SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Datum Inc.
(Name of Issuer)
Common Stock
(Title of Class and Securities)
23820810
(CUSIP Number of Class of Securities)
George A. Sissel
General Counsel
Ball Corporation
345 South High Street
Muncie, Indiana 47305
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 17, 1995
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the
subject of this Statement because of Rule 13d-1(b)(3) or
(4), check the following: ( )
Check the following box if a fee is being paid with this
Statement: (x)
SCHEDULE 13D
CUSIP No. 23820810
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Ball Corporation
35-0160610
________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS*
OO
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Indiana
_________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 1,277,778*
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 1,277,778*
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,277,778*
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
Approximately 32.3% of the shares outstanding as of March
17, 1995
_________________________________________________________________
(14) TYPE OF REPORTING PERSON*
CO
SCHEDULE 13D
CUSIP No. 23820810
_________________________________________________________________
(1) NAMES OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Efratom Holding, Inc.
31-1421208
________________________________________________________________
(2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP:
(a) ( )
(b) ( )
_________________________________________________________________
(3) SEC USE ONLY
_________________________________________________________________
(4) SOURCE OF FUNDS*
OO
_________________________________________________________________
(5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) ( )
__________________________________________________________________
(6) CITIZENSHIP OR PLACE OF ORGANIZATION
Indiana
_________________________________________________________________
(7) SOLE VOTING POWER
NUMBER OF 1,277,778*
SHARES ___________________________________
BENEFICIALLY (8) SHARED VOTING POWER
OWNED BY
EACH ___________________________________
REPORTING (9) SOLE DISPOSITIVE POWER
PERSON 1,277,778*
WITH ___________________________________
(10) SHARED DISPOSITIVE POWER
_________________________________________________________________
(11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,277,778*
_________________________________________________________________
(12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* ( )
_________________________________________________________________
(13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
Approximately 32.3% of the shares outstanding as of March
17, 1995
_________________________________________________________________
(14) TYPE OF REPORTING PERSON*
CO
* On March 17, 1995, Datum Inc. (the "Issuer"), a Delaware corporation,
delivered 1,277,778 newly issued shares (the "Shares") of common stock,
par value $.25 per share, of the Issuer to Efratom Holding, Inc.
("Holding"), a Colorado corporation and a wholly owned subsidiary of Ball
Corporation ("Parent"), an Indiana corporation. As of such date, Parent
and Holding may be deemed to beneficially own the Shares, as indicated in
Rows 11 and 13 of each of the tables above, for purposes of Rule 13d-3
under the Securities and Exchange Act of 1934, as amended.
Item 1. Security and Issuer
This Statement relates to the common stock, par
value $.25 per share (the "Common Stock"), of Datum Inc.,
a Delaware corporation (the "Issuer"), which has its
principal executive offices at 1363 South State College
Blvd., Anaheim, California 92806.
Pursuant to the Stock Purchase Agreement, dated as
of October 20, 1994 (the "Stock Purchase Agreement"), by
and among Ball Corporation, an Indiana corporation ("Par-
ent"), Efratom Holding, Inc., a Colorado corporation and
a wholly owned subsidiary of Parent ("Holding"), and the
Issuer, as part of the consideration for the sale by
Holding to the Issuer of Efratom Time and Frequency
Products, Inc., a Colorado corporation, and Ball Efratom
Elektronik GmbH, a limited liability company organized
under the laws of the Republic of Germany (collectively,
the "Holding Subsidiaries"), the Issuer delivered to
Holding 1,277,778 newly issued shares of Common Stock.
See Item 3 below for more information concerning the
Stock Purchase Agreement.
Item 2. Identity and Background
This Statement is being filed by Parent and Holding,
which have their principal executive offices at 345 South
High Street, Muncie, Indiana 47305 and 10 Longs Peak
Drive, Broomfield, Colorado 80038, respectively.
Holding is a holding company and a wholly owned
subsidiary of Ball.
Ball manufactures metal and glass containers for the
food and beverage industries and provides aerospace
systems and professional services to government and
commercial customers.
Information relating to the directors and executive
officers of Parent and Holding is contained in Appendix A
attached hereto and is incorporated herein by reference.
Neither Parent nor Holding, nor, to the best of
Parent's and Holding's knowledge, any of the persons
listed in Appendix A, has, during the past five years,
been convicted in a criminal proceeding (excluding traf-
fic violations and similar misdemeanors). Neither Parent
nor Holding, nor, to the best of Parent's and Holding's
knowledge, any of the persons listed in Appendix A, has,
during the past five years, been a party to a civil
proceeding of a judicial or administrative body of compe-
tent jurisdiction and as a result of such proceeding was
or is subject to a judgement, decree or final order
enjoining future violations of, or prohibiting or mandat-
ing activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consider-
ation
Pursuant to the Stock Purchase Agreement, the Issuer
agreed to purchase from Holding all of the outstanding
shares of common stock of the Holding Subsidiaries for an
aggregate consideration, subject to adjustment, of (i)
$15 million in cash, and (ii) the number of shares (the
"Shares") of the Issuer's Common Stock which equals $11.5
million divided by the average per share closing sale
price (the "Average Closing Price") as reported on the
Nasdaq National Market System for the ten consecutive
trading days ending on the trading day immediately prior
to the date of the special meeting of the Issuer's stock-
holders (the "Special Meeting") for the purpose of ap-
proving the Stock Purchase Agreement and the transactions
contemplated thereby; provided however, that in no event
would such Average Closing Price be less than $7.00 nor
greater than $9.00. The Special Meeting occurred on
March 16, 1995 and the Average Closing Price was $9.00.
The number of Shares that were delivered to Holding by
the Issuer at the closing of the transactions contemplat-
ed by the Stock Purchase Agreement (the "Closing") on
March 17, 1995 was 1,277,778 (representing approximately
32.3% of the shares of Common Stock outstanding immedi-
ately after the issuance of such shares to Holding).
Reference is made to the Stock Purchase Agreement, a
copy of which is included as Exhibit 1 to this Statement
and which is incorporated by reference herein.
Item 4. Purpose of the Transaction
Holding is acquiring beneficial ownership of the
Issuer's Common Stock for investment purposes. Subject
to, among other things, its obligations under the
Stockholder's Agreement described below, Holding may from
time to time seek to increase, reduce or dispose of its
investment in the Common Stock in the open market, in
privately negotiated transactions or otherwise, in which
event such transactions might be through or together with
entities affiliated with Parent or Holding. The determi-
nation to effect any such transaction will depend, among
other things, upon the market price of the Common Stock,
availability of funds, borrowing costs, market condi-
tions, developments affecting the Issuer, Parent and
Holding, other opportunities available to Parent and
Holding and other considerations. Holding intends, from
time to time, to review its investment in the Issuer and
to take such action with respect to the Issuer as it
considers desirable in light of the circumstances then
prevailing.
The Shares are subject to a Stockholder's Agreement
(the "Stockholder's Agreement") entered into by Holding
and the Issuer prior to the Closing. Reference is made
to the Stockholder's Agreement, a copy of which is in-
cluded as Exhibit 2 to this Statement and which is incor-
porated by reference herein.
The Stockholder's Agreement requires the Company to
amend its bylaws to increase the size of its Board of
Directors to eight directors and to appoint two persons
named by Holding, and, at the option of Holding, to
appoint a third person designated by Holding at any time
after the initial appointments (the "Stockholder's
Designees"), to the Company's Board of Directors (allo-
cated equally among the three classes of the Company's
Board of Directors). The number of Stockholder's
Designees shall be adjusted upon any change in the autho-
rized number of directors or changes in the outstanding
Voting Securities (as defined below) of the Company to
correspond to the percentage of such outstanding Voting
Securities represented by the Shares (subject to adjust-
ment for stock splits, stock dividends and other
recapitalizations). The Stockholder's Agreement provides
that the Company will nominate the Stockholder's
Designees for re-election as such persons' terms expire
and will use its best efforts to cause the Stockholder's
Designees to be elected as directors. Holding has ini-
tially appointed R. David Hoover and Donovan B. Hicks to
serve as its designees on the Board of Directors of the
Company and reserves the right to appoint one additional
director.
Pursuant to the Stockholder's Agreement, neither
Holding nor any affiliate of Holding (collectively, the
"Stockholder Group"), will, directly or indirectly,
acquire shares of any class of the Company's capital
stock which is entitled to vote generally in the election
of directors ("Voting Securities"). The foregoing re-
striction will not apply (i) in connection with the
consummation of the transactions contemplated by the
Stock Purchase Agreement, (ii) to stock dividends stock
splits or other like distributions made with respect to
the Shares held by Holding, (iii) during the pendency
pursuant to Section 14(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") of a bona fide, fully fi-
nanced tender offer by any person (other than the Company
or its affiliates or any employee benefit plan of the
Company), if upon the consummation of such tender offer
such person would beneficially own more than 30% of the
Company's Voting Securities, (iv) in the event that any
person (other than Holding or its affiliates, the Company
or any employee benefit plan of the Company) becomes a
beneficial owner of more than 30% of the Company's then
outstanding Voting Securities or proposes to become such
a beneficial owner and such proposal is approved by or
recommended by a majority of the Board of Directors
(excluding the Stockholder's Designees) of the Company,
(v) in the event that the Company has entered into a
definitive merger agreement or a definitive agreement for
the sale of all or substantially all of its assets, or
(vi) to any transaction with the prior approval of a
majority of the Board of Directors (excluding the
Stockholder's Designees). In addition, if any action by
the Company causes the ownership of Voting Securities by
Holding to be less than the percentage ownership of the
outstanding Voting Securities immediately prior to such
action, the foregoing restriction will not apply to any
acquisitions of Voting Securities by Holding to the
extent necessary for Holding to maintain its percentage
ownership of Voting Securities at the level it had imme-
diately prior to such action.
The Stockholder's Agreement prohibits any member of
the Stockholder Group from soliciting proxies or becoming
a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the Exchange Act), or
entering into any agreement with any person for the
purpose of voting any Voting Securities, in either case
in opposition to the recommendation of the majority of
the directors of the Company with respect to any election
of directors of the Company; provided that Holding may
vote any shares held by it in opposition to the recommen-
dation of the majority of the directors of the Company on
any matter, including the election of directors.
Subject to certain limitations, with respect to any
Shares that are deemed "Restricted Securities" under the
Securities Act of 1933 (the "Act") (the "Registrable
Securities"), Holding, and/or any transferee of Holding,
who own, in the aggregate, in excess of 250,000 shares of
Registrable Securities may make a written request to the
Company for registration with the Securities and Exchange
Commission (the "Commission"), under and in accordance
with the provisions of the Act, of no less than 250,000
Registrable Securities (a "Demand Registration"). The
Company will serve written notice (the "Notice") of such
registration request to all holders of Registrable Secu-
rities issued by the Company, and subject to such request
the Company will include in such registration all Regis-
trable Securities with respect to which the Company has
received written requests for inclusion therein. The
holders of Registrable Securities shall be entitled to
three Demand Registrations, but no more than one in any
four-month period, the expenses of which, except with
respect to applicable underwriting discounts and commis-
sions, will generally be borne by the Company.
In addition, subject to certain limitations, if the
Company proposes to file a registration statement under
the Act with respect to an offering for its own account
or for the account of others of any class of equity
security, the Company will in each case give written
notice of such proposed filing to holders of Registrable
Securities, at least twenty days before the anticipated
filing date and offer such holders the opportunity to
register such Registrable Securities in such offering, in
accordance with the terms of such offering.
Pursuant to the Stockholder's Agreement, so long as
Holding owns Shares constituting more than 15% of the
outstanding Voting Securities of the Company, the Company
will not, without the consent of Holding, adopt a Share-
holder Rights Plan which would result in the issuance or
separation and exercisability of rights upon the transfer
of Shares by Holding or any similar arrangement which
would interfere with the sale of Holding's shares.
Other than as described above, Parent and Holding
have no plans or proposals which relate to or would
result in: (a) the acquisition by any person of addition-
al securities of the Issuer, or the disposition of secu-
rities of the Issuer; (b) an extraordinary corporate
transaction, such as a merger, reorganization or liquida-
tion, involving the Issuer or any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of
the Issuer or any of its subsidiaries; (d) any change in
the present board of directors or management of the
Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing
vacancies on the board; (e) any material change in the
present capitalization or dividend policy of the Issuer;
(f) any other material change in the Issuer's business or
corporate structure; (g) changes in the Issuer's charter,
bylaws or instruments corresponding thereto or any other
actions which may impede the acquisition of control of
the Issuer by any person; (h) a class of securities of
the Issuer to be delisted from a national securities
exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national
securities association; (i) a class of equity securities
of the Issuer becoming eligible for termination of regis-
tration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934; or (j) any action similar to any of
those enumerated above.
Item 5. Interest in Securities of the Issuer
(a),(b) At the Closing, the Issuer delivered to
Holding the Shares. As a result, as of the date of this
Statement, Parent and Holding may be deemed to benefi-
cially own 1,277,778 shares of Common Stock for purposes
of Rule 13d-3 under the Securities and Exchange Act of
1934, as amended.
Except as described in paragraph (c) below, to the
best of Parent's and Holding's knowledge, none of the
directors or officers of Parent or Holding beneficially
owns any shares of Common Stock.
(c) The only transaction effected by Parent and
Holding with respect to the Common Stock is the consumma-
tion of the transactions contemplated by the Stock Pur-
chase Agreement and Stockholder's Agreement.
On February 22, 1995, Albert R. Schlesinger, Vice
President and Controller of Parent, purchased 750 shares
of Common Stock on the open market through a broker at a
price per share of $10.50.
To the best of Parent's and Holding's knowledge,
none of the directors or executive officers of Parent or
Holding have engaged in any other transactions with
respect to the Common Stock during the past 60 days.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships With Respect to Securities of the
Issuer
Except as described in Items 3 and 4 above, there
are no contracts, arrangements, understandings or rela-
tionships (legal or otherwise) among the persons named in
Item 2 and between such persons and any person with
respect to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits
1. Stock Purchase Agreement, dated as of October
20, 1994, by and among Ball Corporation,
Efratom Holding, Inc. and Datum Inc., as amend-
ed (conformed copy).
2. Stockholder's Agreement, dated as of March 17,
1995, by and between Efratom Holding, Inc. and
Datum Inc. (conformed copy).
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned certifies that the
information set forth in this Statement is true, complete
and correct.
Dated: March 27, 1995
BALL CORPORATION
By: /s/ GEORGE A. SISSEL
George A. Sissel
Acting President and
Chief Executive Officer
EFRATOM HOLDING, INC.
By: /S/ DONOVAN B. HICKS
Donovan B. Hicks
President
APPENDIX A
The following tables set forth the name, residence
or business address and present principal occupation or
employment of each director and executive officer of Ball
Corporation and Efratom Holding, Inc. Each such person
is a citizen of the United States of America.
A. Directors and Executive Officers of Ball Corporation
Reporting Person Address Principal Occupation
DIRECTORS:
Delbert C. Staley 345 South High Street Chairman of the Board,
Muncie, Indiana 47305 Alcatel Network Systems,
Dallas, Texas
John F. Lehman 345 South High Street Chairman of the Board,
Muncie, Indiana 47305 Sperry Marine Inc., Char-
lottesville, Virginia;
Chairman, J.F. Lehman &
Company, New York, New
York
George A. Sissel 345 South High Street Acting President and Chief
Muncie, Indiana 47305 Executive Officer and Se-
nior Vice President, Cor-
porate Affairs; Corporate
Secretary and General
Counsel, Ball Corporation
Alvin Owsley 345 South High Street Chairman of the Board
Muncie, Indiana 47305
W. Thomas Stephens 345 South High Street Chairman, President and
Muncie, Indiana 47305 Chief Executive Officer,
Manville Corporation, Den-
ver, Colorado
William P. Stiritz 345 South High Street Chairman, President and
Muncie, Indiana 47305 Chief Executive Officer,
Ralston Purina Company,
St. Louis, Missouri
Howard M. Dean 345 South High Street Chairman of the Board and
Muncie, Indiana 47305 Chief Executive Officer,
Dean Foods Company, Frank-
lin Park, Illinois
John T. Hackett 345 South High Street Managing General Partner,
Muncie, Indiana 47305 CID Equity Partners, Indi-
anapolis, Indiana
Jan Nicholson 345 South High Street Managing Director of Capi-
Muncie, Indiana 47305 tal Markets Assurance Cor-
poration (CapMAC), New
York, New York
CORPORATE OFFICERS:
Richard E. Durbin 345 South High Street Vice President, Informa-
Muncie, Indiana 47305 tion Services
Duane E. Emerson 345 South High Street Senior Vice President,
Muncie, Indiana 47305 Administration
John A. Haas 345 South High Street Group Vice President
Muncie, Indiana 47305 (President and CEO, Ball
Glass Container Corpora-
tion)
Donovan B. Hicks 345 South High Street Group Vice President
Muncie, Indiana 47305 (President, Aerospace and
Communications Group)
R. David Hoover 345 South High Street Senior Vice President and
Muncie, Indiana 47305 Chief Financial Officer
Donald C. Lewis 345 South High Street Assistant Corporate Secre-
Muncie, Indiana 47305 tary and Associate General
Counsel
William A. Lincoln 345 South High Street Executive Vice President,
Muncie, Indiana 47305 Metal Container Operations
Elizabeth A. 345 South High Street Assistant Corporate Secre-
Overmyer Muncie, Indiana 47305 tary
Albert R. 345 South High Street Vice President and Con-
Schlesinger Muncie, Indiana 47305 troller
Raymond J. Seabrook 345 South High Street Vice President and Trea-
Muncie, Indiana 47305 surer
David B. Sheldon 345 South High Street Group Vice President
Muncie, Indiana 47305 (President, Metal Beverage
Container Group)
Harold L. Sohn 345 South High Street Vice President, Corporate
Muncie, Indiana 47305 Relations
David A. Westerlund 345 South High Street Vice President, Human Re-
Muncie, Indiana 47305 sources
B. Directors and Executive Officers of Efratom Holding, Inc.
Donovan B. Hicks 10 Longs Peak Drive President and
Broomfield, Colorado 80038 Director
Donald C. Lewis 10 Longs Peak Drive Vice President
Broomfield, Colorado 80038 and Assistant
Secretary and
Director
Hillary E. Johnson 10 Longs Peak Drive Secretary and
Broomfield, Colorado 80038 Director
J. Patrick 10 Longs Peak Drive Vice President
Dummigan Broomfield, Colorado 80038
Eugene P. Morgan 10 Longs Peak Drive Vice President
Broomfield, Colorado 80038 and Treasurer
[CONFORMED COPY]
STOCK PURCHASE AGREEMENT
Among
EFRATOM HOLDING, INC.,
BALL CORPORATION
and
DATUM INC.
