<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as Permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BRIDGEPORT MACHINES, INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[_] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE>
BRIDGEPORT MACHINES, INC.
500 LINDLEY STREET
BRIDGEPORT, CONNECTICUT 06606
June 9, 1999
To the Stockholders of BRIDGEPORT MACHINES, INC.:
You are cordially invited to attend a special meeting of stockholders of
Bridgeport Machines, Inc. (the "Company") to be held at 11:00 a.m., local time,
on Wednesday, July 14, 1999, at Lehman Brothers Inc., 3 World Financial Center,
200 Vesey Street, 17th Floor Main Conference Room, New York, New York 10285
(the "Special Meeting").
As described in the accompanying proxy statement, at the Special Meeting you
will be asked to approve a merger agreement and the transactions contemplated
thereby, including the merger of Bronze Acquisition Corp. with and into the
Company (the "Merger"), pursuant to which:
. each outstanding share of the common stock of the Company, par value
$0.01 per share (the "Common Stock"), will be converted into the right to
receive $10.00 in cash; and
. the Company will become a wholly owned subsidiary of Goldman Industrial
Group, Inc.
The Board of Directors has received the written opinion of its financial
advisor, Lehman Brothers Inc., to the effect that, based upon and subject to
the matters set forth in such opinion, the consideration to be received by the
holders of the Common Stock pursuant to the Merger is fair, from a financial
point of view, to the holders of the Common Stock.
The Board of Directors has unanimously approved the Merger Agreement, has
determined that the Merger is fair to, advisable and in the best interests of
the Company and the holders of the Common Stock and recommends that
stockholders vote "FOR" approval and adoption of the Merger Agreement and the
Merger.
YOUR VOTE IS IMPORTANT. To assure your representation at the Special
Meeting, please complete, sign and date the enclosed proxy card and return it
in the enclosed prepaid envelope. This will allow your shares to be voted
whether or not you attend the meeting.
Detailed information concerning the proposed Merger is set forth in the
accompanying proxy statement. I urge you to read the enclosed material
carefully and request that you promptly complete and return the enclosed proxy
in the enclosed return envelope, which requires no postage if mailed in the
United States. If you attend the Special Meeting, you may vote in person even
if you have previously returned your proxy. Your vote is important regardless
of the number of shares of Common Stock you own.
Sincerely,
[Joseph E. Clancy Sig. Logo]
Joseph E. Clancy
Chairman of the Board of Directors
<PAGE>
BRIDGEPORT MACHINES, INC.
500 LINDLEY STREET
BRIDGEPORT, CONNECTICUT 06606
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 14, 1999
----------------
NOTICE IS HEREBY GIVEN that a special meeting of holders of common stock of
Bridgeport Machines, Inc., a Delaware corporation (the "Company"), will be held
at 11:00 a.m., local time, on Wednesday, July 14, 1999, at Lehman Brothers
Inc., 3 World Financial Center, 200 Vesey Street, 17th Floor Main Conference
Room, New York, New York 10285 for the following purposes:
(1) To approve and adopt an Agreement and Plan of Merger, dated as of
April 23, 1999 (the "Merger Agreement"), by and among Goldman Industrial
Group, Inc., Bronze Acquisition Corp. and the Company, and the transactions
contemplated thereby, including the merger of Bronze Acquisition Corp. with
and into the Company (the "Merger"); and
(2) To transact such other business as may properly come before the
meeting or any adjournments or postponements thereof.
The accompanying proxy statement describes the Merger Agreement and the
proposed Merger in detail.
Only holders of common stock of the Company of record at the close of
business on June 4, 1999 will be entitled to notice of and to vote at the
meeting or any adjournments or postponements thereof.
Stockholders who do not vote in favor of adopting the Merger Agreement and
who otherwise comply with the requirements of Delaware law will be entitled to
appraisal rights. A summary of the applicable Delaware law provision, including
the requirements a stockholder must follow in order to exercise his or her
appraisal rights, is contained in the accompanying proxy statement.
By order of the Board of Directors
[Walter C. Lazarcheck Sig. Logo]
Walter C. Lazarcheck
Vice President, Chief Financial
Officer and Secretary
June 9, 1999
Bridgeport, Connecticut
The form of proxy is enclosed. To assure that your shares will be voted at
the Special Meeting, please complete and sign the enclosed proxy and return it
promptly in the enclosed envelope. No postage is required if mailed in the
United States. Sending a proxy will not affect your right to vote in person if
you attend the Special Meeting.
Please do not send your Common Stock certificates at this time. If the
Merger is consummated, you will be sent instructions regarding the surrender of
your certificates.
<PAGE>
BRIDGEPORT MACHINES, INC.
500 LINDLEY STREET
BRIDGEPORT, CONNECTICUT 06606
----------------
PROXY STATEMENT
----------------
This proxy statement is being furnished to the holders of the outstanding
shares of common stock of Bridgeport Machines, Inc.
This proxy statement is being mailed in connection with the solicitation of
proxies by the Bridgeport Board of Directors for the approval and adoption of
an agreement and plan of merger involving Bridgeport and Goldman Industrial
Group, Inc. and the approval of the merger contemplated by that agreement.
If the merger is completed, Goldman will pay you $10.00 for each share of
Bridgeport common stock you own, and Bridgeport will become a wholly owned
subsidiary of Goldman.
Because our Board of Directors has determined that the terms of the merger
agreement and the merger are fair to, advisable and in the best interests of
our holders of common stock, the Board unanimously approved and adopted the
merger agreement. The Board considered the opinion of Lehman Brothers Inc.
that, as of the date of the opinion, the consideration to be received by our
stockholders in the merger was fair, from a financial point of view, to our
stockholders.
The Board of Directors recommends that you vote "FOR" approval and adoption
of the merger agreement and the transactions contemplated by that agreement.
We have scheduled a special meeting of our stockholders to vote on the
merger agreement. YOUR VOTE IS VERY IMPORTANT. The special meeting will be held
at 11:00 a.m., local time, on Wednesday, July 14, 1999, at Lehman Brothers
Inc., 3 World Financial Center, 200 Vesey Street, 17th Floor Main Conference
Room, New York, New York 10285.
Whether or not you plan to attend the special meeting, please take the time
to vote by completing and mailing the enclosed proxy card to us. If you sign,
date and mail your proxy without indicating how you want to vote, your proxy
will be counted as a vote in favor of the merger agreement. If you abstain or
do not vote, it will have the effect of a vote against the merger agreement.
This proxy statement provides you with detailed information about the
proposed merger. Bridgeport's annual report for fiscal 1999 that accompanies
this proxy statement contains additional information about Bridgeport. We
encourage you to read the entire proxy statement and the annual report
carefully.
The Securities and Exchange Commission has not passed upon the accuracy or
adequacy of this proxy statement. Any representation to the contrary is
unlawful.
----------------
This proxy statement and the accompanying notice of special meeting, form of
proxy and the annual report are first being mailed to stockholders of
Bridgeport on or about June 9, 1999.
The date of this proxy statement is June 9, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE MERGER..................................... 1
Who Can Help Answer Your Questions......................................... 2
SUMMARY.................................................................... 3
The Companies............................................................ 3
Reasons for the Merger................................................... 3
The Special Meeting...................................................... 3
Recommendation to Stockholders........................................... 4
The Merger............................................................... 5
Other Interests of Officers and Directors in the Merger.................. 6
Forward-Looking Statements May Prove Inaccurate.......................... 6
Information Concerning Goldman........................................... 6
MARKET PRICE AND DIVIDEND INFORMATION...................................... 7
Recent Closing Prices.................................................... 7
Number of Stockholders................................................... 7
Dividends................................................................ 7
SELECTED CONSOLIDATED FINANCIAL DATA....................................... 8
THE SPECIAL MEETING........................................................ 9
General; Date; Place and Time............................................ 9
Purpose of the Special Meeting........................................... 9
Record Date; Voting Power................................................ 9
Vote Required............................................................ 9
Revocation of Proxy...................................................... 10
Expenses of Solicitation................................................. 10
Miscellaneous............................................................ 10
THE PARTIES................................................................ 10
Bridgeport Machines, Inc................................................. 10
Goldman Industrial Group, Inc............................................ 11
THE MERGER................................................................. 11
Background of the Merger................................................. 11
Reasons for the Merger; Recommendation of the Board of Directors......... 12
Projections.............................................................. 14
Opinion of the Company's Financial Advisor............................... 15
Certain Federal Income Tax Consequences of the Merger ................... 20
Accounting Treatment of the Merger....................................... 20
Regulatory Filings and Approvals......................................... 20
Financing Commitments.................................................... 21
Management, Operations and Ownership Structure Following the Merger...... 21
Appraisal Rights......................................................... 21
Public Trading Market.................................................... 23
THE MERGER AGREEMENT....................................................... 23
General; Merger Consideration............................................ 23
Dissenting Shares........................................................ 23
Treatment of Stock Options............................................... 24
Closing; Effective Time.................................................. 24
Cancellation of Shares................................................... 24
Exchange of Certificates................................................. 24
Transfers................................................................ 24
Lost, Stolen or Destroyed Certificates................................... 24
Representations and Warranties........................................... 24
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
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<S> <C>
Conduct of Business Prior to the Merger.................................. 25
Agreement Not to Solicit Other Offers.................................... 27
Board Recommendations.................................................... 28
Certain Other Covenants and Agreements................................... 28
Conditions to the Proposed Merger........................................ 30
Termination.............................................................. 32
Termination Fee; Reimbursement of Goldman Expenses on Termination........ 33
Amendment and Waiver..................................................... 35
INTERESTS OF CERTAIN PERSONS IN THE MERGER................................. 35
Stock Options............................................................ 35
Employment Agreements.................................................... 35
Consulting Agreement..................................................... 35
RELATED AGREEMENTS AND TRANSACTIONS........................................ 36
Voting Agreements for Principal Stockholders Other Than Textron.......... 36
Textron Voting Agreement................................................. 36
Textron Confirmation Letter.............................................. 36
OWNERSHIP OF COMMON STOCK.................................................. 37
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.................. 39
AVAILABLE INFORMATION...................................................... 40
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 40
</TABLE>
APPENDIX A-- AGREEMENT AND PLAN OF MERGER
APPENDIX B-- TEXTRON INC. VOTING AGREEMENT
APPENDIX C-- FORM OF VOTING AGREEMENT FOR PRINCIPAL STOCKHOLDERS OTHER THAN
TEXTRON INC.
APPENDIX D-- TEXTRON INC. CONFIRMATION LETTER
APPENDIX E-- FAIRNESS OPINION OF LEHMAN BROTHERS INC.
APPENDIX F-- SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
ii
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE MERGER
This summary highlights certain information from this proxy statement, is
qualified by reference to the proxy statement and may not contain all of the
information that is important to you. To understand the merger more fully and
for a more complete description of the legal terms of the merger, you should
read carefully this entire proxy statement, the annual report that accompanies
this proxy statement and is incorporated in this proxy statement by reference
and the appendices included with the proxy statement. The summary does not
contain a complete statement of material information relating to the merger
agreement, the merger, or other matters discussed in this document.
Q.Why is Bridgeport proposing to merge with Goldman?
A. The Board of Directors determined to recommend approval of the merger
agreement and the merger based on a wide variety of factors, including:
. Bridgeport's current financial situation, on both an historical and
prospective basis, and current industry, economic and market conditions;
. the premium offered by Goldman over the historical market prices and
recent trading activity of Bridgeport's common stock;
. the terms and provisions of the merger agreement and related agreements;
and
. the opinion of Bridgeport's financial advisor, Lehman Brothers, based
upon and subject to certain matters stated in such opinion, as to the
fairness, from a financial point of view, of the consideration to be
received by holders of Bridgeport's common stock in the merger.
Q. What will I receive as a result of the merger?
A. You will receive $10.00 in cash, without interest, in exchange for each
share of Bridgeport's common stock.
Q. What do I need to do now?
A. After you have carefully read this proxy statement, just indicate on your
proxy card how you want to vote, and sign and mail it in the enclosed
prepaid return envelope as soon as possible, so that your shares of common
stock may be represented at the special meeting. The special meeting will
take place at 11:00 a.m., local time, on Wednesday, July 14, 1999, at Lehman
Brothers Inc., 3 World Financial Center, 200 Vesey Street, 17th Floor Main
Conference Room, New York, New York 10285. The Board of Directors
unanimously recommends voting "FOR" the merger agreement and the proposed
merger.
Q. What vote is required to approve the merger?
A. In order to complete the merger, the merger agreement must be approved by a
majority of the votes eligible to be cast by the holders of the outstanding
shares of Bridgeport's common stock. The holders of approximately 40% of the
outstanding common stock have granted to Goldman irrevocable proxies to vote
all of the shares that they hold and all of the shares over which they have
voting control in favor of the approval and adoption of the merger agreement
and the merger.
Q. If my shares are held in "street name" by my broker, will my broker vote my
shares for me?
A. Your broker will vote your shares only if you provide instructions on how to
vote. You should follow the directions provided by your broker regarding how
to instruct your broker to vote your shares. Without instructions, your
shares will not be voted, which for purposes of voting on the merger
agreement and the merger, will have the same effect as voting against the
merger agreement and the merger.
Q. Can I change my vote after I have mailed my signed proxy card?
A. Yes. You can change your vote at any time before your proxy is voted at the
special meeting of stockholders. You can do this in one of three ways.
<PAGE>
. First, you can send a written notice stating that you would like to
revoke your proxy.
. Second, you can complete and submit a new proxy card. If you choose
either of these two methods, you must submit your notice of revocation
or your new proxy card to Bridgeport at the address on the bottom of
this page.
. Third, you can attend the special meeting of stockholders and vote in
person. Simply attending the special meeting, however, will not revoke
your proxy.
If you have instructed a broker to vote your shares, you must follow
directions received from your broker to change your vote.
Q. Will I have appraisal rights as a result of the merger?
A. Yes. Stockholders have appraisal rights. If you wish to exercise your
appraisal rights you must follow the requirements of Delaware law. A summary
describing the requirements you must follow in order to exercise your
appraisal rights is described in greater detail beginning on page 21.
Q. Should I send in my stock certificates when I return my proxy form?
A. No. Holders of common stock should not send in their stock certificates now.
Following the merger, a separate letter of transmittal will be mailed to the
holders of common stock which will enable holders to receive the merger
consideration due to them.
Q. When do you expect the merger to be completed?
A. We are working towards completing the merger as quickly as possible. As
described above, we must obtain the approval of our stockholders to complete
the merger. We presently expect to complete the merger promptly after the
special meeting.
Q. What are the tax consequences of the merger?
A. The receipt of cash by a stockholder of Bridgeport in the merger will be a
taxable transaction for federal income tax purposes and may also be taxable
under applicable state, local and foreign income and other tax laws. A
stockholder will recognize gain or loss in an amount equal to the difference
between the adjusted tax basis of the common stock and the amount of cash
received in exchange for that stock in the merger. The gain or loss will be
capital gain or loss if the common stock is a capital asset in the hands of
the stockholder and will be long-term capital gain or loss if the holding
period exceeds one year. To review the tax consequences to stockholders in
greater detail, see page 20.
Q. What other matters will be voted on at the special meeting?
A. We do not expect to ask you to vote on any matter other than the merger
agreement at the special meeting.
Who Can Help Answer Your Questions
If you have more questions about the merger or if you would like additional
copies of this proxy statement, you should contact:
Bridgeport Machines, Inc.
500 Lindley Street
Bridgeport, Connecticut 06606
Attention: Walter C. Lazarcheck
Phone Number: (203) 367-3651
2
<PAGE>
SUMMARY
The Companies
Bridgeport Machines, Inc.
500 Lindley Street
Bridgeport, Connecticut 06606
(203) 367-3651
Bridgeport, founded in 1939, is a leading manufacturer of manual and
computer numerically controlled metal cutting machine tools in the United
States and United Kingdom. Bridgeport focuses primarily on standardized,
general-purpose machine tools for small to medium sized machine shops
throughout the United States and in 60 countries worldwide. Bridgeport also
manufactures and sells surface grinders under the "Harig" brand name and sells
manual and computer numerically controlled lathes under the "ROMI" and "EZ-
PATH" brand names.
Goldman Industrial Group, Inc.
One Post Office Square
Suite 4100
Boston, Massachusetts 02109
(617) 338-1200
Goldman is a privately-held company which, through its five operating
subsidiaries, provides metal working machinery to industry. Goldman's products
include gear production machines, grinding machines, consumable gear cutting
tools, optical inspection equipment, casting machinery and related products and
accessories. The products are marketed under the "Fellows", "Bryant", "J&L
Metrology", "Jones & Lamson", "Hill Acme" and "Loma Machines" brand names.
Reasons for the Merger
The Bridgeport Board of Directors determined to recommend approval and
adoption of the merger agreement and the merger based on a variety of factors,
including:
. Bridgeport's current financial situation, on both an historical and
prospective basis, and current industry, economic and market conditions;
. the premium offered by Goldman over the historical market prices and
recent trading activity of Bridgeport's common stock;
. the terms and provisions of the merger agreement and related agreements;
and
. the opinion of Bridgeport's financial advisor, Lehman Brothers, based
upon and subject to certain matters stated in such opinion, as to the
fairness, from a financial point of view, of the consideration to be
received by holders of common stock in the merger.
The Special Meeting
When and Where. The special meeting will be held at 11:00 a.m., local time,
on Wednesday, July 14, 1999, at Lehman Brothers Inc., 3 World Financial Center,
200 Vesey Street, 17th Floor Main Conference Room, New York, New York 10285.
Purposes of the Special Meeting. At the special meeting, you will be asked
to approve and adopt the merger agreement and the consummation of the merger.
3
<PAGE>
Record Date; Voting Power. Holders of common stock as of the close of
business on June 4, 1999, the record date, are entitled to vote at the special
meeting or any adjournment thereof. As of the record date, there were
outstanding 5,568,104 shares of common stock. Each share of common stock is
entitled to one vote.
Vote Required. The affirmative vote of a majority of the votes eligible to
be cast by holders of the outstanding shares of common stock as of the record
date is required to approve and adopt the merger agreement and the merger.
As a condition and inducement to Goldman's entering into the merger
agreement, Textron Inc., Lehman LBO Inc., State of Delaware Employees
Retirement Fund, Joseph E. Clancy and Dan L. Griffith, who hold, in the
aggregate, approximately 40% of Bridgeport's outstanding common stock, granted
to Goldman irrevocable proxies to vote all of the shares that they hold and all
of the shares over which they have voting control in favor of the adoption of
the merger agreement and approval of the merger.
Revocation of Proxy. A stockholder may revoke a proxy at any time prior to
its exercise by (i) delivering to Walter C. Lazarcheck, Vice President, Chief
Financial Officer and Secretary, Bridgeport Machines, Inc., 500 Lindley Street,
Bridgeport, Connecticut 06606, a written notice of revocation of proxy prior to
the special meeting, (ii) delivering prior to the special meeting a duly
executed proxy bearing a later date or (iii) attending the special meeting and
voting in person. The presence of a stockholder at the special meeting will not
in and of itself automatically revoke such stockholder's proxy. If not revoked,
the proxy will be voted in accordance with the instructions indicated on the
proxy, or if no instructions are indicated on a properly executed proxy, such
proxy will be voted "FOR" the approval and adoption of the merger agreement.
Quorum; Abstentions and Broker Non-Votes. The required quorum for the
special meeting is a majority of votes eligible to be cast by holders of common
stock issued and outstanding as of the record date. Both abstentions and broker
non-votes will be included in determining the number of votes present and
voting at the special meeting for the purpose of determining the presence of a
quorum. Abstentions and broker non-votes will have the same effect as votes
against the merger agreement and the consummation of the merger. The actions
proposed in this proxy statement are not matters that can be voted on by
brokers holding shares for beneficial owners without the owners' specific
instructions. Accordingly, all beneficial owners of common stock are urged to
return the enclosed proxy card marked to indicate their votes.
Recommendation to Stockholders
On April 23, 1999, the Bridgeport Board of Directors (i) determined that the
merger and the transactions contemplated by the merger agreement are fair,
equitable and in the best interests of Bridgeport and its stockholders, (ii)
approved and adopted the merger agreement and (iii) resolved to recommend that
its stockholders vote in favor of the merger agreement and the merger
contemplated by that agreement. The Board of Directors unanimously recommends a
vote "FOR" approval and adoption of the merger agreement and the merger.
Opinion of Financial Advisor. On April 23, 1999, Lehman Brothers delivered
its oral opinion to the Board of Directors that as of such date, and based upon
the assumptions and subject to the limitations set forth therein, the
consideration to be received by holders of common stock in the merger was fair,
from a financial point of view, to such holders. Lehman Brothers subsequently
confirmed that oral opinion by delivering a written opinion dated April 23,
1999. The full text of the written opinion of Lehman Brothers, which set forth
assumptions made, matters considered and limitations on the review undertaken
in connection with the opinion, is attached hereto as Appendix E and is
incorporated in this proxy statement by reference.
4
<PAGE>
The Merger
The merger agreement is attached as Appendix A to this proxy statement. The
Bridgeport Board of Directors encourages you to read the merger agreement in
its entirety. It is the legal document governing the merger.
What Bridgeport's stockholders receive as a result of the merger. Holders of
common stock will receive $10.00 in cash, without interest, in exchange for
each share of common stock.
What holders of stock options will receive as a result of the merger.
Bridgeport will use its reasonable efforts to provide for the return and
cancellation of each outstanding stock option in exchange for an amount in cash
equal to the product of (A) the excess, if any, of $10.00 over the exercise
price of each such option and (B) the number of shares subject to the option.
Substantially all of Bridgeport's outstanding stock options have exercise
prices in excess of $10.00 per share.
Conditions to the merger. Consummation of the merger is subject to various
conditions, including, among others:
.the approval of the merger by the stockholders at the special meeting;
.that no law has been enacted or injunction entered which effectively
prohibits the merger;
. that all necessary approvals of governmental authorities and the
consents of the holders of all outstanding stock options to the
cancellation of their options have been obtained; and
. that Bridgeport's and Goldman's respective representations and
warranties are true and correct in all material respects and the parties
have performed in all material respects their respective obligations
under the merger agreement.
Termination. Bridgeport and Goldman can agree to terminate the merger
agreement without completing the merger, and either can terminate the merger
agreement if any of the following occurs:
. the merger is not completed by December 31, 1999;
. a court or other governmental authority permanently prohibits the
merger;
. the required approval of the stockholders is not received at the special
meeting;
. if the Bridgeport Board of Directors recommends to stockholders a
Superior Proposal (as defined below); or
. the other company materially breaches or fails to comply with any of its
representations or warranties or obligations under the merger agreement.
In addition, Goldman can terminate the merger agreement if, among other
things, (A) Bridgeport approves or effects, or its Board of Directors
recommends, a business combination with a third party, or (B) the Bridgeport
Board of Directors withdraws or adversely modifies its approval or
recommendation of the merger agreement.
Termination fee; Reimbursement of Goldman expenses on termination. If the
merger agreement is terminated under certain circumstances, Bridgeport is
required to pay to Goldman a termination fee equal to the amount by which $3.25
million exceeds the fee payable in such event, if any, by Textron to Goldman in
accordance with the terms of a voting agreement between Goldman and Textron,
dated as of April 23, 1999.
If the merger agreement is terminated under circumstances that obligate
Bridgeport to pay to Goldman the termination fee, Textron, which holds
approximately 21% of the outstanding Bridgeport common stock, has agreed to pay
to Goldman an amount equal to the product of (a) the amount by which the
consideration per share paid to Textron in the transaction triggering such
termination exceeds $10.00, and (b) the total number of shares of common stock
transferred by Textron in such transaction.
5
<PAGE>
If the merger agreement is terminated under certain other circumstances,
Bridgeport is required to reimburse Goldman for all expenses incurred by
Goldman since January 1, 1999 in connection with the merger agreement and the
related transactions, subject to limitations on the maximum amount to be
reimbursed.
Regulatory approvals. The Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, prohibits the companies from completing the merger until
after the companies have furnished certain information and materials to the
Antitrust Division of the Department of Justice and the Federal Trade
Commission and a required waiting period has ended. On May 6, Bridgeport and
Goldman, respectively, furnished that information. Early termination of the
waiting period was granted on May 24, 1999. However, the Department of Justice
and the Federal Trade Commission will continue to have the authority to
challenge the merger on antitrust grounds before or after the merger is
completed.
Federal income tax consequences. The receipt of cash by a stockholder of
Bridgeport in the merger will be a taxable transaction for federal income tax
purposes and may also be taxable under applicable state, local and foreign
income and other tax laws. A stockholder will recognize gain or loss in an
amount equal to the difference between the adjusted tax basis of the common
stock and the amount of cash received in exchange for that stock in the merger.
The gain or loss will be capital gain or loss if the common stock is a capital
asset in the hands of the stockholder and will be long-term capital gain or
loss if the holding period exceeds one year. To review the tax consequences to
stockholders in greater detail, see page 20.
Appraisal rights. Pursuant to Section 262 of the Delaware General
Corporation Law, stockholders have a right to an appraisal of the value of
their shares in connection with the merger. For a description of this right,
see page 21.
Other Interests of Officers and Directors in the Merger
In considering the recommendation of the Bridgeport Board of Directors with
regard to the merger, stockholders should be aware that certain officers and
directors of Bridgeport have agreements which will be effected as a result of
the merger. In addition, certain officers of Bridgeport have entered into new
employment or consulting arrangements that become effective upon consummation
of the merger.
Forward-Looking Statements May Prove Inaccurate
Bridgeport has made forward looking statements in this proxy statement and
in the annual report incorporated by reference in this proxy statement that are
subject to risks and uncertainties. Forward looking statements include
information concerning possible or assumed future results of operations of
Bridgeport. When words such as "believes," "expects," "anticipates" or similar
expressions are used, they are intended to identify forward looking statements.
Stockholders should note that many factors, some of which are discussed
elsewhere in this proxy statement and in the annual report incorporated in this
proxy statement by reference, could affect the future financial and business
results of Bridgeport and could cause those results to differ materially from
those expressed in the forward looking statements contained or incorporated by
reference into this document. These factors include, but are not limited to,
uncertainties relating to general economic conditions, product introductions,
contingent liabilities, changes in currency exchange rate, the mix of products
sold and the profit margins thereon, order cancellations or reduced bookings by
customers or distributors, discounting necessitated by price competition, and
general market conditions.
Information Concerning Goldman
All information contained in this proxy statement concerning Goldman and its
subsidiaries, including Bronze Acquisition Corp., has been supplied by Goldman
and has not been independently verified by Bridgeport.
6
<PAGE>
MARKET PRICE AND DIVIDEND INFORMATION
The common stock is traded on the Nasdaq National Market under the trading
symbol "BPTM". The following table sets forth for the fiscal quarters
indicated, the high and low closing sale prices per share of the common stock
as reported by Nasdaq.
<TABLE>
<CAPTION>
High Low
---- ----
<S> <C> <C>
Fiscal 1998
First Quarter ended June 28, 1997...................... $11 1/4 $ 8 1/2
Second Quarter ended September 27, 1997................ $12 1/4 $ 9 3/4
Third Quarter ended December 27, 1997.................. $13 3/8 $ 10
$ 10
Fourth Quarter ended March 28, 1998.................... $12 3/4 1/2
Fiscal 1999
First Quarter ended June 27, 1998...................... $13 7/8 $10 1/2
Second Quarter ended October 3, 1998................... $12 1/8 $ 8 5/8
Third Quarter ended January 2, 1999.................... $ 9 $ 4 3/8
Fourth Quarter ended April 3, 1999..................... $ 8 3/4 $ 4 11/16
Fiscal 2000
First Quarter (through June 4, 1999)................... $ 9 3/8 $ 5 1/8
</TABLE>
Recent Closing Prices
On April 22, 1999, the last trading day before the public announcement of
the proposed merger, the reported closing sale price per share of common stock
was $6.00. On June 4, 1999, the reported closing sale price per share of common
stock was $8.875.
Number of Stockholders
On June 4, 1999, there were approximately 70 holders of record of common
stock.
Dividends
We have not declared or paid any cash dividends on the common stock during
the three fiscal years ended March 31, 1999. Our present policy is to retain
earnings for use in the business.
7
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data of Bridgeport for the years 1999, 1998, 1997,
1996 and 1995 presented below has been derived from the audited consolidated
financial statements of Bridgeport. The information shown below is qualified in
its entirety by, and should be read in conjunction with, the related
consolidated financial statements of Bridgeport, including the related notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations", contained in the annual report accompanying and
incorporated by reference in this proxy statement.
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Year Ended
April 3, March 28, March 29, March 30, April 1,
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Statement of Operations
Data:
Net Sales............. $179,758 $213,770 $227,549 $209,214 $148,783
Net Income (Loss)..... (486) 3,915 8,001 8,424 6,921
Basic Earnings (Loss)
Per Share.............. $ (0.09) $ 0.69 $ 1.41 $ 1.49 $ 1.48
Basic Weighted Average
Number of Shares of
Common Stock
Outstanding............ 5,619 5,657 5,679 5,665 4,660
Diluted Earnings (Loss)
Per Share.............. $ (0.09) $ 0.69 $ 1.40 $ 1.47 $ 1.48
Diluted Weighted Average
Number of Shares of
Common Stock
Outstanding............ 5,619 5,672 5,720 5,748 4,673
<CAPTION>
April 3, March 28, March 29, March 30, April 1,
1999 1998 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working Capital....... $ 50,040 $ 51,600 $ 49,696 $ 39,148 $ 42,810
Total Assets.......... 102,966 136,110 131,711 129,156 88,394
Long Term Debt
Obligations.......... 1,086 3,142 5,862 4,475 3,101
Stockholders' Equity.. 67,166 69,323 65,586 57,109 50,209
</TABLE>
8
<PAGE>
THE SPECIAL MEETING
General; Date; Place and Time
This proxy statement is being provided by, and the enclosed proxy is
solicited by and on behalf of, the Board of Directors (the "Board of
Directors") of Bridgeport Machines, Inc. (the "Company") for use at a special
meeting (the "Special Meeting") of the holders of the common stock of the
Company, par value $0.01 per share (the "Common Stock").
