect to any such demands. The
Company shall not, without the prior written consent of Crane, make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any such
demands.
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(e) Cancellation of Company Common Stock. As of the Effective
Time, all shares of Company Common Stock shall no longer be outstanding and
shall automatically be canceled and shall cease to exist, and each holder of a
certificate that immediately prior to the Effective Time represented any such
shares of Company Common Stock (a "Certificate") shall cease to have any rights
with respect thereto, except the right to receive the applicable Merger
Consideration, without interest, or, in the case of Dissenting Shareholders, if
any, the rights, if any, accorded under the PBCL.
SECTION 2.02. Exchange of Certificates. (a) Deposit with the Exchange
Agent. As of the Effective Time, Crane shall deposit with First Chicago Trust
Company of New York or other independent agent mutually acceptable to the
Company and Crane (the "Exchange Agent") for the benefit of the holders of
shares of Company Common Stock, for exchange through the Exchange Agent, the
cash representing the Merger Consideration (the "Exchange Fund") payable
pursuant to Section 2.01(c) in exchange for outstanding shares of Company
Common Stock.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate or Certificates, (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to such
Certificates shall pass, only upon delivery of such Certificates to the
Exchange Agent and shall be in such form and have such other provisions as
Crane and the Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of such Certificates in exchange for the applicable
Merger Consideration. Upon surrender of such a Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by
Crane, together with such letter of transmittal, duly executed, and such other
documents as may reasonably be required by the Exchange Agent, the holder of
such Certificate shall be entitled to receive cash which such holder has the
right to receive pursuant to this Article II, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Common Stock that is not registered in the transfer
records of the Company, cash may be paid to a person other than the person in
whose name the Certificate so surrendered is registered, if such Certificate
shall be properly endorsed or otherwise be in proper form for transfer. Until
surrendered as contemplated by this Section 2.02(b), each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration which the holder thereof
has the right to receive in respect of such Certificate pursuant to the other
provisions of this Article II. No interest will be paid or will accrue on cash
payable to holders of Certificates pursuant to the provisions of this Article
II. Crane shall pay the charges and expenses of the Exchange Agent.
(c) No Further Ownership Rights in Company Common Stock. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of Company Common Stock theretofore represented by
such Certificates, and there shall be no further registration of transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent
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for any reason, they shall be canceled and exchanged as provided in this
Article II, except as otherwise provided by law.
(d) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains undistributed to the holders of the Certificates for six
months after the Effective Time shall be delivered to Crane, upon demand, and
any holders of the Certificates who have not theretofore complied with this
Article II shall thereafter look only to Crane for payment of their claim for
any cash comprising the Merger Consideration.
(e) No Liability. None of Crane, the Company or the Exchange
Agent shall be liable to any person in respect of any cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
(f) Investment of Exchange Fund. The Exchange Agent shall invest
any cash included in the Exchange Fund, as directed by Crane, on a daily basis.
Any interest and other income resulting from such investments shall be paid to
Crane.
(g) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration deliverable in respect thereof, pursuant
to this Agreement.
(h) Withholding Rights. Crane or the Exchange Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as Crane or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code or any provision of state,
local or foreign tax law. To the extent that amounts are so withheld and paid
over to the appropriate taxing authority by Crane or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by Crane or the Exchange Agent.
Notwithstanding the foregoing, neither Crane nor the Exchange Agent shall
withhold any amounts payable pursuant to this Agreement to any holder of shares
of Company Common Stock so long as such holder provides to Crane or the
Exchange Agent a form W-9 or W-8, as required by applicable law, certifying
such holder's exemption from back-up withholding.
SECTION 2.03. Treatment of Stock Options. Prior to the Effective Time,
the Company shall take all such actions as may be necessary to cause (i) each
unexpired and unexercised option to acquire Company Common Stock held by
current or former directors, officers, employees or consultants of the Company,
whether or not then exercisable or vested (each, a "Company Option"), that has
an exercise price less than the Per Share Amount to be
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automatically converted at the Effective Time into an amount equal to the
difference between the Per Share Amount and the exercise price of the Company
Option, multiplied by the number of shares of Common Stock issuable immediately
prior to the Effective Time upon exercise of the Company Option (without regard
to vesting periods or to restrictions on exercisability) and (ii) each
unexpired and unexercised Company Option that has an exercise price equal to or
greater than the Per Share Amount to be canceled so that no Company Option
shall have any force or effect on or after the Effective Time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule delivered by the
Company to Crane prior to the execution of this Agreement (the "Company
Disclosure Schedule"), the Company represents and warrants to Crane as follows:
SECTION 3.01. Organization, Standing and Corporate Power. The Company
and each of its Subsidiaries is a corporation duly organized, validly
subsisting or existing and in good standing under the laws of the jurisdiction
in which it is incorporated and has the requisite corporate power and authority
to carry on its business as now being conducted. The Company and each of its
Subsidiaries is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed or to be in good standing
individually or in the aggregate would not have a Material Adverse Effect with
respect to the Company and its Subsidiaries taken as a whole.
SECTION 3.02. Subsidiaries. Section 3.02 of the Company Disclosure
Schedule sets forth a true and complete list of the Subsidiaries of the
Company. All the outstanding shares of capital stock of each such Subsidiary
have been validly issued and are fully paid and nonassessable and are owned
directly or indirectly by the Company, free and clear of all Liens, except for
liens of Silicon Valley Bank (the "Silicon Valley Bank Liens") pursuant to the
Loan and Security Agreement dated May 7, 1998 among the Company and Silicon
Valley Bank (the "Silicon Valley Bank Loan"). Except for the capital stock of
its Subsidiaries, the Company does not own, directly or indirectly, any capital
stock or other ownership interest in any corporation, limited liability
company, partnership, joint venture or other entity.
SECTION 3.03 Capital Structure. The authorized capital stock of the
Company consists of 20,000,000 shares of Company Common Stock and 2,000,000
shares of preferred stock, par value $.01 per share ("Company Preferred
Stock"). As of the date of this Agreement, (i) 5,013,233 shares of Company
Common Stock were issued and outstanding, (ii) no shares of Company Preferred
Stock were issued or outstanding, (iii) 14,754 shares of Company Common Stock
were held by the Company in its treasury, (iv) 1,154,000 shares of Company
Common Stock were reserved for issuance pursuant to options outstanding under
the Company's 1992
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Stock Option Plan and the Company's 1988 Stock Option Plan (together, the
"Stock Plans"), and (v) 10,000 shares of Company Series A Junior Participating
Preferred Stock were reserved for issuance in connection with the Rights.
Section 3.03 of the Company Disclosure Schedule sets forth each holder of each
option outstanding pursuant to the Stock Plans on the date hereof and the date
of grant, number of shares of Company Common Stock subject thereto, expiration
date, vesting schedule and exercise price of each such option held by such
holder. Except as set forth above, as of the date of this Agreement, no shares
of capital stock or other voting securities of the Company were issued or
outstanding or reserved for issuance. As of the date of this Agreement, there
were no outstanding stock appreciation rights or rights (other than outstanding
Company Options issued under the Stock Plans as set forth in subparagraph (iv)
above) to receive shares of Company Common Stock on a deferred basis granted
under the Stock Plans or otherwise, except as set forth in the Rights
Agreement. All outstanding shares of capital stock of the Company are, and all
shares which may be issued pursuant to any options outstanding on the date
hereof pursuant to the Stock Plans and the Stock Option Agreement will be, when
issued, duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights. There are no notes, bonds, debentures or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
shareholders of the Company may vote. Except as set forth above, as of the date
of this Agreement, there are no outstanding securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any
kind to which the Company or any of its Subsidiaries was a party or by which
any of them was bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of the Company or any of its Subsidiaries. As of the date of
this Agreement, there are no outstanding contractual obligations of the Company
to vote or to dispose of any shares of the capital stock of any of its
Subsidiaries. The Company has delivered to Crane a complete and correct copy of
the Rights Agreement.
SECTION 3.04. Authority; Noncontravention. (a) The Company has all
requisite corporate power and authority to enter into this Agreement and the
Stock Option Agreement and, subject (in the case of this Agreement) to the
Company Shareholder Approval, to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the Stock
Option Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
the approval of this Agreement and the transactions contemplated hereby, to the
Company Shareholder Approval. This Agreement and the Stock Option Agreement
have been duly executed and delivered by the Company and constitute valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms except as limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) general
principles of equity, regardless of
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whether asserted in a proceeding in equity or at law; provided, however, that
the Company cannot consummate the Merger unless and until it receives the
Company Shareholder Approval.
(b) The execution and delivery of this Agreement and the Stock
Option Agreement by the Company do not, and the consummation of the
transactions contemplated hereby and thereby will not, (i) conflict with, or
result in any violation or breach of any provision of the Amended and Restated
Articles of Incorporation or Bylaws of the Company, (ii) except as set forth in
Section 3.04 of the Company Disclosure Schedule, result in any violation or
breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any material benefit) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, lease,
contract or other agreement, instrument or obligation to which the Company or
any of its Subsidiaries is a party or which any of them or any of their
properties or assets may be bound, or (iii) subject to obtaining the Company
Shareholder Approval and compliance with the requirements set forth in Section
3.04(c) below, conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or any of its Subsidiaries or any of its or their
properties or assets, except in the case of (ii) and (iii) for any such
conflicts, violations, defaults, terminations, cancellations or accelerations
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company and its Subsidiaries taken as a whole.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Authority is required
by or with respect to the Company or any of its Subsidiaries in connection with
the execution and delivery of this Agreement or the Stock Option Agreement or
the consummation of the transactions contemplated hereby or thereby, except for
(i) the filing of the Articles of Merger with the Pennsylvania Secretary of
State, (ii) the filing of the Schedule 14D-9 with the SEC in accordance with
the Exchange Act, (iii) the filing of the Proxy Statement with the SEC in
accordance with the Exchange Act, (iv) the filing of a premerger notification
and report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and (v) such consents, approvals, orders,
authorizations, registrations, declarations and filings as either (x) may be
required under applicable state securities laws and the laws of any foreign
country or (y) which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole, or would not reasonably be expected to impair the ability of
the Company to perform its obligations under this Agreement in any material
respect.
SECTION 3.05. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by the Company with
the SEC since January 1, 1994 (collectively, together with any forms, reports
and documents filed by the Company with the SEC after the date hereof until the
Closing, the "Company SEC Reports"). Each such report, when filed, complied in
all material respects with the requirements of the Exchange Act and the
applicable rules and regulations thereunder and, as of their respective dates,
none of such reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
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(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Company SEC Reports complied as
to form in all material respects with the applicable rules and regulations of
the SEC with respect thereto, was prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements) and fairly presented the consolidated financial position of the
Company and its Subsidiaries as at the respective dates and the consolidated
results of their operations and cash flows for the periods indicated, except
that unaudited interim financial statements contained in any Company Quarterly
Report on Form 10-Q (i) were or are subject to normal year-end adjustments
which were not or are not expected to be material in amount, and (ii) do not
contain footnote disclosure. The unaudited balance sheet of the Company as of
June 30, 1998 is referred to herein as the "Company Balance Sheet."
SECTION 3.06. Indebtedness; Absence of Undisclosed Liabilities. (a)
Section 3.06 of the Company Disclosure Schedule sets forth a list of each
instrument which evidences Indebtedness of the Company or any Subsidiary, and
the aggregate principal amount thereof outstanding as of the date hereof. The
total aggregate principal amount outstanding as of the date hereof of all such
Indebtedness is $189,945, which includes $0 in face amount of outstanding
letters of credit. Except as set forth in Section 3.06 of the Company
Disclosure Schedule, all of such instruments are in full force and effect and
neither the Company, nor any Subsidiary (as the case may be) is in default
thereunder, nor, to the knowledge of the Company, is any other party to any
such instrument in default thereunder, nor to the knowledge of the Company,
does any condition exist that, with the giving of notice or lapse of time or
both, would constitute a default thereunder, which default could reasonably be
expected to give rise to a right on the part of some party thereto to terminate
such instrument, accelerate the obligations thereunder or claim damages
thereunder, except such default (i) as to which requisite waivers or consents
have been obtained or (ii) which is curable and is cured within the applicable
period for cure permitted under such instruments. Section 3.06 of the Company
Disclosure Schedule also sets forth a list of each other instrument or
agreement that contains a restriction, limitation or encumbrance, of any kind,
on the ability of the Company or any Subsidiary to pay dividends on its
respective capital stock.
(b) Section 3.06 of the Company Disclosure Schedule also sets
forth all contracts and other agreements and arrangements pursuant to which the
Company or any Subsidiary has agreed to indemnify or exonerate any officer,
director or employee of the Company or of any Subsidiary with respect to any
matter. Except as described in Section 3.06 of the Company Disclosure Schedule,
the Company has not received any written notice of, and, to the best knowledge
of the Company, there are no circumstances which might give rise to, any
obligation or liability on the part of the Company or any Subsidiary so to
indemnify any such officer, director or employee.
(c) Except as disclosed in the Company SEC Reports filed prior to
the date hereof, the Company and its Subsidiaries do not have any liabilities
as of the date hereof, either accrued or contingent, and whether due or to
become due that, under generally accepted accounting principles, are required
to be reflected in the Company's financial statements, other than (i)
liabilities reflected or reserved against in the Company Balance Sheet, (ii)
liabilities specifically
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described in this Agreement, or in the Company Disclosure Schedule, and (iii)
normal or recurring liabilities incurred since June 30, 1998 in the ordinary
course of business consistent with past practices and which are not,
individually or in the aggregate, material to the business, results,
operations, financial condition or prospects of the Company and its
Subsidiaries, taken as a whole.
SECTION 3.07 Absence of Certain Changes or Events. Since the date of
the Company Balance Sheet, the Company and its Subsidiaries have conducted
their businesses only in the ordinary course and in a manner consistent with
past practice and, since such date, there has not been (i) any Material Adverse
Effect with respect to the Company and its Subsidiaries, taken as a whole, and,
to the best knowledge of the Company, no fact or condition exists or is
threatened which is reasonably likely to cause a Material Adverse Effect with
respect to the Company and its Subsidiaries, taken as a whole, in the future,
or (ii) any material change by the Company in its accounting methods,
principles or practices except as required by concurrent changes in generally
accepted accounting principles.
SECTION 3.08. Tax Matters. (a) Each of the Company and its
Subsidiaries has prepared and timely filed, and will file on a timely basis,
all material federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") relating to any and all Taxes concerning or
attributable to the Company or its Subsidiaries or their operations and
required to be filed on or prior to the Effective Time.
(b) Each such Return was true, correct and complete on the
respective date on which it was filed and, to the knowledge of the Company, no
event has since occurred requiring any amendment thereto, which amendment has
not been made in a manner such that each such Return remains true, correct and
complete.
(c) The Company as of the Effective Time: (A) will have paid all
Taxes it is required to pay prior to the Effective Time and (B) will have
withheld with respect to its employees all federal and state income taxes,
FICA, FUTA and other Taxes required to be withheld.
(d) The accounts shown on the Company Balance Sheet (excluding
amounts classified thereon as deferred) are sufficient for the discharge of all
Taxes attributable or with respect to all periods, or portions thereof, prior
to the date of the Company Balance Sheet remaining unpaid as of such date,
except as set forth in Section 3.08 of the Company Disclosure Schedule. There
is no Tax deficiency outstanding or assessed, or to the Company's knowledge
proposed, against the Company or its Subsidiaries that is not reflected as a
liability on the Company Balance Sheet nor has the Company executed any waiver
of any statute of limitations on or extending the period for the assessment or
collection of any Tax. No tax audit or examination is now pending or currently
in progress with respect to the Company or its Subsidiaries.
(e) The Company has not filed a consent under Section 341(f) of
the Code concerning collapsible corporations. The Company has not made any
payment, nor is it obligated to make any payment, nor is it a party to any
agreement that under certain circumstances could obligate it to make any
payment, that will not be deductible under Sections 280G or 162(m) of the Code.
The Company has not been (nor does it have any liability for unpaid Taxes
because it once was) a member of an affiliated group (other than the current
affiliated group of the Company and its
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Subsidiaries) during any part of any consolidated return year within any part
of which consolidated return year any other corporation was also a member of
such group. The Company is not and has not been during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code a United States real property
holding corporation as defined in Section 897(c)(2) of the Code. Without taking
into account the transactions contemplated by this Agreement, including,
without limitation, the Offer and the Merger, neither the Company nor any of
its Subsidiaries has any losses subject to the limitations of Section 382 of
the Code.
SECTION 3.09. Certain Transactions; Certain Payments. (a) Except as
set forth in Section 3.09 of the Company Disclosure Schedule, none of the
officers or directors of the Company or of any of its Subsidiaries nor any
Affiliate of the Company, and, to the knowledge of the Company, none of the
employees of the Company or of any of its Subsidiaries is currently a party to
any transaction with the Company or any of its Subsidiaries (other than for
services as an employee, officer or director), including, without limitation,
any contract, agreement or other arrangement (i) providing for the furnishing
of services to or by, (ii) providing for rental of real or personal property to
or from, or (iii) otherwise requiring payments to or from, any such officer,
director, Affiliate or employee, any member of the family of any such officer,
director or employee or any corporation, partnership, trust or other entity in
which any such officer, director or employee has a substantial interest or
which is an Affiliate of such officer, director or employee.