dated as of
October 20, 1994
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF STOCK . . . . . . 2
1.1 Transfer of Stock . . . . . . . . 2
1.2 Consideration . . . . . . . . . . 2
1.3 Adjustment with Respect to Purchaser
Shares . . . . . . . . . . . . 2
1.4 Purchase Price Adjustment . . . . 3
1.5 The Closing . . . . . . . . . . . 5
1.6 Further Assurances . . . . . . . 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF
SELLER . . . . . . . . . . . . . . . . 7
2.1 Corporate Organization . . . . . 8
2.2 Capital Stock . . . . . . . . . . 8
2.3 Ownership of Stock . . . . . . . 8
2.4 Authorization, Etc. . . . . . . . 8
2.5 Financial Statements . . . . . . 9
2.6 No Approvals or Conflicts . . . . 10
2.7 Compliance with Law; Governmental
Authorizations . . . . . . . . . 11
2.8 Litigation . . . . . . . . . . . 11
2.9 Title to Assets . . . . . . . . . 11
2.10 Absence of Certain Changes . . . 12
2.11 Taxes . . . . . . . . . . . . . 13
2.12 Employee Benefits . . . . . . . 14
2.13 Labor Relations . . . . . . . . 15
2.14 Patents, Trademarks, Trade Names,
Etc. . . . . . . . . . . . . . 16
2.15 Contracts . . . . . . . . . . . 17
2.16 Environmental Matters . . . . . 17
2.17 Insurance . . . . . . . . . . . 17
2.18 Real Property . . . . . . . . . . 18
2.19 Proxy Statement . . . . . . . . . 18
2.20 Investment Intent . . . . . . . 18
2.21 No Brokers' or Other Fees . . . 19
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
PURCHASER . . . . . . . . . . . . . . 19
3.1 Organization . . . . . . . . . . 19
3.2 Capital Stock . . . . . . . . . . 19
3.3 Authorization, Etc. . . . . . . . 20
3.4 No Approvals or Conflicts . . . . 20
3.5 Purchaser SEC Reports; Financial
Statements . . . . . . . . . . . 21
3.6 Compliance with Law; Governmental
Authorizations . . . . . . . . . 22
3.7 Litigation . . . . . . . . . . . 22
3.8 Title to Assets . . . . . . . . . 22
3.9 Absence of Certain Changes . . . 23
3.10 Taxes . . . . . . . . . . . . . 24
3.11 Employee Benefits . . . . . . . 24
3.12 Labor Relations . . . . . . . . 25
3.13 Patents, Trademarks, Trade Names,
Etc. . . . . . . . . . . . . . 26
3.14 Contracts . . . . . . . . . . . 26
3.15 Environmental Matters . . . . . 27
3.16 Insurance . . . . . . . . . . . 27
3.17 Acquisition for Investment . . . 27
3.18 Financing . . . . . . . . . . . 27
3.19 Stock Issuable to Parent or Seller 28
3.20 Proxy Statement . . . . . . . . 28
3.21 Officer and Director Shares . . . 28
3.22 No Brokers' or Other Fees . . . 29
ARTICLE IV CONDITIONS TO SELLER'S OBLIGATIONS . . 29
4.1 Representations and Warranties . 29
4.2 Performance . . . . . . . . . . . 29
4.3 Officer's Certificate . . . . . . 29
4.4 No Changes . . . . . . . . . . . 29
4.5 Other Agreements . . . . . . . . 29
4.6 HSR Act . . . . . . . . . . . . . 30
4.7 Injunctions . . . . . . . . . . . 30
4.8 Nasdaq . . . . . . . . . . . . . 30
4.9 Stockholder Approval . . . . . . 30
4.10 Consents . . . . . . . . . . . . 30
ARTICLE V CONDITIONS TO PURCHASER'S OBLIGATIONS 30
5.1 Representations and Warranties . 31
5.2 Performance . . . . . . . . . . . 31
5.3 Officer's Certificate . . . . . . 31
5.4 Other Agreements . . . . . . . . 31
5.5 No Changes . . . . . . . . . . . 31
5.6 Resignation of Directors . . . . 31
5.7 HSR Act . . . . . . . . . . . . . 31
5.8 Injunctions . . . . . . . . . . . 31
5.9 Stockholder Approval . . . . . . 32
5.10 Consents . . . . . . . . . . . . 32
5.11 Financing . . . . . . . . . . . . 32
5.12 Actual or Threatened Litigation . 32
ARTICLE VI COVENANTS AND AGREEMENTS . . . . . . . 32
6.1 Conduct of Business . . . . . . . 32
6.2 Transactions Regarding Purchaser
Common Stock . . . . . . . . . . 34
6.3 Delivery of Periodic Reports . . 35
6.4 Access to Books and Records . . . 35
6.5 Filings and Consents . . . . . . 35
6.6 Tax Matters . . . . . . . . . . . 36
6.7 WARN Act . . . . . . . . . . . . 39
6.8 Supplements to Disclosure Schedule 40
6.9 Intercompany Indebtedness . . . . 40
6.10 Covenant to Satisfy Conditions . 41
6.11 Continuation of Employee Welfare and
Retirement Benefits . . . . . 41
6.12 Indemnity for Employee Covenants 42
6.13 Use of "Ball" Name . . . . . . . 42
6.14 Nasdaq . . . . . . . . . . . . . 42
6.15 Proxy Statement; Stockholder
Approval; Financial Statements . .42
6.16 Consents to Assignment and Release
of Certain Obligation . . . . . . 43
6.17 Assignments and Novations of
Government Contracts . . . . . . . 44
6.18 Exclusivity. . . . . . . . . . . . 45
ARTICLE VII TERMINATION . . . . . . . . . . . . . 45
7.1 Termination . . . . . . . . . . . 45
7.2 Procedure and Effect of Termination 46
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . 47
8.1 Indemnification . . . . . . . . . 47
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . 50
9.1 Fees and Expenses . . . . . . . . 50
9.2 Governing Law . . . . . . . . . . 51
9.3 Amendment . . . . . . . . . . . . 51
9.4 No Assignment . . . . . . . . . . 51
9.5 Waiver . . . . . . . . . . . . . 51
9.6 Notices . . . . . . . . . . . . . 51
9.7 Complete Agreement . . . . . . . 53
9.8 Counterparts . . . . . . . . . . 53
9.9 Publicity . . . . . . . . . . . . 53
9.10 Headings . . . . . . . . . . . . 53
9.11 Knowledge . . . . . . . . . . . 53
9.12 Severability . . . . . . . . . . 53
9.13 Third Parties . . . . . . . . . 54
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this
"Agreement"), dated as of October 20, 1994, is entered
into by and among Ball Corporation, an Indiana corporation
("Parent"), Efratom Holding, Inc., a Colorado corporation
and wholly owned subsidiary of Parent ("Seller"), and
Datum Inc., a Delaware corporation ("Purchaser").
WHEREAS, Parent is the owner of (i) all of the
outstanding shares of common stock, no par value per share
(the "Company Shares"), of Efratom Time and Frequency
Products, Inc., a Colorado corporation (the "Company") and
(ii) all of the outstanding shares of common stock (other
than as set forth in Section 2.2 of the Disclosure
Schedule (as defined herein) (the "Efratom Germany
Shares") of Ball Efratom Elektronik GmbH, a corporation
organized under the laws of the Republic of Germany
("Efratom Germany") (the Company Shares and Efratom
Germany Shares being collectively referred to herein as
the "Shares"); and
WHEREAS, prior to the Closing (as defined
herein), Parent intends to transfer the assets,
liabilities and business of the Ball Efratom business unit
of the Ball Aerospace and Communications Group other than
the Efratom Germany Shares to the Company pursuant to an
Assignment and Assumption Agreement between Parent and the
Company (the "Assignment and Assumption Agreement") (such
business unit, including Efratom Germany, is referred to
herein as the "Efratom Business Unit" and the business of
the Efratom Business Unit is referred to herein as the
"Business"); and
WHEREAS, after such transfer and prior to the
Closing, Parent intends to transfer all of the Shares to
Seller; and
WHEREAS, Purchaser desires to purchase and
Seller desires to sell the Shares upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the
foregoing premises and the mutual covenants contained
herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF STOCK
1.1 Transfer of Stock. On the Closing Date (as
defined in Section 1.5) and subject to the terms and
conditions set forth in this Agreement, Seller will sell,
assign, transfer and deliver to Purchaser the Shares, free
and clear of all options, pledges, security interests,
voting trust or similar arrangements, liens, charges or
other encumbrances or restrictions on voting or transfer
("Encumbrances"), other than the restrictions imposed by
Federal and state securities laws.
1.2 Consideration. On the Closing Date and
subject to the terms and conditions set forth in this
Agreement, in reliance on the representations, warranties,
covenants and agreements of the parties contained herein
and in consideration of the sale, assignment, transfer and
delivery of the Shares, Purchaser will (a) pay to Seller
$15 million in cash by wire transfer of immediately
available funds to an account designated by Seller and (b)
deliver to Seller certificates representing the number of
shares (rounded up to the next whole share) (the
"Purchaser Shares") of common stock, par value $.25 per
share, of Purchaser (the "Common Stock") determined as set
forth below and registered in the name of Seller or its
designee. The number of Purchaser Shares shall be that
number which equals $11.5 million divided by the average
of the per share closing sale price as reported on the
Nasdaq National Market System for the ten consecutive
trading days ending on the trading day immediately prior
to the date of the Stockholders Action (as defined in
Section 6.15) (the "Average Closing Price"); provided,
however, that if such Average Closing Price is less than
$ 7.00, such divisor shall be $7.00, and if such Average
Closing Price is greater than $9.00, such divisor shall be
$9.00.
1.3 Adjustment with Respect to Purchaser
Shares. In the event that, on or after the date hereof,
Purchaser declares or pays any cash dividend with respect
to the outstanding Common Stock, payable or distributable
to holders of record of shares of Common Stock on or prior
to the Closing Date, then at the Closing, Purchaser shall
deliver to Seller, together with the Purchaser Shares,
such cash as Seller would have received pursuant to such
dividend had Seller been the holder of record of the
Purchaser Shares on the record date applicable to such
dividend. In addition, after the Closing, Purchaser shall
deliver to Seller, contemporaneously with the delivery to
other holders of Common Stock, all other cash distributed
with respect to the outstanding Common Stock to holders of
record of shares of Common Stock on or after the date
hereof not previously delivered to Seller pursuant to the
foregoing provision.
1.4 Purchase Price Adjustment. (a) As soon as
practicable, but in no event later than 60 days following
the Closing Date (as hereinafter defined), Seller shall
prepare a Combined Statement of Adjusted Working Capital
of the Company and Efratom Germany as of the close of
business on the Closing Date (including the notes thereto,
the "Closing Date Statement"). The Closing Date Statement
shall present the combined amount of the Company's and
Efratom Germany's current assets, less the combined amount
of the Company's and Efratom Germany's current liabilities
as of the close of business on the Closing Date, plus the
net investment in fixed assets of the Efratom Business
Unit, the Company and Efratom Germany from August 7, 1994
to the close of business on the Closing Date (the "Net
Working Capital Amount") and shall be prepared with
respect to such items on a basis consistent with the
Unaudited Special-Purpose Balance Sheet (as defined in
Section 2.5).
(b) During the preparation of the Closing
Date Statement and the period of any dispute within the
contemplation of this Section 1.4, Purchaser shall cause
the Company to (i) provide Parent and Seller and Parent's
authorized representatives with access to the books,
records, facilities and employees of the Company and
Efratom Germany, (ii) provide Parent as promptly as
practicable after the Closing Date (but in no event later
than 15 days after the Closing Date) with financial
information for the period ending on the Closing Date and
(iii) cooperate with Parent and Parent's authorized
representatives, including the provision on a timely basis
of all information necessary or useful in preparing the
Closing Date Statement.
(c) Parent shall deliver a copy of the
Closing Date Statement, together with the work papers used
in the preparation thereof, to Purchaser promptly after it
has been prepared and in no event later than 60 days after
the Closing Date. After receipt of the Closing Date
Statement, Purchaser shall have 30 days to review the
Closing Date Statement, together with the work papers used
in the preparation thereof. Purchaser and its authorized
representatives shall have full access to all relevant
books and records, employees and accountants of Parent to
the extent required to complete their review of the
Closing Date Statement. Unless Purchaser delivers written
notice to Parent on or prior to the 30th day after
Purchaser's receipt of the Closing Date Statement
specifying in reasonable detail all disputed items and the
basis therefor, Purchaser shall be deemed to have accepted
and agreed to the Closing Date Statement. If Purchaser so
notifies Parent of its objection to the Closing Date
Statement on the grounds that such statement was not
prepared on a basis consistent with the Unaudited Special-
Purpose Balance Sheet, Purchaser and Parent shall, within
30 days following such notice (the "Resolution Period"),
attempt to resolve their differences and any resolution by
them as to any disputed amounts shall be final, binding
and conclusive. If following resolution of any disputed
amounts there do not remain in dispute amounts the
aggregate net effect of which exceeds $25,000, then one-
half of all amounts remaining in dispute shall be deemed
to have been resolved in favor of the Closing Date
Statement delivered by Parent to Purchaser.
(d) If, at the conclusion of the
Resolution Period, the aggregate net effect of all amounts
remaining in dispute exceeds $25,000, then all amounts
remaining in dispute shall be submitted to a firm of
nationally recognized independent public accountants (the
"Neutral Auditors") selected by Parent and Purchaser
within 10 days after the expiration of the Resolution
Period. If Parent and Purchaser are unable to agree on
the Neutral Auditors, Parent and Purchaser shall each have
the right to request the American Arbitration Association
to appoint the Neutral Auditors who shall not have had a
material relationship with Parent, Purchaser or any of
their respective affiliates within the past two years.
Each party agrees to execute, if requested by the Neutral
Auditors, a reasonable engagement letter. All fees and
expenses relating to the work, if any, to be performed by
the Neutral Auditors shall be borne equally by Parent and
Purchaser. The Neutral Auditors shall act as an
arbitrator to determine, based solely on presentations by
Parent and Purchaser, and not by independent review, only
those issues still in dispute. The Neutral Auditors'
determination shall be made within 30 days of their
selection, whether or not such presentations by Parent and
Purchaser have been made within such period, and shall be
set forth in a written statement delivered to Parent and
Purchaser and shall be final, binding and conclusive. The
term "Adjusted Closing Date Statement," as hereinafter
used, shall mean the definitive Closing Date Statement
agreed to by Purchaser and Parent in accordance with
Section 1.4(c) or the definitive Closing Date Statement
resulting from the determinations made by the Neutral
Auditors in accordance with this Section 1.4(d) (in
addition to those items theretofore agreed to by Parent
and Purchaser), in each case prepared in the manner set
forth in the last sentence of Section 1.4(a) hereof.
(e) The Purchase Price shall be increased
or decreased, as the case may be, dollar for dollar, to
the extent the Net Working Capital Amount reflected in the
Adjusted Closing Date Statement is greater than or less
than, respectively, the net amount of the current assets
of the Efratom Business Unit less the current liabilities
of the Efratom Business Unit reflected on the Unaudited
Special-Purpose Balance Sheet by an amount in excess of
$50,000. The amount of any increase to or reduction of
the Purchase Price pursuant to this Section 1.4 shall bear
interest from the Closing Date through the date of payment
at the publicly announced base interest rate of First
National Bank of Chicago in effect from time to time from
the Closing Date to the date of such payment. The amount
of any increase to or reduction of the Purchase Price
pursuant to this Section 1.4(e), together with interest
thereon, shall be paid by wire transfer in immediately
available funds to the account specified by Seller or
Purchaser, as the case may be, within five business days
after the Adjusted Closing Date Statement is agreed to by
Parent and Seller or any remaining disputed items are
ultimately determined by the Neutral Auditors.
1.5 The Closing. The closing (the "Closing")
of the transactions contemplated in this Agreement shall
take place at the offices of Stradling, Yocca, Carlson &
Rauth, 660 Newport Center Drive, Suite 1600, Newport
Beach, California 92660-6441, at 9:00 a.m., local time,
on the first business day following the satisfaction or
waiver of all of the conditions set forth in Articles IV
and V hereof (the "Closing Date"), or at such other place
and time as may be agreed upon by Parent and Purchaser.
(a) Deliveries by Seller. At or prior to
the Closing, Seller shall deliver or cause to be delivered
to Purchaser the following:
(i) certificates evidencing the
Shares, which certificates shall be properly
endorsed for transfer or accompanied by duly
executed stock powers, in either case executed
in blank or in favor of Purchaser and otherwise
in a form acceptable for transfer on the books
of the Company or Efratom Germany, as the case
may be;
(ii) an executed copy of the
Stockholders Agreement (as defined in
Section 3.19) and a Services Agreement between
Purchaser and Parent, dated as of the Closing
Date, substantially in the form of Exhibit B
hereto (the "Services Agreement"); and
(iii) all other previously
undelivered documents required to be delivered
by Seller to Purchaser at or prior to the
Closing Date in connection with the transactions
contemplated hereby.
(b) Deliveries by Purchaser. At or prior
to the Closing, Purchaser shall deliver or cause to be
delivered to Seller the following:
(i) $15 million by wire transfer
of immediately available funds to an account
designated by Seller;
(ii) certificates evidencing the
Purchaser Shares, which certificates shall be
registered in such names and amounts as Seller
shall designate;
(iii) an executed copy of the
Stockholders Agreement and the Services
Agreement; and
(iv) all other previously
undelivered documents required to be delivered
by Purchaser to Seller at or prior to the
Closing Date in connection with the transactions
contemplated hereby.
(c) All instruments and documents executed
and delivered to Purchaser pursuant hereto shall be in
form and substance, and shall be executed in a manner
reasonably satisfactory to Purchaser. All instruments and
documents executed and delivered to Seller and Parent
pursuant hereto shall be in form and substance, and shall
be executed in a manner reasonably satisfactory to Seller.