The Special Meeting is scheduled to be held at 11:00 a.m., local time, on
Wednesday, July 14, 1999, at Lehman Brothers Inc., 3 World Financial Center,
200 Vesey Street, 17th Floor Main Conference Room, New York, New York 10285.
Purpose of the Special Meeting
The purpose of the Special Meeting is to consider and vote upon the approval
and adoption of the Agreement and Plan of Merger, dated as of April 23, 1999
(the "Merger Agreement"), by and among Goldman Industrial Group, Inc.
("Goldman"), Bronze Acquisition Corp. ("Merger Sub") and the Company, and the
approval of the transactions contemplated by that agreement, including the
merger of Merger Sub with and into the Company (the "Merger"), and to transact
any other business that is properly brought before the Special Meeting.
Record Date; Voting Power
Only holders of shares of Common Stock as of the close of business on June
4, 1999 (the "Record Date") will be entitled to receive notice of and to vote
at the Special Meeting. As of the Record Date, there were 5,568,104 shares of
Common Stock outstanding and entitled to vote at the Special Meeting. Each
share of Common Stock is entitled to one vote.
Vote Required
The affirmative vote of a majority of votes eligible to be cast by holders
of the outstanding shares of Common Stock as of the Record Date is required to
approve and adopt the Merger Agreement.
As a condition and inducement to Goldman's entering into the Merger
Agreement, Textron Inc. ("Textron"), Lehman LBO Inc., State of Delaware
Employees Retirement Fund, Joseph E. Clancy and Dan L. Griffith (collectively,
the "Principal Stockholders"), who hold, in the aggregate, approximately 40% of
the outstanding Common Stock, granted to Goldman irrevocable proxies to vote
all of the shares that they hold and all of the shares over which they have
voting control in favor of the adoption of the Merger Agreement and approval of
the Merger.
Because the required vote of the stockholders with respect to the Merger
Agreement is based upon the total number of outstanding shares of Common Stock,
the failure to submit a proxy card (or to vote in person at the Special
Meeting) or the abstention from voting by a stockholder will have the same
effect as a vote against approval and adoption of the Merger Agreement. Brokers
holding shares of Common Stock as nominees will not have discretionary
authority to vote such shares in the absence of instructions from the
beneficial owners thereof.
The Delaware General Corporation Law (the "DGCL"), the Company's Amended and
Restated Certificate of Incorporation (the "Certificate of Incorporation"), the
Company's Amended and Restated By-laws (the "By-laws") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act") contain requirements
governing the actions of the Company's stockholders at the Special Meeting.
According to the By-laws, the holders of a majority of the shares of the Common
Stock outstanding on the Record Date must be present, either in person or by
proxy, at the Special Meeting to constitute a quorum. In general, abstentions
and broker non-votes are counted as present or represented at the Special
Meeting for the purpose of determining a quorum for the Special Meeting.
9
<PAGE>
The obligation of the Company and Goldman to consummate the Merger is
subject to, among other things, the condition that the stockholders approve and
adopt the Merger Agreement. The failure to obtain such approval affords each of
the Company and Goldman the right to terminate the Merger Agreement.
Revocation of Proxy
A stockholder may revoke a proxy at any time prior to its exercise by (i)
delivering to Walter C. Lazarcheck, Vice President, Chief Financial Officer and
Secretary, Bridgeport Machines, Inc., 500 Lindley Street, Bridgeport,
Connecticut 06606, a written notice of revocation of proxy prior to the Special
Meeting, (ii) delivering prior to the Special Meeting a duly executed proxy
bearing a later date or (iii) attending the Special Meeting and voting in
person. The presence of a stockholder at the Special Meeting will not in and of
itself automatically revoke such stockholder's proxy. If not revoked, the proxy
will be voted in accordance with the instructions indicated on the proxy, or if
no instructions are indicated on a properly executed proxy, such proxy will be
voted "FOR" the approval and adoption of the Merger Agreement.
Expenses of Solicitation
The Company will bear the costs of soliciting proxies from stockholders. In
addition to soliciting proxies by mail, directors, officers and employees of
the Company, without receiving additional compensation therefor, may solicit
proxies by telephone, by facsimile or in person. Arrangements may also be made
with brokerage firms and other custodians, nominees and fiduciaries to forward
solicitation materials to the beneficial owners of shares held of record by
such persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
Miscellaneous
It is not expected that any matter not referred to herein will be presented
for action at the Special Meeting. If any other matters are properly brought
before the Special Meeting, the persons named in the proxies will have
discretion to vote on such matters in accordance with their best judgment. The
grant of a proxy will also confer discretionary authority on the persons named
in the proxy as proxy appointees to vote in accordance with their best judgment
on matters incident to the conduct of the Special Meeting, including (except as
stated in the following sentence) postponement or adjournment for the purpose
of soliciting additional votes. However, shares represented by proxies that
have been voted "AGAINST" the Merger Agreement and the Merger will not be used
to vote "FOR" postponement or adjournment of the Special Meeting for the
purposes of allowing additional time for soliciting additional votes "FOR" the
approval and adoption of the Merger Agreement and the Merger.
Holders of Common Stock should not send their stock certificates with their
proxy cards. If the Merger is consummated, a separate letter of transmittal
will be mailed to the holders of Common Stock which will enable a holder to
receive the appropriate consideration.
THE PARTIES
Bridgeport Machines, Inc.
The Company, founded in 1939, is a leading manufacturer of manual and
computer numerically controlled ("CNC") metal cutting machine tools in the
United States and United Kingdom. The Company focuses primarily on
standardized, general-purpose machine tools for small to medium sized machine
shops throughout the United States and in 60 countries worldwide. The Company
also manufactures and sells surface grinders under the "Harig" brand name and
sells manual and CNC lathes under the "ROMI" and "EZ-PATH" brand names. The
Company's annual report on Form 10-K for fiscal 1999 that accompanies this
proxy statement (the "Annual Report") contains additional information about the
Company.
10
<PAGE>
The principal executive offices of the Company are located at 500 Lindley
Street, Bridgeport, Connecticut 06606 and its telephone number is (203) 367-
3651.
Goldman Industrial Group, Inc.
Goldman is a privately-held company which, through its five operating
subsidiaries, provides metal working machinery to industry. Goldman's products
include gear production machines, grinding machines, consumable gear cutting
tools, optical inspection equipment, casting machinery and related products and
accessories. The products are marketed under the "Fellows", "Bryant", "J&L
Metrology", "Jones & Lamson", "Hill Acme" and "Loma Machines" brand names.
The principal executive offices of Goldman are located at One Post Office
Square, Suite 4100, Boston, Massachusetts 02109 and its telephone number is
(617) 338-1200.
THE MERGER
Background of the Merger
In April 1996, the Company retained Lehman Brothers Inc. ("Lehman Brothers")
to serve as its financial advisor and, in that capacity, to identify
opportunities for the sale of the Company and to advise the Company in
connection with any such sale. Over the next 12 months, Lehman Brothers
conducted a broad auction of the Company. In that process, Lehman Brothers
contacted persons, both domestic and foreign, that it viewed as potential
strategic or financial buyers of the Company. The Company and its advisors held
discussions with a number of those persons concerning a possible transaction
with the Company. None of these discussions resulted in a definitive agreement
regarding a transaction.
In March 1998, Greg Goldman, the President and Chief Executive Officer of
Goldman, contacted the Company regarding Goldman's interest in acquiring the
Company. Goldman entered into a confidentiality agreement with the Company on
April 3, 1998. During April and early May 1998, Goldman and its financial and
legal advisors conducted a due diligence investigation of the Company and its
operations and discussed the terms of a potential acquisition with members of
Company management, Lehman Brothers and Willkie Farr & Gallagher, the Company's
legal counsel. Goldman indicated that its obligation to close any acquisition
would be subject to a financing condition and that it would fund a purchase of
the Company through a high-yield note offering and bank financing. At a May 8,
1998 meeting, the Board of Directors determined that it would not proceed with
a transaction with Goldman because of the financing contingency, its concern
over whether a high-yield note offering could be successfully completed and its
unwillingness to have the Company effectively bear that financing risk.
In July 1998, Goldman informed the Company that it was still interested in
pursuing a transaction with the Company but had not obtained financing
commitments that would address the Board's concerns regarding the financing of
a proposed transaction. The Board of Directors advised Goldman later in the
month that it was not interested in continuing to pursue a potential
transaction that lacked committed financing.
In December 1998, Mr. Goldman contacted Bhikhaji M. Maneckji, Textron's
designee on the Board of Directors, and stated that Goldman would be interested
in pursuing an acquisition of the Company. Mr. Goldman advised Mr. Maneckji
that Goldman was prepared to offer $8.00 per share of Common Stock. In early
January, Mr. Maneckji told Goldman that he did not believe that the Board of
Directors would consider a sale of the Company in a transaction with a
financing contingency or at that price. In mid-January, Mr. Goldman informed
Mr. Maneckji that Goldman would be prepared to consider an acquisition of the
Company at $10.00 per share in a transaction that would not be subject to a
financing condition but would be subject to a number of other conditions.
11
<PAGE>
On January 19, 1999, Goldman entered into the Confidentiality Agreement (as
defined below) with the Company, and the Company again retained Lehman Brothers
as its financial advisor in connection with a potential sale of the Company.
During January and February, Goldman and its potential lenders conducted a due
diligence investigation of the Company and its operations.
On March 15, 1999, High Technology Holding Corp. ("HTH") sent a letter to
the Company in which HTH suggested, among other things, that the Company should
tender for up to 50% of the outstanding Common Stock at a purchase price of
$10.125 per share and finance that tender through significant additional
borrowings. HTH, which has publicly reported that it owns 10% of the Company's
outstanding Common Stock, issued a press release on March 16 announcing the
suggested transaction. On March 22, the Board of Directors reviewed the
suggested actions with Lehman Brothers and determined not to implement the
suggested stock repurchase because the Board of Directors did not believe such
an action would be in the best interest of the Company and its stockholders.
The Company issued a press release on March 23 announcing its decision with
regard to the suggested transaction.
On March 25, 1999, Goldman submitted to the Board of Directors a non-
binding, written indication of its interest in acquiring the Company at
purchase price of $10 per share of Common Stock in a transaction that would not
be subject to any financing conditions but would be subject to a number of
other conditions. On March 30, the Board of Directors met to review the Goldman
proposal. At that meeting, the Board of Directors authorized Company management
and its advisors to attempt to negotiate an acquisition agreement, but
indicated that it would not approve any transaction unless there was a
satisfactory resolution of the issues raised in Goldman's written indication of
interest regarding, among other things, conditions to closing, termination
rights and the consequences of termination.
During the first three weeks of April 1999, representatives of Goldman,
together with its legal counsel, and representatives of the Company and members
of the Board of Directors, together with Lehman Brothers and Willkie Farr &
Gallagher, communicated by telephone and met in person to discuss various
aspects of the proposed transaction. During this time, drafts of the Merger
Agreement and the Voting Agreements (as defined below) were distributed,
reviewed and negotiated. Among the matters negotiated were the conditions of
the parties to close the Merger, the rights of the parties to terminate the
Merger Agreement and the effect of termination. In addition, Goldman continued
its due diligence investigation of the Company, the Company entered into a
confidentiality agreement with Goldman covering information provided by Goldman
and the Company's representatives discussed the terms of the proposed
Commitments (as defined below) with Goldman's management and its lenders and
counsel.
After the close of the markets on April 23, 1999, the Board of Directors met
to consider the merger transaction with Goldman and the proposed form of Merger
Agreement. Following Lehman Brother's rendering of its oral opinion to the
Board of Directors as to the fairness of the consideration to be received by
the stockholders from a financial point of view, presentations by Willkie Farr
& Gallagher and management, and the Board of Director's discussions and
deliberations, the Board of Directors unanimously determined that the Merger
was fair to, and in the best interest of, the holders of Common Stock.
Accordingly, the Board of Directors unanimously approved the Merger Agreement
and the Merger and resolved unanimously to recommend that the holders of Common
Stock vote "FOR" the approval and adoption of the Merger Agreement and the
Merger.
Later that evening, the Merger Agreement was executed by the Company,
Goldman and Merger Sub. For a detailed summary of the Merger Agreement, see
"The Merger Agreement".
Reasons for the Merger; Recommendation of the Board of Directors
In reaching its determination to recommend approval and adoption of the
Merger Agreement and the Merger, the Board of Directors consulted with
management, as well as Lehman Brothers, its financial advisor, and Willkie Farr
& Gallagher, its legal advisor, and considered a number of factors, including
those listed
12
<PAGE>
below. In view of the wide variety of factors considered in connection with the
Merger, the Board of Directors did not consider it practicable to, nor did it
attempt to, quantify or otherwise assign relative weights to the specific
factors it considered in reaching its decision.
(i) The Company's Business, Condition and Prospects. The Board of Directors
considered information with respect to the financial condition, results of
operations and business of the Company, on both an historical and prospective
basis, and current industry, economic and market conditions, including the
Company's market position in the machine tools market. In particular, the Board
of Directors considered that, throughout fiscal 1999, the Company experienced a
significant decline in net incoming orders in the United States and the United
Kingdom, the Company's two principal markets. Management had advised the Board
of Directors that it believed that these declines represent a cyclical trend in
these markets of declining purchases by customers for machine tools in the
segment of the machine tool industry in which the Company participates. In the
face of this decline in incoming orders, management of the Company advised the
Board of Directors that it was unable to predict with certainty the period of
time that the decreased level of customer purchases would continue, whether the
level of customer purchases would decline further, or the level at which
incoming orders would be. Management had reported to the Board of Directors in
March 1999 that it anticipated that net sales in fiscal 2000 would be
significantly lower than net sales in fiscal 1999 and that the Company would
record a net loss in fiscal 2000.
(ii) Historical and Recent Market Prices Compared to Consideration to be
Received by Holders of Common Stock. The Board of Directors reviewed the
historical market prices and trading information with respect to the Common
Stock, and considered that (A) the price of $10.00 per share of Common Stock
represented a premium of approximately 68% over the $5.969 closing price of the
Common Stock on April 23, 1999 and (B) the price of $10.00 per share of Common
Stock represented a 70% premium over the average closing price of the Common
Stock for the 30 previous trading days prior to the April 23 Board of Directors
meeting.
(iii) Terms of the Merger. The Board of Directors considered the terms and
provisions of the Merger Agreement and related agreements, including the
provision of the Merger Agreement permitting the Board of Directors to receive
unsolicited inquiries and proposals from, and, under certain circumstances,
negotiate and give information to, third parties. The Board of Directors
further considered that the maximum aggregate termination fee that could be
realized by Goldman pursuant to the Merger Agreement was $3.25 million (the
"Termination Fee") and that the amount of the Termination Fee would be reduced
by any fee payable by Textron under the terms of the Textron Voting Agreement
(as defined below). Based on the advice of its financial and legal advisors,
the Board of Directors concluded that the Termination Fee (which by its term is
to be reduced by any fee payable by Textron in accordance with the terms of the
Textron Voting Agreement was within the range of fees payable in comparable
transactions and that it would not in and of itself preclude alternative
proposals. The Board of Directors further considered that Goldman had stated
that it would not enter into a transaction which did not include provisions
similar to the Termination Fee.
(iv) Opinion of Lehman Brothers. The Board of Directors considered the oral
opinion delivered on April 23, 1999 by Lehman Brothers that, as of the date of
such opinion, and based upon and subject to certain matters stated therein, the
consideration to be received by the holders of Common Stock in connection with
the Merger was fair, from a financial point of view, to the holders of Common
Stock. The Board of Directors also considered the oral and written presentation
made to it by Lehman Brothers. See "The Merger--Opinion of the Company's
Financial Advisor". Copies of the Lehman Brothers written opinion to the Board
of Directors, dated April 23, 1999, which sets forth the assumptions made,
matters considered and limitations on the review undertaken, is attached as
Appendix E to this proxy statement and is incorporated herein by reference.
(v) Principal Stockholders Support of the Merger Agreement. The Board of
Directors considered that the Principal Stockholders, who hold, in the
aggregate, approximately 40% of the outstanding Common Stock, were willing to
grant to Goldman irrevocable proxies to vote all of the shares that they hold
and all of the
13
<PAGE>
shares over which they have voting control in favor of the adoption of the
Merger Agreement and approval of the Merger.
(vi) Merger Agreement Does Not Contain a Financing Condition. The Board of
Directors considered that Goldman's obligation to consummate the Merger would
not be subject to a financing condition and that Goldman had delivered to the
Company copies of letters from the lenders evidencing the Commitments and
represented to the Company in the Merger Agreement that, upon receipt of the
funds available under the Commitments, it would have sufficient funds to pay
the aggregate Merger Consideration (as defined below).
The Board of Directors has unanimously approved the Merger Agreement, has
determined that the Merger is fair to, advisable and in the best interests of,
the Company and the holders of Common Stock, and recommends that stockholders
vote "FOR" approval and adoption of the Merger Agreement and the Merger.
Projections
In the course of discussions giving rise to the Merger Agreement,
representatives of the Company furnished representatives of Goldman with
certain business and financial information that was not publicly available,
including certain financial projections for fiscal year 2000 (the
"Projections"). The Projections were prepared solely for the Company's internal
purposes and were not prepared for publication or with a view to complying with
the published guidelines of the Securities and Exchange Commission regarding
projections or with the American Institute of Certified Public Accountants
Guide for Prospective Financial Statements, and such information is being
included in this proxy statement solely because it was furnished to Goldman in
connection with the discussions giving rise to the Merger Agreement. The
independent accountants of the Company have neither examined nor compiled the
prospective financial information set forth below and, accordingly, do not
express an opinion or any other form of assurance with respect thereto. The
report of such independent accountants incorporated by reference in this proxy
statement relate to the historical financial information of the Company and do
not extend to the prospective financial information and should not be read to
do so.
The Projections set forth below necessarily reflect numerous assumptions
with respect to general business and economic conditions and other matters,
many of which are inherently uncertain or beyond the Company or Goldman's
control, and do not take into account any changes in the Company's operations
or capital structure which may result from the Merger. It is not possible to
predict whether the assumptions made in preparing the projected financial
information will be valid, and actual results may prove to be materially higher
or lower than those contained in the projections. In addition to the specific
assumptions relating to the Projections set forth below, certain other
information pertinent to the Projections was furnished by the Company. The
inclusion of this information should not be regarded as an indication that the
Company, Goldman or anyone else who received this information considered it a
reliable predictor of future events, and this information should not be relied
on as such. None of the Company, Goldman or any of their respective
representatives assumes any responsibility for the validity, reasonableness, or
completeness of the projected financial information, and the Company has made
no representation to Goldman or Merger Sub regarding such information.
<TABLE>
<CAPTION>
Year Ended
April 1,
2000
--------------
(In thousands)
<S> <C>
Net Sales.................................................. $139,470
Pretax Loss................................................ 3,147
Net Loss................................................... 2,998
</TABLE>
The major assumptions made by the Company with respect to the Projections
and conveyed to Goldman were as follows. The level of sales for the first six
months of the Projections is based upon judgments of the
14
<PAGE>
Company management with respect to the level of incoming orders for December
1998 through February 1999 and the assumption that business conditions would
not improve during that six-month period. The second six months of the
Projections assume an improvement in the level of business. In addition, the
Projections assume no tax benefit would be established for net operating losses
generated in fiscal 2000 for the Company's operations in the United Kingdom.
Opinion of the Company's Financial Advisor
Lehman Brothers acted as financial advisor to the Company in connection with
the sale of the Company. On April 23, 1999, at a meeting of the Board of
Directors, Lehman Brothers rendered its oral opinion to the Board that, as of
such date, and based upon and subject to certain matters stated in Lehman
Brothers written opinion, the consideration to be received by the stockholders
of the Company in the sale of the Company was fair, from a financial point of
view, to the Company's stockholders. Lehman Brothers subsequently confirmed its
oral opinion by delivery of its written opinion dated April 23, 1999.
The full text of the Lehman Brothers' opinion dated April 23, 1999 is
included in Appendix E to this proxy statement and is incorporated in this
document by reference. The summary of the Lehman Brothers' opinion set forth in
this proxy statement is qualified in its entirety by reference to the full text
of the Lehman Brothers' opinion. Holders of Common Stock may read the Lehman
Brothers' opinion in its entirety for the procedures followed, factors
considered, assumptions made and qualifications and limitations of the review
undertaken by Lehman Brothers in connection with its opinion.
No limitations were imposed by the Company on the scope of Lehman Brothers'
investigation or the procedures to be followed by Lehman Brothers in rendering
its opinion except that the Company did not authorize Lehman Brothers to
solicit, and Lehman Brothers did not solicit, any indications of interest from
any third party with respect to the purchase of all or a part of the Company's
business. Lehman Brothers was not requested to and did not make any
recommendation to the Board of Directors as to the form or amount of the
consideration to be offered to the Company's stockholders in the sale of the
Company, which was determined through arm's length negotiations between the
parties and their advisors. Lehman Brothers' advisory services and opinion were
provided for the information and assistance of the Board of Directors in
connection with its consideration of the sale of the Company. Lehman Brothers'
opinion is not intended to be and does not constitute a recommendation to any
stockholder of the Company as to how such stockholder should vote with respect
to the sale of the Company. Lehman Brothers was not requested to opine as to,
and its opinion does not address, the Company's underlying business decision to
proceed with or effect the sale of the Company.
In arriving at its opinion, Lehman Brothers reviewed and analyzed:
.the Merger Agreement and the specific terms of the sale of the Company;
.publicly available information concerning the Company as it believed to
be relevant to its analysis;
.financial and operating information with respect to the business,
operations and prospects of the Company furnished to it by the
Company;
.a trading history of the Common Stock from January 1, 1996 to the
present and a comparison of that trading history with those of
companies that it deemed relevant;
.a comparison of the historical financial results and present financial
condition of the Company with those of other companies that it deemed
relevant; and
.a comparison of the financial terms of the sale of the Company with the
financial terms of certain other transactions that it deemed
relevant.
In addition, Lehman Brothers had discussions with the management of the
Company concerning its business, operations, assets, financial condition and
prospects and undertook such other studies, analyses and investigations as it
deemed appropriate.
15
<PAGE>
In arriving at its opinion, Lehman Brothers assumed and relied upon the
accuracy and completeness of the financial and other information used by it
without assuming any responsibility for independent verification of such
information. Lehman Brothers further relied upon the assurances of the
management of the Company that they were not aware of any facts or
circumstances that would make such information inaccurate or misleading. With
respect to the financial projections of the Company, upon advice of the
Company, Lehman Brothers assumed that such projections were reasonably prepared
on a basis reflecting the best currently available estimates and judgments of
the management of the Company as to their future financial performance of the
Company and that the Company would perform in accordance with such projections.
In arriving at its opinion, Lehman Brothers conducted only a limited physical
inspection of the properties and facilities of the Company and did not make or
obtain any evaluations or appraisals of the assets or liabilities of the
Company. In addition, the Board of Directors did not authorize Lehman Brothers
to solicit, and Lehman Brothers did not solicit, any indications of interest
from any third party with respect to the purchase of all or a part of the
Company's business. Lehman Brothers' opinion was necessarily based upon market,
economic and other conditions as they existed on, and could be evaluated as of,
the date of such opinion.
In arriving at its opinion, Lehman Brothers did not ascribe a specific range
of value to the Company stockholders, but rather made its determination as to
the fairness, from a financial point of view, of the consideration to be
received by the stockholders of the Company in the sale of the Company on the
basis of financial and comparative analyses described below. The preparation of
a fairness opinion involves various determinations as to the most appropriate
and relevant methods of financial and comparative analysis and the application
of those methods to the particular circumstances, and therefore, such an
opinion is not readily susceptible to summary description. Furthermore, in
arriving at its opinion, Lehman Brothers did not attribute any particular
weight to any analysis or factor considered by it, but rather made qualitative
judgments as to the significance and relevance of each analysis and factor.
Accordingly, Lehman Brothers believes that its analyses must be considered as a
whole and that considering any portion of such analyses and factors, without
considering all analyses and factors as a whole, could create a misleading or
incomplete view of the process underlying its opinion. In its analyses, Lehman
Brothers made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of the Company. None of the Company, Lehman Brothers or any
other person assumes responsibility if future results are materially different
from those discussed. Any estimates contained in these analyses were not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. In addition, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the prices at which businesses actually
may be sold.
The following is a summary of the material financial and comparative
analyses used by Lehman Brothers in connection with rendering its opinion to
the Board of Directors. Certain of the summaries of the financial and
comparative analyses include information presented in tabular format. In order
to fully understand the methodologies used by Lehman Brothers and the results
of its financial and comparative analyses, the tables must be read together
with the text of each summary. The tables alone do not constitute a complete
description of the financial and comparative analyses. In particular, you
should note that in applying the various valuation methods to the particular
circumstances of the Company, Lehman Brothers made qualitative judgments as to
the significance and relevance of each analysis and factor. In addition, Lehman
Brothers made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of the Company. Accordingly, the information presented in
the tables and described below must be considered as a whole. Considering any
portion of such analyses and of the factors considered, without considering all
analyses and factors as a whole, could create a misleading or incomplete view
of the process underlying Lehman Brothers' opinion.
Purchase Price Ratio Analysis. The purchase price ratio analysis provides
enterprise value multiples and equity value multiples of key operating
statistics for a range of transaction values. The total implied equity value to
be received by holders of Common Stock is $57.0 million based upon the offer
price of $10.00 per share, which represents a premium of 68% over the closing
price of the Company shares of $5.969 on April 23,
16
<PAGE>
1999, the last trading day prior to announcement. Over the 52-week period ended
April 23, 1999, the Common Stock traded at a low of $4.688 per share on March
15, 1999 and at a high of $13.250 per share on April 22, 1998, representing a
113% premium and a 25% discount, respectively, with respect to the $10.00 per
share offer price. The Common Stock has not traded at or above $10.00 per share
since September 4, 1998.
Based on the offer price per share of $10.00, Lehman Brothers calculated the
ratio of implied equity value to net income as well as the ratio of the
transaction value to revenue, earnings before interest and taxes ("EBIT") and
earnings before interest, taxes, depreciation and amortization ("EBITDA")
derived from the Company's financial projections. The Company's transaction
value was obtained by adding the implied equity value and short- and long-term
debt and subtracting its cash and cash equivalents. The following table
presents (i) the ratios of the $10.00 offer price per share to the latest
twelve months ("LTM") ended January 2, 1999, estimated fiscal year 1999 and
projected fiscal year 2000 net income, (ii) the ratio of equity value to book
value as of February 27, 1999 and (iii) the ratios of transaction value to the
latest twelve months ended January 2, 1999, estimated fiscal year 1999 and
projected fiscal year 2000 revenue, EBITDA and EBIT.
<TABLE>
<CAPTION>
Proposed
Offer Price Per Share as Multiple of: Transaction
------------------------------------- -----------
<S> <C>
LTM Net Income.............................................. 29.3x
1999E Net Income............................................. 8.3x
2000E Net Income............................................. NM*
Equity Value as a Multiple of:
------------------------------
Book Value (2/27/99) 0.84x
Transaction Value as a Multiple of:
-----------------------------------
LTM Revenue................................................. 0.36x
1999E Revenue................................................ 0.39x
2000E Revenue................................................ 0.50x
LTM EBITDA.................................................. 7.4x
1999E EBITDA................................................. 12.8x
2000E EBITDA................................................. NM*
LTM EBIT.................................................... 12.0x
1999E EBIT................................................... NM*
2000E EBIT................................................... NM*
</TABLE>
--------
* "NM" means "not meaningful".
In addition, Lehman Brothers compared the stock price performance of the
Company with selected comparable publicly-traded companies, which included
DeVlieg-Bullard, Inc., Hardinge, Inc., Hurco Companies, Inc. and Monarch
Machine Tool Co., and with the S&P 400 Industrials Index.
Comparable Publicly-Traded Company Analysis. The comparable publicly-traded
company analysis provides a market valuation benchmark based on the common
stock trading multiples of selected comparable publicly-traded companies. For
this analysis, Lehman Brothers reviewed the public stock market trading
multiples for selected companies that Lehman Brothers deemed comparable to the
Company. The selected comparable publicly-traded companies included DeVlieg-
Bullard, Inc.; Hardinge, Inc.; Hurco Companies, Inc.; and Monarch Machine Tool
Co. Using publicly available information, Lehman Brothers calculated and
analyzed the common equity market value multiples of certain historical and
projected financial criteria (such as net income) and the enterprise value
multiples of certain historical financial criteria (such as revenues, EBITDA
and EBIT) as of April 22, 1999, the last trading day prior to the Board of
Directors meeting on April 23, 1999 (at which time the sale of the Company was
considered) and two trading days prior to the
17
<PAGE>
announcement of the sale of the Company. Net income for the selected companies
was based on research analysts' estimates published on First Call, a service
reporting equity analyst estimates.
The following table presents median multiples for equity value as a multiple
of net income for the calendar year ending December 31, 1999 and December 31,
2000 and enterprise value as a multiple of LTM revenue, EBITDA and EBIT
multiples.
<TABLE>
<CAPTION>
Median
Equity Value Multiples: Comparables
----------------------- -----------
<S> <C>
LTM Net Income.............................................. 7.1x
1999E Net Income............................................. 10.9x
2000E Net Income............................................. 10.3x
Enterprise Value Multiples:
---------------------------
LTM Revenue................................................. 0.46x
LTM EBITDA.................................................. 6.3x
LTM EBIT.................................................... 7.6x
</TABLE>
Because of the inherent differences between the businesses, operations,
financial conditions and prospects of the Company and the businesses,
operations, financial conditions and prospects of the companies included in the
comparable company group, Lehman Brothers believed that it was inappropriate
to, and therefore did not, rely solely on the quantitative results of the
analysis, and accordingly, also made qualitative judgments concerning
differences between the financial and operating characteristics of the Company
and companies in the comparable company group that would affect the public
trading values of the Company and such comparable companies.
Comparable Transaction Analysis. The comparable transaction analysis
provides a market benchmark based on the consideration paid in selected
comparable transactions. For this analysis, Lehman Brothers reviewed publicly
available information to determine the purchase prices and multiples paid in
certain transactions that were publicly announced in the machine tool
manufacturing industry involving target companies which were similar to the
Company in terms of business mix, product portfolio and/or markets served.