(b) Except as set forth in Section 3.09 of the Company Disclosure
Schedule, none of the officers or directors of the Company or of any of its
Subsidiaries nor any Affiliate of the Company, or, to the knowledge of the
Company, any other person or entity associated with or acting for or on behalf
of the Company or any of its Subsidiaries, has directly or indirectly (i) made
any bribe, payoff, influence payment (other than payments made in accordance
with normal commercial practices), kickback or other unlawful gift or payment
to any person or entity, private or public, regardless of form, whether in
money, property or services (w) to obtain favorable treatment in securing
business, (x) to pay for favorable treatment for business secured, (y) to
obtain special concessions or for special concessions already obtained, for or
in respect of the Company or any of its Subsidiaries or Affiliates or (z) in
violation of the United States Foreign Corrupt Practices Act or any other
federal, state, territorial, local or foreign law, statute, rule or regulation
or (ii) established or maintained any fund or asset that has not been recorded
in the books and records of the Company in connection with any of the matters
described in clause (i) above.
SECTION 3.10. Required Authorizations. Section 3.10 of the Company
Disclosure Schedule sets forth a true and complete list of all Required
Authorizations which the Company or any of its Subsidiaries must give or obtain
for the execution and delivery of this Agreement or the Stock Option Agreement
by the Company or the consummation by the Company or any of its Subsidiaries of
any of the transactions contemplated hereby or thereby or in order to enable
all the issued and outstanding capital stock of the Company to be acquired in
the Offer or to be converted as contemplated by Article II.
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SECTION 3.11. Litigation. Except as set forth in Section 3.11 of the
Company Disclosure Schedule or as indicated in any of the Company SEC Reports
filed prior to the date hereof, there are no suits, litigations,
investigations, actions or proceedings of any kind pending or (to the knowledge
of the Company) threatened against the Company or any Subsidiary, nor (to the
knowledge of the Company) is any such matter pending or threatened against any
other person, which, if adversely determined, would have a Material Adverse
Effect with respect to the Company and its Subsidiaries taken as a whole.
SECTION 3.12. Compliance with Law; Regulatory Compliance. (a) Except
as set forth in Section 3.12 of the Company Disclosure Schedule and except for
instances of non-compliance which, individually or in the aggregate, would not
have a Material Adverse Effect with respect to the Company and its Subsidiaries
taken as a whole, neither the Company nor any of its Subsidiaries is or has
been in violation of any applicable federal, state, provincial, local or
foreign law, regulation, ordinance or other requirement of any Governmental
Authority relating to it or to its securities, property, operations or
business, and, to the best knowledge of the Company, no event has occurred or
condition or state of facts exists that could give rise to any such violation.
Except as set forth in Section 3.12 of the Company Disclosure Schedule, there
is no outstanding order, writ, judgment, stipulation, injunction, decree,
determination, award or other order of any court or governmental agency or
instrumentality, domestic or foreign, against or affecting the Company, any of
its Subsidiaries or any of the assets of the Company or its Subsidiaries.
(b) The Company and its Subsidiaries possess, or have made timely
application for, all Governmental Approvals with and under all federal, state,
provincial, local and foreign laws and Governmental Authorities, required by
the Company and its Subsidiaries to carry on any substantial part of their
respective businesses as presently conducted and to use and operate any of
their respective property and assets, other than Governmental Approvals, the
absence of which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Company and its
Subsidiaries, taken as a whole. All such Governmental Approvals are in full
force and effect and neither the Company nor any of its Subsidiaries is in
violation of any such Governmental Approval or any other permit, license,
approval, authorization or registration applicable to it or to the operation of
its respective business, other than violations which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect
with respect to the Company and its Subsidiaries taken as a whole, and, to the
best knowledge of the Company, no event or condition or state of facts exists
(or would exist upon the giving of notice or lapse of time or both) that could
result in such a violation. Except as disclosed in Section 3.12 of the Company
Disclosure Schedule, the Company has no reason to believe that any pending
application for any such Governmental Approval will not be timely granted and
no proceeding is pending or, to the knowledge of the Company, threatened to
revoke, suspend or materially modify any Governmental Approval possessed by the
Company or its Subsidiaries or deny any renewal thereof.
(c) Except as disclosed in Section 3.12 of the Company Disclosure
Schedule, the Company and its Subsidiaries have made all Governmental Filings
required to be made with any Governmental Authority with respect to the
operation of their respective businesses and the use and operation of their
respective properties and assets, other than Governmental Filings, the
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absence of which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Company and its
Subsidiaries, taken as a whole.
SECTION 3.13 Contracts. Set forth in Section 3.13 of the Company
Disclosure Schedule is a list of (a) all contracts, agreements, commitments,
undertakings or obligations to which the Company or any of its Subsidiaries is
a party or by which it or its assets or properties are bound or subject which
involve the payment by or to the Company or any of its Subsidiaries of more
than $50,000 under any one of such contracts and which have a remaining term of
more than 120 days (taking into account the effect of any renewal options), (b)
all contracts, agreements or other instruments evidencing Indebtedness; (c) all
joint venture or partnership agreements to which the Company or any Subsidiary
is a party; (d) all contracts or agreements restricting the right of any person
or entity to compete with the Company or any Subsidiary, and all contracts or
agreements restricting the right of the Company or any Subsidiary to compete
with any person or entity, to sell to or purchase from any person or entity or
to hire any person; (e) all contracts or agreements, other than contracts or
agreements for the sale of products in the ordinary course of business,
providing for indemnification or exoneration of any other person or entity by
the Company or any Subsidiary; (f) all contracts or agreements with any public
utility pursuant to which the Company or any Subsidiary provides goods or
services to such public utility; (g) all contracts pursuant to which the
Company provides services and pursuant to which there is no limitation on the
liability of the Company; and (h) all other contracts, agreements, commitments,
undertakings or obligations to which the Company or any of its Subsidiaries is
a party or by which it or its assets or properties are bound or subject (other
than Real Property Leases, Personal Property Leases, Employment Agreements and
Benefit Plans) (x) which if terminated or lost would have a Material Adverse
Effect with respect to the Company and its Subsidiaries, taken as a whole, or
(y) was not entered into in the ordinary course of business (collectively, the
"Contracts"). There have been made available to Crane true and complete copies
of all such Contracts that are in writing (including all amendments thereto, if
any). Except as set forth in Section 3.13 of the Company Disclosure Schedule,
all of the Contracts are in full force and effect and neither the Company nor
any of its Subsidiaries (as the case may be) is in default thereunder, nor, to
the knowledge of the Company, is any other party to any Contract in default
thereunder, nor, to the best of the Company's knowledge, does any condition
exist that, with the giving of notice or lapse of time or both, would
constitute a default thereunder, which default would give rise to a right on
the part of some party thereto to terminate such Contract or claim damages
thereunder, except such default (i) as to which requisite waivers or consents
have been obtained or (ii) which is curable and is cured within the applicable
period for cure permitted under such Contract. Except as set forth in Section
3.10 of the Company Disclosure Schedule, no approval or consent of any person
is needed in order for the Contracts to continue in full force and effect under
the same terms and conditions currently in effect following the consummation of
the transactions contemplated by this Agreement.
SECTION 3.14 Real Property. None of the Company or any of its
Subsidiaries owns any real property. Section 3.14 of the Company Disclosure
Schedule sets forth a list (by lessee) and summary description of all Real
Property Leases. The Company and each Subsidiary (as the case may be) has a
valid leasehold interest in each Real Property
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Lease held by it as of the date of this Agreement, in each case free and clear
of all Liens, except for the Silicon Valley Bank Liens. The Company has made
available to Crane a true and complete copy of each Real Property Lease which
is in writing. Neither the Company nor any of its Subsidiaries is a party to or
holds property subject to any Real Property Lease which is not in writing. The
Real Property Leases are in full force and effect and neither the Company nor
any of its Subsidiaries (as the case may be) has received any written notice of
default thereunder which has not been remedied or waived. Each Real Property
Lease was negotiated on an arm's length basis. Neither the Company nor any of
its Subsidiaries has received any written notice or has any knowledge of any
pending, threatened or contemplated condemnation proceeding or assessment for
public improvements affecting any real property leased pursuant to a Real
Property Lease or any part thereof or of any sale or other disposition thereof
in lieu of condemnation.
SECTION 3.15. Personal Property. The Company or one of its
Subsidiaries (as the case may be) owns all Personal Property owned by it as of
the date of this Agreement, whether or not reflected in the Company Balance
Sheet, in each case free and clear of all Liens, except for the Silicon Valley
Bank Liens. Section 3.15 of the Company Disclosure Schedule also sets forth a
list (by lessee or licensee) and a summary description of all Personal Property
Leases. The Company or one of its Subsidiaries (as the case may be) has a valid
leasehold interest in each Personal Property Lease held by it as of the date of
this Agreement, in each case free and clear of all Liens except for the Silicon
Valley Bank Liens. All of the Personal Property owned or leased by, and
currently used or necessary for or in the operations of, the Company or any of
its Subsidiaries, taken as a whole, is in good operating condition and repair,
ordinary wear and tear excepted.
SECTION 3.16. Intellectual Property Rights. Except as set forth on
Section 3.16 of the Company Disclosure Schedule:
(a) the Company and each of its Subsidiaries owns or has the
exclusive, perpetual, royalty-free right to use all Intellectual Property
Rights that are used in connection with the operation of its business
(collectively, the "Requisite Rights"), free and clear of all Liens other than
the Silicon Valley Bank Liens;
(b) to the knowledge of the Company, no product or service
licensed, marketed or sold by the Company or any of its Subsidiaries violates
any license or infringes any Intellectual Property Rights of others and no
person is infringing upon or has misappropriated any Requisite Rights.
(c) there is no pending or, to the knowledge of the Company,
threatened claim or litigation against the Company or any of its Subsidiaries
contesting the validity of or right to use the Requisite Rights, nor has the
Company or any of its Subsidiaries received any written notice that any of the
Requisite Rights or the operation of their respective businesses conflicts with
the asserted rights of others, in any case, which, individually or in the
aggregate, if adversely determined against the Company or the applicable
Subsidiary would reasonably be expected to have a Material Adverse Effect with
respect to the Company and its Subsidiaries, taken as a whole.
As used herein, the term "Intellectual Property Rights" means all intellectual
property rights, including, without limitation, Proprietary Technology,
patents, patent applications, patent rights,
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trademarks, trademark applications, trade names, service marks, service mark
applications and registrations, copyrights, copyright applications and
registrations, know-how, licenses, trade secrets, proprietary processes and
formulae. As used herein, "Proprietary Technology" means all source and object
code, processes, inventions, trade secrets, know-how and other proprietary
rights owned by the Company or any of its Subsidiaries pertaining to any
product or service licensed, marketed or sold by the Company or any of its
Subsidiaries or used, employed or exploited in the development, license, sale,
marketing, distribution or maintenance thereof, and all documentation
describing or relating to the foregoing, including, without limitation,
manuals, memoranda, know-how, notebooks, patents and patent applications,
trademarks and trademark applications and registrations, copyrights and
copyright applications and registrations, records and disclosures.
SECTION 3.17 Environmental Matters. (a) The Company and each of its
Subsidiaries has applied for and has in effect all federal, state and local and
foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Environmental Permits")
under applicable statutes, laws, ordinances, rules, orders and regulations
which are administered, interpreted or enforced by a Governmental Authority
with jurisdiction over pollution or protection of the environment
(collectively, "Environmental Laws") necessary for it to carry on its business
as now conducted, and there has occurred no default under any such
Environmental Permit, except for the lack of Environmental Permits and for
defaults under Environmental Permits that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect with respect
to the Company and its Subsidiaries taken as a whole.
(b) The Company and each of its Subsidiaries is, and has been, in
compliance with applicable Environmental Laws except for instances of possible
noncompliance which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect with respect to the Company and its
Subsidiaries taken as a whole.
(c) There is no suit, action, proceeding or inquiry pending or,
to the Company's knowledge, threatened before any Governmental Authority in
which the Company or any or its Subsidiaries has been or, to the best knowledge
of the Company with respect to threatened suits, actions and proceedings, may
be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material (as hereinafter defined), asbestos,
polychlorinated biphenyls or oil, whether or not occurring at, on, under or
involving a site owned, leased or operated by the Company or any of its
Subsidiaries, or (iii) for any site or location for which it or its
Subsidiaries has been designated as a potentially responsible party under any
federal, state, local or foreign superfund law, or (iv) for any claim for
damages to natural resources, except in the cases of clauses (i) through (iv)
above for any such suits, actions,, proceedings and inquiries that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect with respect to the Company and its Subsidiaries taken
as a whole.
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(d) During the period of ownership or operation by the Company
and its current or former Subsidiaries of any of their respective current or
formerly owned properties, there have been no underground storage tanks
(whether currently active or not) and no polychlorinated biphenyls in
transformers or other electrical equipment and there have been no releases of
Hazardous Material or of asbestos, polychlorinated biphenyls or oil in, on,
under or affecting such properties or, to the Company's knowledge, any
surrounding site, except for those that, individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect with respect to
the Company and its Subsidiaries taken as a whole. Prior to the period of
ownership or operation by the Company or its current or former Subsidiaries of
any of their respective current or formerly owned properties, to the Company's
knowledge, there were no releases of Hazardous Material or asbestos,
polychlorinated biphenyls or oil or other petroleum products in, on, under or
affecting any such property or any surrounding site, except for those that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect with respect to the Company and its Subsidiaries taken
as a whole. "Hazardous Material" means any pollutant, contaminant, or hazardous
substance within the meaning of the Comprehensive Environmental Response,
Compensation and Liability Act or other applicable Environmental Laws.
(e) The Company and each of its Subsidiaries have all
Environmental Permits required in connection with the use, storage, handling
and disposal of radioactive materials, and have complied and are in current
compliance with all applicable federal, state, local and foreign laws in
connection with the disposal of radioactive materials.
SECTION 3.18. Products Liability. Other than ordinary course warranty
claims, during the past five years there have been no claims made against the
Company, its Subsidiaries or any Predecessor for personal injury, property
damage or other loss as a result of product defects that exceed, with respect
to any one type or class of defect, $25,000 in the aggregate.
SECTION 3.19. Insurance. The Company and each of its Subsidiaries has
in effect valid and effective policies of insurance (true and complete copies
of which have been provided to Crane), issued by companies believed by the
Company to be sound and reputable, insuring the Company or such Subsidiary (as
the case may be) for losses customarily insured against by others engaged in
similar lines of business. To the best knowledge of the Company, such policies
are reasonable, in both scope and amount, in light of the risks attendant to
the businesses conducted by the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries will have any liability after the Effective
Time for retrospective or retroactive premium adjustments. The Company has
delivered to Crane true and complete copies of lists furnished by the Company's
insurance brokers identifying the names of any third party named as an
additional insured under any insurance policy maintained by the Company or any
of its Subsidiaries since 1994. Section 3.19 of the Company Disclosure Schedule
also discloses the manner in which the Company and its Subsidiaries provide
coverage for workers' compensation claims and a list of all workers'
compensation claims filed against the Company or any of its Subsidiaries during
the past five years.
SECTION 3.20 Employment and Change in Control Agreements. (a) Section
3.20 of the Company Disclosure Schedule sets forth a true and complete list of
all written, and to the
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best knowledge of the Company, oral agreements with any officer, director or
employee of the Company or any of its Subsidiaries to which the Company or any
of its Subsidiaries is a party, providing for the terms of his or her
employment with the Company or any of its Subsidiaries and/or the terms of his
or her severance or other payments upon termination of such employment (the
"Employment Agreements"). The Company has previously furnished to Crane true
and complete copies of all Employment Agreements, together with all amendments
thereto (if any). Since the date of the Company Balance Sheet, neither the
Company nor any Subsidiary has (i) except as set forth in Section 3.20 of the
Company Disclosure Schedule, effected any increase in salary, wage or other
compensation of any kind, whether current or deferred, to any officer,
director, employee, agent, broker or consultant in excess of five percent of
the compensation payable to any such person or (ii) made any contribution to
any trust or plan for the benefit of employees except for contributions made in
the normal and ordinary course of business in a manner consistent with past
practices or as required by the terms thereof as now in effect.
(b) Except as set forth in Section 3.20 of the Company Disclosure
Schedule or as disclosed in the Company SEC Reports filed prior to the date of
this Agreement, and except as provided for in this Agreement, neither the
Company nor any of its Subsidiaries is a party to any oral or written (i)
agreement with any officer or other key employee of the Company or any of its
Subsidiaries (A) the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company of the nature contemplated by this Agreement or (B) providing for
compensation payments that would not be deductible by the Company for federal
income tax purposes, (ii) agreement with any officer or other key employee of
the Company or any of its Subsidiaries providing any compensation guarantee in
excess of $50,000 per annum, or (iii) agreement or Benefit Plan, any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
SECTION 3.21 Labor Relations. To the best knowledge of the Company,
relations of the Company and each of its Subsidiaries with their employees are
good. Except as disclosed on Section 3.21 of the Company Disclosure Schedule,
no employee of the Company or any of its Subsidiaries is represented by any
union or other labor organization. No representation election, arbitration
proceeding, grievance, labor strike, dispute, slowdown, stoppage or other labor
trouble is pending or, to the knowledge of the Company, threatened, against the
Company or any of its Subsidiaries. No complaint against the Company or any of
its Subsidiaries is pending or, to the knowledge of the Company, threatened
before the National Labor Relations Board, the Equal Employment Opportunity
Commission or any similar state or local agency, by or on behalf of any
employee of the Company or any of its Subsidiaries.
SECTION 3.22. Employee Benefit Plans. (a) The Company has set forth on
Section 3.22 of the Company Disclosure Schedule a list of all employee benefit
plans (as defined in Section 3(3) of ERISA) and all bonus, stock option, stock
purchase, fringe benefits, incentive, deferred compensation, supplemental
retirement, post-retirement health or welfare plan, severance and other
employee benefit plans and arrangements, written or otherwise, maintained by
the Company or any trade or business (whether or not incorporated) which is a
member or
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which is under common control with the Company (an "ERISA Affiliate") within
the meaning of Section 414 of the Code, or any Subsidiary of the Company for
the benefit of, or relating to, any current or former employee of the Company
or an ERISA Affiliate (together, the "Company Group") or with respect to which
the Company or an ERISA Affiliate may have liability (together, the "Benefit
Plans").