1.6 Further Assurances. After the Closing,
each party hereto shall from time to time, at the request
of the other party and without further cost or expense to
such other party, execute and deliver such other
instruments of conveyance and transfer and take such other
actions as such other party may reasonably request in
order to more effectively consummate the transactions
contemplated hereby and to vest in Purchaser good and
valid title to the Shares and in Seller or its designees,
as applicable, good and valid title to the Purchaser
Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller and Parent, jointly and severally,
represent and warrant to Purchaser as follows:
2.1 Corporate Organization. Each of Parent,
Seller and the Company is a corporation duly organized,
validly existing and in good standing under the laws of
its respective state of incorporation. The Company has
full corporate power and authority to own its properties
and assets and to carry on its business as now being
conducted and is duly qualified or licensed to do business
as a foreign corporation in good standing in the
jurisdictions in which the ownership of its property or
the conduct of its business requires such qualification,
except jurisdictions in which the failure to be so
qualified or licensed would not have a material adverse
effect on the business, operations or financial condition
of the Efratom Business Unit or the Company and the
Subsidiaries (as defined below) considered as a single
enterprise (hereinafter referred to as a "Material Adverse
Effect"). Seller has delivered to Purchaser complete and
correct copies of the Articles of Incorporation and all
amendments thereto to the date hereof (or comparable
governing document), and the By-laws (or comparable
governing document) as presently in effect of the Company
and each Subsidiary. Except for Ball Efratom Corporation
Limited, a corporation organized under the laws of the
United Kingdom ("Efratom UK") which will be a subsidiary
of the Company on or before the Closing Date, and except
as set forth in Section 2.1 of the Disclosure Schedule,
the Company does not own, directly or indirectly, any
capital stock or other equity securities of any
corporation or have any direct or indirect equity or
ownership interest in any partnership, joint venture or
other business. Efratom UK and Efratom Germany are
collectively referred to herein as the "Subsidiaries."
2.2 Capital Stock. The authorized capital
stock of the Company consists of 1,000,000 shares of
common stock, no par value per share, of which only the
Company Shares are issued and outstanding and no other
shares of any other class or series of capital stock are
issued and outstanding. All of the outstanding shares of
capital stock of Efratom UK (the "Subsidiary Shares") will
be, as of the Closing Date, owned by the Company. Except
as set forth in Section 2.2 of the disclosure schedule
relating to this Agreement and dated as of the date hereof
(the "Disclosure Schedule") and except for the Assignment
and Assumption Agreement, there are no subscriptions,
options, warrants, calls, rights, contracts, commitments,
understandings, restrictions or arrangements relating to
the issuance, sale, transfer or voting of any shares of
common stock of the Company or any of the Subsidiaries,
including any rights of conversion or exchange under any
outstanding securities or other instruments. Except as
set forth in Section 2.2 of the Disclosure Schedule, all
of the outstanding shares of capital stock of Efratom
Germany are owned by Parent. All of the Shares and
Subsidiary Shares have been validly issued and are fully
paid, nonassessable and free of preemptive rights.
2.3 Ownership of Stock. As of the Closing
Date, the Shares will be owned by Seller and the
Subsidiary Shares will be owned by the Company, in each
case free and clear of all Encumbrances, other than the
restrictions imposed by Federal and state securities laws.
Upon the consummation of the transactions contemplated
hereby, Purchaser will acquire title to the Shares, free
and clear of all Encumbrances, other than the restrictions
imposed by Federal and state securities laws and
Encumbrances arising as a result of any action taken by
Purchaser or any of its affiliates ("Affiliates") as
defined in Rule 12b-2 of the regulations promulgated
pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
2.4 Authorization, Etc. Each of Parent and
Seller has full corporate power and authority to execute
and deliver this Agreement and the Stockholders Agreement
and to carry out the transactions contemplated hereby and
thereby. The Board of Directors of Seller has duly
approved and authorized the execution and delivery by
Seller of this Agreement and the Stockholders Agreement
and the consummation of the transactions contemplated
hereby and thereby and the Board of Directors of Parent
has ratified such actions and approved such transactions,
and no other corporate proceedings on the part of Parent,
Seller, the Company or any Subsidiary (other than those
necessary to effect the transactions contemplated by the
Assignment and Assumption Agreement) are necessary to
approve and authorize the execution and delivery by Parent
and Seller of this Agreement and the Stockholders
Agreement and the consummation by Parent and Seller of the
transactions contemplated hereby and thereby. This
Agreement constitutes a valid and binding agreement of
Parent and Seller, enforceable against Parent and Seller
in accordance with its terms, except that (i) the
enforcement hereof and thereof may be limited by
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 and other forms of
equitable relief may be subject to equitable defenses and
to the discretion of the court before which any proceeding
therefor may be brought.
2.5 Financial Statements. Seller has
previously delivered to Purchaser the combined audited
special-purpose balance sheet of the Efratom Business Unit
as of December 31, 1993 (the "Audited Special-Purpose
Balance Sheet") and the combined audited special-purpose
statements of earnings and cash flows of the Efratom
Business Unit for the fiscal year then ended (together
with the Audited Special-Purpose Balance Sheet, the
"Audited Financial Statements"), and the combined
unaudited special-purpose balance sheet of the Efratom
Business Unit as of August 7, 1994 (the "Unaudited
Special-Purpose Balance Sheet") and combined unaudited
special-purpose statements of earnings and cash flows of
the Efratom Business Unit for the seven months then ended
(such unaudited statements of earnings and cash flows,
together with the Unaudited Special-Purpose Balance Sheet,
including the related notes and supplemental information
thereto, are referred to herein as the "Unaudited
Financial Statements"). All of the audited and unaudited
financial statements referred to above, including the
related notes thereto, are sometimes referred to herein as
the "Financial Statements." Except as otherwise disclosed
in the notes or supplemental information thereto or in the
notes to the Audited Financial Statements, the Unaudited
Financial Statements fairly present in all material
respects the financial position and results of operations
of the Efratom Business Unit as of the date thereof and
the period covered thereby and have been prepared in
accordance with GAAP. Except as disclosed in Section 2.5
of the Disclosure Schedule, as of the date hereof, neither
the Company nor the Efratom Business Unit nor any of the
Subsidiaries has any liabilities or obligations, whether
accrued, absolute, contingent or otherwise that are
required to be reflected on a balance sheet prepared in
accordance with GAAP, other than (i) liabilities and
obligations that are reflected, accrued or reserved for in
the Unaudited Special-Purpose Balance Sheet or disclosed
in the notes or supplemental information thereto, (ii)
obligations incurred in the ordinary course of business
and consistent with past practice since the date of the
Unaudited Special-Purpose Balance Sheet, (iii) liabilities
which arise as a result of a breach of the representations
and warranties contained in Section 2.11 hereof and (iv)
other liabilities and obligations that would not, in the
aggregate, have a Material Adverse Effect.
2.6 No Approvals or Conflicts. Except as set
forth in Section 2.6 of the Disclosure Schedule, neither
the execution and delivery by Parent or Seller of this
Agreement, the Stockholders Agreement or the Assignment
and Assumption Agreement nor the consummation by Parent or
Seller of the transactions contemplated hereby and thereby
will (i) violate, conflict with or result in a breach of
any provision of the Articles of Incorporation or By-laws
of Parent, Seller, the Company or any Subsidiary, (ii)
violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a
default) under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the
properties of the Company, or the Subsidiaries or on
Seller's interest in the Shares under, any note, bond,
mortgage, indenture, deed of trust, license, franchise,
permit, lease, contract, agreement or other instrument to
which Seller, the Company, the Subsidiaries or any of
their respective properties, as of the Closing Date, may
be bound, (iii) violate any order, injunction, judgment,
ruling, law or regulation of any court or governmental
authority applicable to Parent, Seller, the Company or the
Subsidiaries or any of their respective properties or (iv)
except for applicable requirements of the Exchange Act,
and the rules and regulations promulgated thereunder and
the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), require any consent, approval
or authorization of, or notice to, or declaration, filing
or registration with, any governmental or regulatory
authority or other third party, which, in the case of
clauses (ii), (iii) and (iv) above, would have a Material
Adverse Effect or a material adverse effect on Parent's or
Seller's ability to consummate the transactions
contemplated hereby.
2.7 Compliance with Law; Governmental
Authorizations. Except as set forth in Section 2.7 of the
Disclosure Schedule, the Company, the Subsidiaries and the
Efratom Business Unit are not in violation of any order,
injunction, judgment, ruling, law or regulation of any
court or governmental authority applicable to the property
or business of the Company, the Subsidiaries or the
Efratom Business Unit which violation or violations in the
aggregate would have a Material Adverse Effect. Except as
set forth in Section 2.7 of the Disclosure Schedule, as of
the Closing Date, the licenses, permits and other
governmental authorizations held by the Company and the
Subsidiaries will be valid and sufficient for the conduct
of the Company's and the Subsidiaries' businesses as
currently conducted by the Efratom Business Unit, except
where the failure to hold such licenses, permits and other
governmental authorizations would not have a Material
Adverse Effect. Except as disclosed in Section 2.7 of the
Disclosure Schedule, no written claim has been made by any
governmental authority within the preceding five years to
the effect that either the Company or any Subsidiary
either failed or is failing to comply, in any material
respect, with any law, rule, regulation or ordinance
applicable to the Company or such Subsidiary,
respectively.
2.8 Litigation. Except as set forth in Section
2.8 of the Disclosure Schedule, as of the date hereof,
there are no claims, actions, proceedings or
investigations pending or, to the knowledge of Parent or
Seller, threatened against Parent (with respect to the
Efratom Business Unit), the Company or the Subsidiaries,
or the transactions contemplated by this Agreement, before
any court or governmental or regulatory authority or body
which would have a Material Adverse Effect or a material
adverse effect on Parent's or Seller's ability to
consummate the transactions contemplated hereby. Except
as set forth in Section 2.8 of the Disclosure Schedule,
none of Parent (with respect to the Efratom Business
Unit), the Company or any Subsidiaries are named as a
plaintiff or defendant in any such material legal
proceeding.
2.9 Title to Assets. Except as set forth in
Section 2.9 of the Disclosure Schedule, on August 7, 1994,
Parent had and, subject to Section 6.16 and except with
respect to assets disposed of in the ordinary course of
business since August 7, 1994 (including distributions of
all of the Company's and the Subsidiaries' then cash
balances to Seller or Parent immediately prior to the
Closing), as of the Closing Date, the Company and the
Subsidiaries will have, good and valid title to all the
properties and assets owned by Parent or the Subsidiaries
and reflected on the Unaudited Special-Purpose Balance
Sheet or which would have been reflected on the Unaudited
Special-Purpose Balance Sheet if acquired prior to
August 7, 1994, free and clear of all Encumbrances of any
nature except for (i) exceptions to title as set forth in
Section 2.9 of the Disclosure Schedule; (ii) mortgages and
encumbrances which secure indebtedness or obligations
which are properly reflected on the Financial Statements
and are set forth in Section 2.9 of the Disclosure
Schedule; (iii) liens for Taxes (as defined in Section
2.11) not yet payable or any Taxes being contested in good
faith (any such contests being identified in Section 2.11
of the Disclosure Schedule); (iv) liens arising as a
matter of law in the ordinary course of business, provided
that the obligations secured by such liens are not
delinquent or are being contested in good faith; and (v)
such imperfections of title and encumbrances, if any, as
do not materially interfere with the present use of any of
the Company's or the Subsidiaries' properties and assets
subject thereto. As of the Closing Date, subject to
Section 6.16, the Company or the Subsidiaries will own, or
have valid leasehold interests in, all material properties
and assets presently used in the conduct of the Business
other than assets disposed of in the ordinary course of
business or used by Parent to provide general and
administrative services to the Efratom Business Unit
which will be discontinued as of the Closing Date.
2.10 Absence of Certain Changes. Except as
disclosed in Section 2.10 of the Disclosure Schedule and
as otherwise provided herein, since August 7, 1994 and
through the date hereof:
(a) the Business has been conducted only
in the ordinary course and consistent with past practice
in all material respects;
(b) there has been no direct or indirect
redemption, purchase or other acquisition by the Company
or any Subsidiary of any shares of its capital stock, or
any declaration, setting aside or payment of any dividend
or other distribution by the Company or any Subsidiary
other than distributions of all of the Company's then cash
balances to Parent or Seller immediately prior to the
Closing and other cash management procedures or dividend
payment procedures comparable to those described in the
supplementary information to the Unaudited Financial
Statements in the ordinary course of Seller's or the
Company's business;
(c) there has been no sale, assignment or
transfer of any material assets of the Company, the
Subsidiaries or the Efratom Business Unit (other than
sales, assignments or transfers of assets in the ordinary
course of business and consistent with past practice);
(d) there has been no material adverse
change in the financial condition, results of operations,
or business of the Efratom Business Unit; and
(e) there has been no material increase in
compensation payable or to become payable to any of the
Efratom Business Unit's or the Subsidiaries' respective
officers, directors or employees, other than increases in
the ordinary course of business and consistent with past
practice.
2.11 Taxes. (a) The Company, or an Affiliate
of the Company on its behalf, has (i) duly filed with the
appropriate Federal, state, local and foreign taxing
authorities all Tax Returns (as defined below) required to
be filed by or with respect to the Company, the
Subsidiaries or the Efratom Business Unit as of the date
hereof other than those Tax Returns the failure of which
to file would not have a Material Adverse Effect, and such
Tax Returns are true, correct and complete in all material
respects and (ii) paid or made provision for or disclosed
in the Financial Statements (including in the supplemental
information to the Unaudited Financial Statements) all
material Taxes (as defined below) of the Company, the
Subsidiaries or the Efratom Business Unit shown to be due
on such Tax Returns. As of the date hereof, there are no
material liens for Taxes upon the assets of the Efratom
Business Unit except liens for current Taxes not yet due
or Taxes being contested in good faith by appropriate
proceedings (which contests are set forth in Section 2.11
of the Disclosure Schedule). Except as set forth in
Section 2.11 of the Disclosure Schedule, as of the date
hereof, none of Parent, Seller, the Company or any
Subsidiary has received any written notice of deficiency
or assessment from any Federal, state, local or foreign
taxing authority with respect to liabilities for material
Taxes of the Efratom Business Unit which have not been
paid or finally settled, and any such deficiency or
assessment disclosed in Section 2.11 of the Disclosure
Schedule is being contested in good faith through
appropriate proceedings. Except as disclosed in Section
2.11 of the Disclosure Schedule, neither the Company nor
any Subsidiary is a party to any tax-sharing agreement.
(b) For purposes of this Agreement,
"Taxes" shall mean all taxes, charges, fees, levies,
penalties or other assessments imposed by any United
States Federal, state, local or foreign taxing authority,
including, but not limited to, income, service, leasing,
occupation, excise, property, sales and use, transfer,
franchise, payroll, withholding, social security or other
taxes, including any interest, penalties or additions
attributable thereto.
(c) For purposes of this Agreement, "Tax
Return" shall mean any return, report, information return
or other document (including any related or supporting
information) filed or required to be filed with any taxing
authority with respect to Taxes.
2.12 Employee Benefits. (a) Schedule 2.12 of
the Disclosure Schedule sets forth a true and complete
list of each employee benefit plan within the meaning of
Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), that is maintained for
employees or former employees of the Efratom Business Unit
by Parent or the Company (together with any comparable
employee benefit plans maintained by Efratom Germany, the
"Plans").
(b) Except as disclosed in Schedule 2.12
of the Disclosure Schedule, to the knowledge of Parent and
Seller, each of the Plans that is subject to ERISA is in
material compliance with the currently applicable
provisions of ERISA; each of the Plans intended to be
"qualified" within the meaning of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), is
so qualified; and no Plan is subject to Title IV of ERISA.
(c) All contributions (including all
employer contributions and employee salary reduction
contributions) that are due have been paid to each Plan,
and all contributions for any period ending on or before
the Closing Date that are not yet due will be paid to each
Plan or accrued in accordance with the past custom and
practice of Parent, Seller and the Company or Efratom
Germany, as the case may be.
(d) To the knowledge of Parent or Seller,
there have been no prohibited transactions with respect to
any Plan subject to ERISA with respect to which Parent,
Seller, the Company or any of the Subsidiaries has
incurred any material liability. To the knowledge of
Parent or Seller, no breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of any Plan has
occurred. As of the date hereof, no charge, complaint,
action, suit, proceedings, hearing, investigation, claim,
or demand with respect to the administration or the
investment of the assets of any Plan (other than routine
claims for benefits) is pending or, to the knowledge of
Parent or Seller, threatened.
(e) None of Parent, Seller, the Company or
the Subsidiaries contributes to any multiemployer plan, as
defined in Section 3(37) of ERISA on behalf of employees
or former employees of the Efratom Business Unit.
(f) Except as provided in Sections 6.11
and 6.12 hereof, as accrued on the Unaudited Special-
Purpose Balance Sheet or the Closing Date Statement or as
required by applicable law or regulation, the terms of any
Plan exclusively covering Company Employees employed by
Efratom Germany or any agreement with any Company Employee
at Efratom Germany, as of the Closing Date, the Company
and the Subsidiaries will have no liabilities with respect
to any of the Plans from and after the Closing Date.
2.13 Labor Relations. Except as set forth in
Section 2.13 of the Disclosure Schedule, none of Parent,
Seller, the Company or the Subsidiaries is a party to any
collective bargaining agreement applicable to employees of
the Efratom Business Unit. As of the date hereof, no
labor organization or group of employees of the Efratom
Business Unit has made a demand for recognition or has
filed a petition seeking a representation proceeding.
Except as set forth in Section 2.13 of the Disclosure
Schedule, the Company, the Subsidiaries and the Efratom
Business Unit are, and for the preceding five years have
been, in material compliance with all applicable laws
respecting employment and employment practices, terms and
conditions of employment and wages and hours and is not
and, to the knowledge of Parent and the Company, has not
engaged in any unfair labor practice which has had or is
reasonably likely to have a Material Adverse Effect, and,
as of the date hereof, there is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge
of Parent or Seller, threatened against or affecting the
Company, the Subsidiaries or the Efratom Business Unit.
Except as set forth in Section 2.12 or 2.13 of the
Disclosure Schedule, as of the Closing Date neither the
Company nor any subsidiary will be a party to any material
employment or consulting agreement.
2.14 Patents, Trademarks, Trade Names, Etc.
Section 2.14 of the Disclosure Schedule contains an
accurate list of all patents, trademarks, service marks,
trade names and copyrights, and all applications therefor
(collectively, "Intellectual Property") used or owned by
the Company or the Subsidiaries which are material to the
Company and the Subsidiaries considered as a single
enterprise, all applications therefor, and a list of all
material licenses and other agreements relating thereto.