These transactions include UNOVA, Inc.'s acquisition of Cincinnati Milacron's
machine tool unit; Capitalmarket plc's acquisition of B. Elliott plc; Cooper
Industries, Inc.'s acquisition of Global Industrial Technologies' INTOOL
division; DLJ Merchant Banking Partners II's acquisition of Thermadyne Holdings
Corp.; and Thyssen AG's acquisition of Giddings & Lewis, Inc.
Lehman Brothers calculated the enterprise value of the selected relevant
transactions (calculated as the consideration offered for the common equity and
short- and long-term debt and subtracting the enterprise's cash and cash
equivalents), and applied it to certain historical financial criteria
(including revenue, EBITDA and EBIT) of the acquired business for the LTM
period. The most recent transaction in the machine tool manufacturing industry
which Lehman Brothers believed is most relevant to the sale of the Company is
UNOVA, Inc.'s acquisition of the machine tool unit of Cincinnati Milacron Inc.
The multiples of enterprise value to LTM revenue, EBITDA and EBIT for that
transaction were 0.38x, 7.0x and 11.6x, respectively. In comparison, the
comparable multiples for the sale of the Company were 0.36x, 7.4x and 12.0x,
respectively. In Lehman Brothers' judgment, the most relevant enterprise value
multiples for the machine tool manufacturing industry are EBITDA and EBIT given
the cyclicality of the machine tool manufacturing industry. The median ratios
of enterprise value to LTM EBITDA and EBIT for all selected machine tool
manufacturing industry transactions for the selected period were 8.0x and
11.2x, respectively.
Discounted Cash Flow Analysis. The discounted cash flow analysis provides a
net present valuation of management projections of the projected after-tax
unlevered free cash flows (defined as operating cash flow
18
<PAGE>
available after changes in working capital, capital spending, tax and other
operating requirements) based upon the Company's financial projections and
Lehman Brothers' estimates.
<TABLE>
<S> <C>
Base Case A scenario based on forecasts of the Company
management and Lehman Brothers reflecting the
cyclicality of sales growth and EBIT margins
based on the historical performance of the
Company
Conservative Case A scenario based on certain adjustments to the
Base Case forecasts; assumes lower sales growth
and lower EBIT margins than in the Base Case
Upside Case A scenario based on certain adjustments to Base
Case forecasts; assumes higher sales growth and
higher EBIT margins than in the Base Case
</TABLE>
Utilizing these three financial forecast scenarios, Lehman Brothers
calculated a range of present values for the Company using a range of after-tax
discount rates from 11% to 13% and a terminal value based upon a range of
multiples of estimated EBITDA in 2003 from 6.0x to 8.0x.
The following table presents the range of implied equity values per share of
Common Stock indicated by this analysis.
<TABLE>
<CAPTION>
Implied Equity Value Per
Share of the Common Stock
-------------------------
Low High
------------ -------------
<S> <C> <C>
Base Case....................................... $ 7.47 $ 10.01
Conservative Case............................... $ 4.97 $ 6.48
Upside Case..................................... $ 10.37 $ 14.12
</TABLE>
Lehman Brothers is an internationally recognized investment banking firm
and, as part of its investment banking activities, is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. The Board of Directors selected
Lehman Brothers because of its expertise, reputation and familiarity with the
Company and because its investment banking professionals have substantial
experience in transactions comparable to the sale of the Company.
As compensation for its services as financial advisor to the Company in
connection with the sale of the Company, the Company has paid to Lehman
Brothers a retainer of $50,000 and a fee of $250,000 upon delivery of its
fairness opinion and has agreed to pay Lehman Brothers a fee of 1.125% of the
total consideration (including the Company's total debt less cash and
marketable securities) involved in the sale of the Company upon closing of the
sale, from which the opinion fee will be deducted. In addition, the Company has
agreed to reimburse Lehman Brothers for reasonable out-of-pocket expenses
incurred in connection with, and to indemnify Lehman Brothers for certain
liabilities that may arise out of, its engagement by the Company and its
rendering of its opinion. Lehman Brothers has previously rendered investment
banking services to the Company and received customary fees for such services.
In the ordinary course of its business, Lehman Brothers may actively trade
in the equity securities of the Company for its own account and for the
accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities. Mr. Eliot Fried, a Managing Director of
Lehman Brothers, is a director of the Company. In addition, affiliates of
Lehman Brothers own approximately 639,935 shares of the Common Stock.
19
<PAGE>
Certain Federal Income Tax Consequences of the Merger
The following discussion describes certain United States federal income tax
consequences of the Merger. The discussion is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), existing and proposed Treasury
regulations promulgated thereunder, rulings, administrative pronouncements and
judicial decisions, changes to which could materially affect the tax
consequences described herein and could be made on a retroactive basis. This
discussion does not address all aspects of federal income taxation that may be
important to a stockholder based on such holder's particular circumstances and
does not address any aspect of state, local or foreign tax laws. This summary
generally considers only shares of Common Stock that are held as capital assets
(generally, assets held for investment) and may not apply to holders who
acquired Common Stock pursuant to the exercise of employee stock options or
other compensation arrangements with the Company, holders that are subject to
special tax treatment (such as broker-dealers, insurance companies, tax-exempt
organizations, financial institutions, and regulated investment companies),
holders that hold Common Stock as part of a "straddle", "hedge", or "conversion
transaction", or holders the functional currency of which is not the U.S.
dollar.
Consequences to Holders of Common Stock. A holder of Common Stock will
recognize gain or loss equal to the difference between the amount of cash
received in the Merger and the holder's adjusted tax basis in the shares of
Common Stock exchanged. Such gain or loss will generally be capital gain or
loss and will be long-term capital gain or loss if at the Effective Time (as
defined below) the holder has a holding period for the Common Stock of more
than one year.
Backup Withholding and Information Reporting. Payments of cash to a holder
surrendering shares of Common Stock will be subject to information reporting
and "backup" withholding at a rate of 31% of the cash payable to the holder,
unless the holder furnishes its taxpayer identification number in the manner
prescribed in applicable Treasury Regulations, certifies that such number is
correct, certifies as to no loss of exemption from backup withholding and meets
certain other conditions. Any amounts withheld from payments to a holder under
the backup withholding rules will be allowed as a refund or credit against the
holder's United States federal income tax liability, provided the required
information is furnished to the Internal Revenue Service.
The preceding discussion does not purport to be a complete analysis or
discussion of all potential tax effects relevant to the Merger. Thus,
stockholders are urged to consult their own tax advisors as to the specific tax
consequences to them of the Merger, including tax return reporting
requirements, the applicability and effect of federal, state, local and other
applicable tax laws and the effect of any proposed changes in the tax laws.
Accounting Treatment of the Merger
The Merger will be accounted for by Goldman as a purchase for financial
reporting purposes.
Regulatory Filings and Approvals
Antitrust. Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and the rules promulgated thereunder by the Federal
Trade Commission (the "FTC"), the Merger cannot be consummated until
notifications have been given and certain information has been furnished to the
FTC and the Antitrust Division of the Department of Justice (the "Antitrust
Division") and specified waiting period requirements have been satisfied. Each
of the Company and Goldman filed notification and report forms under the HSR
Act with the FTC and the Antitrust Division on May 6, 1999. Early termination
of the waiting period was granted on May 24, 1999.
At any time before or after consummation of the Merger, the Antitrust
Division or the FTC or any state could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the consummation of the Merger or seeking divestiture of
substantial assets of the
20
<PAGE>
Company or Goldman. Private parties may also seek to take legal action under
the antitrust laws under certain circumstances.
There can be no assurance that the required regulatory approvals described
above will be received or, if received, the timing and the terms and conditions
thereof.
Financing Commitments
Goldman has obtained a commitment from Fleet Capital Corporation ("Fleet")
to establish a secured credit facility for up to $120,000,000 (the "Fleet
Commitment") for the purpose of funding Goldman's purchase of the outstanding
shares of Common Stock to be acquired in the Merger, refinancing the existing
debt of the Company and the existing debt of Goldman's subsidiaries and
providing working capital. The Fleet Commitment consists of a secured revolving
credit facility for up to $90,000,000 and a secured term loan in the amount of
$30,000,000. Goldman, its subsidiaries and the Company and its subsidiaries
would be co-borrowers under this facility. The Fleet Commitment is subject to
customary conditions, including no material adverse change in the conditions or
operations, financial or otherwise, of Goldman, the Company or their respective
subsidiaries.
Goldman has also obtained the commitment of ING (U.S.) Capital LLC ("ING")
to provide secured bridge financing in an aggregate principal amount up to
$30,000,000 (the "ING Commitment") for the purpose of funding Goldman's
purchase of the outstanding shares of Common Stock to be acquired in the
Merger, financing the payment of fees and expenses payable in connection with
the Merger and repaying certain existing indebtedness of Goldman's subsidiaries
and the Company. Goldman would be the borrower under this bridge facility. The
ING Commitment is subject to customary conditions, including no material
adverse change in the condition, financial or otherwise, business, operations
or assets of Goldman, certain of its subsidiaries or the Company.
The Fleet Commitment and the ING Commitment are collectively referred to in
this proxy statement as the "Commitments".
Goldman delivered to the Company copies of the letters from Fleet and ING
evidencing the Commitments and represented to the Company in the Merger
Agreement that, upon receipt of the funds available under the Commitments, it
would have sufficient funds to pay the aggregate Merger Consideration.
Goldman's obligation to consummate the Merger is not subject to any financing
condition.
Management, Operations and Ownership Structure Following the Merger
Following the Merger, the Company will continue its operations as a wholly
owned indirect subsidiary of Goldman. The directors of Merger Sub will become
the directors of the Company. At the Effective Time, Joseph E. Clancy, Chairman
of the Board of Directors, and Dan L. Griffith, President and Chief Executive
Officer of the Company, will be terminated without cause.
Appraisal Rights
Under the DGCL, stockholders are entitled to appraisal rights in connection
with the Merger. Any holder of record of Common Stock that objects to the
Merger (a "Dissenting Stockholder") may elect to have his or her shares of
Common Stock appraised under the procedures of the DGCL and to be paid the
appraised value of his or her shares. The appraised value of the shares will
not include any value arising from the Merger but may include a fair rate of
interest. It is possible that the fair value determined may be more or less
than the Merger Consideration.
Any stockholder who is considering exercising his or her appraisal rights is
urged to review carefully the provisions of Section 262 of the DGCL ("Section
262"), a copy of which is attached as Appendix F to this proxy statement,
particularly with respect to the procedural steps required to perfect the right
of appraisal. The
21
<PAGE>
right of appraisal may be lost if the procedural requirements of Section 262
are not followed exactly. The following is a summary of the procedures relating
to exercise of the right of appraisal, which should be read in conjunction with
the full text of Section 262.
Under Section 262, the Company is required to notify each stockholder
entitled to appraisal rights at least 20 days prior to the Special Meeting that
such appraisal rights are available. The notice must include a copy of Section
262. This proxy statement constitutes such notice to the stockholders.
A stockholder electing to exercise his or her appraisal rights under Section
262 must deliver to the Company a written demand for appraisal before the vote
is taken at the Special Meeting. The written demand must identify the
stockholder and state that the stockholder intends to demand appraisal of his
or her shares of Common Stock. A vote against the adoption of the Merger
Agreement or an abstention will not constitute a demand for appraisal. A
stockholder electing to take any of those actions must do so by a separate
written demand to the Company. Demands should be mailed or delivered to
Bridgeport Machines, Inc., 500 Lindley Street, Bridgeport, Connecticut, 06606,
Attention: Secretary. Within 10 calendar days after the Effective Time, the
Company will notify each stockholder who has made a proper written demand for
appraisal and who has not voted for the adoption of the Merger Agreement that
the Merger has been completed. A vote "FOR" the adoption of the Merger
Agreement will have the effect of waiving all appraisal rights.
Within 120 calendar days after the Effective Time, the Company or any
stockholder who has complied with the foregoing notice requirement and the
other requirements of Section 262 may file a petition in the Delaware Court of
Chancery (the "Court") demanding a determination of the fair value of his or
her shares of Common Stock. The Company has no obligation to file a petition
and does not currently intend to do so. As a result, any Dissenting Stockholder
who wishes to file a petition is advised to do so on a timely basis. If a
petition for appraisal is not filed during the 120-day period, all appraisal
rights relating to the Common Stock will terminate. Any stockholder may
withdraw a demand for appraisal at any time within 60 calendar days after the
Effective Time (or thereafter with the written consent of the Company).
If a stockholder either withdraws his or her demand for appraisal or has his
or her appraisal rights terminated as described above, the stockholder will
only be entitled to receive the Merger Consideration for his or her shares of
Common Stock as provided under the terms of the Merger Agreement.
Within 120 calendar days after the Effective Time, any stockholder who has
complied with the above-described notice requirements and the other
requirements of Section 262 may request in writing a list of the aggregate
number of shares of Common Stock for which demands for appraisal have been made
and the aggregate number of holders demanding appraisal rights.
If a petition is filed by a Dissenting Stockholder, the Company will receive
notice from the Court of such filing. Within 20 calendar days after the Company
receives notice from the Court, the Company must file with the office of the
Register in Chancery in which the petition was filed, a list containing the
names and addresses of all stockholders who have demanded appraisal rights and
the names of all stockholders who have disagreements with the Company regarding
the value of their shares of Common Stock. If a petition is filed by the
Company, the petition will be accompanied by a similar list. If ordered by the
Court, the Register in Chancery will give notice of the time and place of the
hearing by registered or certified mail to the Company and to each stockholder
shown on the list. The notice will also be given by publishing the notice in a
newspaper of general circulation published in Wilmington, Delaware (or any
other location the Court may determine), at least one week before the hearing.
The forms of the notices to be used will be approved by the Court, and all
costs related to the distribution of the notices will be paid by the Company.
After the Court determines which of the stockholders are entitled to an
appraisal under Section 262, the Court will appraise the shares of the Common
Stock. Following determination by the Court of the fair value of the shares,
the Company will pay all Dissenting Stockholders the appraised value of their
shares, together with interest, if any, upon surrender to the Company of their
certificates representing the Common Stock. The costs
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<PAGE>
of the appraisal proceeding may be determined by the Court and charged to the
parties as the Court deems equitable in the circumstances. Upon application of
a Dissenting Stockholder, the Court may order all or a portion of the expenses
incurred by any Dissenting Stockholder in connection with the appraisal
proceeding, including reasonable attorneys' fees and the fees and expenses of
experts, to be charged pro rata against the value of all of the shares entitled
to an appraisal.
After the Effective Time, no stockholder who has demanded his or her
appraisal rights as set forth above will be entitled to vote his or her shares
for any purpose or to receive payment of dividends or other distributions on
his shares (except dividends or other distributions payable to stockholders of
record at a date prior to the Effective Time).
Public Trading Market
The Common Stock is currently traded on the Nasdaq National Market under the
trading symbol "BPTM". Upon consummation of the Merger, the Common Stock will
no longer be traded on the Nasdaq National Market and will be deregistered
under the Exchange Act.
THE MERGER AGREEMENT
The following describes certain aspects of the proposed Merger, including
material provisions of the Merger Agreement. The following description of the
Merger does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, which is attached as Appendix A to this
proxy statement and is incorporated herein by reference. Holders of Common
Stock are urged to read the Merger Agreement carefully. Capitalized terms used
in this section or elsewhere in this proxy statement but not defined in this
proxy statement have the meanings attributed to them in the Merger Agreement.
General; Merger Consideration
The terms of the Merger are set forth in the Merger Agreement. The Merger
Agreement was approved by the Board of Directors and signed by the Company,
Goldman and Merger Sub on April 23, 1999. Pursuant to the Merger Agreement, and
on the terms and conditions set forth therein, at the Effective Time, Merger
Sub will be merged with and into the Company, and the Company will be the
surviving corporation (the "Surviving Corporation"). As a result of the Merger,
each share of Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares owned by the Company, Goldman, Merger Sub or
any subsidiary thereof or shares with respect to which the holders have
perfected appraisal rights under the DGCL (collectively, the "Excluded
Shares")) will be converted into the right to receive $10.00 in cash, without
interest (the "Merger Consideration").
Dissenting Shares
In the Merger, stockholders have appraisal rights under Section 262 of the
DGCL. If a stockholder exercises his or her appraisal rights and complies with
the requirements of Section 262, the shares of Common Stock owned by the
Dissenting Stockholder will not be converted into the right to receive the
Merger Consideration at the Effective Time. Instead, such Dissenting
Stockholder will receive the appraisal value of his or her shares of Common
Stock (the "Dissenting Shares"). If after the Effective Time, the Dissenting
Stockholder fails to comply with the requirements of Section 262, the
Dissenting Shares of such Dissenting Stockholder will be treated as shares of
Common Stock and will be converted into the right to receive the Merger
Consideration. At the Effective Time, a Dissenting Stockholder will not have
any rights (including voting rights and rights to dividends or distributions)
with respect to his or her Dissenting Shares other than rights provided by
Section 262. For a summary of the requirements that a stockholder must follow
in order to exercise his or her appraisal rights, see "The Merger--Appraisal
Rights".
23
<PAGE>
Treatment of Stock Options
The Company will use its reasonable efforts to provide for the return and
cancellation of each outstanding option to acquire Common Stock (an "Option")
in exchange for an amount in cash equal to the product of (A) the excess, if
any, of $10.00 over the exercise price of each such Option and (B) the number
of shares subject to the Option. Substantially all of the Options outstanding
have exercise prices in excess of $10.00 per share.
Closing; Effective Time
The closing of the Merger (the "Closing") will take place by the third
business day following the satisfaction or waiver of the conditions to the
Merger set forth in the Merger Agreement, unless otherwise agreed by the
parties. Concurrently with the Closing, the Company, Goldman and Merger Sub
will cause a Certificate of Merger to be executed, acknowledged and filed with
the Secretary of State of the State of Delaware. The Merger will become
effective at the time the Certificate of Merger is duly filed with the
Secretary or at such later time agreed by the parties (the "Effective Time").
See "--Conditions to the Proposed Merger" and "The Merger--Regulatory Filings
and Approvals".
Cancellation of Shares
At the Effective Time, all shares of Common Stock will no longer be
outstanding and will be canceled and retired and will cease to exist, and each
certificate (a "Certificate") formerly representing any of such shares (other
than Excluded Shares) will thereafter represent only the right to receive the
Merger Consideration.
Exchange of Certificates
Prior to the Effective Time, Goldman will designate a bank, trust company or
other Person reasonably acceptable to the Company to act as agent (the "Paying
Agent") for the benefit of the holders of shares of Common Stock to receive the
funds to which holders of shares of Common Stock become entitled upon surrender
of their Certificates. Upon surrender of a Certificate to the Paying Agent
together with a signed letter of transmittal, duly executed, Goldman will cause
the Paying Agent to pay to the holder of such Certificate in exchange therefor
the Merger Consideration for each share formerly represented by such
Certificate and the Certificate surrendered will then be canceled. No interest
will be paid or accrued on any amount payable upon due surrender of a
Certificate.
Transfers
At the Effective Time, the stock transfer books of the Company will be
closed and thereafter there will be no further registration of transfers of
shares of Common Stock on the records of the Company.
Lost, Stolen or Destroyed Certificates
In the event any Certificate is lost, stolen or destroyed, upon the making
of an affidavit of that fact by the stockholder claiming such Certificate to be
lost, stolen or destroyed and, if required by the Surviving Corporation or
Goldman, the posting by such stockholder of a bond in customary amount as
indemnity against any claim that may be made against it with respect to such
Certificate, the Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate the applicable Merger Consideration such stockholder is
entitled to receive pursuant to the Merger Agreement.
Representations and Warranties
Mutual Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties relating to and including, among
other things: (a) organization and similar corporate matters and subsidiaries;
(b) authorization, execution, delivery, performance and enforceability of the
Merger
24
<PAGE>
Agreement and related matters; (c) conflicts with governing documents or law;
(d) required consents or approvals; (e) information supplied in this proxy
statement; and (f) brokers.
Additional Representations and Warranties of Goldman. Goldman has
additionally represented and warranted, among other things, that it has
obtained the Commitments sufficient to fund the payment of the Merger
Consideration for the shares of Common Stock to be acquired pursuant to the
Merger.
Additional Representations and Warranties of the Company. The Company has
made additional representations and warranties relating to, among other things:
(a) capitalization; (b) its filings with the Securities and Exchange
Commission; (c) the absence of certain changes or events; (d) litigation; (e)
retirement and other employee plans and matters relating to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") and the absence of
changes thereto; (f) the filing of tax returns and other tax matters; (g) non-
deductible payments triggered by the Merger; (h) compliance with applicable
laws, including environmental regulations; (i) ownership of intellectual
property; (j) owned and lease real property; (k) contracts and commitments; (l)
labor relations; (m) claims against the Company for products liability; (n)
transactions with affiliates; (o) compliance with Section 203 of the DGCL; (p)
approval by stockholders; (q) the opinion of Lehman Brothers; (r) the
sufficiency of the disclosure in the disclosure schedules to the Merger
Agreement; and (s) Year 2000 compliance.
Conduct of Business Prior to the Merger
The Company has agreed as to itself and, where indicated, each of its
Subsidiaries, that after the date of the Merger Agreement and prior to the
Effective Time (except as expressly provided in the Merger Agreement or as
Goldman otherwise agrees in writing) that:
(a)it and its Subsidiaries will conduct their respective businesses in
the ordinary course;
(b)it and its Subsidiaries will use all reasonable best efforts
consistent with good business judgment to preserve their business
organizations intact, to keep available the services of their current
officers and key employees and to preserve their relationships
consistent with past practice with desirable customers, suppliers,
licensors, licensees, distributors and other persons with which the
Company or its Subsidiaries has business dealings so as to maintain
their goodwill and ongoing businesses;
(c)neither it nor its Subsidiaries will amend or modify the Certificate
of Incorporation, By-laws or similar organizational documents;
(d)neither it nor its Subsidiaries will declare, set aside or pay any
dividend or other distribution payable in cash, stock or property in
respect of any capital stock, with the exception of the declaration
and payment of dividends or the making of other advances by a wholly
owned Subsidiary to its parent or the Company;
(e)neither it nor its Subsidiaries will redeem, purchase or otherwise
acquire directly or indirectly any shares of the Company's capital
stock or that of its Subsidiaries;
(f)neither it nor its Subsidiaries will issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into
or exchangeable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of capital stock of any
class of the Company or its Subsidiaries, other than the issuance of
shares of Common Stock upon the exercise of Options outstanding as of
the date of the Merger Agreement;
(g)neither it nor its Subsidiaries will split, combine or reclassify the
outstanding shares of the capital stock of the Company or that of any
of its Subsidiaries;
(h)neither it nor its Subsidiaries will acquire or agree to acquire (A)
by merging or consolidating with, or by repurchasing a substantial
portion of the assets of or by any other manner, any
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business or any corporation or other entity, or (B) any assets,
including real estate, except purchases in the ordinary course of
business consistent with past practice and capital expenditures
permitted by the Merger Agreement;
(i) neither it nor its Subsidiaries will make any new capital expenditure
or expenditures in an aggregate amount exceeding $550,000 and which
are set forth in the disclosure schedules to the Merger Agreement;
(j) neither it nor its Subsidiaries will, except in the ordinary course
of business and as otherwise permitted by the Merger Agreement, amend
or terminate any contract or agreement where such amendment or
termination would have a Material Adverse Effect on the Company, or
waive, release or assign any material rights or claims;
(k) neither it nor its Subsidiaries will transfer, lease, license, sell,
mortgage, pledge, dispose of or encumber any material property or
assets other than sales of sales of products to customers in the
ordinary course of business consistent with past practice;
(l) neither it nor its Subsidiaries will (A) enter into any employment or
severance agreement with or grant any severance or termination pay to
any officer, director or key employee, or (B) hire or agree to hire
any new or additional key employees or officer, except to fill vacant
positions specified in the disclosure schedules to the Merger
Agreement;
(m) neither it nor any of its Subsidiaries will make any changes to its
Benefit Plans;
(n) neither it nor its Subsidiaries will (A) incur or assume any long-
term indebtedness or, except in the ordinary course of business,
incur or assume any short-term indebtedness (including advances under
the Company's existing revolving credit facility) in amounts not
consistent with past practice, (B) incur or modify any material
indebtedness or other liability, except as set forth in the
disclosure schedules to the Merger Agreement, or (C) assume,
guarantee, endorse or otherwise become liable or responsible for the
obligations of any other Person;
(o) neither it nor its Subsidiaries will make any loans, advances or
capital contributions to, or investments in, any other Person other
than to wholly owned Subsidiaries of the Company or to the entities
listed on the disclosure schedules to the Merger Agreement or
customary loans or advances to employees or customers in the ordinary
course of business in accordance with past practice;
(p) neither it nor its Subsidiaries will enter into any material
commitment or transaction unless it is in the ordinary course of
business consistent with past practice and not specifically
prohibited under the Merger Agreement;
(q) neither it nor its Subsidiaries will change its accounting principles
except as required by GAAP or the SEC;
(r) neither it nor its Subsidiaries will make any tax election, unless
required by law, or settle or compromise any material tax liability;
(s) neither it nor any of its Subsidiaries will pay, discharge or
otherwise satisfy any claims, liabilities or obligations other than
(A) in the ordinary course of business consistent with past practice,
(B) in connection with the transactions contemplated by the Merger
Agreement, (C) which, in the aggregate, do not exceed $100,000, and
(D) which are reflected, or reserved against in, or contemplated by,
the consolidated financial statements of the Company and its
Subsidiaries and which, in the aggregate, do not exceed $100,000;
(t) neither it nor any of its Subsidiaries will, except in the ordinary
course of business consistent with past practice, waive the benefits
of, or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which the Company or any of its Subsidiaries
is a party; and
(u) neither it nor its Subsidiaries will authorize or enter into any
agreement to take any of the foregoing actions.
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Agreement Not to Solicit Other Offers
The Company agreed that it will not, nor will it permit any of its
Subsidiaries to, nor will it authorize (and it will use its reasonable efforts
not to permit) any officer, director or employee of, or any investment banker,
attorney or other advisor or representative of, the Company or any of its
Subsidiaries to, (i) solicit or initiate, or encourage, directly or indirectly,
the submission of, any Takeover Proposal (as defined below), (ii) participate
in any discussions or negotiations regarding, or furnish to any Person any
information or data with respect to, or take any other action to knowingly
facilitate the making of any proposal that constitutes, or may reasonably be
expected to lead to, any Takeover Proposal or (iii) enter into any agreement
with respect to any Takeover Proposal or approve or resolve to approve any
Takeover Proposal. However, the Company and the Board of Directors are not
prohibited from (i) taking and disclosing to the Company's stockholders a
position with respect to a tender or exchange offer by a third party pursuant
to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or (ii) making
such disclosure to the Company's stockholders as, in the good faith judgment of
the Company's Board of Directors, after receiving advice from outside counsel,
is required under applicable law, provided that the Company may not, except as
permitted by the Merger Agreement, withdraw or modify, or propose to withdraw
or modify, its position with respect to the Merger or approve or recommend, or
propose to approve or recommend, any Takeover Proposal, or enter into any
agreement with respect to any Takeover Proposal.
Upon execution of the Merger Agreement, the Company agreed to immediately
cease any existing activities, discussions or negotiations with any parties
conducted with respect to any Takeover Proposal. Notwithstanding the foregoing,
prior to the Effective Time, the Company may furnish information concerning its
business, properties or assets to any Person or group pursuant to
confidentiality agreements with terms and conditions similar to the
confidentiality agreement, dated as of January 19, 1999 (the "Confidentiality
Agreement"), between the Company and Goldman, and may negotiate and participate
in discussions and negotiations with such Person or group concerning a Takeover
Proposal if (A) the Board of Directors determines in good faith, after
receiving advice from its financial advisor, that such Person or group has
submitted to the Company a Takeover Proposal which is reasonably likely to be a
Superior Proposal; and (B) the Board of Directors determines in good faith,
based upon advice of its outside legal counsel, that the failure to participate
in such discussions or negotiations or to furnish such information is
reasonably likely to result in a breach of such Board's fiduciary duties under,
or otherwise violate, applicable law.
The Company has agreed to promptly notify Goldman of the existence of any
proposal, discussion, negotiation or inquiry received by the Company and
immediately communicate to Goldman the terms of any proposal, discussion,
negotiation or inquiry which it may receive (and promptly provide to Goldman
copies of any written materials received by the Company in connection with such
proposal, discussion, negotiation or inquiry) and the identity of the party
making such proposal or inquiry or engaging in such discussion or negotiation,
except to the extent that the Board of Directors determines in good faith,
based upon advice of its outside legal counsel, that any such action described
in this sentence would be reasonably likely to result in a breach of such
Board's fiduciary duties under, or otherwise violate, applicable law. The
Company is to promptly provide to Goldman any non-public information concerning
the Company provided to any other Person which was not previously provided to
Goldman. The Company will keep Goldman fully informed of the status and details
(including amendments or proposed amendments) to any such Takeover Proposal,
except to the extent that the Board of Directors determines in good faith,
based upon advice of its outside legal counsel, that any such action would be
reasonably likely to result in a breach of such Board's fiduciary duties under,
or otherwise violate, applicable Law.
For purposes of the Merger Agreement, "Takeover Proposal" means any bona
fide proposal or offer, whether in writing or otherwise, from any Person other
than Goldman, Merger Sub or any affiliates thereof (a "Third Party") to acquire
beneficial ownership (as defined under Rule 13(d) of the Exchange Act) of all
or a material portion of the assets of the Company and its Subsidiaries, taken
as a whole, or 50% or more of any class of equity securities of the Company
pursuant to a merger, consolidation or other business combination, sale of
shares of capital stock, sale of assets, tender offer, exchange offer or
similar transaction with respect to
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the Company, including any single or multi-step transaction or series of
related transactions, which is structured to permit such Third Party to acquire
beneficial ownership of any material portion of the assets of the Company and
its Subsidiaries, taken as a whole, or 50% or more of the equity interest in
the Company.
For purposes of the Merger Agreement, "Superior Proposal" means an
unsolicited bona fide proposal by a Third Party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than a
majority of the Shares then outstanding or all or substantially all of the
assets of the Company, and otherwise on terms (i) which the Board of Directors
determines in good faith to be more favorable to the Company's stockholders by
more than 110% than the Merger, (ii) based on advice of the Company's
independent financial advisor, for which financing, to the extent required, is
then committed or which, in the good faith reasonable judgment of the Board of
Directors, based on advice from the Company's independent financial advisor, is
reasonably capable of being financed by such Third Party, and (iii) which, in
the good faith reasonable judgment of the Board of Directors, is reasonably
capable of being consummated within a period of time not materially longer in
duration than the period of time reasonably believed to be necessary to
consummate the Merger.