(b) With respect to each Benefit Plan, the Company has made
available to Crane a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the Internal Revenue Service ("IRS"), (ii) such Benefit
Plan (or in the case of an unwritten Benefit Plan, a written summary thereof),
(iii) each trust agreement and group annuity contract, if any, relating to such
Benefit Plan and (iv) the most recent actuarial report or valuation relating to
a Benefit Plan subject to Title IV of ERISA.
(c) Each of the Benefit Plans and all related trusts, insurance
contracts and funds have been created, maintained, funded and administered in
all respects in compliance with all applicable laws and in compliance with the
plan document, trust agreement, insurance policy or other writing creating the
same or applicable thereto. No Benefit Plan is or, to the best knowledge of the
Company, is proposed to be under audit or investigation, and no completed audit
of any Benefit Plan has resulted in the imposition of any tax, fine or penalty.
(d) No prohibited transaction (within the meaning of Section 406
of ERISA and Section 4975 of the Code) with respect to any Benefit Plan exists
or has occurred that could subject any member of the Company Group to any
liability or tax under Part 5 of Title I of ERISA or Section 4975 of the Code.
No member of the Company Group, nor any administrator or fiduciary of any
Benefit Plan, nor any agent of any of the foregoing, has engaged in any
transaction or acted or failed to act in a manner that will subject any member
of the Company Group to any liability for a breach of fiduciary or other duty
under ERISA or any other applicable law. With the exception of the requirements
of Section 4980B of the Code, no post-retirement benefits are provided under
any Benefit Plan that is a welfare benefit plan as described in ERISA Section
3(1).
(e) Section 3.22 of the Company Disclosure Schedule discloses
each Benefit Plan that purports to be a qualified plan under Section 401(a) of
the Code and exempt from United States federal income tax under Section 501(a)
of the Code (a "Qualified Plan"). With respect to each Qualified Plan, a
determination letter (or opinion or notification letter, if applicable) has
been received from the IRS that such plan is qualified under Section 401(a) of
the Code and exempt from federal income tax under Section 501(a) of the Code.
No Qualified Plan has been amended since the date of the most recent such
letter applicable to such Qualified Plan. No member of the Company Group, nor
any fiduciary of any Qualified Plan, nor any agent of any of the foregoing, has
taken any action that would adversely affect the qualified status of a
Qualified Plan or the qualified status of any related trust.
(f) No Benefit Plan is a defined benefit plan within the meaning
of Section 3(35) of ERISA (a "Defined Benefit Plan"). No Defined Benefit Plan
sponsored or maintained by any member of the Company Group has been terminated
or partially terminated except as set forth on Section 3.22 of the Company
Disclosure Schedule. Each Defined Benefit Plan identified as
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terminated on Section 3.22 of the Company Disclosure Schedule has met the
requirement for standard termination of single-employer plans contained in
Section 4041(b) of ERISA. During the five-year period ending at the Effective
Time, no member of the Company Group has transferred a Defined Benefit Plan to
a corporation that was not, at the time of transfer, related to the transferor
as described in Section 414 of the Code.
(g) No Benefit Plan is a multiemployer plan within the meaning of
Section 3(37) or Section 4001(a)(3) of ERISA (a "Multiemployer Plan"). No
member of the Company Group has withdrawn from any Multiemployer Plan or
incurred any withdrawal liability to or under any Multiemployer Plan. No
Benefit Plan covers any employees of any member of the Company Group in any
foreign country or territory.
(h) With respect to the Benefit Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of the Company.
SECTION 3.23. No Existing Discussions. As of the date hereof, the
Company is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to an Acquisition Proposal.
SECTION 3.24. Information Supplied. None of the written information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in the Offer Documents or the Proxy Statement will,
at the respective times filed with the SEC and, in the case of the Proxy
Statement, the date it is first mailed to the Company's shareholders or at the
time of the Company Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Crane specifically for inclusion or incorporation by reference in the Proxy
Statement.
SECTION 3.25. Voting Requirements. The affirmative vote of the holders
of at least a majority of the votes cast by the holders of Company Common Stock
entitled to vote thereon (the "Company Shareholder Approval") is the only vote
of the holders of any class or series of the Company's capital stock necessary
to adopt this Agreement and to approve the transactions contemplated by this
Agreement.
SECTION 3.26. State Statutes. The Board of Directors of the Company
has approved the terms of this Agreement, the Stock Option Agreement and the
Shareholders Agreements, the making of the Offer and the consummation of the
Merger and the other transactions contemplated by this Agreement, the Stock
Option Agreement and the Shareholder
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Agreements and such approval renders the provisions of Section 2538 and
Subchapter F of Chapter 25 of the PBCL inapplicable to the transactions
contemplated by this Agreement, the Stock Option Agreement and the Shareholders
Agreements. To the best of the Company's knowledge, no other state takeover
statute or similar statute or regulation applies or purports to apply to this
Agreement, the Stock Option Agreement or the Shareholder Agreements or any of
the transactions contemplated hereby or thereby.
SECTION 3.27. Rights Agreement. The Rights Agreement has been amended
as of the date hereof (i) to render the Rights Agreement inapplicable to this
Agreement, the Stock Option Agreement, the Shareholder Agreements, the Offer,
the Merger and the other transactions contemplated by this Agreement, the Stock
Option Agreement or the Shareholder Agreements and (ii) to ensure that (x)
neither Crane nor any of its wholly owned subsidiaries is an Acquiring Person
(as defined in the Rights Agreement) pursuant to the Rights Agreement, (y)
Crane and its wholly owned subsidiaries are Exempt Persons (as defined in the
Rights Agreement) pursuant to the Rights Agreement, and (z) a Stock Acquisition
Date, Distribution Date or Triggering Event (in each case as defined in the
Rights Agreement) does not occur solely by reason of the execution of this
Agreement, the Stock Option Agreement or the Shareholder Agreements, or the
consummation of the Offer, the Merger or the other transactions contemplated by
this Agreement, the Stock Option Agreement or the Shareholder Agreements.
SECTION 3.28. Brokers. No broker, investment banker, financial advisor
or other person, other than Legg Mason Wood Walker, Inc., is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has provided
Crane with a true and correct copy of its engagement letter with Legg Mason
Wood Walker, Inc..
SECTION 3.29. Disclosure. No representation or warranty of the Company
in this Agreement or any certificate, schedule, statement, document or
instrument furnished or to be furnished to Crane pursuant hereto or in
connection herewith, contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact required to be
stated herein or therein or necessary to make any statement herein or therein
not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CRANE
Except as set forth on the disclosure schedule delivered by Crane to
the Company prior to the execution of this Agreement (the "Crane Disclosure
Schedule"), Crane and the Purchaser represent and warrant to the Company as
follows:
SECTION 4.01. Organization, Standing and Corporate Power. Each of
Crane and the Purchaser is a corporation duly organized, validly existing or
subsisting and in good standing under the laws of the jurisdiction in which it
is incorporated and has the requisite corporate power and authority to carry on
its business as now being conducted. Crane is duly qualified or
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licensed to do business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed or to be in good standing individually or in the
aggregate would not have a Material Adverse Effect on Crane and its
Subsidiaries taken as a whole.
SECTION 4.02. Authority; Noncontravention. Each of Crane and the
Purchaser has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement by Crane and the Purchaser and the
consummation by them of the transactions contemplated by this Agreement have
been duly authorized by all necessary corporate action on the part of Crane and
the Purchaser. This Agreement has been duly executed and delivered by Crane and
the Purchaser and constitutes a valid and binding obligation of each of Crane
and the Purchaser, enforceable against Crane and the Purchaser in accordance
with its terms except as limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) general principles of
equity, regardless of whether asserted in a proceeding in equity or at law. The
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated by this Agreement and compliance with the provisions
of this Agreement by Crane and the Purchaser will not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Crane or the Purchaser under, (i) the Certificate or Articles of Incorporation
or By-laws of Crane or the Purchaser, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to Crane or the Purchaser or their
respective properties or assets or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Crane or the
Purchaser or their respective properties or assets, other than, in the case of
clauses (ii) and (iii), any such conflicts, violations, defaults, rights,
losses or Liens that individually or in the aggregate would not (x) have a
Material Adverse Effect on Crane and its Subsidiaries, taken as a whole, (y)
impair the ability of Crane to perform its obligations under this Agreement in
any material respect or (z) prevent or materially delay the consummation of any
of the transactions contemplated by this Agreement. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required by or with respect to Crane or the Purchaser
in connection with the execution and delivery of this Agreement by Crane or the
Purchaser or the consummation by Crane or the Purchaser of the transactions
contemplated by this Agreement, except for (1) the filing of a premerger
notification and report form under the HSR Act; (2) the filing with the SEC of
the Offer Documents and such reports under Section 13(a), 13(d), 15(d) or 16(a)
of the Exchange Act as may be required in connection with this Agreement, the
Stock Option Agreement or the Shareholder Agreements; (3) the filing of the
Articles of Merger with the Pennsylvania Secretary of State and appropriate
documents with the relevant authorities of other states; (4) such filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
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necessitated by the Offer or the Merger or the transactions contemplated by
this Agreement; and (5) such consents, approvals, orders, authorizations,
registrations, declarations and filings the failure to make or obtain which
would not have a Material Adverse Effect on Crane and its Subsidiaries, taken
as a whole, or impair the ability of Crane or the Purchaser to perform its
obligations under this Agreement in any material respect.
SECTION 4.03. Information Supplied. None of the written information
supplied or to be supplied by Crane or the Purchaser specifically for inclusion
or incorporation by reference in the Schedule 14D-9 or in the Proxy Statement
will, at the respective times filed with the SEC and, in the case of the Proxy
Statement, at the date it or any amendment or supplement thereto is mailed to
Company shareholders and at the date of the Company Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
except that no representation or warranty is made by Crane or the Purchaser
with respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference therein.
SECTION 4.04 Share Ownership. Without giving effect to the
transactions contemplated by this Agreement, the Stock Option Agreement and the
Shareholder Agreements, neither Crane nor the Purchaser is an "interested
shareholder" for purposes of Section 2538 or Subchapter F of Chapter 25 of the
PBCL.
ARTICLE V
COVENANTS
SECTION 5.01. Conduct of Business and Other Actions by the Company.
(a) Except with the consent of Crane, during the period from the date of this
Agreement to the consummation of the Offer, the Company shall, and shall cause
its Subsidiaries to, carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted
and in compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use all reasonable efforts
to preserve intact their current business organizations, keep available the
services of their current officers and employees and preserve their
relationships with those persons having business dealings with them to the end
that their goodwill and ongoing businesses shall be unimpaired at the time of
consummation of the Offer. Without limiting the generality of the foregoing,
during the period from the date of this Agreement to the consummation of the
Offer, the Company shall, and shall cause its Subsidiaries to:
(i) preserve and maintain its corporate existence and all of its
rights, privileges and franchises reasonably necessary or desirable in the
normal conduct of its business, except to the extent contemplated by any
transactions specifically permitted by this Agreement;
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(ii) not acquire any stock or other interest in, nor (except in
the ordinary course of business) purchase any assets of, any corporation,
partnership, association or other business organization or entity or any
division thereof (except any stock or assets distributed to the Company or any
of its Subsidiaries as part of any bankruptcy or other creditor settlement or
pursuant to a plan of reorganization), nor agree to do any of the foregoing;
(iii) not sell, lease, assign, transfer or otherwise dispose of
any of its assets (including, without limitation, patents, trade secrets or
licenses), nor suffer to exist or create any Lien on any of its assets, except
as permitted by this Agreement or in the ordinary course of business and except
that the Company and each of its Subsidiaries may sell or otherwise dispose of
any assets which are obsolete;
(iv) not incur any Indebtedness, other than as a result of
borrowings or drawdowns, the issuance of letters of credit for the account of
the Company and the incurrence of interest, letter of credit reimbursement
obligations and other obligations under the terms of the Silicon Valley Bank
Loan, which Indebtedness shall be incurred only for working capital purposes;
(v) not (x) alter, amend or repeal any provision of its Articles
of Incorporation or Bylaws or its certificate of incorporation or by-laws (as
the case may be), (y) change the number of its directors (other than as a
result of the death, retirement or resignation of a director), (z) form or
acquire any Subsidiaries not existing as of the date of this Agreement, (xx)
enter into, modify or terminate any Contracts, Real Property Leases or Personal
Property Leases or agree to do so, (yy) enter into, modify or terminate any
Employment Agreement or hire any personnel other than temporary personnel not
eligible to participate in any benefit plans or programs of the Company, or
(zz) declare, pay, commit to or incur any obligation of any kind for the
payment of any bonus, additional salary or compensation or retirement,
termination, welfare or severance benefits or change in control benefits
payable or to become payable to any of its employees or such other persons,
except for such matters as are required pursuant to the terms of any existing
Employment Agreement or Benefit Plan;
(vi) maintain its books, accounts and records in the usual,
ordinary and regular manner and in material compliance with all applicable
laws;
(vii) pay and discharge all Taxes imposed upon it or upon its
income or profits, or upon any property belonging to it, prior to the date on
which penalties attach thereto, except to the extent that the Company is
currently contesting, in good faith and by proper proceedings, the payment of
such Taxes and the Company maintains appropriate reserves with respect thereto;
(viii) not settle any tax claim against the Company or any of its
Subsidiaries or any litigation (net of applicable insurance proceeds) in excess
of $10,000;
(ix) meet in all material respects its obligations under all
Contracts, Real Property Leases and Personal Property Leases and not become in
default thereunder;
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(x) maintain in all material respects its business and assets in
good repair, order and condition, reasonable wear and tear excepted, and
maintain insurance upon such business and assets at least comparable in amount
and kind to that in effect on the date hereof;
(xi) maintain in all material respects its present relationships
and goodwill with suppliers, brokers, manufacturers, representatives,
distributors, customers and others having business relations with it (provided
that it may pursue overdue accounts and otherwise exercise lawful remedies in
its customary fashion);
(xii) not declare, set aside, make or pay any dividends or other
distributions with respect to its capital stock, including, without limitation,
in the case of the Company, the Company Common Stock, or purchase or redeem any
shares of its capital stock, including, without limitation, in the case of the
Company , the Company Common Stock, or agree to take any such action;
(xiii) not authorize or make any single capital expenditure in
excess of $5,000, or make any capital expenditure if the aggregate of the
amount of such capital expenditure together with the amounts of all other
capital expenditures since the date of this Agreement shall exceed $25,000;
(xiv) not violate any law or regulation applicable to it nor
violate any order, injunction or decree applicable to the conduct of its
business; and
(xv) not increase the number of shares authorized or issued and
outstanding of its capital stock, including, without limitation, in the case of
the Company, the Company Common Stock, nor grant or make any pledge, option,
warrant, call, commitment, right or agreement of any character relating to its
capital stock, including, without limitation, in the case the Company, the
Company Common Stock, nor issue or sell any shares of its capital stock,
including, without limitation, in the case of the Company, the Company Common
Stock, or securities convertible into such capital stock, or any bonds,
promissory notes, debentures or other corporate securities or become obligated
so to sell or issue any such securities or obligations, except, in any case,
issuance of shares of the Company Common Stock (i) pursuant to the exercise of
options, warrants or other rights outstanding as of the date hereof and
referred to in Section 3.03 or (ii) pursuant to the Stock Option Agreement;
(xvi) not make any change to its accounting methods, principles
or practices, except as may be required by generally accepted accounting
principles;
(xvii) not expend any money pursuant to, or incur expenses
related to performance under, the Development Contract with Norwegian Oil
Companies, Saga Petroleum ASA, Phillips Petroleum Co., Statoil and Norsk Hydro
Produksjon (Contract #ANS 0029555 ESD) in excess of $100,000 in the aggregate;
(xviii) not waive any right of substantial value or cancel any
debt owed to the Company or any Subsidiary or claim against any person or
entity; and
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(xix) not authorize, or commit or agree to take, any of the
foregoing actions;
provided, however, that if the Company requests in writing that Crane consent
to the taking of any affirmative action on the part of the Company the taking
of which would require such consent pursuant to this Section 5.01(a) and the
failure to grant such consent within four business days of receipt by Crane of
such request is the sole cause of the occurrence of a Material Adverse Effect,
then such Material Adverse Effect shall not be an Event for purposes of Annex
II nor shall Crane be permitted to terminate this Agreement solely due to the
occurrence of such Material Adverse Effect.
(b) Other Actions. The Company shall not, and shall not permit
any of its Subsidiaries to, take any action that would, or that could
reasonably be expected to, result in (i) any of its representations and
warranties set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of its representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) subject to the
Company's rights under Section 5.02 and Article VII hereof, any of the
conditions to the Merger set forth in Article VI that are within the Company's
control not being satisfied.
(c) Advice of Changes. The Company shall promptly advise Crane
orally and in writing of (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect, (ii) the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement or (iii) any change or event having, or which could reasonably be
expected to have, a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole or on the truth of its representations and warranties or the
ability of the conditions set forth in Article VI to be satisfied. Upon such
notification, Crane and the Purchaser shall have the option to either terminate
this Agreement or to waive any right to consider any of the foregoing in
connection with a determination as to whether any of the Events specified in
subparagraphs (c), (f) or (g) of Annex II has occurred.