Except as set forth in Section 2.14 of the Disclosure
Schedule and as provided in Section 6.13 hereof, (i) the
consummation of the transactions contemplated by this
Agreement will not materially impair the Company's or any
Subsidiary's right to use any such Intellectual Property,
(ii) no claims have been asserted by any person to the use
of any such Intellectual Property, or challenging or
questioning the validity or effectiveness of any such
license or agreement, which claims, if adversely decided,
would have a Material Adverse Effect and (iii) the use of
such Intellectual Property by the Efratom Business Unit,
the Company or the Subsidiaries, as the case may be, and
the conduct of the business of the Efratom Business Unit,
the Company and the Subsidiaries, as the case may be,
does not infringe in any material respect on the
Intellectual Property rights of any other person. Except
as provided in Section 6.13 hereof and subject to Section
6.16 hereof, as of the Closing Date, the Company's and the
Subsidiaries' rights in and to such Intellectual Property
will be sufficient with respect to Intellectual Property
to permit the Company to carry on its business in all
material respects as presently conducted. The Company's
and the Subsidiaries' Intellectual Property has not been
misappropriated from any third party. In the ordinary
course of its business, Parent and the Subsidiaries have
entered into employee inventions assignment agreements
with employees of the Efratom Business Unit, in a form or
forms that will be made available to Purchaser prior to
the Closing, and such agreements will be assigned to the
Company or the Subsidiaries to the extent permitted by
law on or before the Closing Date.
2.15 Contracts. Section 2.15 of the Disclosure
Schedule sets forth each of the material contracts,
agreements and understandings relating to the Efratom
Business Unit to which Parent is a party and which,
subject to Section 6.16, will be assigned to the Company
pursuant to the Assignment and Assumption Agreement or to
which any of the Subsidiaries is a party or by which any
of the Efratom Business Unit's assets or operations may be
bound, (i) each of which is in full force and effect,
except where the failure to be in full force and effect
would not have a Material Adverse Effect and (ii) with
respect to which there are no existing defaults by Parent,
the Company or such Subsidiary thereunder, nor, to the
knowledge of Parent and Seller, is any other party in
default thereof, which default would result in a Material
Adverse Effect.
2.16 Environmental Matters. Except as set
forth in Section 2.16 of the Disclosure Schedule, neither
Parent, the Company nor any of the Subsidiaries has, as of
the date hereof, received any written notice alleging the
present violation by the Efratom Business Unit of any
applicable Federal, state or local laws or regulations
related to the protection of the environment
("Environmental Laws") which would result in a Material
Adverse Effect, and (i) the Company, the Subsidiaries and
the Efratom Business Unit are, and for the preceding five
years have been, in compliance with all Environmental
Laws, (ii) the Company, the Subsidiaries and the Efratom
Business Unit have obtained and are in compliance with all
required governmental environmental permits with respect
to the Business as currently conducted, (iii) no hazardous
waste, substance or material has been stored, treated or
disposed of by the Company, the Subsidiaries or the
Efratom Business Unit on the real estate owned by the
Company, the Subsidiaries or Parent, except in compliance
with applicable Environmental Laws and (iv) the Company,
the Subsidiaries and the Efratom Business Unit have
lawfully disposed of their hazardous waste products with
respect to the operations of its business except, in each
case, where such failure to be in compliance or to obtain,
store, treat or dispose of would not have a Material
Adverse Effect.
2.17 Insurance. Section 2.17 of the Disclosure
Schedule lists all material insurance policies covering
the assets, employees and operations of the Efratom
Business Unit as of the date hereof. All insurance
coverage and bonds with respect to the properties and
business of the Efratom Business Unit that are in effect
as of the date hereof shall be terminated as of the
Closing Date.
2.18 Real Property. Neither the Company nor
any Subsidiary owns or, as of the Closing Date, will own
any real property. Section 2.18 of the Disclosure
Schedule sets forth a list of all material real property
leased by the Efratom Business Unit, or otherwise used in
the Business. Subject to Section 6.16, all such leases
will be assigned to the Company or a Subsidiary pursuant
to the Assignment and Assumption Agreement on or before
the Closing Date. There is not under any of such leases
an existing default or event which with notice or lapse of
time, or both, would become a default by Parent, the
Company or any Subsidiary, or to the knowledge of Parent
or Seller, by any other party thereto. The real property
listed in Section 2.18 of the Disclosure Schedule
constitutes all of the real property necessary for the
continued conduct of the Business by the Company and the
Subsidiaries in all material respects as such Business is
presently conducted. To the knowledge of Parent and
Seller there exists no condition on any such real property
which materially interferes with the present use of such
real property.
2.19 Proxy Statement. None of the information
supplied by Parent, Seller or the Company in writing
expressly for use in the Proxy Statement (as defined in
Section 6.15) and in the Current Report on Form 8-K of the
Purchaser to be filed in connection with the transactions
contemplated hereby (the "Form 8-K") will (as such
information may be supplemented or amended by Parent) with
respect to the Proxy Statement, at the time of the mailing
of the Proxy Statement and at the time of the Stockholders
Action (as defined in Section 6.15) and with respect to
the Form 8-K, at the time of filing with the Securities
and Exchange Commission, contain any untrue statement of a
material fact or omit to state any material facts 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. If at any time any
event shall occur which will result in a breach of the
foregoing sentence, Parent, Seller and/or the Company
shall promptly advise Purchaser.
2.20 Investment Intent. Seller acknowledges
that the Purchaser Shares it or its designee shall receive
as consideration hereunder are unregistered and Seller
will not sell or otherwise transfer the Purchaser Shares
other than in accordance with the Securities Act of 1933,
as amended (the "Securities Act"), or an exemption
therefrom.
2.21 No Brokers' or Other Fees. Except for the
fees payable to Lehman Brothers Inc. by Parent, no broker,
finder or investment banker is entitled to any fee or
commission in connection with the transactions
contemplated hereby based upon arrangements made by or on
behalf of Parent, Seller or the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to
Seller as follows:
3.1 Organization. Purchaser is a corporation
duly organized, validly existing and in good standing
under the laws of the State of Delaware. Purchaser has
full corporate power and authority to own its properties
and assets and to carry on its business as now being
conducted and is duly qualified or licensed to do business
as a foreign corporation in good standing in the
jurisdictions in which the ownership of its property or
the conduct of its business requires such qualification,
except jurisdictions in which the failure to be so
qualified or licensed would not have a material adverse
effect on the business, operations or financial condition
of Purchaser and the Purchaser Subsidiaries (as defined
below) considered as a single enterprise (hereinafter
referred to as a "Purchaser Material Adverse Effect").
Purchaser has delivered to Seller complete and correct
copies of the Articles of Incorporation and all amendments
thereto to the date hereof, and the By-laws as presently
in effect of Purchaser. Except for the subsidiaries
(collectively, the "Purchaser Subsidiaries") set forth in
Section 3.1 of the Disclosure Schedule, Purchaser does not
own, directly or indirectly, any capital stock or other
equity securities of any corporation or have any direct or
indirect equity or ownership interest in any partnership,
joint venture or other business.
3.2 Capital Stock. The authorized capital
stock of Purchaser consists of 5,000,000 shares of common
stock, $.25 par value per share, of which 2,655,795 shares
are issued and outstanding as of the date hereof. All of
the outstanding shares of capital stock of the Purchaser
Subsidiaries (the "Purchaser Subsidiary Shares") are owned
by Purchaser free and clear of all Encumbrances. Except
for options or rights under Purchaser's existing stock
option and savings plans, copies of which have been
provided to Parent, there are no subscriptions, options,
warrants, calls, rights, contracts, commitments,
understandings, restrictions or arrangements relating to
the issuance, sale, transfer or voting of any shares of
capital stock of Purchaser or, except as set forth in
Section 3.2 of the Disclosure Schedule, any of the
Purchaser Subsidiaries, including any rights of conversion
or exchange under any outstanding securities or other
instruments. All of the shares of capital stock of
Purchaser and the Purchaser Subsidiaries have been validly
issued and are fully paid, nonassessable and free of
preemptive rights.
3.3 Authorization, Etc. Purchaser has full
corporate power and authority to execute and deliver this
Agreement and the Stockholders Agreement, and to carry out
the transactions contemplated hereby and thereby. The
Board of Directors of Purchaser has duly approved and
authorized the execution and delivery of this Agreement
and the Stockholders Agreement and the documents and
instruments contemplated hereby and thereby and the
consummation of the transactions contemplated hereby and
thereby, and other than the approval by the stockholders
of (i) an increase in the authorized number of shares of
Common Stock and (ii) the transactions contemplated
hereby, no other corporate proceedings on the part of
Purchaser are necessary to approve and authorize the
execution and delivery by Purchaser of this Agreement and
the Stockholders Agreement and the consummation by
Purchaser of the transactions contemplated hereby and
thereby. Each of this Agreement and the Stockholders
Agreement constitutes a valid and binding agreement of
Purchaser, assuming the due execution of this Agreement by
Seller, enforceable against Purchaser in accordance with
its terms, except that (i) the enforcement hereof and
thereof may be limited by 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 and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
3.4 No Approvals or Conflicts. Except as set
forth in Section 3.4 of the Disclosure Schedule, neither
the execution and delivery by Purchaser of this Agreement
and the Stockholders Agreement nor the consummation by
Purchaser of the transactions contemplated hereby and
thereby will (i) violate, conflict with or result in a
breach of any provision of the Articles of Incorporation
or By-laws of Purchaser, (ii) violate, conflict with or
result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time
or both, would constitute a default) under, or result in
the creation of any lien, security interest, charge or
encumbrance upon any of the properties of Purchaser or the
Purchaser Subsidiaries under, any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit,
lease, contract, agreement or other instrument to which
Purchaser or the Purchaser Subsidiaries or any of their
respective properties may be bound, (iii) violate any
order, injunction, judgment, ruling, law or regulation of
any court or governmental authority applicable to
Purchaser or the Purchaser Subsidiaries or any of their
respective properties, or (iv) except for applicable
requirements of the Exchange Act and the HSR Act, require
any consent, approval or authorization of, or notice to,
or declaration, filing or registration with, any
governmental or regulatory authority or other third party,
which, in the case of clauses (ii), (iii) and (iv) above,
would have a Purchaser Material Adverse Effect or on
Purchaser's ability to consummate the transactions
contemplated hereby.
3.5 Purchaser SEC Reports; Financial
Statements. Purchaser has delivered to Parent and Seller
copies of all forms, reports and documents (including
exhibits and any amendments thereto) filed by Purchaser
with the Securities and Exchange Commission (the "SEC")
since December 31, 1991 (collectively, including without
limitation any financial statements or schedules included
therein, the "Purchaser SEC Reports"). As of the their
respective dates, the Purchaser SEC Reports did not
contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or
necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading.
Each of the consolidated balance sheets included in or
incorporated by reference into the Purchaser SEC Reports
(including the related notes and schedules) fairly
presents in all material respects the consolidated
financial position of Purchaser and its subsidiaries as of
its date, and each of the consolidated statements of
income and cash flows included in or incorporated by
reference into the Purchaser SEC Reports (including any
related notes and schedules) fairly presents in all
material respects the results of operations, retained
earnings and cash flows, as the case may be, of Purchaser
and its subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal
year-end audit adjustments which will not be material in
amount or effect), in each case in accordance with
generally accepted accounting principles consistently
applied during the periods involved, except as otherwise
noted therein.
3.6 Compliance with Law; Governmental
Authorizations. Except as set forth in Section 3.6 of the
Disclosure Schedule, Purchaser and the Purchaser
Subsidiaries are not in violation of any order,
injunction, judgment, ruling, law or regulation of any
court or governmental authority applicable to the property
or business of Purchaser or the Purchaser Subsidiaries
which violation or violations in the aggregate would have
a Purchaser Material Adverse Effect. Except as set forth
in Section 3.6 of the Disclosure Schedule, to the best
knowledge of Purchaser, the licenses, permits and other
governmental authorizations held by Purchaser and the
Purchaser Subsidiaries are valid and sufficient for the
conduct of its businesses as currently conducted, except
where the failure to hold such licenses, permits and other
governmental authorizations would not have a Purchaser
Material Adverse Effect. Except as disclosed in Section
3.7 of the Disclosure Schedule, no written claim has been
made by any governmental authority within the preceding
five years to the effect that either Purchaser or the
Purchaser Subsidiaries either failed or is failing to
comply, in any material respect, with any law, rule,
regulation or ordinance applicable to Purchaser or any
Purchaser Subsidiary.
3.7 Litigation. Except as disclosed in the
Purchaser SEC Reports or as set forth in Section 3.7 of
the Disclosure Schedule, as of the date hereof, there are
no claims, actions, proceedings or investigations pending
or, to the knowledge of Purchaser, threatened against
Purchaser or the Purchaser Subsidiaries, or the
transactions contemplated by this Agreement, before any
court or governmental or regulatory authority or body
which would have a Purchaser Material Adverse Effect or a
material adverse effect on Purchaser's ability to
consummate the transactions contemplated hereby. Except
as set forth in Section 3.7 of the Disclosure Schedule,
neither the Purchaser nor any Purchaser Subsidiaries are
named as a plaintiff or defendant in any such material
legal proceeding.
3.8 Title to Assets. Except as set forth in
Section 3.8 of the Disclosure Schedule, on June 30, 1994,
Purchaser or the Purchaser Subsidiaries had and, except
with respect to assets disposed of in the ordinary course
of business since June 30, 1994, now have, good and valid
title to all the properties and assets owned by Purchaser
or the Purchaser Subsidiaries and reflected in the balance
sheet contained in the Purchaser's Quarterly Report on
Form 10-Q for the period ended June 30, 1994 (the
"Purchaser Balance Sheet") or which would have been
reflected in the Purchaser Balance Sheet if acquired prior
to June 30, 1994, free and clear of all Encumbrances of
any nature except for (i) exceptions to title as set forth
in Section 3.8 of the Disclosure Schedule; (ii) mortgages
and encumbrances which secure indebtedness or obligations
which are properly reflected in the Purchaser Balance
Sheet; (iii) liens for Taxes not yet payable or any Taxes
being contested in good faith; (iv) liens arising as a
matter of law in the ordinary course of business, provided
that the obligations secured by such liens are not
delinquent or are being contested in good faith; and (v)
such imperfections of title and encumbrances, if any, as
do not materially interfere with the present use of any of
Purchaser's or the Purchaser Subsidiaries' properties and
assets subject thereto. Purchaser or the Purchaser
Subsidiaries own, or have valid leasehold interests in,
all material properties and assets used in the conduct of
the Purchaser's business.
3.9 Absence of Certain Changes. Except as
disclosed in Section 3.9 of the Disclosure Schedule and as
otherwise provided herein, since June 30, 1994 and through
the date hereof:
(a) the business of Purchaser has been
conducted only in the ordinary course and consistent with
past practice in all material respects;
(b) there has been no direct or indirect
redemption, purchase or other acquisition by Purchaser or
any Purchaser Subsidiaries of any shares of its capital
stock, or any declaration, setting aside or payment of any
dividend or other distribution by the Purchaser or any
Purchaser Subsidiaries other than cash management
procedures in the ordinary course of Purchaser's business;
(c) there has been no sale, assignment or
transfer of any material assets of Purchaser or the
Purchaser Subsidiaries (other than sales, assignments or
transfers of assets in the ordinary course of business and
consistent with past practice);
(d) there has been no material adverse
change in the financial condition, results of operations,
or business of Purchaser; and
(e) there has been no material increase in
compensation payable or to become payable to any of
Purchaser's or the Purchaser Subsidiaries' respective
officers, directors or employees, other than increases in
the ordinary course of business and consistent with past
practice.
3.10 Taxes. Purchaser has (i) duly filed with
the appropriate Federal, state, local and foreign taxing
authorities all Tax Returns required to be filed by or
with respect to Purchaser and the Purchaser Subsidiaries
as of the date hereof other than those Tax Returns the
failure of which to file would not have a Purchaser
Material Adverse Effect, and such Tax Returns are true,
correct and complete in all material respects and (ii)
paid or made provision for in the financial statements of
Purchaser included in the Purchaser SEC Reports all
material Taxes of Purchaser and the Purchaser Subsidiaries
shown to be due on such Tax Returns. As of the date
hereof, there are no material liens for Taxes upon the
assets of Purchaser or the Purchaser Subsidiaries except
liens for current Taxes not yet due or Taxes being
contested in good faith by appropriate proceedings.
Except as set forth in Section 3.10 of the Disclosure
Schedule, as of the date hereof, none of Purchaser or any
Purchaser Subsidiaries has received any written notice of
deficiency or assessment from any Federal, state, local or
foreign taxing authority with respect to liabilities for
material Taxes of Purchaser or the Purchaser Subsidiaries
which have not been paid or finally settled, and any such
deficiency or assessment disclosed in Section 3.10 of the
Disclosure Schedule is being contested in good faith
through appropriate proceedings. Except as disclosed in
Section 3.10 of the Disclosure Schedule, neither the
Purchaser nor any Purchaser Subsidiaries is a party to any
tax-sharing agreement.
3.11 Employee Benefits. (a) Schedule 3.11 of
the Disclosure Schedule sets forth a true and complete
list of each employee benefit plan within the meaning of
Section 3(3) of the ERISA, that is maintained for
employees or former employees of Purchaser or the
Purchaser Subsidiaries (the "Purchaser Plans").
(b) Except as disclosed in Schedule 3.11
of the Disclosure Schedule, to the knowledge of Purchaser,
each of the Purchaser Plans that is subject to ERISA is in
material compliance with the currently applicable
provisions of ERISA; each of the Purchaser Plans intended
to be "qualified" within the meaning of Section 401(a) of
the Code is so qualified; and no Purchaser Plan is subject
to Title IV of ERISA.
(c) All contributions (including all
employer contributions and employee salary reduction
contributions) that are due have been paid to each
Purchaser Plan, and all contributions for any period
ending on or before the Closing Date that are not yet due
will be paid to each Purchaser Plan or accrued in
accordance with the past custom and practice of Purchaser.
(d) To the knowledge of Purchaser, there
have been no prohibited transactions with respect to any
Purchaser Plan with respect to which Purchaser or any of
the Purchaser Subsidiaries has incurred any material
liability. To the knowledge of Purchaser, no breach of
fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the
assets of any Purchaser Plan has occurred. As of the date
hereof, no charge, complaint, action, suit, proceedings,
hearing, investigation, claim, or demand with respect to
the administration or the investment of the assets of any
Purchaser Plan (other than routine claims for benefits) is
pending or, to the knowledge of Purchaser, threatened.