Board Recommendations
In connection with the Merger and Special Meeting, the Board of Directors
agreed to recommend to the holders of the Common Stock to vote in favor of the
Merger and use all commercially reasonable efforts to obtain the necessary
approvals by the holders of the Common Stock of the Merger Agreement, subject
to fiduciary obligations under applicable law. Neither the Board of Directors
nor any committee thereof shall (i) withdraw or modify, or propose to withdraw
or modify, in a manner adverse to Goldman or Merger Sub, the approval or
recommendation by the Board of Directors or any such committee of the Merger
Agreement or the Merger, (ii) approve or recommend, or propose to approve or
recommend, any Takeover Proposal or (iii) enter into any agreement with respect
to any Takeover Proposal. Notwithstanding the foregoing, prior to the Effective
Time, the Board of Directors may withdraw or modify its approval or
recommendation of the Merger Agreement or the Merger, approve or recommend a
Superior Proposal, or enter into an agreement with respect to a Superior
Proposal, in each case at any time after the fifth business day following
Goldman's receipt of written notice from the Company advising Goldman that the
Board of Directors has received a Superior Proposal which it intends to accept,
specifying the material terms and conditions of such Superior Proposal,
identifying the person making such Superior Proposal.
Certain Other Covenants and Agreements
Access to Information; Confidentiality. The Merger Agreement provides that,
upon reasonable notice, the Company will (and will cause each of its
Subsidiaries to) afford to the Representatives of Goldman, including the
Persons providing the Commitments, reasonable access, during normal business
hours during the period after the date of the Merger Agreement and prior to the
Effective Time, to such of its properties, personnel, books, contracts,
commitments and records as Goldman may reasonably request. During that period,
the Company will (and will cause each of its Subsidiaries to) furnish promptly
to Goldman (A) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of Federal or state securities Laws, and (B) all other information
concerning its business, properties and personnel as Goldman may reasonably
request. Neither Goldman, its Representatives, nor any Person providing the
commitment has the right to conduct any environmental boring, sampling,
testing, or a Phase II review at any of the properties of the Company or its
Subsidiaries provided that such restriction shall not limit Goldman's right to
conduct any environmental investigation with respect to events occurring after
the date of the Merger Agreement. Goldman will remain bound by the terms of the
Confidentiality Agreement and the Company will remain bound by the terms of a
confidentiality agreement with Goldman dated as of April 20, 1999.
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Notification of Certain Matters. The Merger Agreement provides that each of
the Company, Goldman and Merger Sub will give prompt notice to the other of (i)
any of their representations or warranties contained in the Merger Agreement
becoming untrue or inaccurate in any respect (including in the case of
representations or warranties receiving knowledge of any fact, event or
circumstance which may cause any representation qualified as to the knowledge
to be or become untrue or inaccurate in any respect) or (ii) the failure by
them to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by them under the Merger
Agreement. However, such notification shall not affect the representations,
warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties under the Merger Agreement.
Reasonable Efforts. Upon the terms and subject to the conditions set forth
in the Merger Agreement, each of the parties has agreed to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement. These things include (i) the obtaining of
all necessary actions or non-actions, waivers, consents and approvals from any
Governmental Entity and the making of all necessary registrations and filings
(including filings with any Governmental Entity, if any) and the taking of all
reasonable steps as may be necessary to obtain an approval or waiver from, or
to avoid an action or proceeding by any Governmental Entity, (ii) the obtaining
of all necessary consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging the Merger Agreement or the consummation of any of
the transactions contemplated by the Merger Agreement, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (iv) the execution and delivery of
any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, the Merger Agreement.
However, in connection with any filing or submission or other action required
to be made or taken by any party to effect the Merger and all other
transactions contemplated by the Merger Agreement, the Company may not, without
the prior written consent of Goldman, commit to any divestiture transaction and
Goldman shall not be required to divest or hold separate or otherwise take or
commence to take any action that, in the reasonable discretion of Goldman,
limits in any material respect its freedom of action with respect to, or its
ability to retain, the Company or any of its affiliates or any material portion
of the assets of the Company. In connection with and without limiting the
foregoing, the Company and the Board of Directors are to (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, the Merger Agreement or any
of the other Transactions contemplated by the Merger Agreement and (ii) if any
state takeover statute or similar statute or regulation becomes applicable to
the Merger or the Merger Agreement or any other transaction contemplated by the
Merger Agreement, take all action necessary to ensure that the Merger 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,
the Merger Agreement and the other transactions contemplated by the Merger
Agreement.
Financing. Between the date of the Merger Agreement and the consummation of
the Merger, the Company agreed to cooperate, and to cause its Representatives
to cooperate, in connection with the efforts of Goldman and Merger Sub to
obtain the financing necessary to consummate the transactions contemplated by
the Merger Agreement. However, the Company is not required to pay any fees or
other costs with respect to that financing prior to the consummation of the
Merger, and any agreements which the Company may enter into prior to the
consummation of the Merger relating to the obtaining of that financing must be
conditioned upon the occurrence of the consummation of the Merger.
Indemnification of Directors and Officers; Directors and Officers'
Insurance. The Certificate of Incorporation and By-laws of the Surviving
Corporation are to contain the provisions with respect to indemnification and
exculpation set forth in the Certificate of Incorporation and By-laws of the
Company. These provisions may not be amended, repealed or otherwise modified in
any manner that would adversely
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affect the rights thereunder of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required by Law.
The Company agreed, to the fullest extent permitted under applicable Law or
under the Company's Certificate of Incorporation or By-laws and regardless of
whether the Merger becomes effective, to indemnify and hold harmless, and,
after the Effective Time, Goldman or the Surviving Corporation will, to the
fullest extent permitted under applicable Law or under the Surviving
Corporation's Certificate of Incorporation or By-laws, indemnify and hold
harmless, each present and former director, officer or employee of the Company
or any of its Subsidiaries (collectively, the "Indemnified Parties") against
any costs or expenses (including attorneys' fees), judgments, fines, losses,
claims, damages and liabilities incurred in connection with, and amounts paid
in settlement of, any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative and wherever asserted, brought
or filed, (x) arising out of or pertaining to the Transactions or (y) otherwise
with respect to any acts or omissions or alleged acts or omissions occurring at
or prior to the Effective Time, to the same extent as provided in the
respective Certificate of Incorporation or By-laws of the Company or its
Subsidiaries as in effect on the date of the Merger Agreement. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time must be reasonably
satisfactory to the Surviving Corporation, (ii) after the Effective Time,
Goldman or the Surviving Corporation will pay the reasonable fees and expenses
of such counsel, promptly after statements therefor are received, and (iii)
Goldman or the Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that Goldman or the Surviving Corporation shall not
be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld or delayed). The Indemnified Parties
as a group may retain only one law firm to represent them with respect to any
single action unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties. The indemnity agreements of Goldman and the
Surviving Corporation will extend, on the same terms to, and shall inure to the
benefit of and shall be enforceable by, each person or entity who controls, or
in the past controlled, any present or former director, officer or employee of
the Company or any of its Subsidiaries.
For a period of six years after the Effective Time, Goldman will cause the
Surviving Corporation to maintain in effect, if available, directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy on terms
(including the amounts of coverage and the amounts of deductibles, if any) that
are comparable to the terms now applicable to directors and officers of Goldman
or, if more favorable to the Company's directors and officers, the terms now
applicable to them under the Company's current policies. However, in no event
will Goldman or the Surviving Corporation be required to expend in excess of
150% of the annual premium currently paid by the Company for such coverage, and
if the premium for such coverage exceeds such amount, Goldman or the Surviving
Corporation must purchase a policy with the greatest coverage available for
such 150% of the annual premium.
Conditions to the Proposed Merger
Mutual Conditions. The obligation of each of the Company, Goldman and Merger
Sub to effect and consummate the Merger is conditioned on the following:
(a)the approval and adoption of the Merger Agreement by the requisite
vote of the holders of Common Stock as is required by applicable law,
the Company's Certificate of Incorporation and its By-laws;
(b)the expiration or termination of the waiting period applicable to the
consummation of the Merger under the HSR Act; and
(c)no Governmental Entity having enacted, promulgated or issued any
statute, rule, regulation, order, decree or injunction precluding,
restraining, enjoining or prohibiting consummation of the Merger.
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Additional Conditions to the Obligation of Goldman and Merger Sub. In
addition, the obligation of Goldman and Merger Sub to effect and consummate the
Merger under the Merger Agreement is subject to the following additional
conditions:
(a)the representations and warranties of the Company which are qualified
as to materiality shall be true and correct when made on the date of
the Merger Agreement and shall be true and correct as of the Effective
Time as if made as of the Effective Time, except for those
representations and warranties which are qualified as to materiality
and are made as of a specific date, which shall be true and correct as
of such date; the other representations and warranties of the Company
which are not so qualified as to materiality shall be true and correct
in all material respects when made on the date of the Merger Agreement
and shall be true and correct in all material respects as of the
Effective Time as if made as of the Effective Time, except for those
representations and warranties which are not so qualified as to
materiality and are made as of a specific date, which shall be true
and correct in all material respects as of such date; provided,
however, that the representations and warranties of the Company as to
the operation of its business in the ordinary course and the absence
of any Material Adverse Change in the Company shall not be deemed to
be untrue or incorrect in any material respect (i) if the financial
performance of the Company with regard to the revenues, results of
operations or other financial performance of the Company are
materially consistent with the forecasts previously furnished by the
Company to Goldman, (ii) if the Company or its Subsidiaries lose on a
net basis the services of less than 50 salaried employees or 50 hourly
employees, or (iii) by reason of any matter arising out of the
Company's relationship with Industrias Romi S.A.;
(b)the Company shall have performed or complied in all material respects
with its agreements and covenants required to be performed or complied
with under the Merger Agreement as of or prior to the Effective Time;
(c)the Company shall have delivered to Goldman and Merger Sub a
certificate of its President and Chief Executive Officer to the effect
that certain conditions in the Merger Agreement have been satisfied in
all respects;
(d)(i) the Company shall have obtained all of the waivers, permits,
consents, approvals or other authorizations of Governmental Entities
necessary to be obtained by it to consummate the Merger, and effected
all registrations, filings and notices with respect to Governmental
Entities necessary to be effected by it to consummate the Merger, and
(ii) at least ten days prior to the Closing, the Company shall have
delivered to Goldman a draft Form III and an Environmental Conditions
Assessment Form (an "ECAF") or such other required filing under the
Connecticut Transfer Act, Conn. Gen. Stat. (S)(S) 22a-134 et seq. (the
"Connecticut Transfer Act"); at the Closing, the Company shall have
delivered to Goldman an executed Form III and ECAF or such other
required filing under the Connecticut Transfer Act for filing by the
Surviving Corporation following the Effective Date;
(e)the Company shall have obtained and delivered to Goldman and Merger
Sub copies of all consents, agreements or other evidence of
cancellation from the holders of all outstanding Options;
(f)no action, suit or proceeding shall be pending or threatened in
writing before any Governmental Entity which is reasonably likely to
(i) prevent consummation of any of the transactions contemplated by
the Merger Agreement, (ii) cause any of the transactions contemplated
by the Merger Agreement to be rescinded following consummation or
(iii) affect materially and adversely the right of Goldman to own,
operate or control any of the assets and operations of the Surviving
Corporation following the Merger, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
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(g)from the date of the Merger Agreement to the Effective Time, there
shall not have been any event or development which results in a
Material Adverse Effect on the Company, nor shall there have occurred
any event or development which is reasonably likely to result in a
Material Adverse Effect on the Company; there shall not be deemed to
have been any Material Adverse Effect on the Company (i) if the
financial performance of the Company with regard to revenues, results
of operations or other financial performance of the Company are
materially consistent with the forecasts previously furnished by the
Company to Goldman; (ii) if the Company or its Subsidiaries lose on a
net basis the services of less than 50 salaried employees or 50 hourly
employees; or (iii) by reason of any matter arising out of the
Company's relationship with Industrias Romi S.A.;
(h)Goldman and Merger Sub shall have received from Willkie Farr &
Gallagher, or other counsel to the Company reasonably acceptable to
Goldman, an opinion with respect to certain matters, addressed to
Goldman and Merger Sub and dated as of the Closing Date; and
(i)the Textron Confirmation Letter (as defined below) shall be in full
force and effect as of the Effective Time.
Additional Conditions to the Obligation of the Company. In addition, the
obligation of the Company to effect and consummate the Merger under the Merger
Agreement are subject to the following additional conditions:
(a)the representations and warranties of Goldman and Merger Sub which are
qualified as to materiality shall be true and correct when made on the
date of the Merger Agreement and shall be true and correct as of the
Effective Time as if made as of the Effective Time, except for
representations and warranties which are so qualified as to
materiality and are made as of a specific date, which shall be true
and correct as of such date; the other representations and warranties
of Goldman and Merger Sub which are not so qualified as to materiality
shall be true and correct in all material respects when made on the
date of the Merger Agreement and shall be true and correct in all
material respects as of the Effective Time as if made as of the
Effective Time, except for those representations and warranties which
are not so qualified as to materiality and are made as of a specific
date, which shall be true and correct in all material respects as of
such date;
(b)each of Goldman and Merger Sub shall have performed or complied in all
material respects with its agreements and covenants required to be
performed or complied with under the Merger Agreement as of or prior
to the Effective Time;
(c)each of Goldman and Merger Sub shall have delivered to the Company a
certificate of its President and Chief Financial Officer to the effect
that certain conditions in the Merger Agreement have been satisfied in
all respects;
(d)Goldman and Merger Sub shall have obtained all waivers, permits,
consents, approvals or other authorizations necessary to be obtained
by them to consummate the Merger and effected all registrations,
filings and notices, necessary to be effected by them to consummate
the Merger;
(e)no writ, order, decree or injunction of a Governmental Entity shall
have been entered against Goldman, Merger Sub or the Company which
prohibits the consummation of the Merger; and
(f)the Company shall have received from Brown, Rudnick Freed & Gesmer,
counsel to Goldman and Merger Sub, an opinion with respect to certain
matters, addressed to the Company and dated as of the Closing Date.
Termination
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the Merger Agreement by the holders
of Common Stock:
(a)by mutual written consent of the Board of Directors of Goldman and the
Board of Directors;
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(b)by either Goldman or the Company, if any Governmental Entity shall
have issued an order (other than a temporary restraining order),
decree, or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger, and such order, decree ruling or
other action shall have become final and non-appealable, provided that
the party seeking termination shall have diligently contested such
order, decree, ruling or other action;
(c)by either Goldman or the Company, if the Merger Agreement and the
Merger fail to receive the approval of that number of stockholders of
the Company necessary under Law to authorize and approve the Merger
Agreement and the Merger;
(d)by either Goldman or the Company, if the Board of Directors shall have
recommended or resolved to recommend to its stockholders a Superior
Proposal, or if the Company has approved a Superior Proposal, and
provided that the Company has complied with all provisions of the
Merger Agreement relating thereto, including the notice provisions
therein, and further provided that the Company makes simultaneous
payment of the Termination Fee;
(e)by either Goldman or the Company, if, without fault of and only in the
absence of any breach under the Merger Agreement by, the party
exercising the right of termination, the Merger shall not have been
consummated on or before December 31, 1999;
(f)by Goldman, if the conditions to the obligation of Goldman to effect
the Merger described above under "The Merger Agreement--Conditions to
the Proposed Merger--Additional Conditions to the Obligation of
Goldman and Merger Sub", shall not have been satisfied; provided,
however, that if such failure or failures are capable of being cured
prior to the Effective Time, such failure or failures shall not have
been cured within ten days of delivery to the Company of written
notice of such failure;
(g)by Goldman, if the Company shall have furnished or disclosed non
public information to a Third Party with respect to any Takeover
Proposal, or shall have resolved to do the foregoing, or if the Board
of Directors shall have recommended or resolved to recommend to its
stockholders a Takeover Proposal or if the Company has approved or
effected a Takeover Proposal, whether or not permitted under the
Merger Agreement;
(h)by Goldman, if, prior to the Effective Date, the Board of Directors
shall have withdrawn, or modified or changed in a manner adverse to
Goldman or Merger Sub, its approval or recommendation of the Merger
Agreement or the Merger;
(i)by the Company, if Goldman or Merger Sub shall have failed to comply
in any material respect with any of the covenants or agreements
contained in the Merger Agreement such that the condition to the
obligation of the Company to effect the Merger described above in
clause (b) under "Merger Agreement--Conditions to the Proposed
Merger--Additional Conditions to the Obligation of the Company" would
not be satisfied or the conditions described in clauses (c), (d), (e)
and (f) under that caption shall not have been satisfied; provided,
however, that if such failure is capable of being cured prior to the
Effective Time, such failure shall not have been cured within ten days
of delivery to Goldman of written notice of such failure; or
(j)by the Company, if there exists a breach of any one or more
representations or warranties of Goldman or Merger Sub contained in
the Merger Agreement such that the condition to the obligation of the
Company to effect the Merger described above in clause (a) under
"Merger Agreement--Conditions to the Proposed Merger--Additional
Conditions to the Obligation of the Company" would not be satisfied;
provided, however, that if such failure or failures are capable of
being cured prior to the Effective Time, such failure or failures
shall not have been cured within ten days of delivery to Goldman of
written notice of such failure.
Termination Fee; Reimbursement of Goldman Expenses on Termination
In the event of the termination of the Merger Agreement, the Merger
Agreement has no further effect except as specifically provided in the Merger
Agreement. There shall be no liability on the part of any party (or
33
<PAGE>
its directors, officers or Affiliates) on such termination except for liability
for any willful and material breach by a party of any of its representations,
warranties, covenants or agreements in the Merger Agreement and except as
otherwise provided in the Merger Agreement.
In the event of termination of the Merger Agreement pursuant to clause (d)
under "The Merger Agreement--Termination", the Company has agreed, within five
business days thereafter, to pay Goldman the Termination Fee.
To the extent that the Termination Fee has for any reason other than a
material breach by Goldman not already been paid and within 12 months after the
termination of the Merger Agreement the Company or any of its Subsidiaries, or
any Company Affiliate enters into a definitive agreement with a Third Party
with respect to a Takeover Proposal or a Takeover Proposal is effected, then
the Company has agreed, within five business days after the consummation of
such Takeover Proposal, to pay Goldman the Termination Fee less any Goldman
Documented Expenses previously paid by the Company to Goldman.
If the Merger Agreement is terminated under circumstances that obligate the
Company to pay to Goldman the Termination Fee, Textron, which holds
approximately 21% of the outstanding Common Stock, has agreed to pay to Goldman
an amount equal to the product of (a) the amount by which the consideration per
share paid to Textron pursuant to the transaction triggering such termination
exceeds $10.00, and (b) the total number of shares of Common Stock transferred
by Textron pursuant to such transaction.
In the event of termination of the Merger Agreement:
(i) pursuant to clause (c) under "The Merger Agreement--Termination";
(ii) by Goldman pursuant to clause (f) under "The Merger Agreement--
Termination" as a result of a failure to satisfy the conditions in clause (a)
(to the extent such failure results from a breach by the Company of its
representations and warranties under the Merger Agreement), clause (b) or
clause (d)(ii) under "The Merger Agreement--Conditions to the Proposed Merger--
Additional Conditions to the Obligation of Goldman and Merger Sub";
(iii) by Goldman pursuant to clause (g) under "The Merger Agreement--
Termination"; or
(iv) by Goldman pursuant to clause (h) under "The Merger Agreement--
Termination",
the Company has agreed, within five business days thereafter, to pay Goldman an
amount equal to the Goldman Documented Expenses (as defined below). However,
the Goldman Documented Expenses which the Company is to pay in the event of
termination of the Merger Agreement pursuant to clause (c) under "The Merger
Agreement--Termination" cannot exceed $650,000 and the Goldman Documented
Expenses which the Company is to pay in the event of termination of the Merger
Agreement pursuant to clauses (f), (g) or (h) under "The Merger Agreement--
Termination" cannot exceed $500,000. In addition, the Company is not obligated
to pay any Goldman Documented Expenses if: (i) Goldman or Merger Sub shall have
failed to comply in any material respect with any of the covenants or
agreements contained in the Merger Agreement such that the closing condition
set forth in clause (b) under "The Merger Agreement--Conditions to the Proposed
Merger--Additional Conditions to the Obligation of the Company" would not be
satisfied; or (ii) there exists a breach of any one or more representations or
warranties of Goldman or Merger Sub contained in the Merger Agreement in any
material respect such that the closing condition set forth in clause (a) under
"The Merger Agreement--Conditions to the Proposed Merger--Additional Conditions
to the Obligation of the Company" would not be satisfied.
For purposes of the Merger Agreement, "Goldman Documented Expenses" means
all documented out of pocket reasonable fees and expenses incurred by Goldman
and Merger Sub since January 1, 1999 (including the reasonable fees and
expenses of counsel, accountants, consultants and advisors, and any commitment
fees and other expenses paid to prospective lenders) in connection with the
Merger Agreement and the transactions contemplated thereby.
34
<PAGE>
Amendment and Waiver
Subject to applicable Law, the Merger Agreement may be amended, modified and
supplemented in any and all respects, whether before or after any vote of the
stockholders of the Company contemplated thereby, by written agreement of the
parties thereto at any time prior to the Closing Date with respect to any of
the terms contained therein. The conditions to each of the parties' obligation
to consummate the Merger are for the sole benefit of such party and may be
waived by such party in whole or in part to the extent permitted by applicable
law.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain officers and directors of the Company have agreements which will be
effected as a result of the Merger. In addition, certain officers of the
Company have entered into new employment or consulting arrangements that become
effective at the Effective Time. These existing and new agreements are
discussed below.
Stock Options
Immediately prior to the Effective Time, each Option granted pursuant to the
Company's stock option plans will become fully vested and immediately
exercisable. Each holder of an Option outstanding immediately prior to
Effective Time will be entitled to receive and will be paid in full
satisfaction of such Option, or each Option will after the Effective Time be
exercisable for, a cash payment equal to the product of (i) the excess, if any,
of the Merger Consideration over the exercise price per share of Common Stock
subject to such Option multiplied by (ii) the number of shares of Common Stock
subject to such Option immediately prior to the Effective Time, less any income
or employment tax withholding required under the Code or any provision of
state, local or foreign tax law.
Employment Agreements
The employment of Dan L. Griffith, President and Chief Executive Officer of
the Company, will terminate upon completion of the Merger. Under the terms of
Mr. Griffith's employment agreement with the Company, dated September 7, 1995,
Mr. Griffith will be paid his current base salary, in accordance with the
Company's normal payroll practices, and allowed to participate in the Company's
benefit plans for the two-year period commencing on his termination date. As of
Mr. Griffith's termination date, he will be retained as a consultant to the
Company for six months. The terms of the consulting agreement are discussed
below.
Following the Merger, Walter C. Lazarcheck will continue his employment with
the Company as its Vice President, Chief Financial Officer and Secretary
pursuant to the terms of his present employment agreement with the Company
dated March 27, 1998. Mr. Lazarcheck will also be paid a bonus of $69,575 by
Goldman at the time of the Closing.
Following the Merger, Malcolm Taylor will continue his employment as the
Managing Director European Operations of Bridgeport Machines Limited, a wholly
owned subsidiary of the Company, pursuant to the terms of his present service
agreement dated September 6, 1996. Mr. Taylor will also be paid a bonus of
UK(Pounds)57,576 by Goldman, one-half to be paid at the time of the Closing and
the remainder to be paid six months thereafter, provided Mr. Taylor continues
to perform his present obligations under his service agreement.
Consulting Agreement
Dan L. Griffith, the President and Chief Executive Officer of the Company,
will be retained as a consultant to the Company for the six-month period
commencing as of the Closing (the "Term"). Under the terms of the consulting
agreement, Mr. Griffith will receive $1,000 for each day on which he provides
consulting services to
35
<PAGE>
the Company, and $500 for each business day for which no services are provided
to the Company. Mr. Griffith will also receive a lump sum payment of $72,500 at
the time of the Closing. At the end of the Term, Mr. Griffith will receive an
additional lump sum payment of $72,500 (reduced by the aggregate payments
received by Mr. Griffith on days for which no consulting services are performed
for the Company). During the Term and continuing until July 31, 2000, Mr.
Griffith is prohibited from engaging in certain competitive business activities
with the Company and its affiliates.
RELATED AGREEMENTS AND TRANSACTIONS
Voting Agreements for Principal Stockholders Other Than Textron
In connection with the execution of the Merger Agreement, each of the
Principal Stockholders entered into an agreement (collectively, the "Voting
Agreements") with Goldman pursuant to which such Principal Stockholder, among
other things, granted Goldman a proxy to vote the shares of Common Stock over
which such Principal Stockholder has voting control in favor of the adoption
and approval of the Merger Agreement and the transactions contemplated thereby
at the Special Meeting.
Each Principal Stockholder has agreed not to sell, transfer or otherwise
dispose of, or reduce his interests in, any shares of Common Stock owned by
such stockholder prior to the termination of such Stockholder's Voting
Agreement.
Each Principal Stockholder has additionally agreed not to, directly or
indirectly, (i) solicit, initiate or encourage (or authorize any person to
solicit, initiate or encourage) any inquiry, proposal or offer from any person
(other than Goldman) to acquire the business, property or capital stock of the
Company or any of its subsidiaries, or any acquisition of a substantial equity
interest in, or a substantial amount of the assets of, the Company or any of
its subsidiaries or (ii) participate in any discussion or negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or participate in, facilitate or encourage
any effort or attempt by any person (other than Goldman) to do or seek any of
the foregoing. However, each Principal Stockholder or its representative, as a
member of the Board of Directors, may take actions in such capacity as are
permitted under the Merger Agreement.
Each Voting Agreement will terminate upon the earlier of (i) the Effective
Time, and (ii) the termination of the Merger Agreement in accordance with the
provisions thereof.
Textron Voting Agreement
The Voting Agreement into which Textron entered with Goldman (the "Textron
Voting Agreement") contains substantially identical terms and conditions as are
in the other Voting Agreements. In addition, the Textron Voting Agreement
provides for the payment by Textron, under circumstances, of a fee to Goldman
if the Merger Agreement is terminated and the Company becomes obligated to pay
to Goldman the Termination Fee. See "The Merger Agreement--Termination Fee;
Reimbursement of Goldman Expenses on Termination".
Textron Confirmation Letter
Textron and Goldman entered into a letter agreement, dated April 23, 1999
(the "Textron Confirmation Letter"), which confirms the obligation of Textron
to indemnify the Surviving Corporation following the Merger for environmental
claims under the Purchase and Sale Agreement, dated as of May 7, 1986, by and
between the Company and Textron, and the Settlement Agreement, dated as of June
22, 1994, by and between the Company and Textron.
The foregoing description of the Voting Agreements, the Textron Voting
Agreement and the Textron Confirmation Letter is qualified in its entirety by
reference to the form of Voting Agreement for principal stockholders other than
Textron attached as Appendix C to this proxy statement, the Textron Voting
Agreement attached as Appendix B to this proxy statement and the Textron
Confirmation Letter attached as Appendix D to this proxy statement.
36
<PAGE>
OWNERSHIP OF COMMON STOCK
The table below sets forth, as of June 4, 1999, certain information
regarding beneficial ownership of Common Stock with respect to (i) each person
or entity known to the Company who beneficially owns more than 5% of the
outstanding shares of Common Stock, (ii) each director, (iii) the Company's
Chief Executive Officer and the four other most highly compensated executive
officers in fiscal 1999 and (iv) all executive officers and directors of the
Company as a group. Pursuant to the regulations of the SEC, shares are deemed
to be "beneficially owned" by a person if such person directly or indirectly
has or shares (a) the power to vote or dispose of such shares whether or not
such person has any pecuniary interest in such shares or (b) the right to
acquire the power to vote or dispose of such shares within 60 days, including
any right to acquire through the exercise of any option, warrant or right.
<TABLE>
<CAPTION>
Number of Percent of
Beneficial Owner Shares Total Shares
- ---------------- --------- ------------
<S> <C> <C>
Textron Inc............................................ 1,207,733 21.6%
40 Westminster Street
Providence, RI 02903
Citigroup Inc. (1)..................................... 711,796 12.8%
153 East 53 Street
New York, NY 10043
Lehman Brothers Holdings, Inc.......................... 639,935 11.5%
Three World Financial Center
New York, NY 10285
High Technology Holding Corp. (2)...................... 568,700 10.2%
2229 South Yale Street
Santa Ana, CA 92704
Kansas Debt Fund,...................................... 535,910 9.6%
Nominee for Kansas Public Employees Retirement
Systems (3)
c/o Portfolio Advisors, Inc.
9 Old Kings Highway South
Darien, CT 06820
U.S. Bancorp (4)....................................... 316,140 5.7%
601 2nd Avenue South
Minneapolis, MN 55402
Joseph E. Clancy....................................... 82,043 1.5%
Dan L. Griffith (5).................................... 94,777 1.7%
Walter C. Lazarcheck (6)............................... 17,467 *
Robert L. Rochford (7)................................. 4,000 *
Malcolm Taylor (8)..................................... 26,883 *
Robert J. Cresci (9)................................... 11,500 *
Eliot M. Fried (10).................................... 21,500 *
Bhikhaji M. Maneckji (11).............................. -- *
All Directors and Executive Officers as a group (8
persons).............................................. 258,170 4.5%
</TABLE>
37
<PAGE>
- --------
* Less than 1% of the outstanding Common Stock
1. In a Schedule 13G filed with the SEC on January 22, 1999, Citigroup Inc.
reported that, as of January 12, 1999, it held 711,796 shares of Common
Stock. Citigroup Inc. reported that it possessed: (i) shared dispositive
power with respect to 711,796 shares and (ii) shared voting power with
respect to 711,796 shares.
2. In a Schedule 13D filed with the SEC on July 22, 1998, as amended on March
15, 1999, HTH reported that, as of March 15, 1999, it held 568,700 shares of
Common Stock. HTH reported that it possessed: (i) sole dispositive power
with respect to 568,700 shares and (ii) sole voting power with respect to
568,700 shares.