SECTION 5.02. No Solicitation. (a) The Company shall not, nor shall it
permit any of its Subsidiaries to, nor shall it authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
Subsidiaries to, directly or indirectly through another person, (i) solicit or
initiate (including by way of furnishing information), or take any other action
to facilitate, any inquiries or the making of any proposal that constitutes an
Acquisition Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding any Acquisition Proposal; provided, however, that if,
at any time prior to the acceptance for payment of shares of Company Common
Stock pursuant to the Offer, the Board of Directors of the Company determines
in good faith, based upon the advice of outside counsel (including, for all
purposes of this Agreement, Pepper Hamilton LLP), that it is required to do so
in order to comply with its fiduciary duties to the Company's shareholders
under applicable law, the Company may, in
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response to an Acquisition Proposal that was not solicited by it, and subject
to compliance with Section 5.02(c), (x) furnish information with respect to the
Company and its Subsidiaries to any person pursuant to a customary
confidentiality agreement (as determined by the Company after consultation with
its outside counsel) and (y) participate in negotiations regarding such
Acquisition Proposal. For purposes of this Agreement, "Acquisition Proposal"
means any inquiry, proposal or offer from any person or entity relating to any
direct or indirect acquisition or purchase of 20% or more of the assets of the
Company and its Subsidiaries or 20% or more of any class of equity securities
of the Company or any of its Subsidiaries, any tender offer or exchange offer
that if consummated would result in any person beneficially owning 20% or more
of any class of equity securities of the Company or any of its Subsidiaries, or
any merger, consolidation, business combination, share exchange,
recapitalization, liquidation, dissolution or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement.
(b) Except as expressly permitted by this Section 5.02, neither
the Board of Directors of the Company nor any committee thereof shall (i)
(unless, prior to the acceptance for payment of shares of Company Common Stock
pursuant to the Offer, it determines in good faith, based upon the advice of
outside counsel, that it is required to do so in order to comply with its
fiduciary duties to the Company's shareholders under applicable law) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Crane, the approval or recommendation by such Board of Directors or such
committee of the Offer (including by amendment of the Schedule 14D-9), the
Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal or (iii) cause the Company to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that prior to
the acceptance for payment of shares of Company Common Stock pursuant to the
Offer the Company receives a Superior Proposal (as defined below), the Board of
Directors of the Company may (if it determines in good faith, based upon the
advice of outside counsel, that it is required to do so in order to comply with
its fiduciary duties to the Company's shareholders under applicable law) (x)
withdraw or modify its approval or recommendation of the Offer, the Merger or
this Agreement or (y) approve or recommend such Superior Proposal and terminate
this Agreement (and concurrently with or after such termination, if it so
chooses, cause the Company to enter into an Acquisition Agreement with respect
to any Superior Proposal) but only at a time that is after the third business
day following Crane's receipt of written notice from the Company advising Crane
that the Board of Directors of the Company has received a Superior Proposal,
specifying the terms and conditions of such Superior Proposal and identifying
the person making such Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any proposal or offer made by a third party to
acquire, directly or indirectly, for consideration consisting of cash and/or
securities, more than 50% of the combined voting power of the shares of Company
Common Stock then outstanding or a substantial portion of the assets of the
Company and its subsidiaries and otherwise on terms which the Board of
Directors of the Company determines in its good faith judgment, based upon the
advice of its financial advisors, to be more favorable to the Company's
shareholders than the Offer and the Merger and for which financing is either
not a contingency, or, if a contingency, is then committed and available.
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(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 5.02, the Company shall as promptly as
practicable advise Crane of any Acquisition Proposal, the material terms and
conditions of such Acquisition Proposal and the identity of the person making
such request or Acquisition Proposal. The Company will keep Crane reasonably
informed of the status and details (including amendments) of any such
Acquisition Proposal.
(d) Nothing contained in this Section 5.02 shall prohibit the
Company from taking and disclosing to its shareholders a position contemplated
by Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's shareholders if, in the good faith judgment of the
Board of Directors of the Company, after consultation with outside counsel,
failure so to disclose would be inconsistent with its fiduciary duties to the
Company's shareholders under applicable law; provided, however, that neither
the Company nor its Board of Directors nor any committee thereof shall, except
as permitted by Section 5.02(b), withdraw or modify, or propose publicly to
withdraw or modify, its position with respect to this Agreement or the Offer or
the Merger or approve or recommend, or propose publicly to approve or
recommend, an Acquisition Proposal.
SECTION 5.03. Access to Information; Confidentiality. During normal
business hours during the period prior to the earlier of the termination of
this Agreement and the Effective Time, upon reasonable notice, the Company
shall (and shall cause its Subsidiaries to) (i) afford to the officers,
employees, accountants, counsel and other representatives of Crane, access, to
all its properties, books, contracts, commitments, records, officers,
employees, accountants, accountants' work papers, correspondence and affairs,
and (ii) cause its and their officers and employees to furnish, to Crane, and
its authorized representatives, any and all financial, technical and operating
data and other information pertaining to the businesses of the Company and its
Subsidiaries as Crane shall from time to time reasonably request. In addition,
without limiting the generality of the foregoing, the Company will, and will
cause each of its Subsidiaries to make available to Crane for examination true
and complete copies of all Returns filed by the Company or any of its
Subsidiaries, together with all available revenue agents' reports, all other
reports, notices and correspondence concerning tax audits or examinations and
analyses of all provisions for reserves or accruals of taxes, including
deferred taxes.
SECTION 5.04. Required Authorizations. (a) Crane, Merger Sub and,
subject to Section 5.02 of this Agreement, the Company, shall each, and,
subject to Section 5.02 of this Agreement, the Company shall cause each of its
Subsidiaries to, as promptly as practicable, take all reasonable actions
necessary to obtain all Required Authorizations (if any) required to be given
or obtained by it, respectively, to permit Crane and Merger Sub, on the one
hand, and the Company, on the other, to consummate the transactions
contemplated by this Agreement and the Stock Option Agreement and to realize
the respective benefits to each party contemplated hereby and thereby; provided
that Crane shall not be required to take any action to comply with any legal
requirement or agree to the imposition of any order of any Governmental
Authority that would (i) prohibit or restrict the ownership or operation by
Crane of any portion of the business or assets of Crane or the Company (or
any of
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their respective Subsidiaries), (ii) compel Crane or the Company (or any of
their respective Subsidiaries) to dispose of or hold separate any portion of
its or the Company's business or assets, or (iii) impose any limitation on the
ability of Crane or the Surviving Corporation or any of their respective
affiliates or Subsidiaries to own or operate the business and operations of the
Company and its Subsidiaries, and provided further that the Company and its
Subsidiaries shall not incur fees and expenses in excess of $25,000 in the
aggregate in order to obtain any such Required Authorizations described in
clause (ii) of the definition thereof without the prior written consent of
Crane.
(b) Without limiting the generality of the foregoing, Crane,
Merger Sub and, subject to Section 5.02 of this Agreement, the Company shall
each cooperate with the others in filing in a timely manner any applications,
requests, reports, registrations or other documents, including, without
limitation, all reports and documents required to be filed by or under the
Exchange Act (including, without limitation, the Offer Documents, the Schedule
14D-9 and the Proxy Statement), with any Governmental Authority having
jurisdiction with respect to the transactions contemplated hereby and in
consulting with and seeking favorable action from any Governmental Authority.
(c) Without limiting the generality of the foregoing, and subject
to Section 5.02 of this Agreement, the Company shall, and shall cause each of
its Subsidiaries to, take all reasonable action necessary to obtain all
approvals or consents of any person needed in order that the Contracts continue
in full force and effect under the same terms and conditions currently in
effect following consummation of the transactions contemplated by the
Agreement; provided, however, that the receipt of any approval or consent under
any Contracts pursuant to this Section 5.04(c) shall not be a condition
precedent to the obligations of Parent or Purchaser under this Agreement.
(d) Without limiting the generality of the foregoing, and subject
to Section 5.02 of this Agreement, the Company and its Board of Directors shall
(i) take all reasonable action necessary to ensure that no state takeover
statute or similar statute or regulation in effect on the date of this
Agreement is or becomes applicable to the Offer, the Merger, this Agreement,
the Stock Option Agreement, the Shareholder Agreements or any of the other
transactions contemplated by this Agreement and (ii) if any such state takeover
statute or similar statute or regulation becomes applicable to the Offer, the
Merger, this Agreement, the Stock Option Agreement, the Shareholder Agreements
or any other transaction contemplated by this Agreement, take all reasonable
action necessary to ensure that the Offer, the Merger, the Stock Option
Agreement, the Shareholder Agreements and the other transactions contemplated
by this Agreement may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise to minimize the effect of such
statute or regulation on the Merger and the other transactions contemplated by
this Agreement.
SECTION 5.05. Financial Statements of the Company. As soon as
practicable but in any event within 30 days after the end of each calendar
month commencing with July, 1998, through the consummation of the Offer or
earlier termination of this Agreement in accordance with Article VII, the
Company will deliver to Crane unaudited consolidated balance sheets of the
Company and its Subsidiaries as at the end of such calendar month and as at the
end of the
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comparative month of the preceding year, together with unaudited summaries of
consolidated earnings of the Company and its Subsidiaries for such calendar
month and the comparative calendar month of the preceding year. As soon as
practicable but in any event within 30 days after the end of each fiscal
quarter of the Company, commencing with June 30, 1998, and within 60 days after
the end of the fiscal year ended December 31, 1998, as the case may be, through
the consummation of the Offer or earlier termination of this Agreement in
accordance with Article VII, the Company will deliver to Crane unaudited
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as at the end of such fiscal quarter and as at the end of the
comparative fiscal quarter of the preceding year, together with the related
unaudited statements of consolidated income and cash flows for the fiscal
quarters then ended. All such financial statements of the Company shall present
fairly, in all material respects, the financial position, results of operations
and cash flows of the Company and its Subsidiaries, as at or for the periods
indicated (and, in the case of all such financial statements which are interim
financial statements, shall contain all adjustments necessary so to present
fairly) and shall be prepared in accordance with generally accepted accounting
principles (other than to omit certain footnotes which might be required
thereby and subject, in the case of interim financial statements, to normal
year-end adjustments) consistent with past practice, except as otherwise
indicated in such statements. All such financial statements of the Company
shall be certified, on behalf of the Company, by the President and Chief
Financial Officer of the Company.
SECTION 5.06. Employee Matters. Crane agrees (a) that on and after the
consummation of the Offer and until the date that is 18 months after the
Effective Time, Crane shall cause the Company and, on and after the Effective
Time, the Surviving Corporation, to honor the severance policy of the Company
and the employment agreements that are identified in Section 5.06 of the
Company Disclosure Schedule, (b) to give the employees of the Company full
credit for purposes of eligibility and vesting under any employee benefit plans
or arrangements maintained by Crane, the Surviving Corporation or any
Subsidiary of Crane for such employees' service with the Company or any of its
Subsidiaries to the same extent recognized by the Company immediately prior to
the consummation of the Offer, (c) to waive all limitations as to pre-existing
conditions, exclusions or waiting periods with respect to participation and
coverage requirements applicable to the Company employees under any welfare
benefit plans that such employees may be eligible to participate in after the
consummation of the Offer and (d) to provide employees of the Company and, from
and after the Effective Time, the Surviving Corporation, with employee benefits
comparable to those provided by Crane (or any of its Subsidiaries) to similarly
situated employees of Crane (or any of its Subsidiaries).
SECTION 5.07. Rights Agreement. The Board of Directors of the Company
shall take all further action (in addition to that referred to in Section 3.27)
reasonably requested in writing by Crane (including redeeming the Rights
immediately prior to the Effective Time or amending the Rights Agreement) in
order to render the Rights inapplicable to the Offer, the Merger and the other
transactions contemplated by this Agreement.
SECTION 5.08. Continuance of Existing Indemnification Rights. (a) For
six years after the Effective Time, Crane shall, or shall cause the Company
(or, if after the Effective Time, the Surviving Corporation) to, indemnify,
defend and hold harmless any person who is now, or
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has been at any time prior to the date hereof, or who becomes prior to the
Effective Time, a director or an officer (an "Indemnified Person") of the
Company or any of its Subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including attorneys' fees and expenses),
judgments, fines, losses and amounts paid in settlement in connection with any
actual or threatened action, suit, claim, proceeding or investigation (each a
"Claim") to the extent that any such Claim is based on, or arises out of: (i)
the fact that such Indemnified Person is or was a director or an officer of the
Company or any of its Subsidiaries or is or was serving at the request of the
Company or any of its Subsidiaries as a director or an officer of another
corporation, partnership, joint venture, trust or other enterprise; or (ii)
this Agreement or any of the transactions contemplated hereby, in each case to
the extent that any such Claim pertains to any matter or fact arising, existing
or occurring prior to or at the Effective Time, regardless of whether such
Claim is asserted or claimed prior to, at or after the Effective Time, to the
full extent permitted under the PBCL and the Company's Articles of
Incorporation or By-laws in effect at the date hereof, including provisions
relating to advancement of expenses incurred in the defense of any such Claim;
provided, however, that neither Crane nor the Surviving Corporation shall be
required to indemnify any Indemnified Person in connection with any proceeding
(or portion thereof) involving any Claim initiated by such Indemnified Person
unless the initiation of such proceeding (or portion thereof) was authorized by
the Board of Directors of Crane or unless such proceeding is brought by an
Indemnified Person to enforce rights under this Section 5.08. Without limiting
the generality of the preceding sentence, in the event any Indemnified Person
becomes involved in any Claim, after the consummation of the Offer, Crane
shall, or shall cause the Surviving Corporation to, periodically advance to
such Indemnified Person its legal and other expenses (including the cost of any
investigation and preparation incurred in connection therewith), subject to the
providing by such Indemnified Person of an undertaking to reimburse all amounts
so advanced in the case of a final nonappealable determination by a court of
competent jurisdiction that such Indemnified Person is not entitled to be
indemnified therefor.
(b) Crane or the Surviving Corporation shall maintain the
Company's existing directors' and officers' liability insurance policy ("D&O
Insurance") for a period of not less than six years after the Effective Time;
provided, however, that Crane may substitute therefor policies of substantially
similar coverage (including pursuant to Crane's own policy) and amounts
containing terms no less advantageous to such former directors or officers;
provided further that, subject to the preceding proviso, if the existing D&O
Insurance expires or is canceled during such period, Crane or the Surviving
Corporation shall use their best efforts to obtain substantially similar D&O
Insurance; and provided further that neither Crane nor the Surviving
Corporation shall be required to pay an annual premium for D&O Insurance in
excess of 200% of the last annual premium paid prior to the date hereof, but in
such case shall purchase as much coverage as possible for such amount.
(c) In the event Crane or Purchaser or any of their successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger, or (ii) transfers or conveys all or substantially all of its properties
and assets to any person, then, in each such case, to the extent necessary to
effectuate the purposes of this Section 5.08, proper provision shall be made so
that the successors and assigns of Crane and Purchaser assume the obligations
set forth in this Section
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5.08 and none of the actions described in clauses (i) or (ii) shall be taken
until such provision is made.
SECTION 5.09. Public Announcements. Crane and the Company will consult
with each other before issuing, and provide each other the opportunity to
review, comment upon and concur with, any press release or other public
statements with respect to the transactions contemplated by this Agreement,
including the Offer and the Merger, and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The parties agree that
the initial press releases to be issued with respect to the transactions
contemplated by this Agreement shall be in the forms heretofore agreed to by
the parties.
SECTION 5.10. Shareholder Litigation. The Company shall give Crane the
opportunity to participate, at no expense to the Company, in the defense or
settlement of any shareholder litigation against the Company and its directors
relating to the transactions contemplated by this Agreement. No such settlement
shall be agreed to without Crane's consent; provided, however, that if a
failure to so consent is the sole cause of the occurrence of a Material Adverse
Effect, then such Material Adverse Effect shall not be an Event for purposes of
Annex II nor shall Crane be permitted to terminate this Agreement solely due to
the occurrence of such Material Adverse Effect.
SECTION 5.11. Financial Disclosure. The Company shall give Crane the
opportunity to review and comment upon the Company's Quarterly Report of Form
10-Q for the quarter ending June 30, 1998.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.01. Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger is subject
to the satisfaction on or prior to the Closing Date of the following
conditions:
(a) Shareholder Approval. The Company Shareholder Approval shall
have been obtained, if required by applicable law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
(c) No Injunctions or Restraints. No judgment, decree, statute,
law, ordinance, rule, regulation, temporary restraining order, preliminary or
permanent injunction or other order enacted, entered, promulgated, enforced or
issued by any court of competent jurisdiction or other Governmental Authority
or other legal restraint or prohibition (collectively, "Restraints") preventing
the consummation of the Merger shall be in effect; provided, however, that
each of
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the parties shall have used all reasonable efforts to prevent the entry of any
such Restraints and to appeal as promptly as possible any such Restraints that
may be entered.