(e) None of Purchaser or the Purchaser
Subsidiaries contributes to any multiemployer plan, as
defined in Section 3(37) of ERISA on behalf of employees
or former employees of Purchaser or the Purchaser
Subsidiaries.
3.12 Labor Relations. Except as set forth in
Section 3.12 of the Disclosure Schedule, none of Purchaser
or the Purchaser Subsidiaries is a party to any collective
bargaining agreement applicable to employees of Purchaser
or the Purchaser Subsidiaries. As of the date hereof, no
labor organization or group of employees of Purchaser or
any Purchaser Subsidiaries has made a demand for
recognition or has filed a petition seeking a
representation proceeding. Except as set forth in Section
3.12 of the Disclosure Schedule, Purchaser and the
Purchaser Subsidiaries are, and for the preceding five
years have been, in material compliance with all
applicable laws respecting employment and employment
practices, terms and conditions of employment and wages
and hours and is not and, to the knowledge of Purchaser,
has not engaged in any unfair labor practice which has had
or is reasonably likely to have a Purchaser Material
Adverse Effect, and, as of the date hereof, there is no
labor strike, dispute, slowdown or stoppage actually
pending or, to the knowledge of Purchaser, threatened
against or affecting Purchaser or the Purchaser
Subsidiaries.
3.13 Patents, Trademarks, Trade Names, Etc.
Section 3.13 of the Disclosure Schedule contains an
accurate list of all patents, trademarks, service marks,
trade names and copyrights and all applications therefor
(collectively, "Purchaser Intellectual Property") used or
owned by Purchaser or the Purchaser Subsidiaries which are
material to Purchaser and the Purchaser Subsidiaries
considered as a single enterprise, all applications
therefor, and a list of all material licenses and other
agreements relating thereto. Except as set forth in
Section 3.13 of the Disclosure Schedule, (i) the
consummation of the transactions contemplated by this
Agreement will not materially impair Purchaser's or any
Purchaser Subsidiaries' right to use any such Purchaser
Intellectual Property, (ii) no claims have been asserted
by any person to the use of any such Purchaser
Intellectual Property, or challenging or questioning the
validity or effectiveness of any such license or
agreement, which claims, if adversely decided, would have
a Purchaser Material Adverse Effect and (iii) the use of
such Purchaser Intellectual Property by Purchaser or the
Purchaser Subsidiaries, as the case may be, and the
conduct of the business of the Purchaser and the Purchaser
Subsidiaries does not infringe in any material respect on
the Intellectual Property rights of any other person.
Purchaser's and the Purchaser Subsidiaries' rights in and
to such Purchaser Intellectual Property are sufficient
with respect to the Purchaser Intellectual Property to
permit Purchaser to carry on its business in all material
respects as presently conducted. The Purchaser
Intellectual Property has not been misappropriated from
any third party.
3.14 Contracts. Except as set forth in Section
3.14 of the Disclosure Schedule, (i) each of the material
contracts, agreements and understandings to which
Purchaser or any of the Purchaser Subsidiaries is a party
or by which any of its assets or operations may be bound
is in full force and effect, except where the failure to
be in full force and effect would not have a Purchaser
Material Adverse Effect and (ii) there are no existing
defaults by Purchaser or such Purchaser Subsidiary
thereunder, nor, to the knowledge of Purchaser, is any
other party in default thereof, which default would result
in a Purchaser Material Adverse Effect.
3.15 Environmental Matters. Except as set
forth in Section 3.15 of the Disclosure Schedule, neither
Purchaser nor any of the Purchaser Subsidiaries has, as of
the date hereof, received any written notice alleging the
present violation of any Environmental Laws which would
result in a Purchaser Material Adverse Effect, and (i)
Purchaser and the Purchaser Subsidiaries are, and for the
preceding five years have been, in compliance with all
Environmental Laws, (ii) Purchaser and the Purchaser
Subsidiaries have obtained and are in compliance with all
required governmental environmental permits with respect
to the business of Purchaser and the Purchaser
Subsidiaries as currently conducted, (iii) no hazardous
waste, substance or material has been stored, treated or
disposed of by Purchaser or the Purchaser Subsidiaries on
the real estate owned by Purchaser or the Purchaser
Subsidiaries, respectively, except in compliance with
applicable Environmental Laws and (iv) Purchaser and the
Purchaser Subsidiaries have lawfully disposed of their
hazardous waste products with respect to the operations of
its business except, in each case, where such failure to
be in compliance or to obtain, store, treat or dispose of
would not have a Purchaser Material Adverse Effect.
3.16 Insurance. Purchaser and each of the
Purchaser Subsidiaries maintain reasonable and adequate
insurance covering the assets, employees and operations of
Purchaser and the Purchaser Subsidiaries as of the date
hereof.
3.17 Acquisition for Investment. Purchaser is
acquiring the Shares solely for its own account and not
with a view to any distribution or other disposition of
such Shares, and the Shares will not be transferred except
in a transaction registered or exempt from registration
under the Securities Act.
3.18 Financing. Section 3.18 of the Disclosure
Schedule contains a true and complete copy of a proposal
letter executed by Purchaser and Wells Fargo Bank,
National Association ("Wells Fargo"), dated October 13,
1994, pursuant to which Wells Fargo has proposed, subject
to certain conditions specified therein, to provide
Purchaser with financing (the "Financing") in an amount
sufficient, together with available cash or cash
equivalents on hand, to enable Purchaser to consummate the
transactions contemplated by this Agreement.
3.19 Stock Issuable to Parent or Seller. The
Purchaser Shares, when delivered as herein provided, will
be validly issued, fully paid and non-assessable, and will
not be subject to preemptive rights. The Purchaser Shares
shall be subject to the provisions of the Stockholders
Agreement in the form attached hereto as Exhibit A (the
"Stockholders Agreement"). Except for this Agreement and
the Stockholders Agreement, and except under the
Purchaser's stock option and savings plans, as of the date
hereof, there are no subscriptions, options, warrants,
calls, rights, contracts, commitments, understandings,
restrictions or arrangements relating to the issuance,
sale or transfer by Purchaser of any shares of its capital
stock, including any rights of conversion or exchange
under any outstanding securities or other instruments.
The Purchaser Shares shall be of a class registered under
the Exchange Act and, at the time of their issuance, duly
included for quotation on the NASDAQ National Market
System.
3.20 Proxy Statement. None of the information
included or incorporated by reference in the Proxy
Statement (as defined in Section 6.14) will, at the time
of the mailing of the Proxy Statement and at the time of
the Stockholder Action (as defined in Section 6.15),
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; provided, however, such representation and
warranty shall not apply to any information supplied in
writing by Parent, Seller or the Company expressly for
inclusion therein. If at any time any event shall occur
which is required to be described in the Proxy Statement,
such event shall be so described, and an amendment or
supplement shall be promptly filed with the SEC and, as
required by law, disseminated to the stockholders of
Purchaser and such amendment or supplement shall comply
with all provisions of applicable law.
3.21 Officer and Director Shares. Purchaser
has advised Parent that its directors unanimously intend
to recommend (subject to their fiduciary duties under
applicable law) that Purchaser's stockholders vote in
favor of the issuance of the Purchaser Shares to Seller in
the Stockholders Action and that its directors and
executive officers have agreed in writing to vote all of
the shares of common stock of Purchaser held by them in
favor of such issuance (and copies of such agreements have
been provided to Parent).
3.22 No Brokers' or Other Fees. No broker,
finder or investment banker is entitled to any fee or
commission in connection with the transactions
contemplated hereby based upon arrangements made by or on
behalf of Purchaser.
ARTICLE IV
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Parent and Seller to effect
the Closing under this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the
following conditions, unless waived in writing by Parent
or Seller.
4.1 Representations and Warranties. The
representations and warranties made by Purchaser in this
Agreement shall be true and correct in all material
respects on the Closing Date as though such
representations and warranties were made at and as of such
date, except for changes expressly permitted or
contemplated by this Agreement.
4.2 Performance. Purchaser shall have
performed and complied in all material respects with all
agreements, obligations and conditions required by this
Agreement to be so performed or complied with by Purchaser
prior to the Closing.
4.3 Officer's Certificate. Purchaser shall
have delivered to Parent, Seller and the Company a
certificate, dated the Closing Date and executed by the
President or a Vice President of Purchaser, certifying to
the fulfillment of the conditions specified in Sections
4.1 and 4.2 hereof.
4.4 No Changes. There shall not have been a
material adverse change in the assets, liabilities,
financial condition or business of Purchaser since the
date hereof. The parties agree that such a material
adverse change shall be deemed to have occurred if the
Average Closing Price is less than $6.25.
4.5 Other Agreements. Purchaser shall have
delivered to Parent and Seller at the Closing executed
copies of the Stockholders Agreement and the Services
Agreement.
4.6 HSR Act. All applicable waiting periods
under the HSR Act with respect to the transactions
contemplated hereby shall have expired or been terminated.
4.7 Injunctions. On the Closing Date there
shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a
court or governmental agency of competent jurisdiction
directing that the transactions provided for herein not be
consummated as provided herein.
4.8 Nasdaq. The Purchaser Shares shall have
been authorized for inclusion on the Nasdaq National
Market System, upon official notice of issuance.
4.9 Stockholder Approval. The stockholders of
Purchaser shall have approved the issuance of the
Purchaser Shares and an increase in the authorized shares
of Common Stock of Purchaser sufficient to enable
Purchaser to issue the Purchaser Shares.
4.10 Consents. Those governmental and third
party consents identified in Section 4.10 of the
Disclosure Schedule and necessary to effect the Closing or
the transfer of the assets, liabilities or contract rights
to the Company by Parent pursuant to the Assignment and
Assumption Agreement, shall have been obtained.
4.11 Actual or Threatened Litigation. No
governmental agency or private party shall have
instituted, and no governmental agency shall have
expressly stated in writing that it will institute, any
action, suit or proceeding before any court or
administrative body which seeks to enjoin, questions the
legality of, or materially and adversely affects the
consummation of the transactions contemplated by this
Agreement.
ARTICLE V
CONDITIONS TO PURCHASER'S OBLIGATIONS
The obligations of Purchaser to effect the
Closing under this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the
following conditions, unless waived in writing by
Purchaser.
5.1 Representations and Warranties. The
representations and warranties made by Parent and Seller
in this Agreement shall be true and correct in all
material respects on the Closing Date as though such
representations and warranties were made at and as of such
date, except for changes expressly permitted or
contemplated by the terms of this Agreement.
5.2 Performance. Parent and Seller shall have
performed and complied in all material respects with all
agreements, obligations and conditions required by this
Agreement to be so performed or complied with by Parent
and Seller prior to the Closing.
5.3 Officer's Certificate. Parent and Seller
shall have delivered to Purchaser a certificate, dated the
Closing Date and executed by the President or a Vice
President of Parent and Seller, certifying to the
fulfillment of the conditions specified in Sections 5.1
and 5.2 hereof.
5.4 Other Agreements. Purchaser shall have
delivered to Parent and Seller at the Closing executed
copies of the Stockholders Agreement and the Services
Agreement.
5.5 No Changes. There shall not have been a
material adverse change in the assets, liabilities,
financial condition or business of the Company since the
date hereof.
5.6 Resignation of Directors. Seller shall
have delivered to Purchaser the written resignations of
all of the directors of the Company effective as of the
Closing Date.
5.7 HSR Act. All applicable waiting periods
under the HSR Act with respect to the transactions
contemplated hereby shall have expired or been terminated.
5.8 Injunctions. On the Closing Date there
shall be no injunction, writ, preliminary restraining
order or other order in effect of any nature issued by a
court or governmental agency of competent jurisdiction
directing that the transactions provided for herein not be
consummated as provided herein.
5.9 Stockholder Approval. The stockholders of
Purchaser shall have approved the issuance of the
Purchaser Shares and an increase in the authorized shares
of Common Stock of Purchaser sufficient to enable
Purchaser to issue the Purchaser Shares.
5.10 Consents. Those governmental and third
party consents identified in Section 4.10 of the
Disclosure Schedule and necessary to effect the Closing or
the transfer of the Company's assets, labilities or
contract rights to the Company by Parent pursuant to the
Assignment and Assumption Agreement, shall have been
obtained.
5.11 Financing. At or prior to the Closing,
Purchaser shall have obtained the Financing or financing
not materially less favorable to Purchaser than the
Financing or otherwise reasonably acceptable to Purchaser.
5.12 Actual or Threatened Litigation. No
governmental agency or private party shall have
instituted, and no governmental agency shall have
expressly stated in writing that it will institute, any
action, suit or proceeding before any court or
administrative body which seeks to enjoin, questions the
legality of, or materially and adversely effects the
consummation of the transactions contemplated by this
Agreement.
ARTICLE VI
COVENANTS AND AGREEMENTS
6.1 Conduct of Business.
(1) Parent and Seller covenant that, except (i)
for actions taken to implement this Agreement and the
transactions contemplated hereby, (ii) as disclosed in the
Disclosure Schedule, (iii) for distributions of all of the
Company's and the Subsidiaries' then cash balances to
Parent or Seller immediately prior to the Closing or (iv)
as consented to by Purchaser, from and after the date of
this Agreement and until the Closing Date Parent and
Seller shall:
(a) use reasonable efforts consistent with
good business judgment and past practice to: (i) preserve
intact the present business organization of, and maintain
the property of, the Company and the Subsidiaries, (ii)
keep available the services of those employees of the
Company and the Subsidiaries having management
responsibilities, (iii) preserve the present relationships
of the Company and the Subsidiaries with entities or
persons having business dealings with them and (iv)
generally operate the Company and the Subsidiaries in the
ordinary and regular course of business consistent with
prior practices in all material respects;
(b) refrain from (i) causing to be issued
or sold any shares of capital stock or other securities of
the Company or any Subsidiary or any options, warrants or
commitments of any kind with respect thereto, (ii)
directly or indirectly causing to be purchased, redeemed
or otherwise acquired or disposed of any shares of capital
stock of the Company or any Subsidiary; (iii) declaring,
setting aside or paying any dividend or other distribution
other than cash management procedures in the ordinary
course of Seller's or the Company's business; (iv)
permitting or allowing the Company or any Subsidiary to
borrow or agree to borrow any funds or incur, whether
directly or by way of guarantee, any obligation for
borrowed money, other than in the ordinary course of
business and consistent with past practice, (v) subjecting
any of the property or assets of the Company or any
Subsidiary (real, personal or mixed, tangible or
intangible) to any material mortgage, pledge, lien or
encumbrance or otherwise permitting or allowing the
disposition of any material property or assets of the
Company or any Subsidiary (real, personal or mixed,
tangible or intangible), other than in the ordinary course
of business and consistent with past practice, (vi) making
any change in compensation payable or to become payable to
any employee or in the benefits offered to any employee
other than in the ordinary course of business, consistent
with past practice or (vii) agreeing to do any of the
foregoing; and
(c) maintain the books and records of the
Company and the Subsidiaries in accordance with prior
practice.
(2) Purchaser covenants that, except (i) for
actions taken to implement this Agreement and the
transactions contemplated hereby, (ii) as disclosed in the
Disclosure Schedule, or (iii) as consented to by Parent,
from and after the date of this Agreement and until the
Closing Date Purchaser shall:
(a) use reasonable efforts consistent with
good business judgment and past practice to: (i) preserve
intact the present business organization of, and maintain
the properties of, Purchaser, (ii) keep available the
services of those employees of Purchaser having management
responsibilities, (iii) preserve the present relationships
of Purchaser with entities or persons having business
dealings with it and (iv) generally operate Purchaser in
the ordinary and regular course of business consistent
with prior practices in all material respects;
(b) refrain from (i) borrowing or agreeing
to borrow any funds or incurring, whether directly or by
way of guarantee, any obligation for borrowed money, other
than in the ordinary course of business and consistent
with past practice, (ii) subjecting any of the property or
assets of Purchaser (real, personal or mixed, tangible or
intangible) to any material mortgage, pledge, lien or
encumbrance or otherwise permitting or allowing the
disposition of any material property or assets of
Purchaser (real, personal or mixed, tangible or
intangible), other than in the ordinary course of business
and consistent with past practice, (iii) making any change
in compensation payable or to become payable to any
employee or in the benefits offered to any employee other
than in the ordinary course of business, consistent with
past practice or (iv) agreeing to do any of the foregoing;
and
(c) maintain the books and records of
Purchaser in accordance with prior practice.
6.2 Transaction Regarding Purchaser Common
Stock. Purchaser shall not, from and after the date
hereof and prior to the Closing Date, (i) issue or agree
to issue any additional shares of Common Stock or other
securities of Purchaser or any options, warrants or
commitments of any kind with respect thereto, except for
(a) issuances pursuant to any presently outstanding stock
option, warrant, convertible security or other right to
purchase shares of Common Stock and (b) issuances pursuant
to any existing employee benefit plan or other existing
employee or director arrangement previously disclosed in
writing to Parent, (ii) declare or pay any cash or stock
dividend (other than regular quarterly cash dividends
consistent with past practice) or other distribution or
issue any rights with respect to the outstanding Common
Stock or other equity securities, (iii) effect, with
respect to the outstanding Common Stock, any merger,
recapitalization, combination conversion, exchange of
shares, issuance of shares or other transaction affecting
the Common Stock or (iv) directly or indirectly purchase,
redeem or otherwise acquire or dispose of any shares of
capital stock of Purchaser.
6.3 Delivery of Periodic Reports. From and
after the date hereof and prior to the Closing Date,
Purchaser shall deliver to Parent, copies of all
registration statements and regular periodic reports, if
any, which Purchaser shall file with the SEC (or any
governmental agency substituted therefor).
6.4 Access to Books and Records.
(a) Except as otherwise provided in
Section 6.6, each party agrees that from the date hereof
and for so long as any contracts between the Company and
the Federal government or any agency thereof are subject
to review by the Federal government or such agency, during
normal business hours, such party will permit, at no
charge, cost or expense to the other party and without
disruption of such party's business, the other party
hereto and its auditors and other representatives to have
reasonable access to the properties, auditors and officers
of the Company and to all books and records relating to
the Company and to examine and take copies thereof.