3. The Company's register of stockholders of record indicates that, as of June
4, 1999, Kansas Debt Fund, Nominee for Kansas Public Employees Retirement
Systems, holds 535,910 shares of Common Stock.
4. In a Schedule 13G filed with the SEC on March 1, 1999, U.S. Bancorp, a
parent holding company, reported that as of December 31, 1998 it held
316,140 shares of Common Stock. U.S. Bancorp reported that it possessed: (i)
sole dispositive power with respect to 316,140 shares and (ii) sole voting
power with respect to 303,540 shares.
5. Includes 41,666 shares which may be acquired by Mr. Griffith upon the
exercise of immediately exercisable Options.
6. Consists of 17,467 shares which may be acquired by Mr. Lazarcheck upon the
exercise of immediately exercisable Options.
7. Consists of 4,000 shares which may be acquired by Mr. Rochford upon the
exercise of immediately exercisable Options.
8. Includes 19,133 shares which may be acquired by Mr. Taylor upon the exercise
of immediately exercisable Options.
9. Consists of 11,500 shares which may be acquired by Mr. Cresci upon the
exercise of immediately exercisable Options. Does not include 226,166 shares
beneficially owned by State of Delaware Employees Retirement Fund, which Mr.
Cresci may be deemed to beneficially own by virtue of his position as a
Managing Director of Pecks Management Partners Ltd., investment advisor for
such fund.
10. Includes 11,500 shares which may be acquired by Mr. Fried upon the exercise
of immediately exercisable Options. Does not include shares beneficially
owned by Lehman Brothers Holdings, Inc., which Mr. Fried may be deemed to
beneficially own by virtue of his position as Managing Director of Lehman
Brothers Holdings, Inc.
11. Does not include shares beneficially owned by Textron, which include shares
underlying Options registerered in Mr. Maneckji's name, of which Mr.
Maneckji disclaims beneficial ownership.
38
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The following are or may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995:
(i) certain statements concerning possible or assumed future results of
operations of the Company contained in "The Merger--Background of the
Merger", "The Merger--Reasons for the Merger; Recommendation of the Board
of Directors", "The Merger--Projections" and "The Merger--Opinion of the
Company's Financial Advisor", including any forecasts or projections
referred to in this proxy statement and certain statements incorporated by
reference from the Annual Report, including any statements contained in
this proxy statement or in the Annual Report, regarding the expansion of
the use of the Company's products into the factory floor market, expansion
of the Company's marketing efforts into foreign markets, the Company's
ability to develop additional sources of supply, the Company's shipment of
its current backlog, the Company's expected expenditures on environmental
matters, the Company's use of cash in operating activities, the Company's
ability to satisfactorily resolve any outstanding litigation, the ability
of the Company to meet working capital needs, the effect on the Company of
the adoption of certain accounting standards or the effect of the Merger;
(ii) any statements preceded by, followed by or that include the words
"believes," "expects," "anticipates," "intends" or similar expressions
contained in the sections of this proxy statement cited above or
incorporated herein; and
(iii) other statements contained or incorporated by reference in this
proxy statement regarding matters that are not historical facts.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such forward-
looking statements. The Company's stockholders are cautioned not to place undue
reliance on such statements, which speak only as of the date of this proxy
statement or, in the case of the Company documents incorporated by reference,
the date of such document.
All subsequent written and oral forward-looking statements attributable to
the Company or persons acting on its or their behalf are expressly qualified in
their entirety by the cautionary statements contained or referred to in this
section. The Company does not undertake any obligation to release publicly any
revisions to such forward-looking statements to reflect events or circumstances
after the date of this proxy statement or to reflect the occurrence of
unanticipated events.
No person has been authorized by the Company to give any information or to
make any representation not contained in this proxy statement and, if given or
made, such information or representation should not be relied upon as having
been authorized by the Company. This proxy statement does not constitute an
offer or solicitation to sell or a solicitation of an offer to buy any
securities. The delivery of this proxy statement shall not, under any
circumstances, imply or create any implication that there have not been any
changes in the affairs of the Company or in the information set forth or
incorporated by reference herein subsequent to the date hereof.
39
<PAGE>
AVAILABLE INFORMATION
The Company files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission. You may read
and copy any reports, statements or other information we file at the Securities
and Exchange Commission's public reference rooms in Washington, D.C., New York,
New York and Chicago, Illinois. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. Our filings are also available to the public from commercial document
retrieval services and at the web site maintained by the Securities and
Exchange Commission at "http://www.sec.gov".
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this proxy statement, which means that we can
disclose important information to you by referring you to another document
filed separately with the Securities and Exchange Commission. The information
incorporated by reference is deemed to be part of this proxy statement, except
for any information superseded by information in this proxy statement. This
proxy statement incorporates by reference the Annual Report which accompanies
this proxy statement. The Annual Report contains important information about
the Company and its finances.
40
<PAGE>
APPENDIX A
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
by and among
GOLDMAN INDUSTRIAL GROUP, INC.,
BRONZE ACQUISITION CORP.
and
BRIDGEPORT MACHINES, INC.
dated as of
April 23, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 23, 1999, by and among
GOLDMAN INDUSTRIAL GROUP, INC., a Delaware corporation ("Parent"), BRONZE
ACQUISITION CORP., a Delaware corporation and a wholly-owned Subsidiary of
Parent ("Merger Sub"), and BRIDGEPORT MACHINES, INC., a Delaware corporation
(the "Company").
WHEREAS, the Board of Directors of each of Parent, Merger Sub and the
Company have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
and Merger Sub pursuant to a merger (the "Merger") of the Merger Sub with and
into the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, also in furtherance of such acquisition, the Board of Directors of
each of Parent, Merger Sub and the Company have approved this Agreement and the
Merger in accordance with the General Corporation Law of the State of Delaware,
and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has determined that the per
share consideration to be paid for the issued and outstanding shares of Common
Stock, $.01 par value, of the Company (the "Shares") in the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
such Shares approve and adopt this Agreement and the Merger upon the terms and
subject to the conditions set forth herein;
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger; and
WHEREAS, as a condition and inducement to Parent's and Merger Sub's entering
into this Agreement and incurring the obligations set forth herein,
concurrently with the execution and delivery of this Agreement, Parent, Merger
Sub and the Company are entering into Voting Agreements (collectively, the
"Voting Agreement") with Textron Inc., Lehman LBO Inc., State of Delaware
Employees Retirement Fund, Joseph E. Clancy and Dan L. Griffith. (collectively,
the "Principal Stockholders"), pursuant to which, among other things, the
Principal Stockholders have agreed to grant Parent a proxy with respect to the
voting of the Shares over which they have voting control, all upon the terms
and subject to the conditions set forth in the Voting Agreement;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth herein, the parties hereto, intending to be legally bound
hereby, agree as follows:
A-1
<PAGE>
ARTICLE I.
The Merger
1.1. The Merger.
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.2 hereof), the Company and Merger
Sub shall consummate the Merger pursuant to which (a) Merger Sub shall be
merged with and into the Company and the separate corporate existence of
Merger Sub shall thereupon cease and (b) the Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the
"Surviving Corporation") and shall continue to be governed by the Laws of
the State of Delaware.
(b) Pursuant to the Merger, (x) the Restated Certificate of
Incorporation of the Company (the "Certificate of Incorporation"), as in
effect immediately prior to the Effective Time, shall be the initial
certificate of incorporation of the Surviving Corporation and (y) the by-
laws of the Company (the "By-laws"), as in effect immediately prior to the
Effective Time, shall be the initial By-laws of the Surviving Corporation,
each until thereafter changed or amended as provided therein or by
applicable law. The Merger shall have the effects specified in the Delaware
General Corporation Law (the "DGCL").
(c) The directors of Merger Sub at the Effective Time shall be the
initial directors of the Surviving Corporation until their respective
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws. The officers of the Merger Sub at
the Effective Time shall be the initial officers of the Surviving
Corporation until their respective successors are duly elected and
qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation
and by-laws.
1.2. Effective Time. Parent, Merger Sub and the Company will cause a
certificate of merger, or, if applicable, a certificate of ownership and merger
(as applicable, the "Certificate of Merger"), to be executed and filed on the
date of the Closing (as defined in Section 1.3) (or on such other date as
Parent and the Company may agree) with the Secretary of State of the State of
Delaware (the "Secretary of State") as provided in the DGCL. The Merger shall
become effective on the date on which the Certificate of Merger has been duly
filed with the Secretary of State or such time as is agreed upon by the parties
and specified in the Certificate of Merger, and such time is hereinafter
referred to as the "Effective Time."
1.3. Closing. The closing of the Merger (the "Closing") shall take place at
10:00 a.m., local time, on a date to be specified by the parties, which shall
be no later than the third business day after satisfaction or waiver of all of
the conditions set forth in Article VI hereof (the "Closing Date"), at the
offices of Brown, Rudnick, Freed & Gesmer, One Financial Center, Boston,
Massachusetts 02111, unless another date or place is agreed to in writing by
the parties hereto.
1.4. Stockholders' Meeting and Proxy Statement.
(a) The Company shall prepare, in consultation with Parent, and the
Company shall file with the SEC under the Exchange Act, subject to the
other provisions of this Agreement, proxy materials for the purpose of
soliciting proxies from holders of the Shares to vote in favor of the
adoption of this Agreement and the approval of the Merger at a meeting of
the stockholders of the Company to be called and held for such purpose (the
"Special Meeting"). Such proxy materials shall be used for the purpose of
soliciting such proxies from holders of the Shares (such proxy statement,
together with any accompanying letter to stockholders, notice of meeting
and form of proxy, shall be referred to herein as the "Proxy Statement").
Parent and the Merger Sub shall furnish to the Company all information
concerning Parent and the Merger Sub as the Company may reasonably request
in connection with the preparation of the Proxy Statement. Parent and its
counsel shall be given an opportunity to review and comment on the Proxy
Statement prior to its filing with the SEC. The Company, in consultation
with Parent, shall promptly respond to any SEC
A-2
<PAGE>
comments on the Proxy Statement and shall otherwise use reasonable best
efforts to resolve as promptly as practicable all SEC comments thereon.
(b) A copy of the opinion of Lehman Brothers Inc. as to the fairness of
the Merger Consideration shall be delivered by the Company to Parent as of
the execution of this Agreement.
(c) Promptly following the resolution of all SEC comments on the Proxy
Statement, the Company shall distribute the Proxy Statement to its
stockholders and, pursuant thereto, shall call the Special Meeting in
accordance with the DGCL and subject to the other provisions of this
Agreement, solicit proxies from the stockholders of the Company to vote in
favor of the adoption of this Agreement and the approval of the Merger at
the Special Meeting.
(d) The Company shall comply with all applicable provisions of and rules
under the Exchange Act and all applicable provisions of the DGCL in the
preparation, filing and distribution of the Proxy Statement, the
solicitation of proxies thereunder, and the calling and holding of the
Special Meeting.
(e) Except as otherwise provided herein, the Company, acting through its
Board of Directors, shall include in the Proxy Statement the recommendation
of its Board of Directors that the stockholders of the Company vote in
favor of the adoption of this Agreement and the approval of the Merger, and
shall otherwise use reasonable best efforts to obtain the requisite vote of
the holders of the Shares pursuant to the DGCL and the Company's
Certificate of Incorporation in order to consummate the Merger.
ARTICLE II.
Conversion of Securities
2.1. Conversion of Capital Stock. As of the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any Shares or any
shares of capital stock of Merger Sub:
(a) Merger Sub Capital Stock. Each issued and outstanding share of
Common 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 Merger Sub-Owned Stock. All
Shares that are owned by the Company or any Subsidiary of the Company and
any Shares owned by Parent, Merger Sub or any Subsidiary of Parent or
Merger Sub shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding Share (other than
Shares to be cancelled in accordance with Section 2.1 (b) and any Shares
which are held by stockholders exercising appraisal rights pursuant to
Section 262 of the DGCL ("Dissenting Stockholders")) shall be converted
into the right to receive $10.00 per share in cash, payable to the holder
thereof, without interest (the "Merger Consideration"), upon surrender of
the certificate formerly representing such Share in the manner provided in
Section 2.2. All such Shares, when so converted, shall no longer be
outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of a certificate representing any such
Shares shall cease to have any rights with respect thereto, except the
right to receive the Merger Consideration therefor upon the surrender of
such certificate in accordance with Section 2.2, without interest, or the
right, if any, to receive payment from the Surviving Corporation of the
"fair value" of such Shares as determined in accordance with Section 262 of
the DGCL.
2.2. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
bank, trust company or other Person, reasonably acceptable to the Company,
to act as agent for the holders of the Shares in connection with the Merger
(the "Paying Agent") to receive the funds to which holders of the Shares
shall become entitled pursuant to Section 2.l(c). At the Effective Time,
Parent shall deposit with the Paying Agent funds
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in an amount sufficient for the payment of the Merger Consideration as
provided herein. All interest earned on such funds shall be paid to Parent.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent shall cause the Paying Agent to mail to each holder
of record of a certificate or certificates, which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"), whose
Shares were converted pursuant to Section 2.1 into the right to receive the
Merger Consideration (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Paying Agent and
shall be in such form and have such other provisions as Parent may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by
Parent, together with such letter of transmittal, duly executed, Parent
shall cause the Paying Agent to pay to the holder of such Certificate in
exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be cancelled. If payment of the Merger Consideration is to be
made to a Person other than the Person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise
in proper form for transfer and that the Person requesting such payment
shall have paid any transfer and any other taxes required by reason of the
payment of the Merger Consideration to a Person other than the registered
holder of the Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such tax either has been
paid or is not applicable. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger
Consideration in cash as contemplated by this Section 2.2. The right of any
stockholder to receive the Merger Consideration shall be subject to and
reduced by any applicable federal backup withholding obligation.
(c) Transfer Books; No Further Ownership Rights in the Shares. At the
Effective Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers of the
Shares on the records of the Company. From and after the Effective Time,
the holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by
applicable Law. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be cancelled and
exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying
Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar Laws)
only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest
thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation or the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
2.3. Dissenters' Rights. Notwithstanding anything in this Agreement to the
contrary, if any Dissenting Stockholder shall demand to be paid the "fair
value" of such holder's Shares, as provided in Section 262 of the DGCL, such
Shares shall not be converted into or be exchangeable for the right to receive
the Merger Consideration except as provided in this Section 2.3 and the Company
shall give Parent notice thereof and Parent shall have the right to participate
in all negotiations and proceedings with respect to any such demands. Neither
the Company nor the Surviving Corporation shall, except with the prior written
consent of Parent, voluntarily make any payment with respect to, or settle or
offer to settle, any such demand for payment. If any Dissenting Stockholder
shall fail to perfect or shall have effectively withdrawn or lost the right to
dissent, the
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Shares held by such Dissenting Stockholder shall thereupon be treated as though
such Shares had been converted into the Merger Consideration pursuant to
Section 2.1.
2.4. Transfer of Shares After the Effective Time. No transfer of Shares
shall be made on the stock transfer books of the Surviving Corporation at or
after the Effective Time.
2.5. Stock Options. The Company shall use its reasonable efforts to provide
that, immediately prior to the Effective Time, each then outstanding option to
purchase Shares (in each case, an "Option"), whether or not then exercisable,
shall be returned to and cancelled by the Company and in consideration of such
return and cancellation and except to the extent that Parent or Merger Sub and
the holder of any such Option otherwise agrees, as soon as reasonably
practicable after the Effective Time, Parent shall cause the Paying Agent to
pay to the holders of the Options which have been returned and cancelled to the
satisfaction of Parent an amount in respect thereof equal to the product of (A)
the excess, if any, of the Merger Consideration over the exercise price of each
such Option and (B) the number of Shares previously subject to the Option
immediately prior to its cancellation (such payment to be net of withholding
taxes and without interest). The Company shall use its reasonable efforts to
cause the holders of such Options to consent to the transactions contemplated
by this Section 2.5, prior to the Effective Time. At the Effective Time, Parent
shall deposit with the Paying Agent funds in an amount sufficient for the
payment provided herein. All interest on such funds shall be paid to Parent.
ARTICLE III.
Representations and Warranties of the Company
The Company represents and warrants to Parent and Merger Sub as follows:
3.1. Organization, Standing and Corporate Power. Each of the Company and
each of its Subsidiaries is a corporation duly organized, validly existing and
in good standing under the Laws of the jurisdiction in which it is organized
and has the requisite corporate power and authority to carry on its business as
is now being conducted. Each of the Company and its Subsidiaries is duly
qualified as a foreign corporation or licensed to do business 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 (individually or in the aggregate) would not have a
Material Adverse Effect on the Company. The Company has delivered to Parent
complete and correct copies of the certificate of incorporation of the Company
and by-laws of the Company, in each case as amended to the date of this
Agreement, and has delivered the certificates of incorporation and by-laws or
other comparable organizational documents of its Subsidiaries in each case as
amended as of the date of this Agreement. The respective certificates of
incorporation and by-laws or other comparable organizational documents of the
Subsidiaries of the Company do not contain any provision limiting or otherwise
restricting the ability of the Company to control such Subsidiaries.
3.2. Subsidiaries.
(a) Exhibit 21 to the Company's Annual Report on Form 10-K for the
fiscal year ended March 28, 1998 and Schedule 3.2 of the disclosure
schedule delivered by the Company to Parent at or prior to the execution of
this Agreement (the "Company Disclosure Schedule") together include all of
the Subsidiaries of the Company. Except as set forth in Schedule 3.2 of the
Company Disclosure Schedule, all of the outstanding shares of capital stock
of, or other equity interests in, each Subsidiary of the Company 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 and free of any
other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
(b) The Company does not directly or indirectly beneficially own any
securities or other beneficial ownership interests in any other entity
(including through joint ventures or partnership arrangements) other than
(i) the Subsidiaries of the Company, (ii) as disclosed in Schedule 3.2 of
the Company Disclosure
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Schedule and (iii) investments in publicly traded securities constituting
less than five percent of the outstanding equity of the issuing entity.
3.3. Capital Structure. The authorized capital stock of the Company consists
of 13,000,000 Shares and 2,000,000 shares of preferred stock, par value $.01
per share (the "Preferred Shares"). As of the date hereof, (i) 5,568,104 Shares
were issued and outstanding and no Preferred Shares were issued and
outstanding, (ii) 255,998 Shares were reserved for issuance upon exercise of
outstanding Options pursuant to the 1994 Stock Option Plan and (iii) 46,500
Shares were reserved for issuance upon exercise of outstanding Options pursuant
to the 1994 Non-Employee Director Stock Option Plan. Except as set forth above
or on Schedule 3.3 of the Company Disclosure Schedule, as of the date of this
Agreement: (i) no shares of capital stock or other voting securities of the
Company are issued, reserved for issuance or outstanding; (ii) there are no
stock appreciation rights, phantom stock units, restricted stock grants,
contingent stock grants or Benefit Plans which grant awards of any of the
foregoing, and there are no other outstanding contractual rights to which the
Company is a party the value of which is based on the value of Shares; (iii)
all outstanding shares of capital stock of the Company are, and all of the
Shares which may be exchanged for the Merger Consideration in the Merger will
be, when so exchanged, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights; and (iv) there are no
bonds, debentures, notes 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 stockholders 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 is a party or by which any of them is 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. Except as set forth in Schedule 3.3 of the Company Disclosure
Schedule, there are no programs in place, nor any 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.
3.4. Authority; Noncontravention; Company Action. The Company has the
requisite corporate power and authority to enter into this Agreement and,
subject to approval of this Agreement by the holders of a majority of the
outstanding Shares, to consummate the Merger contemplated by this Agreement.
The execution and delivery of this Agreement by the Company 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, subject, in the case of the Merger, to approval of this Agreement by
the holders of a majority of the outstanding Shares. The Board of Directors of
the Company has unanimously approved this Agreement and the Merger for purposes
of Section 203 of the DGCL (the "Section 203 Approval"). This Agreement has
been duly executed and delivered by the Company and, assuming this Agreement
constitutes the valid and binding obligation of Parent and Merger Sub,
constitutes the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar Laws now or hereafter in effect relating to
creditors' fights generally and (ii) the remedy of specific performance and
injunctive relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought. Except as set
forth in Schedule 3.4 of the Company Disclosure Schedule, the execution and
delivery of this Agreement do not, and the consummation of the Transactions
contemplated by this Agreement including the execution and delivery of the
Voting Agreement and compliance with the provisions of this Agreement 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 loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries under, (i) the
Certificate of Incorporation or By-laws of the Company or the comparable
charter or organizational documents of any of its Subsidiaries, (ii) any loan
or credit agreement, note, bond,
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mortgage, indenture, lease or other agreement, instrument or Permit applicable
to the Company or any of its Subsidiaries or their respective properties or
assets or (iii) any Law applicable to the Company or any of its Subsidiaries or
their respective properties or assets, other than, in the case of clauses (ii)
or (iii), any such conflicts, violations, defaults, rights or Liens that,
individually or in the aggregate, would not (x) impair in any material respect
the ability of the Company to perform its obligations under this Agreement or
(y) have a Material Adverse Effect on the Company. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement by the Company or
the consummation by the Company of the Transactions contemplated by this
Agreement, except for (i) the filing of a premerger notification and report
form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (ii) the filing with the SEC of (x) a
preliminary Proxy Statement, (y) a definitive Proxy Statement and (z) such
reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement and the Transactions contemplated by this
Agreement, (iii) the filing of the Certificate of Merger with the Secretary of
State and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (iv) as may be required by
any applicable state securities or "blue sky" Laws, (v) such filings as may be
required under the Connecticut Transfer Act, Conn. Gen. Stat. (S)(S)22a-134 et
seq. and (vi) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the aggregate, (x) impair, in any material
respect, the ability of the Company to perform its obligations under this
Agreement or (y) have a Material Adverse Effect on the Company.
3.5. SEC Documents; Financial Statements. The Company has filed all reports,
proxy statements, forms, and other documents required to be filed by it with
the SEC under the Securities Act and the Exchange Act since March 30, 1996 (the
"SEC Documents"). As of their respective dates, (i) the SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933,
as amended (the "Securities Act"), or the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
SEC Documents, and (ii) none of the SEC Documents contained at the time of
their filing an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Company included in the SEC
Documents are true and complete and complied at the time of their filing as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set
forth in Schedule 3.5 of the Company Disclosure Schedule and except as set
forth in the SEC Documents filed and publicly available prior to the date of
this Agreement, and except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since the date of the
most recent consolidated balance sheet included in the SEC Documents filed and
publicly available prior to the date of this Agreement, neither the Company nor
any of its Subsidiaries has any material liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) required by
generally accepted accounting principles to be set forth on a consolidated
balance sheet of the Company and its consolidated Subsidiaries or in the notes
thereto.
3.6. Information Supplied. None of the information supplied or to be
supplied by the Company expressly for inclusion or incorporation by reference
in the Proxy Statement, will, on the date the Proxy Statement is first mailed
to the Company's stockholders and at the time of the Special 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 false or
misleading. The Proxy Statement will comply as to form in all material respects
with 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
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or incorporated by reference therein based on written information supplied by
Parent or Merger Sub specifically for inclusion or incorporation by reference
therein.
3.7. Absence of Certain Changes or Events. Except as set forth in the SEC
Documents or Schedule 3.7 of the Company Disclosure Schedule, since January 2,
1999, (i) the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course, there has not been any Material Adverse
Change in the Company and (ii) neither the Company nor any of its Subsidiaries
has amended its Certificate of Incorporation or By-laws; (iii) the Company has
not split, combined or reclassified the Shares or any capital stock of any of
its Subsidiaries; (iv) neither the Company nor any of its Subsidiaries has
declared or set aside or paid any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that of
any of its Subsidiaries (other than dividends or advances from a wholly-owned
Subsidiary of the Company to its parent or the Company); (v) neither the
Company nor any of its Subsidiaries has entered into any employment or
severance agreement with any officer, director or key employee of the Company
or any of its Subsidiaries; (vi) neither the Company nor any of its
Subsidiaries has increased in any manner the compensation or fringe benefits
of, or paid any bonus to, any director or officer thereof; and (vii) neither
the Company nor any of its Subsidiaries has changed its accounting methods,
except as required by GAAP or the SEC.
3.8. Litigation. Except as set forth in the SEC Documents or Schedule 3.8 of
the Company Disclosure Schedule or to the extent reserved for as reflected on
the Company's financial statements for the year ended March 28, 1998, there are
(i) no suits, actions or proceedings pending or, to the knowledge of the
Company, threatened against the Company or any of its Subsidiaries that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, (ii) no complaints, lawsuits, charges or other
proceedings pending or, to the knowledge of the Company, threatened in any
forum by or on behalf of any present or former employee of the Company or any
of its Subsidiaries, any applicant for employment or classes of the foregoing
alleging breach of any express or implied contract of employment, any
applicable Law governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect, (iii) no judgments, decrees,
injunctions or orders of any Governmental Entity or arbitrator outstanding
against the Company that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Company; and (iv) none of the
Intellectual Property Rights is subject to any order, writ, judgment,
injunction, decree, determination or award that has, or would have, a Material
Adverse Effect on the Company.
3.9. Absence of Changes in Benefit Plans; SEC Disclosure. Except as
disclosed in the SEC Documents or Schedule 3.9 of the Company Disclosure
Schedule, there has not been any adoption or material amendment by the Company
or any of its Subsidiaries or any ERISA Affiliate (as defined in Section 3.10
hereof) of any Benefit Plan (as defined in Section 3.10 hereof) since March 28,
1998. Except as disclosed in Schedule 3.9 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries has any formal plan or
commitment to create any additional Benefit Plan or modify or change in any
material respect any existing Benefit Plan that would affect any employee or
terminated employee of the Company or a Subsidiary of the Company. Except as
disclosed in Schedule 3.9 of the Company Disclosure Schedule, all employment,
consulting, severance, termination, change in control or indemnification
agreements, arrangements or understandings between the Company or any of its
Subsidiaries and any current or former officer or director of the Company or
any of its Subsidiaries which are required to be disclosed in the SEC Documents
have been disclosed therein.
3.10. Employee Benefits; ERISA.
(a) Schedule 3.10 of the Company Disclosure Schedule contains a true and
complete list of each material bonus, deferred compensation, incentive
compensation, stock purchase, stock option, employment, severance or
termination pay, health insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or
arrangement, and each other employee benefit
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plan, program, agreement or arrangement, other than a non-material fringe
benefit plan, sponsored, maintained or contributed to or required to be
contributed to (at any time during the past six years) by the Company or
any of its Subsidiaries or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that is a member of a "controlled
group" within the meaning of section 4001 of the Employee Retirement Income
Security Act of 1974, as amended, and the rules and regulations promulgated
thereunder ("ERISA") of which the Company or a Subsidiary is a member or
which is under "common control" within the meaning of Section 4001 of
ERISA, with the Company or a Subsidiary, for the benefit of any employee or
terminated employee of the Company, its Subsidiaries or any ERISA
Affiliate, whether formal or informal (the "Benefit Plans").
(b) With respect to each Benefit Plan, the Company has delivered to
Parent a true and complete copy thereof (including all amendments thereto),
as well as true and complete copies of the two most recent annual reports,
if required under ERISA, with respect thereto; the two most recent
actuarial reports, if required under ERISA, with respect thereto; the two
most recent reports prepared with respect thereto in accordance with
Statement of Financial Accounting Standards No. 87, Employer's Accounting
for Pensions; the most recent Summary Plan Description, together with each
Summary of Material Modifications, if required under ERISA with respect
thereto; if the Benefit Plan is funded through a trust or any third party
funding vehicle, the trust or other funding agreement (including all
amendments thereto) and the latest financial statements thereof; and the
most recent determination letter received from the Internal Revenue Service
with respect to each Benefit Plan that is intended to be qualified under
section 401 of the Internal Revenue Code of 1986, as from time to time
amended (the "Code").
(c) No Benefit Plan is subject to Section 412 of the Code or Title IV of
ERISA.
(d) Neither the Company, nor any Subsidiary of the Company, nor any
trust created thereunder, nor any trustee or administrator thereof has
engaged in a transaction in connection with which the Company or any
Subsidiary of the Company, any such trust, or any trustee or administrator
thereof, or any party dealing with any Benefit Plan or any such trust could
be subject to either a civil penalty assessed pursuant to section 409 or
502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976 of the
Code.
(e) No Benefit Plan is a "multiemployer pension plan," as such term is
defined in section 3(37) of ERISA.
(f) Each Benefit Plan which is intended to be "qualified" within the
meaning of section 401 (a) of the Code is so qualified and the trusts
maintained thereunder are exempt from taxation under section 501 (a) of the
Code and no event has occurred to cause the loss of such qualified or
exempt status.
(g) Except as set forth in Schedule 3.10 of the Company Disclosure
Schedule, no Benefit Plan provides health, death or medical benefits
(whether or not insured) with respect to current or former employees of the
Company or its Subsidiaries beyond their retirement or other termination of
service (other than (a) coverage mandated by applicable Law or (b) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary)).
(h) Except as set forth in Schedule 3.10 of the Company Disclosure
Schedule, the consummation of the Transactions contemplated by this
Agreement, alone, will not (a) entitle any current or former employee or
officer of the Company or any Subsidiary to severance pay, unemployment
compensation or any other payment, (b) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer, (c) result in any prohibited transaction described in section 406
of ERISA or section 4975 of the Code for which an exemption is not
available, or (d) require the Company or any ERISA Affiliate to fund or
make any payments to any trust or other funding vehicle in respect of any
Benefit Plan.
(i) There are no pending, anticipated or, to the knowledge of the
Company, threatened claims by or on behalf of any Benefit Plan, by any
employee or beneficiary covered under any such Benefit Plan, or otherwise
involving any such Benefit Plan (other than routine claims for benefits).
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3.11. Taxes.
Except as set forth on Schedule 3.11 of the Company Disclosure Schedule:
(a) Each of the Company and each of its Subsidiaries has timely filed
(or has had timely filed on its behalf) all income Tax Returns and all
other material Tax Returns required to be filed by it, and all such Tax
Returns are true, complete and correct in all material respects. Each of
the Company and each of its Subsidiaries has paid (or has had paid on its
behalf) all income Taxes and all other material Taxes due and payable with
respect to periods for which Tax Returns were filed (whether or not shown
as due on such Tax Returns). The most recent financial statements contained
in the SEC Documents reflect adequate reserves in accordance with generally
accepted accounting principles for all Taxes not yet paid.