(d) Purchase of Company Common Stock. The Purchaser shall have
accepted for payment and paid for shares of Company Common Stock pursuant to
the Offer in accordance with the terms hereof; provided, however, that this
condition shall be deemed to be satisfied with respect to the obligation of
Crane and the Purchaser to effect the Merger if the Purchaser fails to accept
for payment or pay for shares of Company Common Stock pursuant to the terms and
conditions of the Offer.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Shareholder Approval:
(a) by mutual written consent of Crane and the Company;
(b) by either Crane or the Company:
(i) if the Offer is terminated or withdrawn pursuant to its
terms without any shares of Company Common Stock being purchased thereunder;
provided, however, that neither Crane nor the Company may terminate this
Agreement pursuant to this Section 7.01(b)(i) if such party shall have
materially breached this Agreement;
(ii) if the Offer has not been consummated on or before
October 31, 1998; or
(iii) if any Governmental Authority shall have issued an
order, decree, ruling or injunction or taken any other action permanently
enjoining, restraining or otherwise prohibiting acceptance for payment of
shares of Company Common Stock pursuant to the Offer or the consummation of the
Merger and such order, decree, ruling, injunction or other action shall have
become final and nonappealable;
(c) by the Company if (i) Crane or the Purchaser fails to
commence the Offer as provided in Section 1.01 hereof, or (ii) Crane or the
Purchaser shall not have accepted for payment and paid for shares of Company
Common Stock pursuant to the Offer in violation of the terms hereof and
thereof; provided, however, that the Company may not terminate this Agreement
pursuant to this Section 7.01(c) if the Company shall have materially breached
this Agreement;
(d) by the Company in accordance with Section 5.02(b) prior to
the acceptance for payment of shares of Company Common Stock pursuant to the
Offer; provided that the Company has complied with all provisions thereof;
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(e) by Crane prior to the purchase of shares of Company Common
Stock pursuant to the Offer if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to Crane
its approval or recommendation of the Offer (including by amendment of the
Schedule 14D-9), the Merger or this Agreement, or approved or recommended any
Superior Proposal or (ii) the Board of Directors of the Company or any
committee thereof shall have resolved to take any of the foregoing actions; or
(f) by Crane or the Purchaser pursuant to Section 5.01(c) of this
Agreement.
SECTION 7.02. Effect of Termination. In the event of termination of
this Agreement by either the Company or Crane as provided in Section 7.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Crane, Merger Sub or the Company, except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement; provided that the provisions of this Section 7.02,
Section 7.03 and Article VIII shall remain in full force and effect and survive
any termination of this Agreement.
SECTION 7.03. Fees and Expenses. (a) Except as set forth in this
Section 7.03, all fees and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, whether or not the Merger is consummated.
(b) The Company shall reimburse Crane for out-of-pocket expenses
incurred by Crane relating to the transactions contemplated by this Agreement
prior to termination (including, but not limited to, fees and expenses of
Crane's counsel, accountants and financial advisors) if (i) this Agreement
shall have been terminated pursuant to Sections 7.01(d) or (e), (ii) the
Company enters into an Acquisition Agreement with a party other than Crane or
any of its Affiliates within one year of the date of such termination and (iii)
the transaction contemplated by such Acquisition Agreement is consummated
within 18 months of the date of such termination. Such reimbursement shall be
paid in same-day funds within one business day after the consummation of the
transaction contemplated by any such Acquisition Agreement.
SECTION 7.04. Amendment. This Agreement may be amended by the parties
at any time before or after the Company Shareholder Approval; provided,
however, that after any such approval, there shall not be made any amendment
that by law requires further approval by the shareholders of the Company
without the further approval of such shareholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
SECTION 7.05. Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties of the other parties contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.04, waive compliance by the other parties
with any of the
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agreements or conditions contained in this Agreement. Any agreement on the part
of a party to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of such rights.
SECTION 7.06. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 7.01, an amendment
of this Agreement pursuant to Section 7.04 or an extension or waiver pursuant
to Section 7.05 shall, in order to be effective, require action by its Board of
Directors or, with respect to any amendment to this Agreement, to the extent
permitted by applicable law, a duly authorized committee of its Board of
Directors.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Nonsurvival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 8.01 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 8.02. Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or sent
by overnight courier (providing proof of delivery) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Crane or Merger Sub, to
Crane Co.
100 First Stamford Place
Stamford, CT 06902
Attn: Corporate Secretary
with a copy to:
Janice C. Hartman
Kirkpatrick & Lockhart LLP
1500 Oliver Building
Pittsburgh, PA 15222
Fax: (412) 355-6501
(b) if to the Company, to
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Liberty Technologies, Inc.
Lee Park, Suite 6000
555 North Lane
Conshohocken, PA 19428
Attn: President
with a copy to:
James D. Rosener
Pepper Hamilton LLP
1235 Westlakes Drive
Suite 400
Berwyn, PA 19312
Fax: (610) 889-1839
SECTION 8.03 Definitions. Capitalized and other terms utilized in this
Agreement shall have the respective meanings ascribed thereto in Annex I to
this Agreement.
SECTION 8.04 Interpretation. When a reference is made in this
Agreement to an Article, Section, Exhibit or Schedule, such reference shall be
to an Article or Section of, or an Exhibit or Schedule to, this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include",
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined herein. The definitions contained in this
Agreement are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein
or in any agreement or instrument that is referred to herein means such
agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and references to all attachments thereto and instruments incorporated
therein. References to a person are also to its permitted successors and
assigns.
SECTION 8.05. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties.
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SECTION 8.06. Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein) and the
Confidentiality Agreement (a) constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter of this Agreement and (b) except for
the provisions of Article II, are not intended to confer upon any person other
than the parties any rights or remedies.
SECTION 8.07. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Pennsylvania,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 8.08. Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either party without the
prior written consent of the other party. Any assignment in violation of the
preceding sentence shall be void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 8.09. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to persons or
circumstances other than those as to which it has been held invalid or
unenforceable, shall remain in full force and effect and shall in no way be
affected, impaired or invalidated thereby. Upon any such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the parties.
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<PAGE>
IN WITNESS WHEREOF, Crane, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers hereunto duly authorized,
all as of the date first written above.
CRANE CO.
By: /s/ David S. Smith
--------------------------------
David S. Smith
Vice President - Finance and
Chief Financial Officer
LTI MERGER, INC.
By: /s/ David S. Smith
--------------------------------
David S. Smith
Chief Executive Officer
LIBERTY TECHNOLOGIES, INC.
By: /s/ R. Nim Evatt
--------------------------------
R. Nim Evatt
President
41
<PAGE>
ANNEX I
DEFINITIONS
For purposes of this Agreement (to which this Annex 1 is attached and
of which this Annex I forms a part), the following terms shall have the
meanings set forth below:
"Acquisition Agreement" shall have the meaning assigned thereto in
Section 5.02(b) of this Agreement.
"Acquisition Proposal" shall have the meaning assigned thereto in
Section 5.02(a) of this Agreement.
"Affiliate" of any person shall mean any "affiliate" of such person as
defined in Rule 12b-2 under the Exchange Act and, without limiting the
generality of the foregoing, shall include any person that beneficially owns
(within the meaning of Rule 13d-3 under the Exchange Act) 5% or more of the
outstanding equity interests in such person; provided, however, that for
purposes of this Agreement, neither Crane nor Merger Sub shall be deemed to be
an Affiliate of the Company.
"Affiliated Group" shall have the meaning assigned thereto in Section
3.08(f) of this Agreement.
"Agreement" shall mean this Agreement and Plan of Merger.
"Articles of Merger" shall have the meaning assigned thereto in
Section 1.06 of this Agreement.
"Benefit Plans" shall have the meaning assigned thereto in Section
3.22(a) of this Agreement.
"Certificate" shall have the meaning assigned thereto in Section
2.01(e) of this Agreement.
"Claim" shall have the meaning assigned thereto in Section 5.08(a) of
this Agreement.
"Closing" shall have the meaning assigned thereto in Section 1.05 of
this Agreement.
"Closing Date" shall have the meaning assigned thereto in Section 1.05
of this Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or
any successor statute thereto.
"Company" shall mean Freedom Company, Inc., a Pennsylvania corporation.
<PAGE>
"Company Balance Sheet" shall have the meaning assigned thereto in
Section 3.05(b) of this Agreement.
"Company Common Stock" shall have the meaning assigned thereto in the
preamble to this Agreement.
"Company Disclosure Schedule" shall have the meaning assigned thereto
in the introduction to Article III of this Agreement.
"Company Group" shall have the meaning assigned thereto in Section
3.22(a) of this Agreement.
"Company Options" shall have the meaning assigned thereto in Section
2.03 of this Agreement.
"Company Preferred Stock" shall have the meaning assigned thereto in
Section 3.03 of this Agreement.
"Company SEC Reports" shall have the meaning assigned thereto in
Section 3.05(a) of this Agreement.
"Company Shareholder Approval" shall have the meaning assigned thereto
in Section 3.25 of this Agreement.
"Company Shareholder Meeting" shall have the meaning assigned thereto
in Section 1.11 of this Agreement.
"Confidentiality Agreement" shall mean the confidentiality agreement
dated March 18, 1998 between Crane and the Company.
"Contracts" shall have the meaning assigned thereto in Section 3.13 of
this Agreement.
"Crane" shall mean Crane Co., a Delaware corporation.
"Crane Disclosure Schedule" shall have the meaning assigned thereto in
the introduction to Article IV of this Agreement.
"Current Directors" shall have the meaning assigned thereto in Section
1.03(a) of this Agreement.
"Defined Benefit Plan" shall have the meaning assigned thereto in
Section 3.22(f) of this Agreement.
"Dissenting Shareholder" shall have the meaning assigned thereto in
Section 2.01(d) of this Agreement.
<PAGE>
"Dissenting Shares" shall have the meaning assigned thereto in Section
2.01(d) of this Agreement.
"D&O Insurance" shall have the meaning assigned thereto in Section
5.08(b) of this Agreement.
"Effective Time" shall have the meaning assigned thereto in Section
1.06 of this Agreement.
"Employment Agreements" shall have the meaning assigned thereto in
Section 3.20(a) of this Agreement.
"Environmental Laws" shall have the meaning assigned thereto in
Section 3.17(a) of this Agreement.
"Environmental Permits" shall have the meaning assigned thereto in
Section 3.17(a) of this Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall have the meaning assigned thereto in Section
3.22(a) of this Agreement.
"Event" shall have the meaning assigned thereto in Annex II to this
Agreement.
"Exchange Act" shall have the meaning assigned thereto in Section
1.01(a) of this Agreement.
"Exchange Agent" shall have the meaning assigned thereto in Section
2.02(a) of this Agreement.
"Exchange Fund" shall have the meaning assigned thereto in Section
2.02(a) of this Agreement.
"Expiration Date" shall have the meaning assigned thereto in Section
1.01(b) of this Agreement.
"Governmental Approval" means any permit, license, authorization,
consent, approval, waiver, exception, variance, order, or exemption issued by
any Governmental Authority.
"Governmental Authority" means any nation or government, any state,
province or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of a
government with jurisdiction over the matter in question.
<PAGE>
"Governmental Filings" means any plans, filings, reports,
notifications, or other submissions required to be made to any Governmental
Authority.
"Hazardous Material" shall have the meaning assigned thereto in
Section 3.17(d) of this Agreement.
"HSR Act" shall have the meaning assigned thereto in Section 3.04(c)
of this Agreement.
"Indebtedness" shall mean, with respect to the Company, at any date,
and regardless of whether the indebtedness or obligation was created before, on
or after the date hereof (without duplication): (i) all indebtedness for
borrowed money, or other obligations or liabilities for borrowed money
(including, without limitation, letters of credit) of the Company or any
Subsidiary, whether matured or unmatured, liquidated or unliquidated, direct or
contingent, joint or several, and whether now existing or hereafter created;
(ii) all indebtedness for borrowed money secured by any mortgage, lien, pledge,
charge or encumbrance upon any property or asset of the Company or any
Subsidiary; (iii) all indebtedness, obligations or liabilities of others of the
type described in the preceding clauses (i) and (ii) which the Company or any
Subsidiary has guaranteed, assumed or is in any other way liable for; and (iv)
all amendments, renewals, extensions or refundings of any such indebtedness,
obligation or liability.
"Indemnified Person" shall have the meaning assigned thereto in
Section 5.08(a) of this Agreement.
"Intellectual Property Rights" shall have the meaning assigned thereto
in Section 3.16 of this Agreement.
"IRS" shall mean the Internal Revenue Service.
"Liens" shall mean all mortgages, deeds of trust, pledges, liens,
leases, security interests, security agreements, conditional sales agreements,
notes, easements, restrictions, encroachments and other charges or encumbrances
of any kind whatsoever.
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets (including intangible assets), condition (financial or
otherwise), or results of operations of the Company and its Subsidiaries taken
as a whole; provided, however, that, for purposes of this Agreement, (a) a
decline in the market price of the Company Common Stock shall not, in and of
itself, constitute a Material Adverse Effect and (b) operating losses shall not
constitute a Material Adverse Effect unless such operating losses exceed
$1,000,000 in any consecutive four week period from and after June 30, 1998
and, provided further, that such operating losses shall be determined on the
basis of accounting and financial management practices consistent with the
Company's past practices.
"Merger" shall have the meaning assigned thereto in the preamble to
this Agreement.
<PAGE>
"Merger Consideration" shall have the meaning assigned thereto in
Section 2.01(c) of this Agreement.
"Merger Sub" shall mean FTI Merger Inc., a Pennsylvania corporation.
"Minimum Condition" shall have the meaning assigned thereto in Annex
II to this Agreement.
"Multiemployer Plan" shall have the meaning assigned thereto in
Section 3.22(g) of this Agreement.
"Offer" shall have the meaning assigned thereto in the preamble to
this Agreement.
"Offer Documents" shall have the meaning assigned thereto in Section
1.01(a) of this Agreement.
"PBCL" shall have the meaning assigned thereto in the preamble to this
Agreement.
"Per Share Amount" shall have the meaning assigned thereto in the
preamble to this Agreement.
"Personal Property" shall mean all assets owned by the Company or any
Subsidiary which are personal property, other than the Intellectual Property.
"Personal Property Leases" shall mean all leases, subleases, licenses
or other agreements under which the Company or any Subsidiary is lessee,
sublessee or licensee of any Personal Property and under which the remaining
rental obligations are at least $10,000.
"Predecessor" shall mean (i) a predecessor entity which has been
merged with the Company or any Subsidiary of the Company, or (ii) the
predecessor owner or operator of any of the property or assets owned or
operated by the Company or any Subsidiary of the Company, where the Company or
its Subsidiary is liable (whether by reason of the contractual assumption of
liabilities, indemnification obligations or by other operation of law) for the
actions or inactions of such predecessor.
"Proprietary Technology" shall have the meaning assigned thereto in
Section 3.16 of this Agreement.
"Proxy Statement" shall have the meaning assigned thereto in Section
1.11 of this Agreement.
"Purchaser" shall mean FTI Merger Inc., a Pennsylvania corporation.
"Qualified Plan" shall have the meaning assigned thereto in Section
3.22(e) of this Agreement.
<PAGE>
"Real Property Leases" shall mean all leases or subleases under which
the Company or any Subsidiary is lessee or sublessee of any real property, and
under which the remaining rental obligations are at least $50,000.
"Required Authorizations" shall mean, with respect to any person, (i)
all consents, authorizations, approvals or other orders or actions of, or
filings or registrations with, any federal, state, local or foreign
governmental authority or agency and (ii) all notices, permits, approvals,
consents, qualifications, waivers or other actions of third parties under any
lease, note, mortgage, indenture, agreement or other instrument (or, in the
case of the Company, under any Contract, Employment Agreement or any
Governmental Approval) or under any other third-party franchise, license or
permit, other than any such consents, authorizations, approvals, permits,
qualifications, waivers, orders, registrations, filings, applications or other
actions, the absence of which would not reasonably be expected to have a
Material Adverse Effect with respect to such person and its Subsidiaries, taken
as a whole.
"Requisite Rights" shall have the meaning assigned thereto in Section
3.16(a) of this Agreement.
"Restraints" shall have the meaning assigned thereto in Section
6.01(c) of this Agreement.
"Returns" shall have the meaning assigned thereto in Section 3.08(a)
of this Agreement.
"Rights" shall have the meaning assigned thereto in the preamble to
this Agreement.
"Rights Agreement" shall have the meaning assigned thereto in the
preamble to this Agreement.
"Schedule 14D-9" shall have the meaning assigned thereto in Section
1.02(a) of this Agreement.
"SEC" shall have the meaning assigned thereto in Section 1.01(a) of
this Agreement.
"Shareholder Agreements" shall have the meaning assigned thereto in
the preamble to this Agreement.
"Shares" shall have the meaning assigned thereto in the preamble to
this Agreement.
"Silicon Valley Bank Liens" shall have the meaning assigned thereto in
Section 3.02 of this Agreement.
"Silicon Valley Bank Loan" shall have the meaning assigned thereto in
Section 3.02 of this Agreement.
<PAGE>
"Stock Option Agreement" shall have the meaning assigned thereto in
the preamble to this Agreement.
"Stock Plans" shall have the meaning assigned thereto in Section 3.03
of this Agreement.
"Subsidiary" shall mean, with respect to any party, any corporation,
other organization, whether incorporated or unincorporated, of which (i) such
party or any other Subsidiary of such party is a general partner (excluding
partnerships, the general partnership interests of which held by such party or
any Subsidiary of such party do not have a majority of the voting interest in
such partnership) or (ii) at least a majority of the securities or other
interests having by their terms ordinary voting power to elect a majority of
the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
"Superior Proposal" shall have the meaning assigned thereto in Section
5.02(b) of this Agreement.
"Surviving Corporation" shall have the meaning assigned thereto in
Section 1.04 of this Agreement.
"Tax" or, collectively, "Taxes," shall mean any and all federal,
state, local and foreign taxes, assessments and other governmental charges,
duties, impositions and liabilities including taxes based upon or measured by
gross receipts, income profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements
or arrangements with any other person with respect to such amounts and
including any liability for taxes of a predecessor entity.
"Tender Offer Conditions" shall have the meaning assigned thereto in
Section 1.01(a) of this Agreement.