(b) Each party agrees not to destroy at
any time any files or records which are subject to Section
6.2(a) without giving reasonable notice to the other
party, and within 30 days of receipt of such notice, such
other party may cause to be delivered to it the records
intended to be destroyed, at such other party's expense.
(c) At the request of Parent, from time to
time following the date hereof and prior to the Closing
Date, Purchaser shall permit Parent and/or Seller, their
officers, employees, accountants, counsel and other
representatives, upon reasonable notice to Purchaser,
access to the properties, auditors, officers and books and
records of Purchaser as Parent may reasonably request.
6.5 Filings and Consents. Each of Seller and
Purchaser: (a) shall promptly prepare and make any
required filings under the HSR Act and (b) shall use all
reasonable efforts to obtain and to cooperate in obtaining
any consent, approval, authorization or order of, and in
making any registration or filing with, any governmental
agency or body or other third party required in connection
with the execution, delivery or performance of this
Agreement. Seller and Purchaser will furnish to one
another such necessary information and reasonable
assistance as may be requested in connection with the
preparation of filings or submissions under the HSR Act.
6.6 Tax Matters.
(a) Liability of Parent and Seller for
Taxable Periods Ending On or Before Closing Date. Parent
and Seller shall be liable for, and shall indemnify and
hold Purchaser harmless against, all Taxes of, or payable
by, the Company or the Subsidiaries for any taxable year
or taxable period ending on or before the Closing Date,
but only to the extent such Taxes exceed the amount of
Taxes that have been reserved for on the Unaudited
Special-Purpose Balance Sheet, and other than Taxes
relating to operations, acts or omissions of Purchaser or
the Company that occur after the Closing on the Closing
Date. Seller shall file all Tax Returns relating to the
Company or the Subsidiaries for any taxable year ending on
or before the Closing Date. Seller shall determine the
amount of taxable income of the Company and the
Subsidiaries on the basis of its permanent records and
consistent with the past income tax accounting methods
utilized in preparing its prior income tax returns. Such
determination shall be binding on Parent, Seller and
Purchaser to the extent allowable under applicable law.
Notwithstanding the foregoing, Parent and Seller shall
have no liability for sales, use or other transfer taxes
due by reason of the election to be made with respect to
the transactions contemplated by this Agreement under
Section 338(h)(10) of the Code (or any other election
under any similar state or local statute).
(b) Liability of Purchaser for Taxable
Periods Commencing After Closing Date. Except as
otherwise provided in Section 6.6(a), Purchaser and the
Company shall be liable for, and shall indemnify and hold
Parent and Seller and any of its affiliates harmless
against, (i) any and all Taxes of, or payable by, the
Company, the Subsidiaries and the Efratom Business Unit
for any taxable year or taxable period commencing after
the Closing Date, (ii) any sales, use, transfer or other
similar Tax arising out of the transfer of the Shares or
assets hereunder or the transfer of assets and liabilities
to the Company by Parent or (iii) any Taxes relating to
operations, acts or omissions of Purchaser, the Company or
the Subsidiaries that occur after the Closing on the
Closing Date (other than income taxes relating to the
election under Section 338(h)(10) of the Code). Purchaser
shall file all Tax Returns relating to the Company or the
Subsidiaries for any taxable year commencing after the
Closing Date.
(c) Taxable Period Commencing Before the
Closing Date and Ending After the Closing Date. Purchaser
shall cause the Company to pay all Taxes of the Company,
the Subsidiaries and the Efratom Business Unit for any
taxable year or taxable period commencing before and
ending after the Closing Date (the "Closing Period") and
shall file all Tax Returns relating to the Closing Period.
Upon timely notice from the Purchaser, Seller shall pay to
the Company prior to the date any payment for Taxes
described in this subsection 6.6(c) is due an amount equal
to the excess, if any, of (i) the Taxes that would have
been due if the Closing Period had ended at the Closing,
over (ii) the Taxes for the Closing Period which are
described in this subsection 6.6(c) and which have been
reserved for on the Unaudited Special-Purpose Balance
Sheet or described in the supplemental information
thereto.
(d) Refunds or Credits. Any refunds or
credits of Taxes for which Parent or Seller is liable
pursuant to Section 6.6(a) or (c) shall be solely for the
account of Parent or Seller, and, to the extent that such
refunds or credits are attributable to Taxes for which
Purchaser is liable pursuant to Section 6.6(b) or (c),
such refunds or credits shall be solely for the account of
Purchaser. Purchaser shall cause the Company promptly to
forward to Parent or Seller or to reimburse Parent or
Seller for any such refunds or credits due Parent or
Seller after receipt thereof by either Purchaser or the
Company, and Parent or Seller shall promptly forward to
the Company or reimburse the Company for any refunds or
credits due the Company after receipt thereof by Parent or
Seller of such refunds or credits that are for the account
of the Company hereunder.
(e) Mutual Cooperation. As soon as
practicable, but in any event within 30 days after
Seller's or Purchaser's request, as the case may be,
Purchaser shall or shall cause the Company to deliver to
Seller, or Seller shall deliver to Purchaser, such
information and other data in the possession of Seller,
Purchaser or the Company, as the case may be, relating to
the Tax Returns and Taxes of the Company and the
Subsidiaries, including such information and other data
customarily required by Seller or Purchaser, as the case
may be, to cause the payment of all Taxes or to permit the
preparation of any Tax Returns for which it has
responsibility or liability or to respond to audits by any
taxing authorities with respect to any Tax Returns or
Taxes for which it has any responsibility or liability
under this Agreement or otherwise or to otherwise enable
Seller or Purchaser, as the case may be, to satisfy its
accounting or Tax requirements, and shall make available
such knowledgeable employees of the Company or Seller, as
the case may be, as Seller or Purchaser may reasonably
request. For a period of seven years after the Closing,
and, if at the expiration thereof any Tax audit or
judicial proceeding is in progress or the applicable
statute of limitations has been extended, for such longer
period as such audit or judicial proceeding is in progress
or such statutory period is extended, each party shall,
maintain and make available to the other, on reasonable
request, copies of any and all information, books and
records referred to in this Section 6.6(e). After such
period, any party may dispose of such information, books
and records, provided that prior to such disposition such
party shall give the other a reasonable opportunity to
take possession of such information, books and records.
(f) Contests. Whenever any taxing
authority asserts a claim, makes an assessment or
otherwise disputes or affects the Tax reporting position
of the Company or the Subsidiaries for periods ending on
or prior to the Closing Date or the amount of Taxes for
which Parent or Seller is or may be liable under this
Agreement, Purchaser shall, promptly upon receipt by
Purchaser or the Company of notice thereof, inform Parent
or Seller, and Parent or Seller shall have the right to
control any resulting proceedings and to determine whether
and when to settle any such claim, assessment or dispute,
but only to the extent such proceedings or determinations
affect the Tax reporting position of the Company or the
Subsidiaries for periods ending on or prior to the Closing
Date or the amount of Taxes for which Seller is liable
under this Agreement. Whenever any taxing authority
asserts a claim, makes an assessment or otherwise disputes
the amount of Taxes for which Purchaser is liable under
this Agreement, Parent or Seller shall, promptly upon
receiving notice thereof, inform Purchaser. Purchaser
shall have the right to control any resulting proceedings
and to determine whether and when to settle any such
claim, assessment or dispute, but only to the extent such
proceedings affect solely the amount of Taxes for which
Purchaser is liable under this Agreement; provided that
neither Parent nor Purchaser or its affiliates shall take
any position on any Tax Return or in any contest or
proceeding that is inconsistent with this Agreement or a
position taken by Parent or Seller and its affiliates
(including the Company and the Subsidiaries) with respect
to Taxes incurred on or prior to the Closing Date.
(g) Resolution of Disagreements Between
Seller and Purchaser. If Parent or Seller and Purchaser
disagree as to the amount for which each is liable under
this Section 6.6, Parent, Seller and Purchaser shall
promptly consult with each other in an effort to resolve
such dispute. If any such point of disagreement cannot be
resolved within 15 days of the date of consultation,
Parent, Seller and Purchaser shall jointly select a
Neutral Auditor to act as an arbitrator to resolve all
points of disagreement concerning Tax accounting matters
with respect to this Agreement. If the parties cannot
agree on the selection of a Neutral Auditor within 15
days, then such Neutral Auditor shall be selected in
accordance with the procedures set forth in Section
1.4(d).
(h) 338 Election. Seller and its
affiliates and Purchaser shall on the Closing Date jointly
complete and make an election on Form 8023 or in such
other manner as may be required by rule or regulation of
the Internal Revenue Service under Section 338(h)(10) of
the Code, and shall jointly make an election in the manner
required under any similar state or local statute as
Seller shall designate or as shall be required, concerning
the transactions contemplated by this Agreement. Seller
shall, with the assistance and cooperation of Purchaser,
prepare all Section 338(h)(10) forms required as
attachments to Form 8023 (or all forms under similar state
or local law) in accordance with applicable Tax laws, and
Seller shall deliver such forms and related documents to
Purchaser at least 40 days prior to the due date of
filing. Purchaser shall deliver to Seller at least 20
days prior to the due date of filing such completed forms
as are reasonably requested by Seller and required to be
filed under Section 338(h)(10) of the Code (or similar
state or local law). Purchaser and Seller shall use their
best efforts to agree, as soon as practicable after
Closing but in no event later than 60 days following the
Closing Date, on the computation of the Modified Aggregate
Deemed Sale Price ("MADSP") (as defined under Treasury
Regulations) and the allocation of the MADSP among the
assets as of the Closing Date. Any disputed aspect of the
MADSP shall be resolved in accordance with the dispute
resolution procedure of Section 6.6(g) hereof.
6.7 WARN Act. Purchaser and Seller agree that
for purposes of the United States Worker Adjustment and
Retraining Notification Act (the "WARN Act"), the Closing
Date shall be the "effective date" as such term is used in
the WARN Act. Purchaser acknowledges and represents that
it has no present intent to engage in a "mass layoff" or
"plant closing" with respect to the Company as defined in
the WARN Act. Purchaser agrees that from and after the
Closing Date it shall be responsible for any notification
required under the WARN Act with respect to the Company
and shall indemnify Parent and Seller and hold Parent and
Seller harmless from and against all fines and other
payments which may become due under the WARN Act with
respect to the Company.
6.8 Supplements to Disclosure Schedule. From
time to time prior to the Closing, Parent, Seller and
Purchaser will promptly supplement or amend the sections
of the Disclosure Schedule relating to their respective
representations and warranties in this Agreement with
respect to any matter, condition or occurrence hereafter
arising which, if existing or occurring at the date of
this Agreement, would have been required to be set forth
or described in their respective sections of the
Disclosure Schedule. Except with respect to a supplement
or amendment not objected to in writing by the other party
within five business days after receipt thereof, no
supplement or amendment by either party shall be deemed to
cure any breach of any representation or warranty made in
this Agreement by such party or have any effect for the
purpose of (i) determining satisfaction by Seller of the
conditions set forth in Sections 5.1 and 5.2 hereof or the
compliance by Seller with the covenant set forth in
Section 6.1 hereof or (ii) determining satisfaction by
Purchaser of the conditions set forth in Sections 4.1 and
4.2 hereof or the compliance by Purchaser with the
covenant set forth in Section 6.2 hereof. Notwithstanding
the foregoing, Purchaser may supplement its Disclosure
Schedules for a period of five business days after the
date hereof and, subject to Parent's right to terminate
this Agreement pursuant to Section 7.1(g) hereof
(including as a result of any disclosure contained in any
such supplement), such supplement shall be deemed to cure
any breach of the representation or warranty to which such
supplement relates to the extent that, as so supplemented,
such representation or warranty would have been true as of
the date hereof.
6.9 Intercompany Indebtedness. Immediately
prior to the Closing Date, the Company shall extinguish
without payment all indebtedness of Parent or Seller to
the Company and of the Company to Parent or Seller and all
cash balances of the Company and the Subsidiaries as of
the close of business on the Closing Date shall be
transferred to Seller or Parent. The indebtedness of
Efratom Germany to Parent outstanding as of the Closing
shall remain outstanding and all of Parent's rights with
respect to that portion of such indebtedness that remains
outstanding as of the Closing shall be transferred to the
Company at or before the Closing.
6.10 Covenant to Satisfy Conditions. Each
party agrees to use all reasonable efforts to insure that
the conditions set forth in Article IV and Article V
hereof are satisfied, insofar as such matters are within
the control of such party.
6.11 Continuation of Employee Welfare and
Retirement Benefits.
(a) Purchaser covenants and agrees with
Parent and Seller that immediately after the Closing Date,
the Company shall employ all employees employed by the
Company, the Subsidiaries or the Efratom Business Unit
immediately prior to the Closing Date, including employees
on leaves of absence or on short term disability ("Company
Employees") and provide the Company Employees and their
eligible dependents with welfare benefits and retirement
and post-retirement benefits (which shall include any
welfare benefits or retirement benefits required by
applicable law or regulation or by any agreement with any
Company Employee at Efratom Germany) no less favorable
than the welfare benefits and retirement and post-
retirement benefits provided by Purchaser to similarly
situated employees of Purchaser; provided, however, that
Purchaser shall provide severance and termination benefits
to Company Employees for a period of not less than two (2)
years and such benefits shall be no less favorable than
those provided to such Company Employees immediately prior
to the Closing Date as previously disclosed in writing to
Purchaser.
All Company Employees shall be given full credit
in determining participation, eligibility (including
eligibility for subsidies), benefit accrual and vesting
under any existing or newly established benefit plans and
arrangements of the Company or Purchaser for the period
during which he or she was employed by Parent, its
affiliates, the Company or any predecessor of the
foregoing to the extent that any similar benefit plan or
arrangement of Parent or the Company uses length of
service as a factor in determining participation, benefit
accrual or vesting thereunder.
(b) For purposes of computing deductible
amounts (or similar adjustments with respect to coverage)
under any employee welfare benefit plan (including,
without limitation, any "employee welfare benefit plans"
as defined in Section 3(3) or ERISA), expenses and claims
previously recognized for similar purposes under the
applicable welfare benefit plan of Seller, Parent, the
Company or any affiliate shall be credited or recognized
under any comparable plan maintained after the Closing
Date by Purchaser or the Company.
(c) From and after the Closing Date,
Parent shall retain and be responsible for all obligations
under any retirement plans maintained by Parent or Seller
for the benefit of Company Employees.
6.12 Indemnity for Employee Covenants.
Purchaser agrees to indemnify and hold harmless Parent and
Seller from and against any and all claims, proceedings,
liabilities, damages, losses, fines, penalties, judgments,
costs and expenses (including reasonable attorneys' fees)
arising by reason of Purchaser's failure to pay, perform
or satisfy its obligations in accordance with the terms of
Section 6.11 hereof, including, but not limited to, any
severance or termination payment claimed by any Company
Employee.
6.13 Use of "Ball" Name. Purchaser agrees not
to use the "Ball" name, trade, trademark name or logo at
any time after the Closing Date, except that for a period
of up to six (6) months after the Closing Date, to the
extent necessary despite Purchaser's good faith efforts,
Purchaser may continue to display and use the "Ball" name
and logo in connection with the Company solely on a
transitional basis and only until appropriate measures can
be promptly taken to discontinue such use.
6.14 Nasdaq. Purchaser shall use its best
efforts to have the Purchaser Shares authorized for
inclusion on the Nasdaq National Market System, upon
official notice of issuance, as promptly as practicable.
6.15 Proxy Statement; Stockholder Approval;
Financial Statements. (a) Purchaser, acting through its
Board of Directors, shall (i) duly call, give notice of,
convene and hold a special meeting of stockholders (the
"Stockholders Action") as soon as practicable after the
date hereof for the purpose of considering and taking
action on the issuance of the Purchaser Shares in
connection with the transactions contemplated by this
Agreement, (ii) subject to its fiduciary duties under
applicable law, include in the Proxy Statement distributed
to its stockholders in connection with such Stockholders
Action the recommendation of the Board of Directors of
Purchaser that the stockholders of Purchaser approve the
issuance of the Purchaser Shares in connection with the
transactions contemplated by this Agreement and (iii)
subject to its fiduciary duties under applicable law, use
all reasonable efforts to obtain the necessary approvals
by its stockholders for the issuance of the Purchaser
Shares in connection with the transactions contemplated by
this Agreement. Purchaser will promptly prepare and file
with the SEC a preliminary proxy statement and related
materials and will use all reasonable efforts to cause the
Proxy Statement and related materials to be mailed to
stockholders of Purchaser as soon thereafter as possible.
(b) Parent and/or Seller shall provide all
information with respect to the Company, and its business,
necessary for inclusion in the Proxy Statement. In
addition, Parent and/or Seller shall provide all necessary
financial statements required for inclusion in the Proxy
Statement and Current Report on Form 8-K to be filed by
Purchaser after the Closing. Such financial statements
shall be audited to the extent required by the rules and
regulations of the SEC.
6.16 Consents to Assignment and Release of
Certain Obligations. Purchaser acknowledges that the
assignment of certain contracts to the Company pursuant to
the Assignment and Assumption Agreement requires the
consent of third parties which have not yet been obtained
as of the date hereof. If any such consent is not
obtained prior to the Closing and any closing condition
with respect to such consent is waived by the parties
hereto, Parent and Purchaser will cooperate, in all
reasonable respects, to obtain such consent as soon as
practicable and, until such consent is obtained, to
provide to the Company the benefits under any contract to
which such consent relates (with the Company and Purchaser
responsible for all the liabilities and obligations
thereunder). In particular, in the event that any such
consent is not obtained prior to Closing, then the Company
and Parent shall enter into such arrangements (including
subleasing or subcontracting if permitted) to provide to
the parties the economic and operational equivalent of
obtaining such consent and assigning such contract,
including enforcement for the benefit of the Company all
claims or rights arising thereunder, and the performance
by the Company of the obligations thereunder. Purchaser
and the Company will use all reasonable efforts following
the Closing Date to obtain the release of Parent and
Seller from all obligations assigned by Parent or Seller
to the Company pursuant to the Assignment and Assumption
Agreement form which Parent and Seller have not been
released prior to the Closing Date.
6.17 Assignments and Novations of Government
Contracts.
(a) Government Contracts. As promptly as
practicable, Parent, the Company and, if necessary,
Purchaser will enter into a novation agreement or
agreements with the United States Government or any other
party with respect to the Government Contracts to the
extent so required. Parent, the Company and Purchaser
will cooperate fully with each other and will use all
reasonable efforts to obtain consents to the assignment,
or the novation, of all such Government Contracts, and
Parent, the Company and Purchaser hereby agree to use all
reasonable efforts to obtain approvals of all required
assignments or novations as promptly as practicable;
provided, however, that nothing in this Agreement shall
require Parent, the Company and Purchaser to pay any
consideration or agree to any material modification of the
terms of such Government Contracts in order to obtain any
such consent, approval or novation.