(b) Each of the Company and each of its Subsidiaries has complied in all
material respects with all applicable Laws relating to the payment and
withholding of taxes (including, without limitation, the withholding of
Taxes pursuant to Sections 1441 and 1442 of the Code or similar provisions
under any applicable foreign Laws) and have, within the time and in the
manner prescribed by applicable Laws, withheld from employee wages and paid
over to the proper Governmental Entity all material amounts required to be
so withheld and paid over under all applicable Laws.
(c) No deficiencies for any Taxes have been proposed, asserted or
assessed (in writing) against the Company or any of its Subsidiaries, (ii)
no governmental authority is conducting an audit with respect to income
Taxes or any other material Taxes or any Tax Return of the Company or any
of its Subsidiaries, (iii) no extension or waiver of the statute of
limitations with respect to Taxes or any Tax Return has been granted by the
Company or any of its Subsidiaries, which remains in effect, (iv) none of
the Company or any of its Subsidiaries is a party to any agreement or
arrangement to allocate, share or indemnify another party for Taxes, and
(v) there are no Liens for Taxes upon the assets of the Company or any of
its Subsidiaries, except for Liens for Taxes not yet due.
(d) The Company is not, and has not been, a United States Real Property
Holding Corporation (as defined in Section 897(c)(2) of the Code) on any
"determination date" (as defined in Section 1.897-2(c) of the Treasury
regulations promulgated under the Code).
3.12. No Excess Nondeductible Payments.
(a) Except as set forth in Schedule 3.12 of the Company Disclosure
Schedule, no amounts payable as a result of the Transactions contemplated
by this Agreement under the Benefit Plans or any other plans or
arrangements will constitute a "parachute payment" to a "disqualified
individual" as those terms are defined in Section 280G of the Code, without
regard to whether such payment is reasonable compensation for personal
services performed or to be performed in the future.
(b) Neither the Company nor any of its Subsidiaries is a party to any
contract, agreement or other arrangement which could result in the payment
of amounts that could be nondeductible by reason of Section 162(m) of the
Code.
3.13. Compliance with Applicable Laws.
Except (i) as set forth in the SEC Documents or Schedule 3.13 of the Company
Disclosure Schedule or (ii) where a Material Adverse Effect on the Company
would not result, to the knowledge of the Company:
(a) The Company and each of its Subsidiaries are presently complying
with all applicable Laws, and neither the Company nor any of its
Subsidiaries has received written notification of any asserted present or
past failure to so comply.
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(b) Each of the Company and its Subsidiaries has in effect or has timely
filed applications for all Permits necessary for it to own, lease or
operate its properties and assets and to carry on its business
substantially as now conducted, there are no appeals nor any other actions
pending to revoke any such Permits, and there has occurred no default or
violation under any such Permits.
(c) Each of the Company and its Subsidiaries is, and has been, in
compliance with all applicable Environmental Laws. There are no
circumstances or conditions that would be reasonably likely to prevent or
interfere with compliance by the Company or its Subsidiaries in the future
with Environmental Laws (or Permits issued thereunder).
(d) Neither the Company nor any Subsidiary of the Company has received
any written claim, demand, notice, complaint, court order, administrative
order or request for information from any Governmental Entity or private
party, alleging violation of, or asserting any noncompliance with or
liability under or potential liability under, any Environmental Laws,
except for matters which are no longer threatened or pending or for which
the Company or its Subsidiaries are not subject to further requirements
pursuant to an administrative or court order, judgment, or a settlement
agreement.
(e) During the period of ownership or operation by the Company and its
Subsidiaries of any of their respective current or previously owned or
leased properties, there have been no Releases of Hazardous Material in,
on, under or affecting such properties and none of the Company or its
Subsidiaries have disposed of any Hazardous Material or any other substance
either on said owned or leased properties or at other properties, in a
manner that has led, or could reasonably be anticipated to lead to a
Release. Prior to the period of ownership or operation by the Company and
its Subsidiaries of any of their respective current or previously owned or
leased properties, no Hazardous Material was disposed of at such current or
previously owned or leased properties, and there were no Releases of
Hazardous Material in, on, under or affecting any such property.
(f) Except for leases entered into in the ordinary course of business,
as to which no notice of a claim for indemnity or reimbursement has been
received by the Company, neither the Company nor any of its Subsidiaries
has entered into an agreement that may require it to pay to, reimburse,
guarantee, pledge, defend, indemnify, or hold harmless any Person for or
against any liabilities, damages or costs under or pursuant to
Environmental Laws.
(g) Neither the Company nor any of its Subsidiaries has treated, stored
or disposed of "hazardous waste", as that term is defined in the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., analogous state
Laws, or the regulations promulgated thereunder, such that the Company or
any of its Subsidiaries would be required to obtain a Permit under said
Laws for such treatment, storage or disposal.
(h) The Company has provided to Parent true and correct copies of all
environmental studies and reports in its possession, prepared within the
last five years, relating to (i) the Company's and its Subsidiaries'
compliance with Environmental Laws; (ii) the environmental condition of the
Company's and its Subsidiaries' currently owned or leased properties,
including, but not limited to, the extent of any on-site contamination at
any of such properties, results of investigations at such properties,
remedial action plans for such properties, and asbestos surveys; and (iii)
the environmental condition of any properties formerly owned or operated by
the Company or any of its Subsidiaries, or of any other location at which
the Company or any of its Subsidiaries is subject to an environmental
claim, including, but not limited to, the extent of any on-site
contamination at any such properties, results of investigations at such
properties, and remedial action plans at such properties.
(i) The Company has provided Parent with true and correct copies of all
agreements, except for leases entered into in the ordinary course of
business, by and between the Company and any party providing for or
relating to the indemnification of, or the indemnification by, the Company
for environmental claims (the "Environmental Agreements"), including, but
not limited to (i) the Purchase and Sale Agreement dated as of May 7, 1986
by and between the Company and Textron, Inc. and (ii) the Settlement
Agreement dated as of June 22, 1994 by and between the Company and Textron,
Inc. (such agreements with Textron, Inc. are hereinafter referred to
collectively as the "Textron Agreements").
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3.14. Intellectual Property.
(a) Except as set forth on Schedule 3.14(a) of the Company Disclosure
Schedule, the Company and/or its Subsidiaries own free and clear of all
Liens other than Permitted Liens, or is licensed or otherwise possesses
legally enforceable rights to use, all patents and all material trademarks
(registered or unregistered) service marks (registered or unregistered),
trade names, and copyrights and applications for any of the foregoing,
computer software, inventions, designs, know-how and other proprietary
rights (collectively, the "Intellectual Property Rights") that are
necessary to the business of the Company and its Subsidiaries as currently
conducted.
(b) Schedule 3.14(b) of the Company Disclosure Schedule sets forth a
list of all patents, patent applications, registered trademarks, pending
trademark applications, registered copyrights and material common law
trademarks owned by the Company or any of its Subsidiaries.
(c) Schedule 3.14(c) of the Company Disclosure Schedule sets forth a
list of all material licensing agreements to which the Company or any of
its Subsidiaries is a party relating to the use of the Intellectual
Property Rights.
(d) Each of the Company and each of its Subsidiaries owns or has the
right to use the Intellectual Property Rights in order to allow it to
conduct, and continue to conduct, its business as currently conducted in
all material respects, and the consummation of the Transactions
contemplated hereby will not alter or impair such ability, except where
such alteration or impairment would not have a Material Adverse Effect on
the Company.
(e) Except as set forth on Schedule 3.14(e) of the Company Disclosure
Schedule, (i) to the knowledge of the Company and its Subsidiaries, there
are no pending oppositions, cancellations, invalidity proceedings,
interferences or re-examination proceedings with respect to the
Intellectual Property Rights, (ii) to the knowledge of the Company and its
Subsidiaries, neither the Company nor any of its Subsidiaries has received
any written notice from any other Person pertaining to or challenging the
right of the Company or any of its Subsidiaries to use any of the
Intellectual Property Rights and (iii) neither the Company nor any of its
Subsidiaries has made any claim or has knowledge of a violation or
infringement by others of its rights to or in connection with the
Intellectual Property Rights which is still pending.
3.15. Properties.
(a) Each of the Company and each of its Subsidiaries has sufficiently
good and valid title to, or an adequate leasehold interest in, its material
properties and assets (including the Real Property) in order to allow it to
conduct, and continue to conduct, its business as currently conducted in
all material respects. Except as set forth in Schedule 3.15 of the Company
Disclosure Schedule, such material tangible properties and assets
(including the Real Property) are sufficiently free of Liens to allow each
of the Company and each of its Subsidiaries to conduct, and continue to
conduct, its business as currently conducted in all material respects and
the consummation of the Transactions contemplated by this Agreement will
not alter or impair such ability so as to cause a Material Adverse Effect
on the Company. Each of the Company and each of its Subsidiaries enjoys
peaceful and undisturbed possession under all leases, except for such
breaches of the right to peaceful and undisturbed possession that do not
materially interfere with the ability of the Company and its Subsidiaries
to conduct its business as currently conducted. Schedule 3.15 of the
Company Disclosure Schedule sets forth a complete list of all real property
and material interests in real property owned in fee by the Company or one
of its Subsidiaries (the "Fee Properties") and sets forth all real property
and interests in real property leased by the Company or one of its
Subsidiaries as of the date hereof (the "Leased Properties," together with
the Fee Properties, the "Real Property"). Schedule 3.15 also sets forth all
locations at which properties of the Company and its Subsidiaries are
located, temporarily or permanently, including all warehouses or similar
Third Party storage or staging facilities for such properties.
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(b) All leases executed by the Company or its Subsidiaries as lessee for
the Leased Properties are in full force and effect and, except as set forth
on Schedule 3.15 of the Company Disclosure Schedule, the Company and its
Subsidiaries have received no written notices of default from any landlord
which default remains uncured as of the date hereof, and to their
knowledge, neither the Company nor its Subsidiaries is in default in any
material respect under any such leases.
(c) All leases executed by the Company or its Subsidiaries as lessor or
sublessor for the Real Property are in full force and effect and, except as
set forth on Schedule 3.15 of the Company Disclosure Schedule, there exist
no other tenants of the Real Property, the Company and its Subsidiaries
have received no written notices of default from any tenant which default
remains uncured as of the date hereof, and to the knowledge of the Company
and its Subsidiaries, no such tenant is in material default under any such
leases.
(d) Except as set forth on Schedule 3.15 of the Company Disclosure
Schedule, the Company and/or its Subsidiaries have good, valid, marketable
and fee simple title to all the Fee Property, free and clear of all Liens
other than Permitted Liens.
(e) Except as set forth on Schedule 3.15 of the Company Disclosure
Schedule, all of the Real Properties have connections to sanitary sewer,
water, electricity, gas, telephone and all other necessary utilities and
the Company and/or its Subsidiaries do not know of any existing
circumstances or conditions which would result in a termination of such
access or connections for any period of time which termination would result
in a Material Adverse Effect on the Company.
(f) Except as set forth on Schedule 3.15 of the Company Disclosure
Schedule or where a Material Adverse Effect on the Company would not
result, to the knowledge of the Company, no fact or condition exists which
would prohibit adequate rights of access to and from the Real Properties
from and to public highways and roads, and the Company and its Subsidiaries
have not received written notice of any pending or threatened restriction
or denial, governmental or otherwise, upon such ingress or egress which
would adversely affect the operation of the Real Properties.
3.16. Contracts.
(a) Except as set forth in the SEC Documents or Schedule 3.16 of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries is a party to or bound by (i) any "material contract" (as such
term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) any
non-competition agreement or any other agreement or obligation which
purports to limit in any respect the manner in which, or the localities in
which, all or any material portion of the business of the Company and its
Subsidiaries, taken as a whole, may be conducted, (iii) any agreement with
any Affiliate of the Company, (iv) any voting or other agreement governing
how any Shares shall be voted or (v) any agreement with any holder of 10%
or more of the Shares (all contracts of the type described in clauses (i),
(ii), (iii), (iv) or (v) being referred to herein as "Company Material
Contracts"). Each Company Material Contract is valid and binding on the
Company (or, to the extent a Subsidiary of the Company is a party, such
Subsidiary) and is in full force and effect, and the Company and each
Subsidiary of the Company have, in all material respects, performed all
obligations required to be performed by them to date under each Company
Material Contract, except where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. Neither
the Company nor any Subsidiary of the Company knows of, or has received
notice of, any violation or default under (nor, to the knowledge of the
Company, does there exist any condition which with the passage of time or
the giving of notice or both would result in such a violation or default
under) any Company Material Contract, except where such violation or
defaults, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
(b) Except as disclosed in the SEC Documents or in Schedule 3.16 of the
Company Disclosure Schedule or as provided for in this Agreement, neither
the Company nor any of its Subsidiaries is a party to any oral or written
(i) employment or consulting agreements not terminable on thirty (30) days'
or less
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notice, (ii) union or collective bargaining agreement, (iii) agreement with
any executive officer or other key employee of the Company or any of its
Subsidiaries the benefits of which are contingent or vest, or the terms of
which are materially altered, upon the occurrence of a transaction
involving the Company or any of its Subsidiaries of the nature contemplated
by this Agreement, (iv) agreement with respect to any executive officer or
other key employee of the Company or any of its Subsidiaries providing any
term of employment or compensation guarantee or (v) agreement or plan,
including any stock option, stock appreciation right, restricted stock or
stock purchase 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.
3.17. Labor Relations. Except to the extent set forth in the SEC Documents
or Schedule 3.17 of the Company Disclosure Schedule, (i) the Company and each
of its Subsidiaries is, and has at all times been, in material compliance with
all applicable Laws respecting employment and employment practices, terms and
conditions of employment, wages, hours of work and occupational safety and
health, and is not engaged in any unfair labor practices as defined in the
National Labor Relations Act or other applicable Law, except where the failure
to comply would not be reasonably likely to cause a Material Adverse Effect on
the Company; (ii) there is no labor strike, slowdown, stoppage or lockout
actually pending, or, to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries; and (iii) neither the Company nor any of
its Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization.
3.18. Products Liability. Except as set forth in Schedule 3.18 of the
Company Disclosure Schedule, (i) there is no claim, action, suit or proceeding
pending before any Governmental Entity against the Company or any Subsidiary of
the Company in which a Product is alleged to have a Defect; and (ii) to the
knowledge of the Company and its Subsidiaries, no such claim, action, suit or
proceeding is threatened; other than claims, actions, suits or proceedings
referred to in clause (i) or (ii) of this Section 3.18 that would not, if
adversely determined, have, individually or in the aggregate, a Material
Adverse Effect on the Company.
3.19. Transactions with Affiliates. Except as disclosed in the SEC Documents
or Schedule 3.19 of the Company Disclosure Schedule, since March 28, 1998,
there have been no transactions, agreements, arrangements or understandings
between the Company and its Affiliates that would be required to be disclosed
under Item 404 of Regulation S-K under the Securities Act.
3.20. Applicability of State Takeover Statutes. The Section 203 Approval is
valid and in full force and effect. Section 203 of the DGCL will not apply to
the Voting Agreement or the Merger. No other state takeover statute or similar
statute or regulation applies or purports to apply to the Merger or the other
Transactions.
3.21. Voting Requirements. The affirmative vote of the holders of a majority
of all the Shares entitled to vote approving this Agreement is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the Transactions contemplated by this Agreement.
3.22. Brokers. No broker, investment banker, financial advisor or other
Person, other than Lehman Brothers Inc., the fees and expenses of which will be
paid by the Company, 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 disclosed to Parent its fee
arrangements with Lehman Brothers Inc. and has provided Parent with true,
correct and complete copies of any agreements with respect to its fee
arrangements with Lehman Brothers Inc.
3.23. Opinion of Financial Advisor. The Company has received the opinion of
Lehman Brothers Inc., to the effect that, as of the date of this Agreement, the
consideration to be received in the Merger by the Company's stockholders is
fair to the Company's stockholders from a financial point of view, and a
complete and correct signed copy of such opinion has been, or promptly upon
receipt thereof will be, delivered to Parent.
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3.24. Full Disclosure. No representation or warranty by the Company in this
Agreement and no statement contained in the Company Disclosure Schedules or
certificate furnished or to be furnished by the Company to Parent or any of its
Representatives pursuant to the provisions hereof or in connection with the
Transactions, contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was made, in order to make the statements herein
or therein not misleading.
3.25. Year 2000.
(a) To the Company's knowledge, except as set forth on Schedule 3.25,
all material computer-based systems and software of the Company and its
Subsidiaries (collectively, the "Computer Systems") will record, store,
process and present calendar dates falling on or after January 1, 2000 in
the same manner and with the same functionality as such Computer Systems
record, store, process and present calendar dates falling on or before
December 31, 1999. To the Company's knowledge, except as set forth on
Schedule 3.25, in all other respects, such Computer Systems shall not in
any way lose functionality or degrade in performance as a consequence of
such Computer Systems operating at a date later than December 31, 1999.
(b) To the Company's knowledge, the projections and business plans
provided to the Parent in connection with this Agreement reflect all
expenses the Company and its Subsidiaries will reasonably need to incur in
order to convert, rewrite or replace any Computer System or programs as set
forth in Schedule 3.25 which are not currently Year 2000 Compliant
(including performance of all reasonable and prudent testing) as soon as is
practicable and, in any event, before the later of December 31, 1999 and
the date such system or program is scheduled to be placed in operation.
(c) "Year 2000 Compliant" means all Computer Systems and programs of the
Company and its Subsidiaries (i) being designed to be used prior to, during
and after calendar year 2000 without material error relating to date data,
(ii) being capable of operating without material error relating to the
production of the date data which represents or refers to different
centuries or more than one century, and (iii) being designed so that all
date data fields, date-related user interfaces, and other interfaces,
include the indication of century.
ARTICLE IV.
Representations and Warranties of
Parent and Merger Sub
Parent and Merger Sub represent and warrant to the Company as follows:
4.1. Organization, Standing and Corporate Power.
(a) Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction in
which each is incorporated and has the requisite corporate power and
authority to carry on its business as now being conducted. Each of Parent
and Merger Sub is duly qualified or licensed to do business 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 (individually or in the aggregate) would not
have a Material Adverse Effect on Parent.
(b) Each of Hill-Loma, Inc., Bryant Grinder Corporation, Fellows
Corporation, Jones & Lamson Vermont Corporation and J&L Metrology Company,
Inc., all of which are organized under the Laws of the State of Delaware,
are wholly-owned Subsidiaries, either directly or, in the case of J&L
Metrology, Inc., indirectly, of Parent.
4.2. Authority; Noncontravention. Parent and Merger Sub have the requisite
corporate power and authority to enter into this Agreement and to consummate
the Transactions contemplated by this Agreement. The
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execution and delivery of this Agreement by Parent and Merger Sub and the
consummation by Parent and Merger Sub of the Transactions contemplated by this
Agreement have been duly authorized by all necessary corporate action on the
part of Parent and Merger Sub, as applicable. This Agreement has been duly
executed and delivered by Parent and Merger Sub and, assuming this Agreement
constitutes the valid and binding obligation of the Company, constitutes a
valid and binding obligation of each such party, enforceable against each such
party in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
Laws now or hereafter in effect relating to creditors' rights generally and
(ii) the remedy of specific performance and injunctive relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation of the Transactions contemplated by this
Agreement 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 Parent under, (i) the certificate of incorporation
or by-laws of Parent or Merger Sub, (ii) any Law applicable to Parent or Merger
Sub or their respective properties or assets, other than, in the case of clause
(ii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) impair in any material respect
the ability of Parent and Merger Sub to perform their respective obligations
under this Agreement or (y) prevent or impede 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
Entity or any other Person is required by Parent or Merger Sub in connection
with the execution and delivery of this Agreement or the consummation by Parent
or Merger Sub, as the case may be, of any of the Transactions contemplated by
this Agreement, except for (i) the filing of a premerger notification and
report form under the HSR Act, (ii) the filing with the SEC of such reports and
statements under the Exchange Act as may be required in connection with this
Agreement and the Transactions contemplated by this Agreement, (iii) the filing
of the Certificate of Merger with the Secretary of State and appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) as may be required by an applicable state
securities or "blue sky" Laws, and (v) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not, individually or in the aggregate, (x) impair, in
any material respect, the ability of Parent to perform its obligations under
this Agreement or (y) prevent or significantly delay the consummation of the
Transactions contemplated by this Agreement.
4.3. Information Supplied. None of the information supplied or to be
supplied in writing by Parent or Merger Sub expressly for inclusion or
incorporation by reference in the Proxy Statement will, on the date the Proxy
Statement is first mailed to the Company's stockholders and at the time of the
Special 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.
4.4. Operations of Merger Sub. Merger Sub was formed solely for the purpose
of engaging in the Transactions contemplated hereby and has not engaged in any
business activities or conducted any operations other than in connection with
the Transactions contemplated hereby.
4.5. Financing. Parent has obtained the financing commitments detailed in
the commitment letters dated as of March 25, 1999 (the "Commitment"), true and
correct copies of which have been previously delivered to the Company. Upon
receipt of the funds contemplated by the Commitment, Parent will have
sufficient funds to pay for the Shares acquired in the Merger.
4.6. Brokers. No broker, investment banker, financial advisor or other
Person, other than ING Baring Furman Selz LLC and the parties to the
Commitment, the fees and expenses of which will be paid by Parent, is entitled
to any broker's, finder's, financial advisor's or other similar fee or
commission in connection
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with the Transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Parent or Merger Sub.
ARTICLE V.
Covenants
5.1. Interim Operations of the Company. After the date hereof, except as
specifically contemplated by this Agreement, the Company shall and shall cause
its Subsidiaries to carry on their respective businesses in the ordinary course
and use all reasonable best efforts consistent with good business judgment to
preserve intact their current business organizations, keep available the
services of their current officers and key employees and preserve their
relationships consistent with past practice with desirable customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them to the end that their goodwill and ongoing businesses shall
be unimpaired in all material respects at the Effective Time. Without limiting
the generality of the foregoing, the Company covenants and agrees that, except
(i) as expressly contemplated by this Agreement, (ii) as set forth in Schedule
5.1 of the Company Disclosure Schedule or (iii) as agreed in writing by Parent,
after the date hereof:
(a) neither the Company nor any of its Subsidiaries shall, directly or
indirectly, amend its Certificate of Incorporation or By-laws or similar
organizational documents;
(b) neither the Company nor any of its Subsidiaries shall: (i)(A)
declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to the Company's capital stock or that
of its Subsidiaries, except that a wholly-owned Subsidiary of the Company
may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly
any of the Company's capital stock or that of its Subsidiaries; (ii) issue,
sell, pledge, dispose of or encumber any additional shares of, or
securities convertible into or exchangeable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of capital
stock of any class of the Company or its Subsidiaries, other than Shares
issued upon the exercise of Options outstanding on the date hereof in
accordance with the Option Plans as in effect on the date hereof; or (iii)
split, combine or reclassify the outstanding capital stock of the Company
or of any of the Subsidiaries of the Company;
(c) except as permitted by this Agreement, neither the Company nor any
of its Subsidiaries shall acquire or agree to acquire (A) by merging or
consolidating with, or by purchasing a substantial portion of the assets of
or by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division thereof
(including entities which are Subsidiaries of the Company or any of the
Company's Subsidiaries) or (B) any assets, including real estate, except
purchases in the ordinary course of business consistent with past practice
and capital expenditures permitted under Section 5.l(d);
(d) neither the Company nor any of its Subsidiaries shall make any new
capital expenditure or expenditures in an aggregate amount exceeding
$550,000, and provided such capital expenditures which do not exceed said
$550,000 are set forth in Schedule 5.1 of the Company Disclosure Schedule;
(e) neither the Company nor any of its Subsidiaries shall, except in the
ordinary course of business and except as otherwise permitted by this
Agreement, amend or terminate any contract or agreement where such
amendment or termination would have a Material Adverse Affect on the
Company, or waive, release or assign any material rights or claims;
(f) neither the Company nor any of its Subsidiaries shall transfer,
lease, license, sell, mortgage, pledge, dispose of, or encumber any
material property or assets other than sales of products to customers or in
the ordinary course of business and consistent with past practice;
(g) neither the Company nor any of its Subsidiaries shall: (i) enter
into any employment or severance agreement with or grant any severance or
termination pay to any officer, director or key employee of the
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Company or any its Subsidiaries; or (ii) hire or agree to hire any new or
additional key employees or officers; provided that the Company may hire
key employees to fill vacancies in positions created prior to the date
hereof and listed on Schedule 5.1 of the Company Disclosure Schedule;
(h) neither the Company nor any of its Subsidiaries shall, except as
required to comply with applicable Law or expressly provided in this
Agreement, (A) adopt, enter into, terminate, amend or increase the amount
or accelerate the payment or vesting of any benefit or award or amount
payable under any Benefit Plan or other arrangement for the current or
future benefit or welfare of any director, officer or current or former
employee, except to the extent necessary to coordinate any such Benefit
Plans with the terms of this Agreement, (B) increase in any manner the
compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee, except as set forth in Schedule 5.1, (C) pay any
benefit not provided for under any Benefit Plan, other than employee
salaries in the ordinary course of business consistent with past practice
which is in excess of 1% of any employee's annual compensation, (D) grant
any awards under any bonus, incentive, performance or other compensation
plan or arrangement or Benefit Plan (including the removal of existing
restrictions in any Benefit Plans or agreements or awards made thereunder)
except as set forth in Schedule 5.1, (E) grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units
or restricted stock, or (F) take any action to fund or in any other way
secure the payment of compensation or benefits under any employee plan,
agreement, contract or arrangement or Benefit Plan, except as set forth in
Schedule 5.1;
(i) neither the Company nor any of its Subsidiaries shall: (i) incur or
assume any long-term debt or, except in the ordinary course of business,
incur or assume any short-term indebtedness (including advances under the
Company's existing revolving credit agreement) in amounts not consistent
with past practice; (ii) incur or modify any material indebtedness or other
liability except as set forth in Schedule 5.1 of the Company Disclosure
Schedule; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other Person; (iv) make any loans, advances or capital
contributions to, or investments in, any other Person (other than to wholly
owned Subsidiaries of the Company or to such entities which are listed in
Schedule 3.2 of the Company Disclosure Schedule or customary loans or
advances to employees or customers in the ordinary course of business in
accordance with past practice); (v) settle any material claims; or (vi)
enter into any material commitment or transaction unless it is in the
ordinary course of business consistent with past practice and not otherwise
specifically prohibited by this Section 5.1;
(j) neither the Company nor any of its Subsidiaries shall change any of
the accounting principles used by it unless required by GAAP or the SEC;
(k) neither the Company nor any of its Subsidiaries shall make any Tax
election, unless required by law, or settle or compromise any material Tax
liability;
(l) neither the Company nor any of its Subsidiaries shall pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than (i) the
payment, discharge or satisfaction of any such claims, liabilities or
obligations in the ordinary course of business and consistent with past
practice, (ii) the payment,. discharge or satisfaction of any such claims,
liabilities or obligations in connection with the Transactions, (iii) the
payment, discharge or satisfaction of any such claims, liabilities or
obligations which in the aggregate do not exceed $100,000 and (iv) the
payment, discharge or satisfaction of any such claims, liabilities or
obligations which are reflected or reserved against in, or contemplated by,
the consolidated financial statements (or the notes thereto) of the Company
and its consolidated Subsidiaries and which in the aggregate do not exceed
$100,000;
(m) neither the Company nor any of its Subsidiaries shall, except in the
ordinary course of business consistent with past practice, waive the
benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which the Company or any of its
Subsidiaries is a party; and
(n) neither the Company nor any of its Subsidiaries will enter into an
agreement, contract, commitment or arrangement to do any of the foregoing,
or to authorize, recommend, propose or announce an intention to do any of
the foregoing.
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5.2. Access; Confidentiality. Upon reasonable notice, the Company shall (and
shall cause each of its Subsidiaries to) afford to the Representatives of
Parent, including the Persons providing the Commitment, reasonable access,
during normal business hours during the period after the date hereof and prior
to the Effective Time, to such of its properties, personnel, books, contracts,
commitments and records as Parent may reasonably request, and, during such
period, the Company shall (and shall cause each of its Subsidiaries to) furnish
promptly to Parent (a) a copy of each report, schedule, registration statement
and other document filed or received by it during such period pursuant to the
requirements of Federal or state securities Laws and (b) all other information
concerning its business, properties and personnel as Parent may reasonably
request. Notwithstanding anything in this Agreement to the contrary, neither
Parent, its Representatives, nor any Person providing the Commitment shall have
the right to conduct any environmental boring, sampling, testing, or a Phase II
review at any of the properties of the Company or its Subsidiaries provided
that such restriction shall not limit Parent's right to conduct any
environmental investigation with respect to events occurring after the date
hereof. Parent will remain bound by the terms of a confidentiality agreement
with the Company, dated as of January 19, 1999 (the "Parent Confidentiality
Agreement") and the Company will remain bound by the terms of a confidentiality
agreement with Parent dated as of April 20, 1999 (the "Company Confidentiality
Agreement"). Parent hereby acknowledges and agrees that all Persons providing
the Commitment and the Representatives of such Persons are "Representatives" of
Parent within the meaning of the Confidentiality Agreement.
5.3. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other Transactions
contemplated by this Agreement, including (i) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from any
Governmental Entity and the making of all necessary registrations and
filings (including filings with any Governmental Entity, if any) and the
taking of all reasonable steps as may be necessary to obtain an approval or
waiver from, or to avoid an action or proceeding by any Governmental
Entity, (ii) the obtaining of all necessary consents, approvals or waivers
from third parties, (iii) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement
or the consummation of any of the Transactions contemplated by this
Agreement, including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated or
reversed, and (iv) the execution and delivery of any additional instruments
necessary to consummate the Transactions contemplated by, and to fully
carry out the purposes of, this Agreement; provided, however, that in
connection with any filing or submission or other action required to be
made or taken by any Party to effect the Merger and all other Transactions
contemplated hereby, the Company shall not without the prior written
consent of Parent commit to any divestiture transaction and Parent shall
not be required to divest or hold separate or otherwise take or commence to
take any action that, in the reasonable discretion of Parent, limits in any
material respect its freedom of action with respect to, or its ability to
retain, the Company or any of its affiliates or any material portion of the
assets of the Company. In connection with and without limiting the
foregoing, the Company and its Board of Directors shall (i) take all action
necessary to ensure that no state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this Agreement or any of
the other Transactions contemplated by this Agreement and (ii) if any state
takeover statute or similar statute or regulation becomes applicable to the
Merger or this Agreement or any other transaction contemplated by this
Agreement, take all action necessary to ensure that the Merger and the
other Transactions contemplated by this Agreement may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the
Merger, this Agreement and the other Transactions contemplated by this
Agreement.