<PAGE>
ANNEX II
Conditions to the Offer. Notwithstanding any other provisions of the
Offer, the Purchaser shall not be required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c)
promulgated under the Exchange Act, pay for any tendered Shares and may
terminate or, subject to the terms of the Merger Agreement, amend the Offer, if
(i) there shall not be validly tendered and not properly withdrawn prior to the
Expiration Date for the Offer that number of Shares which represents at least a
majority of the total number of outstanding Shares on a fully diluted basis
(including Shares issuable upon exercise of options) on the date of purchase
(not taking into account the Rights) (the "Minimum Condition"), (ii) any
applicable waiting period (and any extensions thereof) under the HSR Act shall
not have expired or been terminated prior to the Expiration Date, or (iii) at
any time prior to the time of acceptance for payment or payment for any Shares,
any of the following events (each, an "Event") shall occur:
(a) there shall be any action taken, or any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction enacted,
enforced, promulgated, amended, issued or deemed applicable to the Offer,
by any Governmental Authority, directly or indirectly, (i) challenging the
acquisition by Parent or the Purchaser of any shares of capital stock of
the Company or the Surviving Corporation, seeking to restrain or prohibit
the consummation of the Offer or the Merger or any of the other
transactions contemplated by the Merger Agreement or seeking to obtain from
the Company or Parent any damages that are material in relation to the
Company and its subsidiaries taken as a whole or Parent and its
subsidiaries taken as a whole, as applicable, (ii) seeking to prohibit or
limit the ownership or operation by the Company, Parent or any of their
respective subsidiaries of all or any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, or
to compel the Company, Parent or any of their respective subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, as a
result of the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement, (iii) seeking to impose limitations
on the ability of Parent to acquire or hold, or exercise full rights of
ownership of, any shares of capital stock of the Company or the Surviving
Corporation, (iv) seeking to prohibit Parent or any of its Subsidiaries
from effectively controlling in any material respect the business or
operations of the Company or its subsidiaries or (v) which otherwise would
reasonably be expected to have a Material Adverse Effect on the Company or
Parent; or
(b) there shall be pending or threatened any action or proceeding by
any Governmental Authority seeking, or that is reasonably likely to result,
directly or indirectly, in, any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above or by any third party for which
there is a substantial likelihood of resulting in any of the consequences
referred to in clauses (i) through (v) of paragraph (a) above; or
<PAGE>
(c) there shall have occurred any Material Adverse Effect with respect
to the Company and its Subsidiaries taken as a whole; or
(d) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified (including by amendment to the Schedule
14D-9) in a manner adverse to Parent or the Purchaser its approval or
recommendation of the Offer or the Merger Agreement, or approved or
recommended any Superior Proposal, (ii) the Company shall have entered into
an Acquisition Agreement with a party other than Crane or any of its
Affiliates, or (iii) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing; or
(e) the Company and the Purchaser and Parent shall have reached an
agreement that the Offer or the Merger Agreement be terminated, or the
Merger Agreement shall have been terminated in accordance with its terms;
or
(f) the representations and warranties of the Company set forth in the
Merger Agreement shall not be true and correct (without regard to any
materiality qualifications or references to Material Adverse Effect
contained in any specific representation or warranty), as if such
representations and warranties were made at the time of such determination
except to the extent such representations and warranties expressly relate
to an earlier date (in which case as of such date); provided that this
paragraph (f) shall be deemed satisfied so long as the failure of all such
representations and warranties to be true and correct would not (i) have a
Material Adverse Effect on the Company, (ii) prevent or materially delay
the consummation of the Offer, (iii) materially increase the cost of the
Offer to the Purchaser or (iv) have a material adverse effect on the
benefits to Parent of the transactions contemplated by the Merger
Agreement; or.
(g) the Company shall have failed to perform in all material respects
all obligations required to be performed by it under the Merger Agreement;
or
(h) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the
New York Stock Exchange or on the Nasdaq National Market, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) a commencement of a war, armed
hostilities or other national or international crises involving the United
States or a material limitation (whether or not mandatory) by any
governmental Entity on the extension of credit by banks or other lending
institutions, or (iv) with respect to any of the foregoing in effect on the
date of the Merger Agreement, a material worsening or acceleration thereof.
The foregoing conditions (including those set forth in clauses (i) and
(ii) of the initial paragraph) are for the benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such conditions and may be waived by Parent or the Purchaser
in whole or in part at any time and from time to time in their reasonable
discretion, in each case, subject to the terms of the Merger Agreement. The
failure by Parent or the Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a
<PAGE>
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
The terms used in this Annex II shall have the meanings ascribed
thereto in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex II is
appended.
<PAGE>
EXHIBIT 1
SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
LIBERTY TECHNOLOGIES, INC.
1. Name. The name of the Corporation is: Liberty Technologies, Inc.
2. Address. The location and post office address of the registered office of
the Corporation in this Commonwealth is Lee Park, 555 North lane, Conshohocken,
Pennsylvania 19428.
3. Purposes. The Corporation is incorporated under the Business Corporation Law
of the Commonwealth of Pennsylvania for the following purpose or purposes: to
have unlimited power to engage in and to do any lawful act concerning any and
all lawful business for which corporations may be incorporated under the
Business Corporation Law.
4. Perpetual Existence. The term for which the Corporation is to exist is
perpetual.
5. Authorized Capital. The total number of shares of capital stock which the
Corporation shall have authority to issue is 100 shares of Common Stock, par
value $0.01 per share.
6. No Preemptive Rights. No shareholder of the Corporation shall have any
preemptive rights with respect to the capital stock of the Corporation, and any
preemptive rights which previously may have attached to the capital stock of
the Corporation are hereby extinguished.
7. No Cumulative Voting. There shall not be cumulative voting with respect to
the shares of capital stock of the Corporation.
8. Directors' Personal Liability. A director of the Corporation shall not be
personally liable, as such, for monetary damages for any action taken, or any
failure to take any action; provided, however, that this provision shall not
eliminate or limit the liability of a director to the extent that such
elimination or limitation of liability is expressly prohibited by Section 1713
of the Business Corporation law of 1988 or any successor statute as in effect
at the time of the alleged action or failure to take action by such director.
9. Effective Time. This Second Amended and Restated Articles of Incorporation
shall become effective upon filing with the Secretary of State of the
Commonwealth of Pennsylvania.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to its
officers for the years ended December 31, 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
---------------------------------- --------------------------
OTHER ANNUAL ALL OTHER
NAME AND SALARY BONUS COMPENSATION(1) OPTIONS/ COMPENSATION(2)
PRINCIPAL POSITION YEAR ($) ($) ($) SARS (#) ($)
------------------ ---- ------ ----- --------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. Nim Evatt..................... 1997 206,772 -- -- -- 2,375
Chief Executive 1996 194,500 -- -- 25,000 2,375
Officer; President 1995 180,153 -- -- 55,000 2,310
Daniel G. Clare.................. 1997 140,000 -- -- 10,000 1,842
Chief Financial Officer; 1996 131,176 -- -- 15,000 1,767
Vice President 1995 90,600 -- -- 25,000 486
</TABLE>
- -------------------
(1) Would include perquisites and other personal benefits paid for by the
Company, such as automobile payments, long-term disability and life
insurance premiums and relocation expenses. The value of such personal
benefits for each of the named executive officers was less than the minimum
required to be reported, the lesser of $50,000 or 10% of annual salary and
bonus.
(2) Represents allocations to accounts of executive officers under the Company's
Retirement Savings Plan, which is intended to qualify under Sections 401(a)
and 401(k) of the Internal Revenue Code of 1986, as amended (the "401(k)
Plan"). Employees of the Company who have completed at least one-half year
of service with the Company are eligible to make contributions to the 401(k)
Plan on a pre-tax basis in accordance with certain limitations set forth in
the 401(k) Plan or defined in the Code. The Company matches 25% of each
employee's pre-tax contributions, up to a maximum matching contribution of
1.5% of such participant's annual compensation. The pre-tax contributions by
participants and the earnings thereon are at all times fully vested. The
Company's contribution vests to the employee at a rate of 50% for each year
of service with the Company. A participant's vested benefit under the 401(k)
Plan may be distributed to the participant upon his retirement, death,
disability or termination of employment or upon reaching age 59 1/2.
6
<PAGE>
The following table presents information concerning stock options granted
to the named executive officers in 1997:
OPTION/SAR GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ------------------------------------------------------------------------------------- --------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ----- ------------ ------------ ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Daniel G. Clare......... 10,000(1) 7% $2.750 5/13/07 $17,295 $ 43,828
</TABLE>
- -------------------
(1) Options under this grant vest over four years on the annual anniversary of
the option grant date in increments of 25% of total shares granted. These
options expire May, 2007.
The following table presents information concerning the exercise of stock
options by any of the named executive officers during 1997 and stock option
values for unexercised stock options held by each of the named executive
officers as of the end of 1997:
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF UNEXERCISED OPTIONS VALUE OF IN-THE-MONEY
SHARES AT YEAR END OPTIONS/SARS AT YEAR END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Nim Evatt............... -- -- 265,500 29,500 $ 96,135 $ 0
Daniel G. Clare............ -- -- 16,250 33,750 $ 0 $ 4,370
</TABLE>
- -------------------
(1) Represents the product of the number of shares acquired on exercise,
multiplied by the difference between (i) the per share fair market value of
the Common Stock on the date of exercise and (ii) the exercise price per
share.
Employment Agreements
The Company has an employment agreement with Mr. Evatt dated April 1, 1991.
Mr. Evatt is employed at will under his agreement and, if terminated without
cause, is entitled to one-half of his then current base salary for a period of
two years from the time notice is given, reduced by any period during which the
agreement's noncompetition provision, which runs for two years after employment
terminates, is violated. The Company entered into an employment agreement with
Mr. Leon, dated December 28, 1995, which provides for, in effect, a phased-in
retirement for the former executive officer with a gradual reduction of time
commitments and responsibilities, as well as compensation, over the term of the
agreement. Mr. Leon's agreement has a three year term from January 1, 1996
through December 31, 1998 and includes covenants not to compete during the term.
7
<PAGE>
Board of Directors
With regard to compensation for the Board of Directors, employee directors
are not compensated for their services as members of the Board. Compensation of
outside directors is determined by action of the Compensation and Benefits
Committee or the whole Board after receiving the recommendations of the Chief
Executive Officer. Currently, non-employee directors are paid $1,250 per meeting
attended. Each non-employee director has been granted an option to purchase
10,000 shares of Common Stock on the later to occur of October 1, 1993 and the
date that such director is first elected to the Board. In addition, each
non-employee director is entitled to receive an annual grant of a stock option
under the Company's 1992 Stock Option Plan to purchase 2,500 shares of Common
Stock, such option to be granted, priced and fully vested on the date that is
the anniversary of the commencement of such director's service. The exercise
price of option grants is set at the NASDAQ closing price on the day prior to
the date of grant.
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors (the
"Committee") is charged with reviewing and approving the Company's compensation
objectives, practices and policies for all employees, setting the specific
compensation for the Chief Executive Officer and other executive officers of the
Company and making determinations with respect to the granting of stock options
under the Company's 1992 Stock Option Plan, including the relevant terms
thereof. The current members of the Committee are Messrs. Evatt, Defieux,
Rosener, and Wells, except with respect to the grant of stock options to
executive officers, in which case the members are Messrs. Defieux and Wells
alone. Mr. Evatt is the Company's President, Chief Executive Officer and
Chairman of the Board, and Messrs. Defieux, Rosener, and Wells are non-employee
directors of the Company.
For the fiscal year ended December 31, 1997, the Committee continued to
implement compensation policies, plans and programs that were developed during
1995 which align the financial interests of the Company's senior management, in
their management capacities, with those of its shareholders. The Committee
believes that (1) executive compensation should be meaningfully related to the
performance of the Company and the value created for shareholders; (2)
compensation programs should support both short and long-term goals and
objectives of the Company; (3) compensation programs should reward individuals
for outstanding contributions to the Company's success; and (4) short and
long-term compensation policies play a significant role in attracting and
retaining well qualified executives.
In setting annual compensation for executive officers, the Committee
reviews a number of criteria relating to the performance of the Company
generally and of each executive officer specifically (other than the Chief
Executive Officer) during the prior fiscal year and evaluates its expectation as
to each such individual's future contributions to the Company. With respect to
the Chief Executive Officer, such review is conducted by the three non-employee
directors of the Company who serve on the Committee.
The salaries of the executive officers for 1997 were based on an evaluation
of individual job performance and the performance of the Company as a whole. In
making its decision on salary levels, the Committee did not use any
predetermined formula or assign any particular weight to any individual
criteria. The Committee also has discretion to pay bonus compensation, although
there is no formalized incentive payment plan or program and no annual bonuses
were paid to executive officers for 1997.
The Committee believes that it is essential for executives, as well as
other employees, of the Company, to own significant amounts of Common Stock,
through the granting of stock options which generally vest over a four year
period, thereby better aligning the long-term interest of executives with that
of the Company's shareholders. The Compensation and Benefits Committee believes
that stock options provide incentive to executives by giving
8
<PAGE>
them a strong economic interest in maximizing stock price appreciation and
enhancing their performance in attaining long-term Company objectives. The
Committee believes that such modification will further align the long-term
interest of the Company's executives and other employees to that of the
Company's shareholders. The Company also uses initial option grants to induce
qualified senior management candidates to accept offers of employment.
Beginning in 1994, Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), limits the deductibility of compensation in excess of $1
million paid to the Company's Chief Executive Officer and to any of the other
four highest-paid executive officers unless such compensation qualifies as
"performance-based," as defined in Section 162(m) and the regulations
thereunder. The Company is assessing, and generally will seek to implement steps
to eliminate or minimize, the impact of this provision on its compensation plans
and policies and to assure future deductibility of senior executive
compensation, to the extent that so qualifying does not compromise the
Committee's flexibility in designing effective, competitive compensation plans
and is not inconsistent with the Company's fundamental compensation policies.
The effect of Section 162(m) did not limit the deductibility of any compensation
paid to any of the "covered employees" of the Company between 1994 to 1997.
R. Nim Evatt
Richard J. Defieux
James D. Rosener
Stephen A. Wells
The above Report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 (the "Securities Act") or the Exchange
Act and shall not otherwise be deemed filed under such Acts.
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation and Benefits Committee of the Board of Directors currently
consists of R. Nim Evatt, Richard J. Defieux, Stephen A. Wells and James D.
Rosener. Mr. Evatt is the Chairman of the Board, Chief Executive Officer and
President of the Company. Mr. Defieux is an affiliate of one of the two venture
capital funds that together were controlling shareholders of the Company prior
to its initial public offering, each of which had a right to designate one board
member at such time, which right terminated upon the closing of the initial
public offering. See also "Certain Transactions."
9
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return (assuming $100 invested at
the opening of the market on March 31, 1993, the date that the Company's Common
Stock began trading on the Nasdaq National Market, and the reinvestment of
dividends paid during the period) of the Common Stock with the Nasdaq Stock
Market -- U.S. Companies Index and the Nasdaq Stock Market-Laboratory Apparatus
and Analytical, Optical, Measuring and Controlling Instruments Index (SIC Code
382). The Company does not make nor endorse any predictions as to future stock
performance.
In the printed version of this document, a line graph appears which
depicts the following plot points.
Liberty Technologies, Inc. Nasdaq Stock Market NASDAQ Stocks (Peer)
------------------------- ------------------- --------------------
03/31/93 100 100 100
12/31/93 104.11 112.678 107.158
12/30/94 41.096 110.14 119.105
12/29/95 54.795 155.767 174.02
12/31/96 35.616 191.587 243.751
12/31/97 25.342 235.157 278.589
The graph set forth above shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or the Exchange Act and shall not otherwise be
deemed filed under such Acts.
10
<PAGE>
CERTAIN TRANSACTIONS
James D. Rosener, a director of the Company who has been nominated for
reelection to the Board, is a partner of the law firm of Pepper Hamilton LLP,
which is general counsel to and provides various legal services for the Company.
AUDITORS
(PROPOSAL NO. 2)
Arthur Andersen LLP have been the Company's auditors since 1992. Upon the
recommendation of the Audit Committee, the Board of Directors has appointed
Arthur Andersen LLP to be the independent auditors of the Company for the year
ending December 31, 1998. It is anticipated that representatives of Arthur
Andersen LLP will be present at the Annual Meeting to respond to questions and,
if they desire, to make a statement. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR RATIFICATION OF THIS APPOINTMENT.
PROPOSALS OF SHAREHOLDERS
Under certain circumstances, shareholders are entitled to present proposals
at shareholder meetings. Any such proposal to be included in the Proxy Statement
for the Company's 1999 Annual Meeting of Shareholders must be submitted by a
shareholder to the Company's Secretary prior to December 29, 1998 in a form that
complies with applicable regulations.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance thereof files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, or obtained by mail from the
Public Reference Section of the Commission, at prescribed rates.
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
at the Annual Meeting. If, however, other matters are properly presented, the
persons named in the enclosed proxy will vote the shares represented thereby in
accordance with their best judgment.
By Order of the Board of Directors
/s/ JAMES D. ROSENER
-----------------------------
JAMES D. ROSENER
Secretary
11
<PAGE>
CRANE CO.
100 FIRST STAMFORD PLACE
STAMFORD, CT 06902
NON-DISCLOSURE AGREEMENT
Liberty Technologies, Inc.
Attn: R. Nim Evatt
Lee Park
555 North Lane, Suite 6000
Conshohocken, PA 19428-2208
Gentlemen:
Crane Co. is about to enter into discussions and evaluations concerning a
possible negotiated transaction involving one or more divisions or subsidiaries
of Liberty Technologies, Inc. (the "Business"). In connection with these
discussions and evaluations, you are furnishing us or our representatives with
certain information which may be either non-public, confidential or proprietary
in nature. The divisions or subsidiaries are part of the Business. The
information furnished to us or our representatives, together with analyses,
compilations, forecasts, studies or other documents prepared by us, our agents,
representatives (including attorneys, accountants and financial advisors) or
employees which contain or otherwise reflect such information or our review of,
or interest in, the Business, is hereinafter referred to as the "Information."