(b) Performance Under Nonassignee
Contracts. With respect to any Government Contract that
is not assigned to the Company or novated on the Closing
Date, the performance obligations of Parent thereunder
shall, unless prohibited by such Government Contract, be
subcontracted or delegated to the Company and Purchaser
pursuant to the terms of a Subcontract Agreement in a form
mutually acceptable to Purchaser and Parent (the
"Subcontract Agreement").
(c) Assignment After Closing. If, after
the Closing Date, Parent, the Company and Purchaser obtain
the necessary consent or approval for the assignment or
novation of a Government Contract for which an assignment
or novation is required, then such Government Contract
shall be deemed to be assigned and transferred to the
Company promptly after Parent, the Company and Purchaser
obtain such consent or approval or effect such a novation.
(d) For purposes of this Agreement,
"Government Contracts" means any bid, quotation, proposal,
contract, agreement, work authorization, lease, commitment
or sale or purchase order of the Efratom Business Unit,
the Company or the Subsidiaries that is directly, or
indirectly through one or more subcontracts, with the
United States Government, or any state, local or foreign
government, including, among other things, all contracts
and work authorizations to supply goods and services to
the United States Government, and "United States
Government" means the United States Government including
any agencies, commissions, branches, instrumentalities and
departments thereof.
6.18 Exclusivity. From and after the date
hereof, none of the Parent, Seller, the Company or any
Subsidiary will, directly or indirectly, solicit,
initiate, or encourage the submission of or participate in
any negotiations or discussions with respect to any
proposal or offer from any person relating to the
acquisition of the Efratom Business Unit, the Company or
any Subsidiary (or all or substantially all of the assets
thereof) including any acquisition structured as a merger,
consolidation or share exchange. Parent, Seller, the
Company or any Subsidiary shall promptly notify Purchaser
if any person makes any proposal, offer, inquiry, or
contact with respect to any of the foregoing, and will
furnish Purchaser with any information with respect
thereto that Purchaser may reasonably request.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement may be
terminated and abandoned at any time prior to the Closing:
(a) by the mutual consent of Parent and
Purchaser;
(b) by either Parent or Purchaser in the
event the Closing has not occurred on or before March 31,
1995 (the "Cut-Off Date"), unless the failure of such
consummation shall be due to the failure of the party
seeking to terminate this Agreement to comply in all
material respects with the agreements and covenants
contained herein to be performed by such party on or
before the Cut-Off Date;
(c) by either Parent or Purchaser in the
event any court or governmental agency of competent
jurisdiction shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby
and such order, decree or ruling or other action shall
have become final and nonappealable;
(d) by either Parent or Purchaser in the
event the stockholders of Purchaser do not approve the
issuance of the Purchaser Shares;
(e) by Parent in the event that the
Average Closing Price is less than $6.25;
(f) by Parent if, within 60 days after the
date hereof, Purchaser and Wells Fargo or any substitute
lender have not entered into a binding credit agreement
and any related agreements with respect to the Financing
which provides for funding of the full amount of the
Financing, subject only to the Closing, their being no
material adverse change in Purchaser or the Efratom
Business Unit and the completion of other customary
documentation;
(g) by Parent at any time within 45 days
after the date hereof if Parent is not reasonably
satisfied with the results of its due diligence
investigation of Purchaser;
(h) by Purchaser within 30 days of the
date hereof if Purchaser is not reasonably satisfied with
the results of its "Phase I" environmental survey of the
properties of the Efratom Business Unit;
(i) by Purchaser on or before the earlier
of (i) four weeks after the date hereof or (ii) November
11, 1994 if the first meeting between representatives of
Purchaser and representatives of the Efratom Business
Unit's largest customer occurs prior to November 11, 1994,
if Purchaser is not reasonably satisfied with the status
of the Efratom Business Unit's customer relationship with
such customer based on the results of any such meeting.
7.2 Procedure and Effect of Termination. In
the event of the termination and abandonment of this
Agreement by Parent or Purchaser pursuant to Section 7.1
hereof, written notice thereof shall forthwith be given to
the other party. If the transactions contemplated by this
Agreement are terminated as provided herein:
(a) Each party will redeliver all
documents, work papers and other material of any other
party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof,
to the party furnishing the same;
(b) All confidential information received
by Purchaser with respect to the business of Parent, the
Company or Seller or Subsidiaries shall be treated in
accordance with the provisions of the Confidentiality
Agreement, dated as of June 24, 1994, between Purchaser
and Lehman Brothers Inc. on behalf of Parent (the
"Purchaser Confidentiality Agreement"), which shall
survive the termination of this Agreement and all
confidential information received by Parent, with respect
to the business of Purchaser shall be treated in
accordance with the provisions of the Confidentiality
Agreement, dated as of September 23, 1994, between
Purchaser and Parent (the "Parent Confidentiality
Agreement") which shall survive the termination of this
Agreement; and
(c) No party to this Agreement will have
any liability under this Agreement to the other except (i)
as stated in subparagraphs (a) and (b) of this Section
7.2; (ii) for any willful breach of any provision of this
Agreement, (iii) as provided in the Confidentiality
Agreement and (iv) as provided in the second sentence of
Section 9.1 hereof.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification. None of the provisions of
this Section 8.1 shall apply to the claims, obligations,
liabilities, covenants and representations regarding
Taxes, which shall be governed solely by the terms of
Section 6.6.
(a) Indemnification by Parent and Seller.
Subject to the limits set forth in this Section 8.1,
Parent and Seller agree to indemnify, defend and hold
Purchaser, its officers, directors, agents and affiliates,
harmless from and in respect of any and all losses,
damages, costs and reasonable expenses (including, without
limitation, reasonable expenses of investigation and
defense fees and disbursements of counsel and other
professionals), in each case in excess of $10,000
(collectively, "Losses"), that they may incur arising out
of or due to any inaccuracy of any representation (without
regard to any qualification as to "Material Adverse
Effect" contained therein) or the breach of any warranty,
covenant, undertaking or other agreement of Seller
contained in this Agreement or the Disclosure Schedule;
provided, however, that neither Parent nor Seller shall
have any liability to Purchaser as a result of the breach
of any representation or warranty to the extent that
Purchaser knew that such representation or warranty was
untrue or incorrect prior to the Closing Date.
(b) Indemnification by Purchaser. Subject
to the limits set forth in this Section 8.1, Purchaser
agrees to indemnify, defend and hold Parent and Seller,
its officers, directors, agents and affiliates, harmless
from and in respect of any and all Losses that they may
incur (i) arising out of or due to any inaccuracy of any
representation or the breach of any warranty (without
regard to any qualification as to "Material Adverse
Effect" contained therein), covenant, undertaking or other
agreement of Purchaser contained in this Agreement or (ii)
arising out of any and all actions, suits, claims and
administrative or other proceedings of every kind and
nature instituted or pending against Parent or Seller or
any of their affiliates at any time before (if listed in
Section 2.8 of the Disclosure Schedule as supplemented by
Seller through the Closing Date) or after the Closing Date
to the extent that such Losses (x) relate to or arise out
of or in connection with the assets, businesses,
operations, conduct, products and/or employees (including
former employees) of the Company, the Subsidiaries or the
Efratom Business Unit (including any Losses with respect
to all of the agreements and obligations which are
assigned to the Company pursuant to the Assignment and
Assumption Agreement), whether relating to or arising out
of or in connection with occurrences or omissions before
or after the Closing Date and (y) do not constitute a
breach of Parent's or Seller's representations and
warranties (without regard to any qualifications as to
"Material Adverse Effect" contained therein) in, or a
default in the performance of any of Parent's or Seller's
covenants under, this Agreement; provided, however, that
Purchaser shall have no liability to Parent or Seller as a
result of the breach of any representation or warranty to
the extent that Parent or Seller knew that such
representation or warranty was untrue or incorrect prior
to the Closing Date.
(c) Survival of Representations and
Warranties. The several representations and warranties of
the parties contained in this Agreement or in any
instrument delivered pursuant hereto will survive the
Closing Date and will remain in full force and effect
thereafter for a period of 18 months from the Closing
Date; provided, however, that the representations and
warranties contained in Section 2.11 and 3.10 shall
survive for seven years after the Closing Date and the
representations and warranties contained in Sections 2.2,
2.3, 2.9, 3.2 and 3.8 shall survive indefinitely;
provided, further, that such representations or warranties
shall survive (if at all) beyond such period with respect
to any inaccuracy therein or breach thereof, notice of
which shall have been duly given within such applicable
period in accordance with Section 8.1(d) hereof. Anything
to the contrary contained herein notwithstanding, neither
party shall be entitled to recover from the other with
respect to any inaccuracy or breach of any representation
or warranty unless and until the total of all claims for
indemnity or damages with respect to any inaccuracy or
breach of any such representations or warranties, whether
such claims are brought under this Section 8.1 or
otherwise, exceeds $500,000 and then only for the amount
by which such claims for indemnity or damages exceed
$500,000; provided, however, that no party shall be
entitled to recover from the other more than $15 million
in the aggregate pursuant to this Section 8.1.
(d) Notice and Opportunity to Defend. If
there occurs an event which a party asserts is an
indemnifiable event pursuant to Section 8.1(a) or 8.1(b),
the party seeking indemnification shall notify the other
party obligated to provide indemnification (the
"Indemnifying Party") promptly. If such event involves
(i) any claim or (ii) the commencement of any action or
proceeding by a third person, the party seeking
indemnification will give such Indemnifying Party prompt
written notice of such claim or the commencement of such
action or proceeding; provided, however, that the failure
to provide prompt notice as provided herein will relieve
the Indemnifying Party of its obligations hereunder only
to the extent that such failure prejudices the
Indemnifying Party hereunder. In case any such action
shall be brought against any party seeking indemnification
and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be
entitled to participate therein and, to the extent that it
shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to such party seeking
indemnification and, after notice from the Indemnifying
Party to such party seeking indemnification of such
election so to assume the defense thereof, the
Indemnifying Party shall not be liable to the party
seeking indemnification hereunder for any legal expenses
of other counsel or any other expenses subsequently
incurred by such party in connection with the defense
thereof. The party seeking indemnification agrees to
cooperate fully with the Indemnifying Party and its
counsel in the defense against any such asserted
liability. The party seeking indemnification shall have
the right to participate at its own expense in the defense
of such asserted liability. In no event shall an
Indemnifying Party be liable for any settlement effected
without its consent nor shall an Indemnifying Party settle
any claim without the consent of the indemnified party,
which consent shall not be unreasonably withheld.
(e) Adjustment for Insurance and Taxes.
The amount which an Indemnifying Party is required to pay
to, for or on behalf of any other party (hereinafter
referred to as an "Indemnitee") pursuant to this Section
8.1 shall be adjusted (including, without limitation,
retroactively) (i) by any insurance proceeds actually
recovered by or on behalf of such Indemnitee in reduction
of the related indemnifiable loss (the "Indemnifiable
Loss") and (ii) to take account of any tax benefit
realized as a result of any Indemnifiable Loss. Amounts
required to be paid, as so reduced, are hereafter
sometimes called an "Indemnity Payment." If an Indemnitee
shall have received or shall have had paid on its behalf
an Indemnity Payment in respect of an Indemnifiable Loss
and shall subsequently receive insurance proceeds in
respect of such Indemnifiable Loss, or realize any tax
benefit as a result of such Indemnifiable Loss, then the
Indemnitee shall pay to the Indemnifying Party the amount
of such insurance proceeds or tax benefit or, if lesser,
the amount of the Indemnity Payment.
ARTICLE IX
MISCELLANEOUS
9.1 Fees and Expenses. Except as set forth
below, Seller shall bear its own expenses (and any
expenses of the Company prior to Closing) and Purchaser
shall bear its own expenses (and any expenses of the
Company after Closing) in connection with the negotiation
and consummation of the transactions contemplated by this
Agreement and each of Seller and Purchaser shall bear the
fees and expenses of any broker or finder retained by such
party in connection with the transactions contemplated
herein. Notwithstanding the foregoing, in the event that
this Agreement is terminated pursuant to Section 7.1(d) or
pursuant to Section 7.1(b) and the condition set forth in
Section 5.9 has not been satisfied or if this Agreement is
terminated pursuant to Section 7.1(f) or pursuant to
Section 7.1(b) and the condition set forth in Section 5.11
has not been satisfied, then Purchaser shall promptly pay
to Parent $400,000 cash.
9.2 Governing Law. This Agreement shall be
construed under and governed by the laws of the State of
Delaware without regard to the conflicts of laws
provisions thereof.
9.3 Amendment. This Agreement may not be
amended, modified or supplemented except upon the
execution and delivery of a written agreement executed by
the parties hereto.
9.4 No Assignment. Neither this Agreement nor
any of the rights, interests or obligations hereunder
shall be assigned by any party hereto without the prior
written consent of the other parties hereto.
9.5 Waiver. Any of the terms or conditions of
this Agreement which may be lawfully waived may be waived
in writing at any time by each party which is entitled to
the benefits thereof. Any waiver of any of the provisions
of this Agreement by any party hereto shall be binding
only if set forth in an instrument in writing signed on
behalf of such party. No failure to enforce any provision
of this Agreement shall be deemed to or shall constitute a
waiver of such provision and no waiver of any of the
provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a
continuing waiver.
9.6 Notices. All notices, requests, claims,
demands and other communications hereunder shall be in
writing and shall be given by delivery, by telex,
telecopier or by mail (registered or certified mail,
postage prepaid, return receipt requested) to the
respective parties as follows:
If to Purchaser:
Datum Inc.
1363 South State College Blvd.
Anaheim, California 92806-5790
(714) 533-8772 (telecopier)
(714) 533-6333 (telephone)
Attention: Mr. Louis B. Horwitz
with a copy to:
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660
(714) 725-4100 (telecopier)
(714) 725-4000 (telephone)
Attention: Lawrence B. Cohn
If to Seller:
Efratom Holding, Inc.
9300 West 108th Circle
Broomfield, CO 80021
(303) 460-2674 (telecopier)
(303) 469-5511 (telephone)
Attention: General Counsel
With a copy to:
Skadden, Arps, Slate, Meagher & Flom
333 West Wacker Drive
Chicago, Illinois 60606
(312) 407-0411 (telecopier)
(312) 407-0700 (telephone)
Attention: Charles W. Mulaney, Jr.
or to such other address as any party hereto may, from
time to time, designate in a written notice given in like
manner.
9.7 Complete Agreement. This Agreement, the
Purchaser Confidentiality Agreement, the Parent
Confidentiality Agreement, the Stockholders Agreement and
the other documents and writings referred to herein or
delivered pursuant hereto or concurrently herewith contain
the entire understanding of the parties with respect to
the subject matter hereof and thereof and supersede all
prior agreements and understandings, both written and
oral, between the parties with respect to the subject
matter hereof and thereof. This Agreement shall be
binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted
assigns.
9.8 Counterparts. This Agreement may be
executed in one or more counterparts, all of which shall
be considered one and the same agreement and each of which
shall be deemed an original.
9.9 Publicity. Parent and Purchaser will
consult with each other and will mutually agree upon any
publication or press release of any nature with respect to
this Agreement or the transactions contemplated hereby and
shall not issue any such publication or press release
prior to such consultation and agreement except as may be
required by applicable law or by obligations pursuant to
any listing agreement with any securities exchange or any
securities exchange regulation, in which case the party
proposing to issue such publication or press release shall
use reasonable efforts to consult in good faith with the
other party before issuing any such publication or press
release.
9.10 Headings. The headings contained in this
Agreement are for reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
9.11 Knowledge. For purposes of this
Agreement, the term "knowledge" means, with respect to
Purchaser, the knowledge of any elected corporate
executive officer of Purchaser and, with respect to
Parent, Seller or the Company, the knowledge of any
elected corporate executive officer of Parent or any
officer having a title of vice president or higher of the
Efratom Business Unit.
9.12 Severability. Any provision of this
Agreement which is invalid, illegal or unenforceable in
any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality
or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or
rendering that or any other provision of this Agreement
invalid, illegal or unenforceable in any other
jurisdiction.
9.13 Third Parties. Except as specifically set
forth or referred to herein, nothing herein expressed or
implied is intended or shall be construed to confer upon
or give to any person or corporation, other than the
parties hereto and their permitted successors or assigns,
any rights or remedies under or by reason of this
Agreement.
IN WITNESS WHEREOF, each of Purchaser, Parent
and Seller have caused this Agreement to be executed by
their duly authorized officers as of the day and year
first above written.
EFRATOM HOLDING, INC.
By /s/ DONALD C. LEWIS
Name: Donald C. Lewis
Title: Vice President and
Assistant Secretary
BALL CORPORATION
By /s/ R. DAVID HOOVER
Name: R. David Hoover
Title: Senior Vice President
and Chief Financial
Officer
DATUM INC.
By /s/ LOUIS B. HORWITZ
Name: Louis B. Horwitz
Title: Chairman and President
[CONFORMED COPY]
STOCKHOLDER'S AGREEMENT
THIS STOCKHOLDER'S AGREEMENT (this "Agreement") is
made as of the 17th day of March, 1995, by and between DATUM
INC., a Delaware corporation (the "Company") and EFRATOM HOLDING,
INC., a Colorado corporation ("Stockholder").
R E C I T A L S
A. The Company and Stockholder have entered into a Stock
Purchase Agreement, dated as of October 20, 1994 (the "Stock
Purchase Agreement"), pursuant to which, among other things, the
Stockholder is receiving from the Company as part of the
consideration for the sale of its wholly-owned subsidiaries,
Efratom Time and Frequency Products, Inc. and Ball Efratom
Electronik GmbH, an aggregate of 1,277,778 shares of Common
Stock, $.25 par value, of the Company (the "Shares"); and
B. It is a condition to the obligations of the Company
under the Stock Purchase Agreement that this Agreement be
executed by the parties hereto, and the parties are willing to
execute this Agreement and to be bound by the provisions hereof.