(b) Each of the Company, Parent and Merger Sub shall give prompt notice
to the other of (i) any of their representations or warranties contained in
this Agreement becoming untrue or inaccurate in any
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respect (including in the case of representations or warranties receiving
knowledge of any fact, event or circumstance which may cause any
representation qualified as to the knowledge to be or become untrue or
inaccurate in any respect) or (ii) the failure by them to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by them under this Agreement; provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations
of the parties under this Agreement.
5.4. No Solicitation.
(a) The Company shall not, nor shall it permit any of its Subsidiaries
to, nor shall it authorize (and shall use its reasonable efforts not to
permit) any officer, director or employee of, or any investment banker,
attorney or other advisor or representative of, the Company or any of its
Subsidiaries to, (i) solicit or initiate, or encourage, directly or
indirectly, the submission of, any Takeover Proposal, (ii) participate in
any discussions or negotiations regarding, or furnish to any Person any
information or data with respect to, or take any other action to knowingly
facilitate the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal or (iii) enter into any
agreement with respect to any Takeover Proposal or approve or resolve to
approve any Takeover Proposal, provided that nothing contained in this
Section 5.4 or any other provision hereof shall prohibit the Company or the
Company's Board of Directors from (i) taking and disclosing to the
Company's stockholders a position with respect to a tender or exchange
offer by a third party pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act, or (ii) making such disclosure to the Company's
stockholders as, in the good faith judgment of the Company's Board of
Directors, after receiving advice from outside counsel, is required under
applicable law, provided that the Company may not, except as permitted by
Section 5.4(b) withdraw or modify, or propose to withdraw or modify, its
position with respect to the Merger or approve or recommend, or propose to
approve or recommend any Takeover Proposal, or enter into any agreement
with respect to any Takeover Proposal. Upon execution of this Agreement,
the Company will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of
the foregoing. Notwithstanding the foregoing, prior to the Effective Time
the Company may furnish information concerning its business, properties or
assets to any Person or group pursuant to confidentiality agreements with
terms and conditions similar to the Confidentiality Agreement and may
negotiate and participate in discussions and negotiations, with such Person
or group concerning a Takeover Proposal if:
(x) the Board of Directors of the Company determines in good faith,
after receiving advice from its financial advisor, that such Person or
group has submitted to the Company a Takeover Proposal which is
reasonably likely to be a Superior Proposal; and
(y) the Board of Directors of the Company determines in good faith,
based upon advice of its outside legal counsel, that the failure to
participate in such discussions or negotiations or to furnish such
information is reasonably likely to result in a breach of such Board's
fiduciary duties under, or otherwise violate, applicable Law.
The Company will promptly notify Parent of the existence of any
proposal, discussion, negotiation or inquiry received by the Company, and
the Company will immediately communicate to Parent the terms of any
proposal, discussion, negotiation or inquiry which it may receive (and will
promptly provide to Parent copies of any written materials received by the
Company in connection with such proposal, discussion, negotiation or
inquiry) and the identity of the party making such proposal or inquiry or
engaging in such discussion or negotiation, except to the extent that the
Board of Directors of the Company determines in good faith, based upon
advice of its outside legal counsel, that any such action described in this
sentence would be reasonably likely to result in a breach of such Board's
fiduciary duties under, or otherwise violate, applicable Law. The Company
will promptly provide to Parent any non-public information concerning the
Company provided to any other Person which was not previously provided to
Parent. The Company will keep Parent fully informed of the status and
details (including amendments or proposed amendments) to any such Takeover
Proposal, except to the extent that the Board of Directors of the
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Company determines in good faith, based upon advice of its outside legal
counsel, that any such action would be reasonably likely to result in a
breach of such Board's fiduciary duties under, or otherwise violate,
applicable Law.
(b) Except as set forth in this Section 5.4(b), neither the Board of
Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent or
Merger Sub, the approval or recommendation by the Board of Directors of the
Company or any such committee this Agreement or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal.
Notwithstanding the foregoing, prior to the Effective Time the Board of
Directors of the Company may withdraw or modify its approval or
recommendation of this Agreement or the Merger, approve or recommend a
Superior Proposal, or enter into an agreement with respect to a Superior
Proposal, in each case at any time after the fifth business day following
Parent's receipt of written notice from the Company advising Parent that
the Board of Directors of the Company has received a Superior Proposal
which it intends to accept, specifying the material terms and conditions of
such Superior Proposal, identifying the person making such Superior
Proposal.
5.5. Publicity. Except as required by Law, so long as this Agreement is in
effect, none of the Company, Parent or Merger Sub shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions contemplated hereby without
prior consultation with the other parties hereto.
5.6. Transfer Taxes. All liability for all recording fees, such as deed
stamps and similar fees imposed on the transfer of real or personal property
owned by the Company or any of its Subsidiaries or affiliates, whether imposed
on the Company, any of its Subsidiaries, the stockholders of the Company,
Merger Sub or Parent as a result of the Merger ("Transfer Taxes"), shall be
borne by Merger Sub, and Merger Sub shall file or cause to be filed all Tax
Returns relating to such Transfer Taxes which are due.
5.7. State Takeover Laws. Notwithstanding any other provision in this
Agreement, in no event shall the Section 203 Approval be withdrawn, revoked or
modified by the Board of Directors of the Company. If any state takeover
statute other than Section 203 of the DGCL becomes or is deemed to become
applicable to the Voting Agreement or the Merger, the Company shall take all
action necessary to render such statute inapplicable to all of the foregoing.
5.8. Indemnification and Insurance.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain the provisions with respect to indemnification
and exculpation set forth in the Certificate of Incorporation and By-Laws
of the Company, which provisions shall not be amended, repealed or
otherwise modified in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were directors,
officers, employees or agents of the Company, unless such modification is
required by Law.
(b) The Company shall, to the fullest extent permitted under applicable
Law or under the Company's Certificate of Incorporation or By-Laws and
regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, Parent or the Surviving
Corporation shall, to the fullest extent permitted under applicable Law or
under the Surviving Corporation's Certificate of Incorporation or By-Laws,
indemnify and hold harmless, each present and former director, officer or
employee of the Company or any of its Subsidiaries (collectively, the
"Indemnified Parties") against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages and liabilities incurred
in connection with, and amounts paid in settlement of, any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative and wherever asserted, brought or filed, (x) arising out
of or pertaining to the Transactions or (y) otherwise with respect to any
acts or omissions or alleged acts or omissions occurring at or prior to the
Effective Time, to the same extent as provided in the respective
Certificate of Incorporation or By-Laws of the Company or the Subsidiaries
as
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in effect on the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period
after the Effective Time must be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, Parent or the Surviving
Corporation shall pay the reasonable fees and expenses of such counsel,
promptly after statements therefor are received, and (iii) Parent or the
Surviving Corporation will cooperate in the defense of any such matter;
provided, however, that Parent or the Surviving Corporation shall not be
liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld or delayed). The Indemnified
Parties as a group may retain only one law firm to represent them with
respect to any single action unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the
positions of any two or more Indemnified Parties. The indemnity agreements
of Parent and the Surviving Corporation in this Section 5.8(b) shall
extend, on the same terms to, and shall inure to the benefit of and shall
be enforceable by, each person or entity who controls, or in the past
controlled, any present or former director, officer or employee of the
Company or any of its Subsidiaries.
(c) For a period of six years after the Effective Time, Parent shall
cause the Surviving Corporation to maintain in effect, if available,
directors' and officers' liability insurance covering those persons who are
currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Parent) on
terms (including the amounts of coverage and the amounts of deductibles, if
any) that are comparable to the terms now applicable to directors and
officers of Parent, or, if more favorable to the Company's directors and
officers, the terms now applicable to them under the Company's current
policies; provided, however, that in no event shall Parent or the Surviving
Corporation be required to expend in excess of 150% of the annual premium
currently paid by the Company for such coverage; and provided, further,
that if the premium for such coverage exceeds such amount, Parent or the
Surviving Corporation shall purchase a policy with the greatest coverage
available for such 150% of the annual premium. The Company has provided
Parent with copies of all of the Company's directors' and officers'
liability insurance policies which are currently in effect. The aggregate
annual premium payable by the Company under such policies is $49,500.
(d) This Section 5.8 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors
and assigns of Parent and the Surviving Corporation and shall be
enforceable by the Indemnified Parties.
5.9. Connecticut Transfer Act. The Company shall prepare and provide to
Parent, prior to the consummation of the Merger, a Form III and an
Environmental Conditions Assessment Form ("ECAF") as required by the
Connecticut Transfer Act, Conn. Gen. Stat. (S)(S) 22a-134 et seq., (the
"Connecticut Transfer Act") or such other form as may be required under the
Connecticut Transfer Act as hereinafter provided and provide such Form III and
ECAF or other such required form to Parent at least ten days prior to the
consummation of the Merger. The Company shall consult with Parent and accept
Parent's reasonable suggestions with respect to the contents of such Form III
and ECAF or other required form. Prior to the Effective Time, the Company shall
execute the Form III and ECAF as the certifying party and shall pay all costs
of filing the Form III and ECAF, and after the Effective Time, the Surviving
Corporation shall file the Form III and ECAF. If the Company and the Parent
determine that a Form III is not the required form under the Connecticut
Transfer Act for the Merger, the Company shall prepare and pay all costs
associated with the required Connecticut Transfer Act filing which filing shall
be made by the Surviving Corporation.
5.10. Financing. Between the date hereof and the consummation of the Merger,
the Company agrees to cooperate, and to cause its Representatives to cooperate,
in connection with the efforts of Parent and Merger Sub to obtain the financing
necessary to consummate the Transactions (the "Transaction Financing"),
provided that the Company shall not be required to pay any fees or other costs
with respect to the Transaction Financing prior to the consummation of the
Merger and that any agreements which the Company may enter into prior to the
consummation of the Merger relating to the obtaining of the Transaction
Financing shall be conditioned upon the occurrence of the consummation of the
Merger.
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ARTICLE VI.
Conditions
6.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect and consummate the Merger shall
be subject to the satisfaction on or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Merger Sub, as the case may be, to the extent permitted
by applicable Law:
(a) this Agreement shall have been approved and adopted by the requisite
vote of the holders of Shares as required by applicable Law, the Company's
Certificate of Incorporation and its By-Laws, in order to consummate the
Merger;
(b) any waiting period applicable to the Merger under the HSR Act shall
have expired or been terminated; and
(c) no statute, rule, regulation, order, decree or injunction shall have
been enacted, promulgated or issued by any Governmental Entity precluding,
restraining, enjoining or prohibiting consummation of the Merger.
6.2. Conditions to Obligations of Parent and the Merger Sub. The obligation
of each of Parent and Merger Sub to effect and consummate the Merger shall be
subject to the satisfaction of or waiver by Parent and the Merger Sub prior to
the Effective Time of the following additional conditions:
(a) the representations and warranties of the Company set forth in
Article III which are qualified as to materiality shall be true and correct
when made on the date hereof and shall be true and correct as of the
Effective Time as if made as of the Effective Time, except for those
representations and warranties which are qualified as to materiality and
are made as of a specific date, which shall be true and correct as of such
date; the other representations and warranties of the Company set forth in
Article III which are not so qualified as to materiality shall be true and
correct in all material respects when made on the date hereof and shall be
true and correct in all material respects as of the Effective Time as if
made as of the Effective Time, except for those representations and
warranties which are not so qualified as to materiality and are made as of
a specific date, which shall be true and correct in all material respects
as of such date; provided, however, for purposes of this Section 6.2(a),
the representations and warranties of the Company set forth in Section
3.7(i) shall not be deemed to be untrue or incorrect in any material
respect (i) if the financial performance of the Company with regard to the
revenues, results of operations or other financial performance of the
Company are materially consistent with the forecasts previously furnished
by the Company to Parent; (ii) if the Company or its Subsidiaries lose on a
net basis the services of less than 50 salaried employees or 50 hourly
employees; or (iii) by reason of any matter arising out of the Company's
relationship with Industrias Romi S.A.;
(b) the Company shall have performed or complied in all material
respects with its agreements and covenants required to be performed or
complied with under this Agreement as of or prior to the Effective Time;
(c) the Company shall have delivered to Parent and the Merger Sub a
certificate of its President and Chief Financial Officer to the effect that
each of the conditions specified in clause (a) of Section 6.1 and clauses
(a), (b), (d), (f) and (g) of this Section 6.2 is satisfied;
(d) (i) the Company shall have obtained all of the waivers, permits,
consents, approvals or other authorizations of Governmental Entities
necessary to be obtained by it to consummate the Merger, and effected all
registrations, filings and notices with respect to Governmental Entities
necessary to be effected by it to consummate the Merger; and (ii) at least
ten days prior to the Closing, the Company shall have delivered to Parent a
draft Form III and ECAF or such other required filing under the Connecticut
Transfer Act; at the Closing, the Company shall have delivered to Parent an
executed Form III and ECAF or such other required filing under the
Connecticut Transfer Act for filing by the Surviving Corporation following
the Effective Date;
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(e) the Company shall have obtained and delivered to Parent and the
Merger Sub copies of all consents, agreements or other evidence of
cancellation from the holders of all outstanding Options pursuant to
Section 2.5;
(f) no action, suit or proceeding shall be pending or threatened in
writing before any Governmental Entity which is reasonably likely to (i)
prevent consummation of any of the Transactions contemplated by this
Agreement, (ii) cause any of the Transactions contemplated by this
Agreement to be rescinded following consummation or (iii) affect materially
and adversely the right of Parent to own, operate or control any of the
assets and operations of the Surviving Corporation following the Merger,
and no such judgment, order, decree, stipulation or injunction shall be in
effect; provided, however, that Parent shall contest or cooperate with the
Company in contesting, as applicable, the action, suit or proceeding and if
any injunction or order has been so issued, will use reasonable efforts to
have it dismissed; in the case of any action, suit or proceeding brought by
a Person, other than a Governmental Entity, the Company shall determine
whether the consequences in clauses (i), (ii) or (iii) of this Section
6.2(f) are reasonably likely to occur, which determination shall be final
and binding on Parent and Merger Sub;
(g) from the date of this Agreement to the Effective Time, there shall
not have been any event or development which results in a Material Adverse
Effect on the Company, nor shall there have occurred any event or
development which is reasonably likely to result in a Material Adverse
Effect on the Company; there shall not be deemed to have been any Material
Adverse Effect on the Company (i) if the financial performance of the
Company with regard to revenues, results of operations or other financial
performance of the Company are materially consistent with the forecasts
previously furnished by the Company to Parent; (ii) if the Company or its
Subsidiaries lose on a net basis the services of less than 50 salaried
employees or 50 hourly employees; or (iii) by reason of any matter arising
out of the Company's relationship with Industrias Romi S.A.;
(h) Parent and the Merger Sub shall have received from Willkie Farr &
Gallagher, or other counsel to the Company reasonably acceptable to Parent,
an opinion with respect to the matters set forth in Exhibit A attached
hereto, addressed to Parent and the Merger Sub and dated as of the Closing
Date; and
(i) that certain letter agreement (the "Textron Letter Agreement") dated
the date hereof by and between Textron Inc. and Parent which confirms the
obligations of Textron Inc. to indemnify the Surviving Corporation
following the Merger for environmental claims under the Textron Agreements
and contains the representations and warranties of Textron Inc. that the
Textron Agreements are the legal, valid and binding obligations of Textron
Inc. and will be, following the Effective Time, along with the Voting
Agreement to which Textron Inc. is a party, enforceable against Textron
Inc., in accordance with their terms, shall be in full force and effect as
of the Effective Time.
6.3. Conditions to Obligations of the Company. The obligation of the Company
to effect and consummate the Merger shall be subject to the satisfaction of or
waiver by the Company prior to the Effective Time of the following additional
conditions:
(a) the representations and warranties of Parent and the Merger Sub set
forth in Article IV which are qualified as to materiality shall be true and
correct when made on the date hereof and shall be true and correct as of
the Effective Time as if made as of the Effective Time, except for
representations and warranties which are so qualified as to materiality and
are made as of a specific date, which shall be true and correct as of such
date; the other representations and warranties of Parent and the Merger Sub
set forth in Article IV which are not so qualified as to materiality shall
be true and correct in all material respects when made on the date hereof
and shall be true and correct in all material respects as of the Effective
Time as if made as of the Effective Time, except for those representations
and warranties which are not so qualified as to materiality and are made as
of a specific date, which shall be true and correct in all material
respects as of such date;
(b) each of Parent and the Merger Sub shall have performed or complied
in all material respects with its agreements and covenants required to be
performed or complied with under this Agreement as of or prior to the
Effective Time;
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(c) each of Parent and the Merger Sub shall have delivered to the
Company a certificate of its President and Chief Financial Officer to the
effect that each of the conditions specified in clauses (a), (b), (d) and
(e) of this Section 6.3 is satisfied in all respects;
(d) Parent and the Merger Sub shall have obtained all waivers, permits,
consents, approvals or other authorizations necessary to be obtained by
them to consummate the Merger and effected all registrations, filings and
notices, necessary to be effected by them to consummate the Merger;
(e) no writ, order, decree or injunction of a Governmental Entity shall
have been entered against Parent, the Merger Sub or the Company which
prohibits the consummation of the Merger; provided, however, that the
Company shall have contested or cooperated with Parent or the Merger Sub,
as applicable, in contesting, the action suit or proceeding giving rise to
such writ, order, decree or injunction and shall have used reasonable
efforts to have the same dismissed; and
(f) the Company shall have received from Brown, Rudnick Freed & Gesmer,
counsel to Parent and the Merger Sub, an opinion with respect to the
matters set forth in Exhibit B attached hereto, addressed to the Company
and dated as of the Closing Date.
ARTICLE VII.
Termination
7.1. Termination. This Agreement shall not be terminated, and the Merger
shall not be abandoned, except in accordance with the provisions of this
Article VII, all strictly construed against the party seeking such termination.
This Agreement may be terminated and the Merger may be abandoned at any time
prior to the Effective Time, whether before or after approval of this Agreement
and the Merger by the Company's Stockholders:
(a) by mutual written consent of the Board of Directors of Parent and
the Board of Directors of the Company;
(b) by either Parent or the Company, if any Governmental Entity shall
have issued an order (other than a temporary restraining order), decree, or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger, and such order, decree ruling or other action shall
have become final and nonappealable, provided that the party seeking
termination shall have diligently contested such order, decree, ruling or
other action;
(c) by either Parent or the Company, if this Agreement and the Merger
fail to receive the approval of that number of stockholders of the Company
necessary under Law to authorize and approve this Agreement and the Merger;
(d) by either Parent or the Company, if the Board of Directors of the
Company shall have recommended or resolved to recommend to its stockholders
a Superior Proposal, or if the Company has approved a Superior Proposal,
each in accordance with Section 5.4(b), and provided that the Company has
complied with all provisions of Section 5.4, including the notice
provisions therein, and further provided that the Company makes
simultaneous payment of the Termination Fee; or
(e) by either Parent or the Company if, without fault of and only in the
absence of any breach under this Agreement by, the party exercising the
right of termination, the Merger shall not have been consummated on or
before December 31, 1999.
7.2. Termination by Parent. This Agreement may be terminated and the Merger
may be abandoned by Parent, at any time prior to the Effective Time, before or
after the approval by the stockholders of the Company, if:
(a) the Closing conditions set forth in Section 6.2 shall not have been
satisfied; provided, however, that if such failure or failures are capable
of being cured prior to the Effective Time, such failure or
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failures shall not have been cured within ten (10) days of delivery to the
Company of written notice of such failure;
(b) the Company shall furnish or disclose non public information to a
Third Party with respect to any Takeover Proposal, or shall have resolved
to do the foregoing, or if the Board of Directors of the Company shall have
recommended or resolved to recommend to its stockholders a Takeover
Proposal or if the Company has approved or effected a Takeover Proposal,
whether or not permitted under this Agreement; or
(c) if prior to the Effective Date, the Board of Directors of the
Company shall have withdrawn, or modified or changed in a manner adverse to
Parent or the Merger Sub, its approval or recommendation of this Agreement
or the Merger.
7.3. Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or
after the approval by the Company's stockholders, by action of the Board of
Directors of the Company, if:
(a) Parent or the Merger Sub shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement
such that the Closing condition set forth in Section 6.3(b) would not be
satisfied or if the Closing conditions set forth in Section 6.3(c), (d),
(e) and (f) shall not have been satisfied; provided, however, that if such
failure or failures are capable of being cured prior to the Effective Time,
such failure or failures shall not have been cured within ten (10) days of
delivery to Parent of written notice of such failure; or
(b) there exists a breach of any one or more representations or
warranties of Parent or the Merger Sub contained in this Agreement such
that the Closing condition set forth in Section 6.3(a) would not be
satisfied; provided, however, that if such failure or failures are capable
of being cured prior to the Effective Time, such failure or failures shall
not have been cured within ten (10) days of delivery to Parent of written
notice of such failure.
7.4. Procedure for Termination. If either Parent or the Company wish to
terminate this Agreement pursuant to this Article VII, written notice thereof
shall forthwith be given to the other.
7.5. Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and abandonment of the
Merger pursuant to this Article VII, no party hereto (or any of its
directors, officers or Affiliates) shall have any liability or further
obligation to any other party to this Agreement, except as provided in
Sections 3.22 and 4.6, the last sentence of Section 5.2, Article VII,
Article VIII, and 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.
(b) In the event of termination of this Agreement pursuant to Section
7.1(c), or by Parent pursuant to (i) 7.2(a) as a result of a failure to
satisfy the conditions in Sections 6.2(a) (to the extent such failure
results from a breach by the Company of its representations and warranties
hereunder), 6.2(b) or 6.2(d)(ii); (ii) Section 7.2(b); or (iii) Section
7.2(c), then the Company shall, within five (5) business days thereafter,
pay Parent by wire transfer of immediately available funds to an account
specified by Parent an amount equal to all documented out of pocket
reasonable fees and expenses incurred by Parent and Merger Sub since
January 1, 1999 (including the reasonable fees and expenses of counsel,
accountants, consultants and advisors, and any commitment fees and other
expenses paid to prospective lenders) in connection with this Agreement and
the Transactions contemplated hereby (the "Parent Documented Expenses");
provided, however, the Parent Documented Expenses which the Company shall
pay in the event of termination of this Agreement pursuant to Section
7.1(c) shall not exceed $650,000 and the Parent Documented Expenses which
the Company shall pay in the event of termination of this Agreement
pursuant to Section 7.2 shall not exceed $500,000; and provided, further,
that the Company shall not be obligated to pay any Parent
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Documented Expenses if (i) Parent or the Merger Sub shall have failed to
comply in any material respect with any of the covenants or agreements
contained in this Agreement such that the Closing condition set forth in
Section 6.3(b) would not be satisfied; or (ii) there exists a breach of any
one or more representations or warranties of Parent or the Merger Sub
contained in this Agreement in any material respect such that the closing
condition set forth in Section 6.3(a) would not be satisfied.
(c) In the event of termination of this Agreement pursuant to Section
7.1(d), the Company shall, within five (5) business days thereafter, pay
Parent by wire transfer of immediately available funds to an account
specified in writing by Parent a fee equal to the amount, if any, by which
$3.25 million exceeds the fee payable in such event by Textron Inc. to
Parent under the Voting Agreement to which Textron Inc. is a party (the
"Termination Fee").
(d) To the extent that the Termination Fee has for any reason other than
a material breach by Parent not already been paid and within twelve (12)
months after the termination of this Agreement the Company or any of its
Subsidiaries, or any Company Affiliate enters into a definitive agreement
with a Third Party with respect to a Takeover Proposal or a Takeover
Proposal is effected, then the Company shall, within five (5) business days
after the consummation of such Takeover Proposal, pay Parent by wire
transfer of immediately available funds to an account specified in writing
by Parent the Termination Fee less any Parent Documented Expenses
previously paid by the Company to Parent.
ARTICLE VIII.
Miscellaneous
8.1. Amendment and Modification. Subject to applicable Law, this Agreement
may be amended, modified and supplemented in any and all respects, whether
before or after any vote of the stockholders of the Company contemplated
hereby, by written agreement of the parties hereto at any time prior to the
Closing Date with respect to any of the terms contained herein; provided;
however, that after the approval of this Agreement by the stockholders of the
Company, no such amendment, modification or supplement shall reduce the amount
or change the form of the Merger Consideration or otherwise adversely affect
the rights of stockholders.
8.2. Nonsurvival of Representations and Warranties. Except as otherwise
provided herein, none of the representations and warranties in this Agreement
or in any schedule, instrument or other document delivered pursuant to this
Agreement shall survive the Effective Time. This Section 8.2 shall not limit
any covenant or agreement of the parties which by its terms contemplates
performance after the Effective Time.
8.3. Notices. All notices and other communications hereunder shall be in
writing, writing and shall be deemed given upon receipt, and shall be given to
the parties at the following addresses or telecopy numbers (or at such other
address or telecopy number for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Goldman Industrial Group, Inc.
One Post Office Square, Suite 4100
Boston, Massachusetts 02109
Attention: Gregory I. Goldman, Chief Executive Officer
Telecopy: 617-338-1481
with a copy to:
Brown Rudnick Freed & Gesmer
One Financial Center
Boston, Massachusetts 02111
Attention: Steven R. London, Esq.
Telecopy: 617-856-8201
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(b) if to the Company, to:
Bridgeport Machines, Inc.
500 Lindley Street
Bridgeport, Connecticut
Attention: President
Telecopy: (203)-337-8339
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attention: William J. Grant, Jr., Esq.
Telecopy: 212-728-8111
8.4. Interpretation.
(a) The words "hereof," "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this
Agreement as a whole and not to any particular provision of this Agreement,
and article, section, paragraph, exhibit and schedule references are to the
articles, sections, paragraphs, exhibits and schedules of this Agreement
unless otherwise specified. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed
by the words "without limitation." All terms defined in this Agreement
shall have the defined meanings contained herein when used in any
certificate or other document made or delivered pursuant hereto unless
otherwise defined therein. 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 mended, modified or
supplemented, including (in the case of agreements and instruments) by
waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and all attachments thereto and instruments incorporated
therein. References to a Person are also to its permitted successors and
assigns.
(b) The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be
deemed to refer to April 23, 1999. The phrase "to the knowledge of" the
Company or any Subsidiary thereof or any similar phrase shall mean such
facts and other information which Joseph E. Clancy, Dan L. Griffith, Walter
C. Lazarcheck and Malcolm Taylor or any successor to the positions at the
Company occupied by any of the foregoing after the conduct of a reasonable
investigation by such officers. The phrase "made available" in this
Agreement shall mean that the information referred to has been actually
delivered to the party to whom such information is to be made available.
8.5. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each
of the parties and delivered to the other parties.
8.6. Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement, the Voting Agreement and the Confidentiality Agreement
(including the documents and the instruments referred to herein and therein):
(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 hereof, and (b) except as provided in Section 5.8 are not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
8.7. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the
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remainder of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated unless the economic or legal substance of the
Transactions is affected in an adverse way to any party.
8.8. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware without giving effect to the
principles of conflicts or choice of law thereof or of any other jurisdiction.
8.9. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether
by operation of Law or otherwise) without the prior written consent of the
other parties, except that Merger Sub may assign, in its sole discretion, any
or all of its rights, interests and obligations hereunder to Parent or to any
direct or indirect wholly owned Subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
8.10. Extension; Waiver. At any time prior to the Effective Time, the
parties 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 8.1, waive compliance by the other parties with any of the
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 those rights.
8.11. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 7.1, an amendment of this
Agreement pursuant to Section 8.1 or an extension or waiver pursuant to Section
8.10 shall, in order to be effective, require in the case of Parent, Merger Sub
or the Company, action by its Board of Directors or the duly authorized
designee of its Board of Directors.
8.12. Undertakings of Parent. Parent shall perform, or cause to be
performed, all obligations of Merger Sub under this Agreement.
8.13. Definitions. For purposes of this Agreement:
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange Act.
"Benefit Plans" has the meaning assigned thereto in Section 3.10.
"By-laws" has the meaning assigned thereto in Section 1.5.
"Certificate of Incorporation" has the meaning assigned thereto in
Section 1.5.
"Certificate of Merger" has the meaning assigned thereto in Section 1.6.
"Certificates" has the meaning assigned thereto in Section 2.2.
"Closing" has the meaning assigned thereto in Section 1.3.
"Closing Date" has the meaning assigned thereto in Section 1.3.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Bridgeport Machines, Inc. a Delaware corporation.
"Company Confidentiality Agreement" has the meaning assigned thereto in
Section 5.2.
"Company Material Contracts" has the meaning assigned thereto in Section
3.16(a).
"Computer Systems" has the meaning assigned thereto in Section 3.25(a).
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"Connecticut Transfer Act" has the meaning assigned thereto in Section
5.9.
"Defect" means a defect or impurity of any kind, whether in design,
manufacture, processing, or otherwise, including, without limitation, any
dangerous propensity associated with any reasonably foreseeable use of a
Product, or the failure to warn of the existence of any defect, impurity,
or dangerous propensity.
"DGCL" means the Delaware General Corporation Law, as amended.
"Dissenting Stockholders" has the meaning assigned thereto in Section
2.l(c).
"ECAF" has the meaning assigned thereto in Section 5.9.
"Effective Time" has the meaning assigned thereto in Section 1.2.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Environmental Agreements" has the meaning assigned thereto in Section
3.13(i).
"Environmental Laws" means all foreign, Federal, state and local Laws
relating to pollution or protection of human health, safety or the
environment, including, without limitation, Laws relating to Releases or
threatened Releases of Hazardous Materials into the outdoor environment
(including, without limitation, ambient air, surface water, groundwater,
land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Materials, and all Laws and regulations
with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Materials.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fee Properties" has the meaning assigned thereto in Section 3.15.