In consideration of your furnishing us with the Information, we agree
that:
1. The Information will be kept confidential and shall not without your
prior written consent, be disclosed by us, or by our agents,
representatives or employees, in any manner whatsover, in whole or in part,
and shall not be used by us, our agents, representatives or employees,
other than in connection with the transaction described above. Moreover, we
agree to reveal the Information only to our agents, representatives and
employees who need to know the Information for the purpose of evaluating
the transaction described above, who are informed by us of the confidential
nature of the Information and who shall agree in writing to act in
accordance with the terms and conditions of this Agreement. We shall be
responsible for any breach of this Agreement by our agents, representatives
or employees.
2. Without your prior written consent, except as required by law, we and
our agents, representatives and employees will not disclose to any person
or entity the fact that the Information has been made available, that
discussions or negotiations are taking place or have taken place concerning
a possible transaction involving the Business or any of the terms,
conditions or other facts with respect to any such possible transaction,
including the status thereof.
3. We shall keep a record of the written Information furnished to us and
of the location of such Information. All copies of the Information, along
with our notes on, summaries and compilations of, or excepts from, the
Information, except for that portion of the Information which consists of
analyses, compilations, forecasts, studies or other documents prepared by
us, our agents, representatives or employees, will be returned to you
immediately upon your request. That portion of the Information which
consists of analyses, compilations, forecasts, studies or other documents
prepared by us, our agents, representatives or employees, will be held by
us and kept confidential and subject to the terms of this Agreement, or
destroyed upon your request, and any oral Information will continue to be
subject to the terms of this Agreement. Such destruction will be confirmed
in writing to you by us and the person or persons who prepared such
documents.
4. The term Information shall not include such portions of the
Information which (i) are or become generally available to the public other
than as a result of a disclosure by us, our agents, representatives or
employees, or (ii) become available to us on a non-confidential basis from
a source (other than you or your agents) which is not prohibited from
disclosing such information to us by a legal, contractual or fiduciary
obligation to you or (iii) information which we have developed
independently through conducting our own competitive business.
1
<PAGE>
5. Without your prior written consent, we and our Representatives will
not communicate with any person or entity that is a party to any agreement
with the Business or any possible transaction between us and the Business
involving the Business.
6. Without your prior written consent, we will not for a period of one
year from the date hereof directly or indirectly solicit for employment any
person who is now employed by you or any of your subsidiaries who is
identified by us as a result of our invastigation of the Business.
7. We acknowledge that you make no express or implied representation or
warranty as to the accuracy or completeness of the Information, and you
expressly disclaim any and all liability that may be based on the
Information, errors therein or omissions therefrom. We agree that we are
not entitled to rely on the accuracy or completeness of the Information and
that we shall be entitled to rely solely on the representations and
warranties made to us by the Business in any final purchase agreement
regarding the acquisition.
8. In the event that we or anyone to whom we transmit the Information
pursuant to this Agreement becomes legally compelled to disclose any of the
Information, we will provide you with prompt written notice and oral notice
so that you may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement. In the event that
such protective order or other remedy is not obtained, or that the Business
waives compliance with the provisions of this Agreement, we will furnish
only that portion of the Information which we are advised by the Business
or the Business' attorney we are legally required to furnish and we will
exercise the efforts directed by the Business to obtain reliable assurance
that confidential treatment will be accorded the Information. All costs for
actions taken at the direction of the Business shall be subject to
indemnification and reimbursement by the Business.
9. We agree that, until the expiration of the term of this Agreement
pursuant to Paragraph 10 below, neither we nor any of our affiliates,
including any person or entity directly or indirectly through one or more
intermediaries, controlling us or controlled by or under common control
with us, will purchase, offer or agree to purchase any securities or assets
of the Business, enter, or agree to enter into any acquisition or other
business combination, relating to the Business, or make, or induce any
other entity to make or negotiate or otherwise deal with others for a
tender or exchange offer of Common Stock of the Business, solicit proxies,
votes or consents other than for nonimees selected by the Business' Board
of Directors, and proposals recommended by the Business' Board of
Directors, or otherwise seek to acquire control of the Business unless such
purchase, transaction, offer, agreement or proposal shall have previously
been approved by the Board of Directors of the Business.
10. This Agreement shall expire on December 31, 1999.
11. This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Pennsylvania.
12. We acknowledge that remedies at law may be inadequate to protect
against breach of this Agreement and we hereby agree in advance to the
granting of injunctive relief in your favor without proof of actual
damages.
Very truly yours,
CRANE CO.
By: /s/ N.S. Evans
----------------------------------
Print Name: N.S. Evans
--------------------------------
Title: CEO
-------------------------------
Date: 3/18/98
--------------------------------
2
<PAGE>
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, dated as of August 11, 1998
("Agreement"), between Liberty Technologies, Inc., a Pennsylvania corporation
(the "Company"), and Crane Co., a Delaware corporation ("Crane");
W I T N E S S E T H:
WHEREAS, the Company, Crane and LTI Merger, Inc., a Pennsylvania
corporation and wholly owned subsidiary of Crane ("Merger Sub"), propose to
enter into an Agreement and Plan of Merger, of even date herewith (the "Merger
Agreement"), which provides that, among other things, upon the terms and
subject to the conditions thereof, Merger Sub will be merged with and into the
Company, with the Company continuing as the surviving corporation; and
WHEREAS, as a condition to the willingness of Crane to enter into the
Merger Agreement, Crane has required that the Company agree, and in order to
induce Crane to enter into the Merger Agreement, the Company has agreed, to
grant Crane an option to purchase certain shares of the common stock of the
Company together with the Rights associated therewith, in accordance with the
terms of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein and in the Merger Agreement, and
intending to be legally bound, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
Section 1.1 Grant of Stock Option. The Company hereby grants to Crane
an irrevocable option (the "Stock Option") to purchase up to 997,633 newly
issued shares (the "Option Shares") of common stock, par value $.01 per share,
together with the Rights associated therewith, of the Company ("Company Common
Stock") in the manner set forth below at a price (the "Purchase Price") of
$2.75 per Option Share. Capitalized terms used herein but not defined herein
shall have the meanings set forth in the Merger Agreement.
Section 1.2 Exercise of Stock Option. (a) Subject to the satisfaction
of the conditions set forth in Section 1.3 hereof, the Stock Option may be
exercised by Crane, in whole or in part, at any time or from time to time after
the occurrence of an Exercise Event (as defined below) and prior to the
Termination Date (as defined below).
(b) An "Exercise Event" shall occur for purposes of this
Agreement upon the termination of the Merger Agreement pursuant to Section
7.01(d) or (e) thereof.
<PAGE>
(c) The "Termination Date" shall occur for purposes of this
Agreement upon the first to occur of any of the following:
(i) the consummation of the Offer;
(ii) the date on which the Merger Agreement is terminated
pursuant to Section 7.01 thereof, if an Exercise Event shall not have
occurred; or
(iii) the date which is 365 days after the date on which the
Merger Agreement is terminated pursuant to Section 7.01 thereof, if an
Exercise Event shall have occurred;
provided that, with respect to clause (iii) above, if the Stock Option cannot
be exercised as of such date by reason of any applicable judgment, decree, law,
regulation or order, then the Termination Date shall be extended until fifteen
days after such impediment has been removed.
(d) In the event Crane wishes to exercise the Stock Option, Crane
shall send a written notice (an "Exercise Notice") to the Company specifying
the total number of Option Shares, if any, Crane wishes to purchase, the number
of Option Shares, if any, with respect to which Crane wishes to exercise its
Cash-Out Right (as defined herein) pursuant to Section 1.4 hereof, the
denominations of the certificate or certificates evidencing such Option Shares
which Crane wishes to receive, a date (a "Closing Date"), which shall be a
business day which is at least three business days after delivery of such
notice, and place for the closing of such purchase (a "Closing").
(e) Upon receipt of an Exercise Notice, the Company shall be
obligated to deliver to Crane the number of Option Shares specified therein, in
accordance with the terms of this Agreement, on the later of (i) the Closing
Date and (ii) the first business day on which there shall be no preliminary or
permanent injunction or other order by any court of competent jurisdiction
preventing or prohibiting such exercise of the Stock Option or the delivery of
the Option Shares in respect of such exercise.
Section 1.3 Closings. At each Closing, the Company will deliver to
Crane a certificate or certificates evidencing the number of Option Shares
specified in Crane's Exercise Notice, registered in the name of Crane or its
nominee, and Crane will deliver to the Company the aggregate Purchase Price for
such Option Shares. All payments made by Crane to the Company pursuant to this
Section 1.3 shall be made, at the option of Crane, by wire transfer of
immediately available funds, or by delivery to the Company of a certified or
bank check or checks payable to or on the order of the Company.
Section 1.4 Cash-Out Right. If, at any time during the period
commencing on the occurrence of an Exercise Event and terminating on the
Termination Date, Crane sends to the Company an Exercise Notice indicating
Crane's election to exercise its rights (the "Cash-Out Right") pursuant to this
Section 1.4, then the Company shall pay to Crane, on the Closing Date, in
exchange for the cancellation of the Stock Option with respect to such number
of Option Shares as Crane specifies in the Exercise Notice, an amount in cash
equal to such number of Option Shares multiplied by the difference between (i)
the average closing price for the 10 trading days commencing on the 12th
trading day immediately preceding the date of the Exercise
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<PAGE>
Notice per share of Company Common Stock (the "Average Price") and (ii) the
Purchase Price. If Crane has sent an Exercise Notice to the Company prior to
the Termination Date, Crane shall be entitled to all of its rights under this
Section 1.4 to the extent exercised pursuant to the Exercise Notice
notwithstanding the failure of the Company to perform all of its obligations
under this Section 1.4 prior to the Termination Date.
Section 1.5 Adjustments Upon Share Issuances, Changes in
Capitalization, etc. (a) In the event of any change in Company Common Stock or
in the number of outstanding shares of Company Common Stock by reason of a
stock dividend, split-up, recapitalization, combination, exchange of shares or
similar transaction or any other change in the corporate or capital structure
of the Company (including, without limitation, the declaration or payment of an
extraordinary dividend of cash, securities or other property), the type and
number of shares or securities to be issued by the Company upon exercise of the
Stock Option shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction, so that Crane shall receive
upon exercise of the Stock Option the number and class of shares or other
securities or property that Crane would have received in respect of Company
Common Stock if the Stock Option had been exercised immediately prior to such
event, or the record date therefor, as applicable, and such Company Common
Stock had elected to the fullest extent it would have been permitted to elect,
to receive such securities, cash or other property.
(b) No adjustment made in accordance with this Section 1.5 shall
constitute or be deemed a waiver of any breach of any of the Company's
representations, warranties, covenants, agreements or obligations contained in
the Merger Agreement.
(c) The provisions of this Agreement, including, without
limitation, Sections 1.1, 1.2, 1.3, 1.4 and 3.2, shall apply with appropriate
adjustments to any securities for which the Stock Option becomes exercisable
pursuant to this Section 1.5.
Section 1.6 Covenants of Crane. Crane agrees not to transfer or
otherwise dispose of the Option or the Option Shares, or any interest therein,
except in compliance with the Securities Act of 1933, as amended (the
"Securities Act") and any applicable state securities laws. Crane further
agrees to the placement of the following legend on the certificate(s)
representing the Option Shares (in addition to any legend required under
applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER (i) THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR
(ii) ANY APPLICABLE STATE LAW GOVERNING THE OFFER AND SALE OF
SECURITIES, NO TRANSFER OR OTHER DISPOSITION OF THESE SHARES, OR OF
ANY INTEREST THEREIN, MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT AND SUCH OTHER STATE LAWS OR
PURSUANT TO EXEMPTIONS FROM REGISTRATION UNDER THE ACT, SUCH OTHER
STATE LAWS, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER."
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representations and Warranties of the Company. The Company
represents and warrants to Crane that (a) the Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania, and has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement, (b) the execution and delivery by the Company
of this Agreement and the consummation by the Company of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of the Company, (c) this Agreement has been duly
executed and delivered by the Company and constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, (d) the Company has taken all necessary corporate action to
authorize and reserve and permit it to issue, and at all times from the date
hereof through the Termination Date shall have reserved, all the Option Shares
issuable pursuant to this Agreement, and the Company will take all necessary
corporate action to authorize and reserve and permit it to issue all additional
shares of Company Common Stock or other securities which may be issued pursuant
to Section 1.5 hereof, all of which, upon their issuance and delivery in
accordance with the terms of this Agreement, shall be duly authorized, validly
issued, fully paid and nonassessable, shall be delivered free and clear of all
security interests, liens, claims, pledges, options, rights of first refusal,
agreements, limitations on Crane's voting rights, charges and other
encumbrances of any nature whatsoever (other than this Agreement) and shall not
be subject to any preemptive rights, and (e) the execution and delivery of this
Agreement by the Company does not, and the consummation by the Company of the
transactions contemplated by this Agreement will not, conflict with, or result
in a violation of, or default under (with or without notice or lapse of time or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the Amended
and Restated Articles of Incorporation or Bylaws of the Company or (ii) any
mortgage, indenture, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company
or its properties or assets, except in the case of the preceding clause (ii)
for any such conflicts, violations, default, terminations, cancellations or
accelerations which would not have a Material Adverse Effect on the Company.
Section 2.2 Representations and Warranties of Crane. Crane represents
and warrants to the Company that (a) Crane is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement,
(b) the execution and delivery by Crane of this Agreement and the consummation
by Crane of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Crane, and (c) the
execution and delivery of this Agreement by Crane does not, and the
consummation by Crane of the transactions contemplated by this Agreement will
not conflict with, or result in a violation of, or default under (with or
without notice or lapse of time or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Certificate of Incorporation or Bylaws
of Crane or (ii) any mortgage, indenture, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Crane or its properties or assets, except in the case of the
preceding clause (ii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which would not have a Material
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Adverse Effect on Crane.
ARTICLE III
COVENANTS OF THE COMPANY
Section 3.1 Listing; Other Action. (a) The Company shall, at its
expense, use its best efforts to cause the Option Shares to be approved for
trading on the Nasdaq National Market ("Nasdaq"), subject to notice of
issuance, as promptly as practicable following the date of this Agreement, and
will provide prompt notice to Nasdaq of the issuance of each Option Share.
(b) The Company shall use its best efforts to take, or cause to
be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereunder,
including, without limitation, obtaining all licenses, permits, consents,
approvals, authorizations, qualifications and orders of Governmental
Authorities.
Section 3.2 Registration. (a) As used in this Agreement, "Registrable
Securities" means each of the Option Shares issued to Crane hereunder and any
other securities issued in exchange for, or issued as dividends or otherwise on
or in respect of, any of such Option Shares.
(b) At any time or from time to time following the first Closing,
Crane may make a written request to the Company for registration under and in
accordance with the provisions of the Securities Act with respect to all or
part of the Registrable Securities (a "Demand Registration"). A Demand
Registration may be, at the option of Crane, a shelf registration or a
registration involving an underwritten offering. As soon as reasonably
practicable after Crane's request for a Demand Registration, the Company shall
file one or more registration statements on any appropriate form with respect
to all of the Registrable Securities requested to be so registered; provided
that the Company will not be required to file any such registration statement
during any period of time (not to exceed 30 days after such request) when (A)
the Company is in possession of material non-public information which it
reasonably believes, upon the advice of its outside counsel, would have to be
disclosed if a registration statement were filed at that time, and that any
such disclosure at that time would be materially detrimental to the Company, or
(B) the Company is required under the Securities Act to include audited
financial statements for any period in such registration statement that are not
yet available for inclusion therein. The Company shall use its best efforts to
have the Demand Registration declared effective as soon as reasonably
practicable after such filing and to keep the Demand Registration continuously
effective; provided that the effectiveness of any Demand Registration may be
terminated if and when all of the Registrable Securities covered thereby shall
have been sold. If any Demand Registration involves an underwritten offering,
(i) the Company shall have the right to select the managing underwriter, which
shall be reasonably acceptable to Crane, and (ii) the Company shall enter into
an underwriting agreement in customary form. The Company shall not include in
any Demand Registration any securities other than the Registrable Securities
requested to be registered therein by Crane.
(c) Up to two registrations effected under this Section 3.2 shall
be effected at the Company's expense except for underwriting commissions
allocable to the Registrable
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Securities. The Company shall indemnify and hold harmless Crane, its affiliates
and controlling persons and their respective officers, directors, agents and
representatives from and against any and all losses, claims, damages,
liabilities and expenses (including, without limitation, all out-of-pocket
expenses, investigation expenses, expenses incurred with respect to any
judgment and fees and disbursements of counsel and accountants) arising out of
or based upon any statements contained in, or omissions or alleged omissions
from, each registration statement (and related prospectus) filed pursuant to
this Section 3.2; provided, however, that the Company shall not be liable in
any such case to Crane or any affiliate or controlling person of Crane or any
of their respective officers, directors, agents or representatives to the
extent that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue statement
or omission or alleged omission made in such registration statement or
prospectus in reliance upon, and in conformity with, written information
furnished to the Company specifically for use in the preparation thereof by
Crane, such affiliate, controlling person, officer, director, agent or
representative, as the case may be.
ARTICLE IV
COVENANT OF CRANE
Section 4.1 Distribution. Crane hereby covenants and agrees that Crane
is acquiring the Stock Option and will acquire the Option Shares for investment
purposes only and not with a view to any distribution thereof in violation of
the Securities Act, and shall not sell any Option Shares purchased pursuant to
this Agreement except in compliance with the Securities Act and applicable law.