"Governmental Entity" means any (i) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (ii) federal,
state, local, municipal, foreign or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal); or (iv) body exercising, or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory, or
taxing authority or power of any nature.
"Hazardous Materials" means all substances defined as hazardous
substances in the National Oil and Hazardous Substances Pollution
Contingency Plan, 40 C.F.R. (S) 300.5, or substances defined as hazardous
substances, hazardous materials, toxic substances, hazardous wastes,
pollutants or contaminants, under any Environmental Law, or substances
regulated under any Environmental Law, including, but not limited to,
petroleum (including crude oil or any fraction thereof), asbestos, and
polychlorinated biphenyls.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" has the meaning assigned thereto in Section
5.8(b).
"Intellectual Property Rights" has the meaning assigned thereto in
Section 3.14(a).
"Laws" means any administrative order, constitution, law, ordinance,
principle of common law, rule, regulation, statute, treaty, judgment,
decree, license or permit enacted, promulgated, issued, enforced or entered
by any Governmental Entity.
"Leased Properties" has the meaning assigned thereto in Section 3.15.
"Lien" means any conditional sale agreement, default of title, easement,
encroachment, encumbrance, hypothecation, infringement, lien, mortgage,
pledge, reservation, restriction, security
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<PAGE>
interest, title retention or other security arrangement, or any adverse
right or interest, charge or claim of any nature whatsoever of, on, or with
respect to any asset, property or property interest.
"Material Adverse Change" or "Material Adverse Effect" means, when used
in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to
result in any change or effect) that is materially adverse to the business,
properties, assets, prospects, financial condition or results of operations
of such party and its Subsidiaries taken as a whole.
"Merger" has the meaning assigned thereto in Section 1.5.
"Merger Consideration" has the meaning assigned thereto in Section 2.1.
"Merger Sub" means Bronze Acquisition Corp., a Delaware corporation.
"Option Plans" has the meaning assigned thereto in Section 2.5(b).
"Option" has the meaning assigned thereto in Section 2.5.
"Parent" means Goldman Industrial Group, Inc., a Delaware corporation.
"Parent Confidentiality Agreement" has the meaning assigned thereto in
Section 5.2.
"Parent Documented Expenses" has the meaning assigned thereto in Section
7.5(b).
"Paying Agent" has the meaning assigned thereto in Section 2.2(a).
"Permit" means any Federal, state, local and foreign governmental
approval, authorization, certificate, filing, franchise, license, notice,
permit or right.
"Permitted Liens" means (i) Liens for Taxes which are not yet due or
delinquent or which are being contested in good faith, (ii) carriers',
warehousemen's, mechanics', materialmen's or other like Liens arising in
the ordinary course of business and securing obligations that are not due
or which are being contested in good faith, (iii) zoning restrictions,
easements, rights-of-way, restrictions on use of real property and other
similar encumbrances incurred in the ordinary course of business and (iv)
Liens or other imperfections of title which, individually or in the
aggregate, do not materially detract from the value of the property subject
thereto or materially interfere with the ordinary conduct of the business
of the Company and its Subsidiaries, taken as a whole.
"Person" means an individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, labor union,
estate, trust, unincorporated organization or other entity, including any
Governmental Entity.
"Product" means any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of
commerce by or on behalf of the Company or any of its Subsidiaries,
including, without limitation, any product sold in the United States by the
Company or any of its Subsidiaries as the distributor, agent, or pursuant
to any other contractual relationship with a non-U.S. manufacturer.
"Proxy Statement" has the meaning assigned thereto in Section 1.4.
"Real Property" has the meaning assigned thereto in Section 3.15.
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the environment (including, without limitation, ambient air,
surface water, groundwater, and surface or subsurface strata) or into or
out of any property, including the movement of Hazardous Materials through
or in the air, soil, surface water, ground, water or property.
"Representative" means, with respect to any Person, such Person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such Person or
its Subsidiaries).
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"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"SEC Documents" has the meaning assigned thereto in Section 3.5.
"Secretary of State" means the Secretary of State of the State of
Delaware.
"Section 203 Approval" has the meaning assigned thereto in Section 3.4.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning assigned thereto in the recitals.
"Significant Subsidiaries" has the meaning assigned thereto in Rule 1-02
of Regulation S-X of the SEC.
"Special Meeting" has the meaning assigned thereto in Section 1.4.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity, whether incorporated or
unincorporated, of which such Person or any other Subsidiary of such Person
(i) owns, directly or indirectly, 50% or more of the outstanding voting
securities or equity interests, (ii) is entitled to elect at least a
majority of the Board of Directors or similar governing body, or (iii) is a
general partner (excluding such partnerships where such Person or any
Subsidiary of such Person do not have a majority of the voting interests in
such partnership).
"Superior Proposal" means an unsolicited bona fide proposal by a Third
Party to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than a majority of the Shares then outstanding
or all or substantially all of the assets off the Company, and otherwise on
terms which the Board of Directors of the Company determines in good faith
to be more favorable to the Company's stockholders by more than one hundred
ten percent (110%) than the Merger, based on advice of the Company's
independent financial advisor, for which financing, to the extent required,
is then committed or which, in the good faith reasonable judgment of the
Board of Directors of the Company, based on advice from the Company's
independent financial advisor, is reasonably capable of being financed by
such Third Party and which, in the good faith reasonable judgment of the
Board of Directors of the Company, is reasonably capable of being
consummated within a period of time not materially longer in duration than
the period of time reasonably believed to be necessary to consummate the
Merger.
"Surviving Corporation" means Bridgeport Machines, Inc. after the
Merger.
"Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any Person other than Parent, Merger Sub or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as
defined under Rule 13(d) of the Exchange Act) of all or a material portion
of the assets of the Company and its Subsidiaries, taken as whole, or 50%
or more of any class of equity securities of the Company pursuant to a
merger, consolidation or other business combination, sale of shares of
capital stock, sale of assets, tender offer, exchange offer or similar
transaction with respect to the Company, including any single or multi-step
transaction or series of related transactions, which is structured to
permit such Third Party to acquire beneficial ownership of any material
portion of the assets of the Company and its Subsidiaries, taken as a
whole, or 50% or more of the equity interest in the Company.
"Taxes" mean any Federal, state, local or foreign net income, gross
income, receipts, windfall profit, severance, property, production, sales,
use, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum, ad valorem, transfer, stamp or environmental
tax, or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or
penalty, addition to tax or additional amount imposed by any Governmental
Entity.
"Tax Returns" mean all returns, reports, or statements required to be
filed with any Governmental Entity with respect to any Tax (including any
attachments thereto), including, without limitation, any consolidated,
unitary or similar return, information return, claim for refund, amended
return or declaration of estimated Tax.
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"Termination Fee" has the meaning assigned thereto in Section 7.5(c).
"Textron Agreements" has the meaning assigned thereto in Section
3.13(i).
"Textron Letter Agreement" has the meaning assigned thereto in Section
6.2(i).
"Third Party" has the meaning assigned thereto in this Section 8.13.
"Transactions" mean this Agreement and the transactions contemplated
hereby, including the Merger.
"Transaction Financing" has the meaning assigned thereto in Section
5.10.
"Transfer Taxes" has the meaning assigned thereto in Section 5.6.
"Year 2000 Compliant" has the meaning assigned thereto in Section
3.25(c).
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.
GOLDMAN INDUSTRIAL GROUP, INC.
By:/s/ Gregory I. Goldman
-------------------------------------
Name: Gregory I. Goldman
Title: President and Chief Executive
Officer
BRONZE ACQUISITION CORP.
By: /s/ Gregory I. Goldman
-------------------------------------
Name: Gregory I. Goldman
Title: President and Chief Executive
Officer
BRIDGEPORT MACHINES, INC.
By: /s/ Dan L. Griffith
-------------------------------------
Name: Dan L. Griffith
Title: President and Chief Executive
Officer
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APPENDIX B
Affiliate's Agreement
This AGREEMENT (this "Agreement") is made as of April 23, 1999, by and among
Goldman Industrial Group, Inc., a Delaware corporation (the "Parent"), and
Textron Inc., a Delaware corporation ("Textron"), a shareholder of Bridgeport
Machines, Inc., a Delaware corporation (the "Company"). Reference is made to
that certain Agreement and Plan of Merger, dated April 23, 1999 (the "Merger
Agreement"), by and among Parent, Bronze Acquisition Corp., a Delaware
corporation and wholly owned subsidiary of Parent (the "Purchaser"), and the
Company.
WHEREAS, pursuant to the Merger Agreement, Parent, Purchaser and the Company
are contemplating a merger of Purchaser with and into the Company (the
"Merger"), pursuant to which the Company will become a wholly-owned subsidiary
of Parent;
WHEREAS, the Merger is contingent upon the approval of the Merger and the
Merger Agreement by the Company's stockholders at a special meeting of the
Company's stockholders, and Textron desires to facilitate the Merger by
agreeing to vote Textron's shares of the Company's Common Stock, $.01 per value
(the "Common Stock") and any shares of Common Stock of the Company over which
Textron has voting control in favor of the Merger and the Merger Agreement;
WHEREAS, Textron desires irrevocably to appoint Parent or any designee of
Parent as Textron's lawful agent, attorney and proxy to vote in favor of the
Merger and the Merger Agreement;
WHEREAS, in accordance with the Merger Agreement, shares of Common Stock
owned by Textron at the Effective Time (as defined in the Merger Agreement)
shall be converted into the right to receive cash in accordance with the Merger
Agreement; and
WHEREAS, Textron has agreed to provide certain other inducements to Parent
and Purchaser to induce them to enter into the Merger Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants set forth in the Merger Agreement and hereinafter in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Textron agrees as follows:
1. Transfer Restriction. Textron will not sell, transfer or otherwise
dispose of, or reduce his or its interest in any shares of Common Stock
currently owned or hereafter acquired by it prior to the termination of this
Agreement.
2. Irrevocable Proxy. Textron hereby irrevocably appoints Parent or any
designee of Parent as Textron's lawful agent, attorney and proxy to vote or
give consents with respect to all shares of Common Stock held by Textron and
all shares of Common Stock over which Textron has voting control, in favor of
the approval of the Merger and the Merger Agreement and any matters incidental
thereto. Textron intends this proxy to be irrevocable and coupled with an
interest. Parent agrees that it or its designee shall vote the shares of Common
Stock held by Textron and the shares of Common Stock over which Textron has
voting control in favor of the approval of the Merger and the Merger Agreement.
The agents, attorneys and proxies named herein may not exercise this proxy on
any other matter except as provided herein. Textron may vote all shares of
Common Stock held by Textron and all shares of Common Stock over which Textron
has voting control on all other matters.
3. Voting Agreement. If the Parent cannot or does not for any reason vote
the proxy granted to the Parent in Section 2, above, at a special meeting of
the stockholders of the Company called for the purpose of considering the
approval of the Merger and the Merger Agreement, Textron agrees to vote all of
the shares of Common Stock held by Textron and all shares of Common Stock over
which Textron has voting control in favor of the Merger and the Merger
Agreement.
4. No Shopping. Textron shall not directly or indirectly (i) solicit,
initiate or encourage (or authorize any person to solicit, initiate or
encourage) any inquiry, proposal or offer from any person (other than Parent)
to
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acquire the business, property or capital stock of the Company or any direct or
indirect subsidiary thereof, or any acquisition of a substantial equity
interest in, or a substantial amount of the assets of, the Company or any
direct or indirect subsidiary thereof, whether by merger, purchase of assets,
tender offer or other transaction or (ii) participate in any discussion or
negotiations regarding, or furnish to any other person any information with
respect to, or otherwise cooperate in any way with, or participate in,
facilitate or encourage any effort or attempt by any person (other than Parent)
to do or seek any of the foregoing. Notwithstanding any provision in this
Section 4 to the contrary, Textron's representative on the Company's Board of
Directs may take actions in such capacity permitted under the Merger Agreement.
5. Transfer of Profits. In the event the Company is obligated to pay a
Termination Fee (as defined in the Merger Agreement) pursuant to Section 7.5(c)
or 7.5(d) of the Merger Agreement, Textron shall, within five (5) business days
after the consummation of the transaction which triggers such obligation (a
"Triggering Transaction"), pay Parent by wire transfer of immediately-available
funds to an account specified in writing by Parent, the amount (hereinafter,
the "Textron Takeover Fee") which equals the product of (a) the amount by which
the consideration paid to Textron pursuant to such Triggering Transaction
exceeds $10 per share of Common Stock and (b) the total number of shares of
Common Stock transferred by Textron pursuant to such Triggering Transaction.
The $10 per share shall be adjusted for any recapitalization,
reclassifications, stock split or similar event.
6. Miscellaneous.
(a) By signing below, Textron represents and warrants that Textron has
all necessary power and authority to execute this Agreement and to cause
Textron's shares of Common Stock and the shares of Common Stock over which
Textron has voting control, to be voted as provided herein, and Textron has
duly authorized, executed and delivered this Agreement.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without giving effect to the principles
of conflict of laws thereof.
(c) This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any
and all of the parties hereto may execute this Agreement by signing any
such counterpart.
(d) This Agreement shall terminate upon the earlier to occur of (i) the
Effective Date or (ii) termination of the Merger Agreement in accordance
with the terms thereof except that the provisions of Section 5 hereof shall
continue for as long as Parent has the right to receive any payment of the
Textron Takeover Fee.
(e) This Agreement shall be binding on Textron's successors and assigns.
(f) Textron has carefully read this agreement and discussed its
requirements, to the extent Textron believes necessary, with its counsel or
counsel for the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
GOLDMAN INDUSTRIAL GROUP, INC.
By: /s/ Gregory Goldman
----------------------------------
Gregory Goldman
Chief Executive Officer
TEXTRON INC.
By: /s/ Stephen L. Key
----------------------------------
Stephen L. Key
Executive Vice President and
Chief Financial Officer
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APPENDIX C
Form of Affiliate's Agreement For Principal Stockholders Other Than Textron
Inc.
This AGREEMENT (this "Agreement") is made as of April 23, 1999, by and among
Goldman Industrial Group, Inc., a Delaware corporation (the "Parent"), and the
undersigned stockholder (the "Undersigned") of Bronze, Inc., a Delaware
corporation (the "Company"). Reference is made to that certain Agreement and
Plan of Merger, dated April 23, 1999 (the "Merger Agreement"), by and among
Parent, Bronze Acquisition Corp., a Delaware corporation and wholly owned
subsidiary of Parent (the "Purchaser"), and the Company.
WHEREAS, pursuant to the Merger Agreement, Parent, Purchaser and the Company
are contemplating a merger of Purchaser with and into the Company (the
"Merger"), pursuant to which the Company will become a wholly owned subsidiary
of Parent;
WHEREAS, the Merger is contingent upon the approval of the Merger and the
Merger Agreement by the Company's stockholders at a special meeting of the
Company's stockholders, and the Undersigned desires to facilitate the Merger by
agreeing to vote the Undersigned's shares of the Company's Common Stock, $.01
par value (the "Common Stock") and any shares of Common Stock of the Company
over which the Undersigned has voting control in favor of the Merger and the
Merger Agreement;
WHEREAS, the Undersigned desires irrevocably to appoint Parent or any
designee of Parent as the Undersigned's lawful agent, attorney and proxy to
vote in favor of the Merger and the Merger Agreement; and
WHEREAS, in accordance with the Merger Agreement, shares of Common Stock
owned by the Undersigned at the Effective Time (as defined in the Merger
Agreement) shall be converted into the right to receive cash in accordance with
the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants set forth in the Merger Agreement and hereinafter in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Undersigned agrees as follows:
1. Transfer Restriction. The Undersigned will not sell, transfer or
otherwise dispose of, or reduce his or its interest in any shares of Common
Stock currently owned or hereafter acquired by him or it prior to the
termination of this Agreement.
2. Irrevocable Proxy. The Undersigned hereby irrevocably appoints Parent or
any designee of Parent as the Undersigned's lawful agent, attorney and proxy to
vote or give consents with respect to all shares of Common Stock held by the
Undersigned and all shares of Common Stock over which the Undersigned has
voting control, in favor of the approval of the Merger and the Merger Agreement
and any matters incidental thereto. The Undersigned intends this proxy to be
irrevocable and coupled with an interest. Parent agrees that it or its designee
shall vote the shares of Common Stock held by the Undersigned and the shares of
Common Stock over which the Undersigned has voting control in favor of the
approval of the Merger and the Merger Agreement. The agents, attorneys and
proxies named herein may not exercise this proxy on any other matter except as
provided herein. The Undersigned may vote all shares of Common Stock held by
the Undersigned and all shares of Common Stock over which the Undersigned has
voting control on all other matters.
3. Voting Agreement. If the Parent cannot or does not for any reason vote
the proxy granted to the Parent in Section 2, above, at a special meeting of
the stockholders of the Company called for the purpose of considering the
approval of the Merger and the Merger Agreement, the Undersigned agrees to vote
all of the shares of Common Stock held by the Undersigned and all shares of
Common Stock over which the Undersigned has voting control in favor of the
Merger and the Merger Agreement.
4. No Shopping. The Undersigned, in its capacity as a stockholder of the
Company, shall not directly or indirectly (i) solicit, initiate or encourage
(or authorize any person to solicit, initiate or encourage) any inquiry,
proposal or offer from any person (other than Parent) to acquire the business,
property or capital stock of the Company or any direct or indirect subsidiary
thereof, or any acquisition of a substantial equity interest in, or a
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substantial amount of the assets of, the Company or any direct or indirect
subsidiary thereof, whether by merger, purchase of assets, tender offer or
other transaction or (ii) participate in any discussion or negotiations
regarding, or furnish to any other person any information with respect to, or
otherwise cooperate in any way with, or participate in, facilitate or encourage
any effort or attempt by any person (other than Parent) to do or seek any of
the foregoing. Notwithstanding any provision of this Section 4 to the contrary,
the Undersigned's representative on the Company's Board of Directors may take
actions in such capacity permitted under the Merger Agreement.
5. Miscellaneous.
(a) By signing below, the Undersigned represents and warrants that the
Undersigned has all necessary power and authority to execute this Agreement
and to cause the Undersigned's shares of Common Stock and the shares of
Common Stock over which the Undersigned has voting control, to be voted as
provided herein, and the Undersigned has duly authorized, executed and
delivered this Agreement.
(b) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without giving effect to the principles
of conflict of laws thereof.
(c) This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any
and all of the parties hereto may execute this Agreement by signing any
such counterpart.
(d) This Agreement shall terminate upon the earlier to occur of (i) the
Effective Date or (ii) termination of the Merger Agreement in accordance
with the terms thereof.
(e) This Agreement shall be binding on the Undersigned's successors and
assigns, including his heirs, executors and administrators.
(f) The undersigned has carefully read this agreement and discussed its
requirements, to the extent the Undersigned believed necessary, with its
counsel or counsel for the Company.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
GOLDMAN INDUSTRIAL GROUP, INC.
By:
----------------------------------
Name: Gregory I. Goldman
Title:Chief Executive Officer
STOCKHOLDER:
By:
----------------------------------
Name:
Title:
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APPENDIX D
[LETTERHEAD OF TEXTRON INC.]
April 23, 1999
Goldman Industrial Group, Inc.
One Post Office Square, Suite 4100
Boston, Massachusetts 02109
Gentlemen:
Reference is made to that certain Agreement and Plan of Merger, dated as of
April 23, 1999, by and among Goldman Industrial Group, Inc. ("Goldman"), Bronze
Acquisition Corp., and Bridgeport Machines, Inc. (the "Company"). Capitalized
terms used herein without definition shall have the meanings ascribed to them
in the Merger Agreement.
We further make reference to the Purchase and Sale Agreement, dated as of
May 7, 1986 between the Company and Textron Inc. ("Textron") and the Settlement
Agreement, dated as of June 23, 1994, between the Company and Textron (such
agreements, collectively, the "Textron Agreements").
Textron is the holder of shares of the Common Stock of the Company, and in
connection with the Merger, Textron will receive from Goldman (or Bronze
Acquisition Corp.) $10.00 for each share of such Common Stock.
In connection with the Merger and in consideration of the Merger Agreement,
Textron hereby confirms and ratifies that, subject to compliance by the Company
(or any successor thereto) of its obligations under the Textron Agreements,
Textron's obligations under the Textron Agreements will continue, and, subject
to completion of the Merger, the Company's rights under the Textron Agreements
may be assigned to any successor to the Company. Textron further represents and
warrants to Goldman that the Textron Agreements are legal, valid and binding
obligations of Textron, and are and will be, following the Effective Time,
enforceable against Textron in accordance with their terms.
Very truly yours,
TEXTRON INC.
By: /s/ Stephen L. Key
----------------------------------
Stephen L. Key
Executive Vice President and
Chief Financial Officer
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APPENDIX E
April 23, 1999
Board of Directors of Bridgeport Machines, Inc.
c/o Bridgeport Machines, Inc.
500 Lindley Street
Bridgeport, CT 06606
Members of the Board:
We understand that Bridgeport Machines, Inc. ("Bridgeport Machines" or the
"Company") and the Goldman Industrial Group, Inc. ("Goldman Industrial") are
proposing to enter into an agreement pursuant to which the Company will merge
with and into Goldman Industrial and, upon the effectiveness of such merger,
each outstanding share of common stock of the Company will be converted into
the right to receive $10.00 in cash (the "Proposed Transaction"). The terms and
conditions of the Proposed Transaction are set forth in more detail in the
Agreement and Plan of Merger dated April 23, 1999 between the Company and
Goldman Industrial (the "Agreement").
We have been requested by the Board of Directors of the Company to render
our opinion with respect to the fairness, from a financial point of view, to
the Company's stockholders of the consideration to be offered to such
stockholders in the Proposed Transaction. We have not been requested to opine
as to, and our opinion does not in any manner address, the Company's underlying
business decision to proceed with or effect the Proposed Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the Agreement and
the specific terms of the Proposed Transaction, (2) publicly available
information concerning the Company that we believe to be relevant to our
analysis, (3) financial and operating information with respect to the business,
operations and prospects of the Company furnished to us by the Company, (4) a
trading history of the Company's common stock from January 1, 1996 to the
present and a comparison of that trading history with those of other companies
that we deemed relevant, (5) a comparison of the historical financial results
and present financial condition of the Company with those of other companies
that we deemed relevant, and (6) a comparison of the financial terms of the
Proposed Transaction with the financial terms of certain other recent
transactions that we deemed relevant. In addition, we have had discussions with
the management of the Company concerning its business, operations, assets,
financial condition and prospects and have undertaken such other studies,
analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information used by us without assuming
any responsibility for independent verification of such information and have
further relied upon the assurances of management of the Company that they are
not aware of any facts or circumstances that would make such information
inaccurate or misleading. With respect to the financial projections of the
Company, upon advice of the Company we have assumed that such projections have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of the management of the Company as to the future
financial performance of the Company and that the Company will perform in
accordance with such projections. In arriving at our opinion, we have conducted
only a limited physical inspection of the properties and facilities of the
Company and have not made or obtained any evaluations or appraisals of the
assets or liabilities of the Company. In addition, you have not authorized us
to solicit, and we have not solicited, any indications of interest from any
third party with respect to the purchase of all or a part of the Company's
business. Our opinion necessarily is based upon market, economic and other
conditions as they exist on, and can be evaluated as of, the date of this
letter.
LEHMAN BROTHERS
3 WORLD FINANCIAL CENTER, NEW YORK, NY 10285 TELEPHONE (212) 526-7000 FACSIMILE
(212)526-3738
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<PAGE>
April 23, 1999
Page Two
Based upon and subject to the foregoing, we are of the opinion as of the
date hereof that, from a financial point of view, the consideration to be
offered to the stockholders of the Company in the Proposed Transaction is fair
to such stockholders.
We have acted as financial advisor to the Company in connection with the
Proposed Transaction and will receive a fee for our services which is
contingent upon the consummation of the Proposed Transaction. In addition, the
Company has agreed to indemnify us for certain liabilities that may arise out
of the rendering of this opinion. We also have performed various investment
banking services for the Company in the past and have received customary fees
for such services. Mr. Eliot Fried, a Managing Director of Lehman Brothers
Inc., is a director of the Company. In addition, affiliates of Lehman Brothers
Inc. own approximately 639,935 shares of the Company's common stock.
This opinion is for the use and benefit of the Board of Directors of the
Company and is rendered to the Board of Directors in connection with its
consideration of the Proposed Transaction. This opinion is not intended to be
and does not constitute a recommendation to any stockholder of the Company as
to whether to accept the consideration to be offered to such stockholder in
connection with the Proposed Transaction.
Very truly yours,
/s/ LEHMAN BROTHERS
-------------------------------------
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APPENDIX F
SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS. -- (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation,
who has otherwise complied with subsection (d) of this section and who has
neither voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S)228 of this title shall be entitled to an appraisal by
the Court of Chancery of the fair value of the stockholder's shares of stock
under the circumstances described in subsections (b) and (c) of this section.
As used in this section, the word "stockholder" means a holder of record of
stock in a stock corporation and also a member of record of a nonstock
corporation; the words "stock" and "share" mean and include what is ordinarily
meant by those words and also membership or membership interest of a member of
a nonstock corporation; and the words "depository receipt" mean a receipt or
other instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S)251 (other than a merger effected pursuant to (S)251
(g) of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264 of this
title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of (S)251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
(S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to accept for such
stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders.
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
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(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a
provision, the procedures of this section, including those set forth in
subsections (d) and (e) of this section, shall apply as nearly as is
practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are
available pursuant to subsections (b) or (c) hereof that appraisal rights
are available for any or all of the shares of the constituent corporations,
and shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of such stockholder's shares shall deliver
to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholder's shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of such stockholder's shares. A proxy or vote against
the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written
demand as herein provided. Within 10 days after the effective date of such
merger or consolidation, the surviving or resulting corporation shall
notify each stockholder of each constituent corporation who has complied
with this subsection and has not voted in favor of or consented to the
merger or consolidation of the date that the merger or consolidation has
become effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
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(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw such
stockholder's demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not
voted in favor of the merger or consolidation and with respect to which demands
for appraisal have been received and the aggregate number of holders of such
shares. Such written statement shall be mailed to the stockholder within 10
days after such stockholder's written request for such a statement is received
by the surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the
addresses therein stated. Such notice shall also be given by 1 or more
publications at least 1 week before the day of the hearing, in a newspaper of
general circulation published in the City of Wilmington, Delaware or such
publication as the Court deems advisable. The forms of the notices by mail and
by publication shall be approved by the Court, and the costs thereof shall be
borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled
to appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as
to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the merger
or consolidation, together with a fair rate of interest, if any, to be paid
upon the amount determined to be the fair value. In determining such fair
value, the Court shall take into account all relevant factors. In determining
the fair rate of interest, the Court may consider all relevant factors,
including the rate of interest which the surviving or resulting corporation
would have had to pay to borrow money during the pendency of the proceeding.
Upon application by the surviving or resulting corporation or by any
stockholder entitled to participate in the appraisal proceeding, the Court may,
in its discretion, permit discovery or other pretrial proceedings and may
proceed to trial upon the appraisal prior to the final determination of the
stockholder entitled to an appraisal. Any stockholder whose name appears on the
list filed by the surviving or resulting corporation pursuant to subsection (f)
of this section and who has submitted such stockholder's certificates of stock
to the Register in Chancery, if such is required, may participate fully in all
proceedings until it is finally determined that such stockholder is not
entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to
the stockholders entitled thereto. Interest may be simple or compound, as the
Court may direct. Payment shall be so made to each such stockholder, in the
case of holders of uncertificated stock forthwith, and the case of holders of
shares represented by certificates upon the surrender to
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the corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this State
or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded appraisal rights as provided in subsection (d) of
this section shall be entitled to vote such stock for any purpose or to receive
payment of dividends or other distributions on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that
if no petition for an appraisal shall be filed within the time provided in
subsection (e) of this section, or if such stockholder shall deliver to the
surviving or resulting corporation a written withdrawal of such stockholder's
demand for an appraisal and an acceptance of the merger or consolidation,
either within 60 days after the effective date of the merger or consolidation
as provided in subsection (e) of this section or thereafter with the written
approval of the corporation, then the right of such stockholder to an appraisal
shall cease. Notwithstanding the foregoing, no appraisal proceeding in the
Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court
deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation. (Last amended by Ch. 339, L.
'98, eff. 7-1-98.)
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REVOCABLE PROXY
BRIDGEPORT MACHINES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR USE AT THE
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD AT 11:00 A.M., LOCAL TIME, ON
WEDNESDAY, JULY 14, 1999.
The undersigned hereby appoints Dan L. Griffith and Walter C. Lazarcheck, and
each of them as Proxies, each with full power of substitution, to represent and
to vote as designated herein all the shares of Common Stock of Bridgeport
Machines, Inc. (the "Company") held of record by the undersigned on June 4, 1999
at the Special Meeting of Stockholders to be held at 11:00 a.m., local time, on
Wednesday, July 14, 1999, at Lehman Brothers Inc., 3 World Financial Center, 200
Vesey Street, 17th Floor Main Conference Room, New York, New York 10285 or any
adjournment or adjournments thereof.
1. To approve and adopt the Agreement and Plan of Merger, dated as of April 23,
1999, by and among Goldman Industrial Group, Inc., Bronze Acquisition Corp.
("Merger Sub") and the Company and the transactions contemplated thereby,
including the merger of Merger Sub with and into the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. In his discretion, the Proxy is authorized to vote on such other business as
may properly come before the Special Meeting.
PROPERLY EXECUTED PROXIES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED. IF NO SUCH DIRECTIONS ARE GIVEN, SUCH PROXIES WILL BE VOTED "FOR"
PROPOSAL 1.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If stockholder is a corporation, corporate name should
be signed by an authorized officer and the corporate seal affixed. If
stockholder is a partnership, please sign in partnership name by authorized
persons. For joint accounts, each joint owner should sign.
Please be sure to sign and date
this Proxy in the box below.
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Date
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Stockholder sign above
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Co-holder (if any) sign above
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Detach above card, sign, date and mail in postage paid
envelope provided.
BRIDGEPORT MACHINES, INC.
PLEASE MARK, SIGN, DATE AND MAIL YOUR PROXY CARD TODAY