ARTICLE V
MISCELLANEOUS
Section 5.1 Expenses. Except as otherwise provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
Section 5.2 Further Assurances. The Company and Crane will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
Section 5.3 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
Section 5.4 Entire Agreement. This Agreement and the Merger Agreement
(together with the annexes and the other documents delivered pursuant thereto)
constitute the entire agreement between the parties and supersede all prior
agreements and understandings, both written and oral, between the parties or
any of them, with respect to the subject matter hereof.
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Section 5.5 Assignment. This Agreement shall not be assigned by either
party without the prior written consent of the other party.
Section 5.6 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto and its successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
Section 5.7 Amendment; Waiver. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto. Either party
hereto may with respect to the other party (i) extend the time for the
performance of any obligation or other act, (ii) waive any inaccuracy in the
representations and warranties contained herein or in any document delivered
pursuant hereto or (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
Section 5.8 Severability. If any term or other provision of this
Agreement is held by a court or other competent authority to be invalid,
illegal or incapable of being enforced by any rule of law, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and
effect.
Section 5.9 Notice. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, sent or transmitted, if delivered personally,
sent by reputable overnight courier to the respective parties at their
addresses as specified in the Merger Agreement or sent by electronic
transmission to the respective parties at their telecopier numbers as specified
in the Merger Agreement.
Section 5.10 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the principles of conflicts of law thereof.
Section 5.11 Headings. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 5.12 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which shall constitute one and the same agreement.
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IN WITNESS WHEREOF, the Company and Crane have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
LIBERTY TECHNOLOGIES, INC.
/s/ R. Nim Evatt
----------------------------------------
R. Nim Evatt
President
CRANE CO.
/s/ David S. Smith
----------------------------------------
David S. Smith
Vice President - Finance and Chief
Financial Officer
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<PAGE>
SHAREHOLDER AGREEMENT
THIS SHAREHOLDER AGREEMENT, dated as of August 11, 1998 (this
"Agreement"), between Crane Co., a Delaware corporation ("Crane"), and the
shareholder listed on the signature page hereof (such shareholder and (with
respect to Shares (as defined herein) owned by an individual jointly with such
shareholder's spouse) together with his or her spouse, being referred to herein
as the "Shareholder");
WITNESSETH:
WHEREAS, the Shareholder, as of the date hereof, is the owner of or
has the sole right to vote the number of shares of common stock, par value $.01
per share ("Common Stock"), of Liberty Technologies, Inc., a Pennsylvania
corporation (the "Company"), set forth below the name of the Shareholder on the
signature page hereof, together with the Rights associated therewith (the
"Shares"); and
WHEREAS, in reliance upon the execution and delivery of this
Agreement, Crane will enter into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), with, among others, the Company,
which provides, among other things, that upon the terms and subject to the
conditions thereof, the Offer will be made and the Company will become wholly
owned by Crane at the Effective Time of the Merger; and
WHEREAS, to induce Crane to enter into the Merger Agreement and to
incur the obligations set forth therein, the Shareholder is entering into this
Agreement pursuant to which the Shareholder agrees to vote in favor of the
transactions contemplated by the Merger Agreement and certain other matters as
set forth herein, and to make certain agreements with respect to the Shares
upon the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged, and
intending to be legally bound, the parties hereto agree as follows:
Section 1. Tender of Shares. The Shareholder covenants and agrees to
tender, or cause to be tendered, and to not (without the consent of Crane)
withdraw the Shares owned by such Shareholder pursuant to the Offer until the
earlier of (i) the date on which the Offer is terminated or withdrawn or (ii)
the date on which the Merger Agreement is terminated.
Section 2. Voting of Shares; Proxy. (a) The Shareholder agrees that
until the earlier of (i) the Effective Time, (ii) the date on which the Merger
Agreement is terminated or (iii) the purchase of all of the Shares owned by the
Shareholder pursuant to the Offer (the earliest thereof being hereinafter
referred to as the "Expiration Date"), the Shareholder shall vote all Shares
owned by the Shareholder at any meeting of the Company's shareholders (whether
annual or special and whether or not an adjourned meeting), or, if applicable,
take action by written consent (x) for adoption and approval of the Merger
Agreement and in favor of the Merger and otherwise
<PAGE>
in favor of the transactions contemplated by the Merger Agreement as such
Merger Agreement may be modified or amended from time to time and (y) against
any action, omission or agreement which would or could impede or interfere
with, or have the effect of discouraging, the transactions contemplated by the
Merger Agreement, including, without limitation, any Acquisition Proposal other
than the transactions contemplated by the Merger Agreement. Any such vote shall
be cast or consent shall be given in accordance with such procedures relating
thereto as shall ensure that it is duly counted for purposes of determining
that a quorum is present and for purposes of recording the results of such vote
or consent.
(b) At the request of Crane, the Shareholder, in furtherance of the
transactions contemplated hereby and by the Merger Agreement, and in order to
secure the performance by the Shareholder of such Shareholder's duties under
this Agreement, shall promptly execute, in accordance with the provisions of
Section 1759(c) of the Pennsylvania Business Corporation Law, and deliver to
Crane, an irrevocable proxy, substantially in the form of Annex A hereto, and
irrevocably appoint Crane or its designees, with full power of substitution,
such Shareholder's attorney and proxy to vote, or, if applicable, to give
consent with respect to, all of the Shares owned by the Shareholder in respect
of any of the matters set forth in, and in accordance with the provisions of,
clauses (i) and (ii) above of Section 1(a). The Shareholder acknowledges that
the proxy executed and delivered by such Shareholder shall be coupled with an
interest, shall constitute, among other things, an inducement for Crane to
enter into the Merger Agreement, shall be irrevocable and shall not be
terminated by operation of law upon the occurrence of any event, including,
without limitation, the death or incapacity of the Shareholder. Notwithstanding
any provision contained in such proxy, such proxy shall terminate upon the
Expiration Date.
(c) The Shareholder agrees, and shall take all actions necessary to
ensure, that the certificate(s) evidencing the Shares shall have the following
legend placed thereon (in addition to any legend required under applicable
state or federal securities law):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION
PURSUANT TO A SHAREHOLDER AGREEMENT DATED AUGUST 11, 1998, BETWEEN THE
SHAREHOLDER WHOSE NAME APPEARS ON THIS CERTIFICATE AND CRANE CO. (THE
"SHAREHOLDER AGREEMENT")."
Section 3. Covenants of the Shareholder. The Shareholder covenants and
agrees for the benefit of Crane that such Shareholder, in his or her capacity
as a Shareholder, will:
(a) until the date that is six months after the Expiration Date,
except for the tendering of the Shares pursuant to the Offer and
except for the option granted to Crane pursuant to Section 4 hereof,
not sell, transfer, pledge, hypothecate, encumber, assign, tender or
otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer,
pledge, hypothecation, encumbrance, assignment, tender or other
disposition of, any of the Shares owned by such Shareholder or any
interest therein, unless and until such transferee executes and
delivers to Crane a joinder to this Agreement pursuant to which such
transferee shall agree that, for all purposes of this Agreement, (i)
such transferee shall be deemed to be the "Shareholder"
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hereunder and (ii) all shares of the Common Stock of the Company
transferred to such transferee pursuant to this Section 3(a) shall be
deemed to be "Shares" hereunder;
(b) until the Expiration Date, except as may be required to vote
the Shares in accordance with Section 2 hereof, not grant any powers
of attorney or proxies or consents in respect of any of the Shares
owned by such Shareholder, deposit any of the Shares owned by such
Shareholder into a voting trust, enter into a voting agreement with
respect to any of the Shares owned by such Shareholder or otherwise
restrict the ability of the holder of any of the Shares owned by such
Shareholder freely to exercise all voting rights with respect thereto;
and
(c) until the Expiration Date, not, and cause such Shareholder's
agents and representatives not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation
of any Acquisition Proposal or engage in any negotiations concerning,
or provide any confidential information or data to, or have any
discussions with, any person relating to a Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement a
Acquisition Proposal. The Shareholder shall immediately cease and
cause to be terminated any existing activities, including discussions
or negotiations with any parties, conducted heretofore with respect to
any of the foregoing and will take the necessary steps to inform such
Shareholder's agents and representatives of the obligations undertaken
in this Section 3(c). The Shareholder shall notify Crane immediately
if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, such Shareholder.
Section 4. Grant of Option. (a) The Shareholder hereby grants to Crane
an irrevocable option (the "Option") to purchase all or any part of the Shares
owned by such Shareholder (the "Option Shares") at a price of $3.50 per Option
Share.
(b) The Option may be exercised by Crane, in whole or in part, at
any time or from time to time if the Company enters into an Acquisition
Agreement with a party other than Crane or any of its Affiliates within six
months after the Expiration Date;
(c) In the event Crane wishes to exercise the Option, Crane shall
send a written notice (an "Exercise Notice") to the Shareholder specifying the
total number of Option Shares Crane wishes to purchase, the denominations of
the certificate or certificates evidencing such Option Shares which Crane
wishes to receive, a date (a "Closing Date"), which shall be a business day
which is at least three business days after delivery of such notice, and place
for the closing of such purchase (a "Closing"). Upon receipt of an Exercise
Notice, the Shareholder shall be obligated to deliver to Crane the number of
Option Shares specified therein, in accordance with the terms of this
Agreement, on the later of (i) the Closing Date and (ii) the first business day
on which there shall be no preliminary or permanent injunction or other order
by and court of competent jurisdiction preventing or prohibiting such exercise
of the Option or the delivery of the Option Shares in respect of such exercise.
At each Closing, the Shareholder will deliver to Crane a certificate or
certificates evidencing the number of Option Shares specified in Crane's
Exercise Notice, registered in the name of Crane or its nominee, and Crane will
deliver
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<PAGE>
to the Shareholder the aggregate purchase price for such Option Shares. All
payments made by Crane to the Shareholder pursuant to this Section 4 shall be
made, at the option of the Shareholder, by wire transfer of immediately
available funds, or by delivery to the Shareholder of a certified or bank check
or checks payable to or on the order of the Shareholder.
Section 5. Covenants of Crane. Crane covenants and agrees for the
benefit of the Shareholder that (a) immediately upon execution of this
Agreement, Crane shall enter into the Merger Agreement, and (b) until the
Expiration Date, it shall use all reasonable efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Merger Agreement, consistent with the
terms and conditions of each such agreement; provided, however, that nothing in
this Section 5, Section 14 or any other provision of this Agreement is
intended, nor shall it be construed, to limit or in any way restrict Crane's
right or ability to exercise any of its rights under the Merger Agreement.
Section 6. Representations and Warranties of the Shareholder. The
Shareholder represents and warrants to Crane that: (a) the execution, delivery
and performance by the Shareholder of this Agreement will not conflict with,
require a consent, waiver or approval under, or result in a breach of or
default under, any of the terms of any contract, commitment or other obligation
(written or oral) to which the Shareholder is bound, other than consents,
waivers and approvals the absence of which would not reasonably be expected to
have an adverse effect on the Shareholder's ability to perform his or her
obligations hereunder and except for such conflicts, breaches or defaults which
would not reasonably be expected to have an adverse effect on the Shareholder's
ability to perform his or her obligations hereunder; (b) this Agreement has
been duly executed and delivered by the Shareholder and constitutes a legal,
valid and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms, subject to the effect of bankruptcy,
insolvency, moratorium, reorganization, fraudulent conveyance and similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and subject to the application of equitable principles and the
discretion of the court (regardless of whether the enforceability is considered
in a proceeding in equity or at law); (c) the Shareholder is the sole owner of
or has the sole right to vote the Shares and the Shares represent all shares of
Common Stock which the Shareholder is the sole owner of or has the sole right
to vote at the date hereof, and the Shareholder does not have any right to
acquire, nor is he or she the "beneficial owner" (as such term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of, any other
shares of any class of capital stock of the Company or any securities
convertible into or exchangeable or exercisable for any shares of any class of
capital stock of the Company (other than shares subject to options or other
rights granted by the Company); (d) the Shareholder has full right, power and
authority to execute and deliver this Agreement and to perform his or her
obligations hereunder; and (e) the Shareholder owns the Shares free and clear
of all liens, claims, pledges, charges, proxies, restrictions, encumbrances,
proxies, voting trusts and voting agreements of any nature whatsoever, other
than restrictions upon resale which may be imposed by federal or state
securities laws and other than as provided by this Agreement. The
representations and warranties contained herein shall be made as of the date
hereof and, with respect to the representations and warranties set forth in
clauses (c), (d) and (e) of this Section 6, as of each day from the date hereof
through and
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including the earlier to occur of the date that is six months after the
Expiration Date or the date of the consummation of any transfer of Shares
permitted by Section 3(a) hereof.
Section 7. Adjustments; Additional Shares. In the event (a) of any
stock dividend, stock split, merger (other than the Mergers) recapitalization,
reclassification, combination, exchange of shares or the like of the capital
stock of the Company on, of or affecting the Shares or (b) that the Shareholder
shall become the beneficial owner of any additional shares of Common Stock or
other securities entitling the holder thereof to vote or give consent with
respect to the matters set forth in Section 2, then such additional shares of
Common Stock and other securities shall become Option Shares hereunder and the
terms of this Agreement shall otherwise apply to the shares of capital stock or
other instruments or documents held by the Shareholder immediately following
the effectiveness of the events described in clause (a) or the Shareholder
becoming the beneficial owner thereof as described in clause (b), as though, in
either case, they were Shares hereunder.
Section 8. Specific Performance. The Shareholder acknowledges that the
agreements contained in this Agreement are an integral part of the transactions
contemplated by the Merger Agreement, and that, without these agreements, Crane
would not enter into the Merger Agreement, and acknowledges that damages would
be an inadequate remedy for any breach by him or her of the provisions of this
Agreement. Accordingly, the Shareholder and Crane each agree that the
obligations of the parties hereunder shall be specifically enforceable and
neither party shall take any action to impede the other from seeking to enforce
such right of specific performance.
Section 9. Notices. All notices, requests, claims, demands and other
communications hereunder shall be effective upon receipt (or refusal of
receipt), shall be in writing and shall be delivered in person, by telecopy or
telefacsimile, by telegram, by next-day courier service, or by mail (registered
or certified mail, postage prepaid, return receipt requested) to the
Shareholder at the address listed on the signature page hereof, and to Crane at
100 First Stamford Place, Stamford, CT 06902, Attention: Augustus I. duPont,
telecopy number 203-363-7350 or to such other address or telecopy number as any
party may have furnished to the other in writing in accordance herewith.
Section 10. Binding Effect; Survival. Upon execution and delivery of
this Agreement by Crane, this Agreement shall become effective as to the
Shareholder at the time the Shareholder executes and delivers this Agreement.
This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, personal representatives, successors and
assigns.
Section 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania
applicable to agreements made and to be performed entirely within such
Commonwealth.
Section 12. Counterparts. This Agreement may be executed in two
counterparts, both of which shall be an original and both of which together
shall constitute one and the same agreement.
5
<PAGE>
Section 13. Effect of Headings; Defined Terms. The Section headings
herein are for convenience of reference only and shall not affect the
construction hereof. Capitalized terms used but not defined herein shall have
the meanings assigned thereto in the Merger Agreement.
Section 14. Additional Agreements; Further Assurance. Subject to the
terms and conditions herein provided, each of the parties hereto agrees to use
all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective the transactions contemplated by this Agreement. The Shareholder
will provide Crane with all documents which may reasonably be requested by
Crane and will take reasonable steps to enable Crane to obtain all rights and
benefits provided it hereunder.
Section 15. Amendment; Waiver. No amendment or waiver of any provision
of this Agreement or consent to departure therefrom shall be effective unless
in writing and signed by Crane and the Shareholder, in the case of an
amendment, or by the party which is the beneficiary of any such provision, in
the case of a waiver or a consent to depart therefrom.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto all as of the day and year first above written.
CRANE CO.
By
--------------------------------
Title:
--------------------------
SHAREHOLDER:
- --------------------------------
[Name]
SPOUSE:
- --------------------------------
Name:
Address:
Number of Shares:
6
<PAGE>
ANNEX A
IRREVOCABLE PROXY
In order to secure the performance of the duties of the undersigned
pursuant to the Shareholder Agreement, dated as of August 11, 1998 (the
"Shareholder Agreement"), between the undersigned and Crane Co., a copy of such
agreement being attached hereto and incorporated by reference herein, the
undersigned hereby irrevocably appoints David S. Smith and Augustus I. duPont,
and each of them, the attorneys, agents and proxies, with full power of
substitution in each of them, for the undersigned and in the name, place and
stead of the undersigned, in respect of any of the matters set forth in clauses
(x) and (y) of Section 2 of the Shareholder Agreement, to vote or, if
applicable, to give written consent, in accordance with the provisions of said
Section 2 and otherwise act (consistent with the terms of the Shareholder
Agreement) with respect to all shares of Common Stock, par value $.01 per share
(the "Shares"), of Liberty Technologies, Inc., a Pennsylvania corporation (the
"Company"), whether now owned or hereafter acquired, which the undersigned is
or may be entitled to vote at any meeting of the Company held after the date
hereof, whether annual or special and whether or not an adjourned meeting, or,
if applicable, to give written consent with respect thereto. This Proxy is
coupled with an interest, shall be irrevocable and binding on any successor in
interest of the undersigned and shall not be terminated by operation of law
upon the occurrence of any event, including, without limitation, the death or
incapacity of the undersigned. This Proxy shall operate to revoke any prior
proxy as to the Shares heretofore granted by the undersigned. This Proxy has
been executed in accordance with Section 1759(c) of the Pennsylvania Business
Corporation Law.
- ----------------------------
[Name]
- ----------------------------
Dated:
----------------------
A-1