A G R E E M E N T
NOW THEREFORE, in consideration of the foregoing and the
agreements set forth below, the parties agree with each other, as
follows:
1. Representations and Warranties.
1.1 Stockholder's Representations and Warranties.
Stockholder represents and warrants to the Company that:
(a) Stockholder is a corporation validly existing
and in good standing under the laws of the State of Colorado;
(b) Stockholder has the full power and authority
to execute, deliver and carry out the terms and provisions of
this Agreement and consummate the transactions contemplated
hereby;
(c) This Agreement has been duly and validly
authorized, executed and delivered by Stockholder, and, assuming
due execution and delivery by the Company, constitutes a valid
and binding agreement of Stockholder, enforceable against
Stockholder in accordance with its terms, except to the extent
that such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect affecting creditors' rights; and
(d) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will
not result in the breach of any of the terms or conditions of,
constitute a default under or violate, or accelerate any other
similar right of any other party under, the charter or by-laws of
Stockholder, any law, rule or regulation, or any agreement,
lease, mortgage, note, bond, indenture, license or other document
or undertaking, to which Stockholder is a party or by which
Stockholder or its properties may be bound, nor will such
execution, delivery and consummation violate any order, writ,
injunction or decree of any court, administrative agency or
governmental body to which Stockholder or any of its properties
is subject, the effect of any of which either individually or in
the aggregate, would materially impair the ability of Stockholder
to perform its obligations hereunder.
1.2 The Company's Representations and Warranties. The
Company represents and warrants to Stockholder that:
(a) The Company is a corporation validly existing
and in good standing under the laws of the State of Delaware;
(b) The Company has the full power and authority
to execute, deliver and carry out the terms and provisions of
this Agreement and consummate the transactions contemplated
hereby;
(c) This Agreement has been duly and validly
authorized, executed and delivered by the Company, and, assuming
due execution and delivery by Stockholder, constitutes a valid
and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except to the extent that
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter
in effect affecting creditors' rights; and
(d) The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby will
not result in the breach of any of the terms or conditions of,
constitute a default under or violate, or accelerate any other
similar right of any other party under, the charter or by-laws of
the Company, any law, rule or regulation, or any agreement,
lease, mortgage, note, bond, indenture, license or other document
or undertaking, to which the Company is a party or by which the
Company or its properties may be bound, nor will such execution,
delivery and consummation violate any order, writ, injunction or
decree of any court, administrative agency or governmental body
to which the Company or any of its properties is subject, the
effect of any of which either individually or in the aggregate,
would have a material adverse effect on the consolidated
operations or consolidated financial position of the Company and
its subsidiaries taken as a whole.
2. Board of Directors.
Upon closing of the transaction contemplated by the Stock
Purchase Agreement, the Company will promptly amend its bylaws to
increase the size of its Board of Directors to eight directors
and appoint two persons (who shall be reasonably acceptable to
the Company) named by Stockholder to the Company's Board of
Directors. One such person shall be a Class III director whose
term shall expire on the date of the Company's Annual Meeting in
1996 and the other such person shall be a Class I director whose
term shall expire on the date of the Company's Annual Meeting in
1997. At any time after the appointment of such two persons,
Stockholder may name a third person (who shall be reasonably
acceptable to the Company) who shall be appointed by the Company
to the Board of Directors as a Class II director. After such
initial appointments, the Company agrees to nominate such persons
(or such other persons designated by Stockholder and reasonably
acceptable to the Company) for reelection as such persons' terms
expire. In connection with any election of members of the Board
of Directors, the Company will use its best efforts to cause such
persons to be elected as directors and shall cause all
discretionary proxies solicited on behalf of and granted to the
Board of Directors in connection with such election to be voted
in favor of the Stockholder's designees selected in accordance
with this Section 2. Such persons are referred to herein as
"Stockholder's Directors." In the event of the resignation or
other termination of service of a Stockholder Director, the
Company shall appoint or nominate for reelection, as the case may
be, another designee of Stockholder (who shall be reasonably
acceptable to the Company).
The number of Stockholder's Directors shall be adjusted upon
any change in the authorized number of directors or changes in
the percentage of the outstanding Voting Securities (as defined
below) of the Company represented by the Shares. In such events,
the number of Stockholder's Directors shall equal the number
(rounded to the closest whole number, with .5 being rounded to
the next higher whole number) of individuals (who shall be
reasonably acceptable to the Company) determined by multiplying
the total number of authorized directors times the percentage of
the outstanding Voting Securities of the Company represented by
the Shares then owned by Stockholder. The Stockholder's
Directors designated pursuant to this Section 2 shall be
allocated as equally as possible among the three classes of the
Company's Board of Directors.
Notwithstanding the foregoing, so long as Stockholder owns
50% or more of the Shares, the number of Stockholder Directors
shall be no less than two and so long as Stockholder owns five
percent (5%) or more of the then outstanding Voting Securities,
the number of Stockholder Directors shall be no less than one.
If Stockholder owns less than five percent (5%) of the then
outstanding Voting Securities of the Company then the number of
Stockholder's Directors shall be zero. For the purposes of the
foregoing the number of Shares held by Stockholder shall be
adjusted for stock splits, stock dividends, and other
recapitalizations). To the extent the foregoing results in the
number of Stockholder Directors then serving exceeding the number
of Stockholder Directors to which Stockholder is entitled,
Stockholder shall cause the resignation of one or more
Stockholder Directors so that the aggregate number of Stockholder
Directors then serving does not exceed the number to which
Stockholder is entitled to hereunder. Stockholder's rights
under this Section 2 are non-transferable, including by way of a
transfer of controlling interest in Stockholder; provided,
however, that Stockholder may transfer such rights to Ball
Corporation or a direct or indirect wholly-owned subsidiary of
Ball Corporation.
3. Restriction on Purchase of Additional Shares,
Solicitations.
3.1 Restriction on Purchase. Neither Stockholder nor
any Affiliate (as defined below) of Stockholder (collectively,
the "Stockholder Group"), will, directly or indirectly, acquire
shares of any class of the Company's capital stock which is
entitled to vote generally in the election of directors ("Voting
Securities") (except by way of stock dividends or other
distributions or offerings made available to holders of Voting
Securities generally), provided that no member of the Stockholder
Group shall be obligated to dispose of any Voting Securities if
the aggregate percentage ownership of the Stockholder Group is
increased as a result of a recapitalization of the Company, stock
repurchase by the Company or any other action taken by the
Company or its Affiliates other than the Stockholder Group. For
purposes of this Agreement, "Affiliate" of Stockholder shall mean
any person (i) that owns, directly or indirectly, more than 50%
of the then outstanding equity securities having the right to
vote generally in the election of directors ("Stockholder Voting
Securities") of Stockholder or (ii) that more than 50% of then
outstanding Voting Securities of which are owned, directly or
indirectly, by Stockholder.
3.2 Exceptions. The foregoing restrictions shall not
apply (i) in connection with the consummation of the transactions
contemplated by the Stock Purchase Agreement, (ii) to stock
dividends stock splits or other like distributions made with
respect to the Shares held by Stockholder, (iii) during the
pendency pursuant to Section 14(d) of the Securities Exchange Act
of 1934 (the "Exchange Act") of a bona fide, fully financed
tender offer by any Person (as defined in Section 3(a) of the
Exchange Act) (other than the Company or its affiliates or any
employee benefit plan of the Company), if upon the consummation
of such tender offer such Person would beneficially own more than
30% of the Company's Voting Securities, (iv) in the event that
any Person (other than Stockholder or its affiliates, the Company
or any employee benefit plan of the Company) becomes a beneficial
owner of more than 30% of the Company's then outstanding Voting
Securities or proposes to become such a beneficial owner and such
proposal is approved by or recommended by a majority of the Board
of Directors (excluding the Stockholder Directors) of the
Company, (v) in the event that the Company has entered into a
definitive merger agreement or a definitive agreement for the
sale of all or substantially all of its assets, or (vi) or to any
transaction with the prior approval of a majority of the Board of
Directors (excluding the Stockholder Directors). In addition, if
any action by the Company causes the ownership of Voting
Securities by Stockholder to be less than the percentage
ownership of the outstanding Voting Securities immediately prior
to such action, the foregoing restrictions shall not apply to any
acquisitions of Voting Securities by Stockholder to the extent,
and only to the extent, necessary for Stockholder to maintain its
percentage ownership of Voting Securities at the level it had
immediately prior to such action.
3.3 Solicitations. No member of the Stockholder Group
shall solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under
the Exchange Act), or enter into any agreement with any person
for the purpose of voting any Voting Securities, in either case
in opposition to the recommendation of the majority of the
directors of the Company with respect to any election of
directors of the Company; provided that the nominees for any such
election to the board include designees of the Stockholder in
accordance with Section 2 hereof. Nothing in this Section 3
shall prevent the Stockholder from voting any shares held by it
in opposition to the recommendation of the majority of the
directors of the Company on any matter, including the election of
directors.
3.4 Termination. The provision of this Section 3
shall terminate on the earlier of (i) the fifth anniversary
hereof or (ii) the date that Stockholder first owns less than 5%
of the then outstanding Voting Securities of the Company.
4. Demand Registration Rights.
4.1 Right to Demand. With respect to any Shares that
are deemed "Restricted Securities" under the Securities Act of
1933 (the "Act") (the "Registrable Securities"), Stockholder,
and/or any transferee to whom Stockholder has transferred rights
to demand registration hereunder, who own, in the aggregate, in
excess of 250,000 shares of Registrable Securities may make a
written request to the Company for registration with the
Securities and Exchange Commission (the "Commission"), under and
in accordance with the provisions of the Act, of no less than
250,000 Registrable Securities (a "Demand Registration") provided
that no registration statement filed hereunder shall be required
to become effective prior to four (4) months from the date of
this Agreement. Within ten (10) days after receipt of such
request, the Company will serve written notice (the "Notice") of
such registration request to all holders of Registrable
Securities issued by the Company, and subject to such request the
Company will include in such registration all Registrable
Securities with respect to which the Company has received written
requests for inclusion therein within twenty (20) days after the
mailing of the Notice by the Company. The Company shall not be
required to comply with a request for a Demand Registration for
four (4) months after the effective date of any registration
statement filed by the Company under the Act, other than
registration statements on Form S-8 or Form S-4. The Company
shall have the right to defer for a reasonable period (not to
exceed 90 days) the filing of any registration statement
requested under Section 4.1 if, in the reasonable judgment of the
Company's Board of Directors, such registration would materially
interfere with or materially and adversely affect any then
existing negotiations for financing or other business
arrangements or plans of the Company or any arrangement or plan
of the Company, then pending or being negotiated in good faith,
relating to any acquisition, disposition, merger or similar
transaction or other significant business transaction.
4.2 Number of Demand Registrations. The holders of
Registrable Securities shall be entitled to three (3) Demand
Registrations, but no more than one (1) in any four-month period,
the expenses of which shall only be borne by the Company to the
extent set forth in Section 8. The Company shall not be deemed
to have effected a Demand Registration with respect to the
Registrable Securities unless after a request for a Demand
Registration pursuant hereto, (i) a registration statement with
respect to some or all of the Registrable Securities is declared
effective by the Commission and remains effective for a period of
at least 90 days (or such shorter period during which the holders
of Registrable Securities shall have sold all Registrable
Securities which they requested to be registered) or (ii) the
holders of Registrable Securities decide not to proceed with the
offering of Shares after a Demand Registration request has been
made by such holders, for any reason, and do not reimburse the
Company for all of its costs and expenses incurred in fulfilling
its obligations hereunder as a result of such Demand Registration
request.
4.3 Selection of Underwriters. If a Demand
Registration is an underwritten offering, holders of more than
50% of the Registrable Securities to be registered shall select
the managing underwriter or underwriters for such offering, which
underwriter or underwriters shall be reasonably acceptable to the
Company.
4.4 Best Efforts. The Company will use its best
efforts to cause the effectiveness of a registration filed with
respect to a Demand Registration, including making management
reasonably available to participate in any road show deemed
necessary by the managing underwriter.
5. Piggy-Back Registration.
5.1 Piggy-Back Right. If the Company proposes to file
a registration statement under the Act with respect to an
offering for its own account or for the account of others of any
class of equity security (other than a registration statement (i)
on Form S-4 or S-8 (or any successor form), or (ii) filed in
connection with an exchange offer or an offering of securities
solely to the Company's existing stockholders), then the Company
shall in each case give written notice of such proposed filing to
holders of Registrable Securities, at least twenty (20) days
before the anticipated filing date and offer such holders the
opportunity to register such Registrable Securities in such
offering, in accordance with the terms of such offering.
5.2 Procedure For Registration. Those holders of
Registrable Securities who desire to have such shares included in
the registration for such offering shall notify the Company
promptly (and in no event later than ten (10) days after notice)
of their desire to include such shares in the registration
statement. The Company shall use its best efforts to cause the
managing underwriter of a proposed underwritten offering to
permit the holders of Registrable Securities who request to be
included in the registration for such offering to include such
shares in such offering on the same terms and conditions as any
similar securities of the Company included therein.
Notwithstanding the foregoing, if the managing underwriter of
such offering delivers an opinion to each holder of Registrable
Securities wishing to include any Registrable Securities in such
registration that the total amount or kind of securities which
the Company or any other person or entity intend to include in
such offering is sufficiently large or different to affect
materially and adversely the success of such offering, then the
amount or kind of securities to be offered for the accounts of
holders of Registrable Securities other than holders of
Registrable Securities who have requested a Demand Registration
shall be reduced pro rata based on the number of shares requested
to be included in the offering by the holders of Registrable
Securities, and any such other persons or entities (other than
the Company) to the extent necessary to reduce the total amount
of securities to be included in such offering to the amount
recommended by such managing underwriter. The Company may, in
its discretion, cancel any registration statement in which
Registrable Securities are included under this Section 5 which is
not effected pursuant to Section 4. The Company shall not be
subject to cut-back under this Section 5.
6. Holdback Agreements.
6.1 Restrictions on Public Sale by Stockholder. To
the extent not inconsistent with applicable law, each holder of
Registrable Securities included in a Registration Statement
agrees not to effect any public sale or distribution of the issue
being registered or a similar security of the Company or any
securities convertible into or exchangeable or exercisable for
such securities, during the seven days prior to, and during the
ninety (90) day period beginning on, the effective date of such
registration statement (except as part of such registration), if
and to the extent requested in writing (with reasonable prior
notice) by the Company in the case of a non-underwritten public
offering by the Company, or if and to the extent requested in
writing (with reasonable prior notice) by the managing
underwriter in the case of an underwritten public offering by the
Company.
7. Registration Procedures.
Whenever any Registrable Securities are to be
registered pursuant to Sections 4 or 5 of this Agreement, the
Company will use its best efforts to effect the registration and
the sale of such stock in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection
with any such request and with any Demand Registration, the
Company will as expeditiously as possible:
(a) prepare and file with the Commission a
registration statement which includes the Registrable Securities
and use its best efforts to cause such registration statement to
become effective; provided that before filing a registration
statement or prospectus or any amendments or supplements thereto,
including documents incorporated by reference after the initial
filing of the registration statement, the Company will furnish to
one counsel selected by the holders of a majority of the
Registrable Securities covered by such registration statement and
the underwriters, if any, and their counsel, copies of all such
documents proposed to be filed at least five (5) business days
prior thereto, which documents will be subject to the reasonable
review of such counsel and underwriters, and the Company will not
file any registration statement or amendment thereto or any
prospectus or any supplement thereto (including such documents
incorporated by reference) to which the holders of a majority of
the Registrable Securities covered by such registration statement
or the underwriters with respect to such Registrable Securities,
if any, shall reasonably object, and will notify each holder of
the Registrable Securities of any stop order issued or threatened
by the Commission in connection therewith and take all reasonable
actions required to prevent the entry of such stop order or to
remove it if entered;
(b) prepare and file with the Commission such
amendments and post-effective amendments to the registration
statement as may be necessary to keep the registration statement
effective for a period of not less than ninety (90) days (or such
shorter period which will terminate when all Registrable
Securities covered by such registration statement have been sold
or withdrawn); cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be
filed pursuant to Rule 424 under the Act; and comply with the
provisions of the Act applicable to it with respect to the
disposition of all securities covered by such registration
statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth
in such registration statement or supplement to the prospectus;
(c) furnish to counsel for the holders of Registrable
Securities included in such registration statement and the
managing underwriter, if any, without charge, at least two signed
copies of the registration statement and any post-effective
amendment thereto, upon request, and such number of conformed
copies thereof and such number of copies of the prospectus
(including each preliminary prospectus) and any amendments or
supplements thereto, and any documents incorporated by reference
therein, as such counsel or underwriter may reasonably request in
order to facilitate the disposition of the Registrable Securities
being sold by such holder; provided that before filing a
registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to one counsel
selected by the holders of a majority of the Registrable
Securities covered by such registration statement, copies of all
documents proposed to be filed, which documents will be subject
to the reasonable review of such counsel;
(d) notify each holder of Registrable Securities
included in such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Act, when the Company becomes aware of the happening of any event
as a result of which the prospectus included in such registration
statement (as then in effect) contains any untrue statement of a
material fact or omits to state a material fact necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading and, as promptly as possible
thereafter, prepare and file with the Commission and furnish a
supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such
prospectus will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading;
(e) as promptly as practicable after the filing with
the Commission of any document which is incorporated by reference
into a registration statement, deliver a copy of such document to
each holder of Registrable Securities covered by such
registration statement;
(f) on or prior to the date on which the registration
statement is declared effective, use its best efforts to register
or qualify the Registrable Securities covered by the registration
statement for offer and sale under the securities or blue sky
laws of each state and other jurisdiction of the United States as
any such holder or underwriter reasonably requests in writing,
and to cooperate with the holders of Registrable Securities
included in such registration statement, the underwriter, if any,
and their counsel, in connection therewith; to use its best
efforts to keep each such registration or qualification
effective, including through new filings, or amendments or
renewals, during the period such registration statement is
required to be kept effective;
(g) cooperate with the holders of Registrable
Securities covered by the registration statement and the managing
underwriter, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends)
representing securities to be sold under the registration
statement, and enable such securities to be in such denominations
and registered in such names as the managing underwriter, if any,
may request;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other
actions as the holders of a majority of the Registrable
Securities being sold or the managing underwriter, if any,
reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities;
(i) make available for inspection by any holder of
Registrable Securities included in such Registration Statement,
any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or other
agent retained by such seller or underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively,
the "Records"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility, and cause the
Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in
connection with such registration statement; provided that
records which the Company determines, in good faith, to be
confidential and which it notifies the Inspectors are
confidential shall not be disclosed to the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the registration statement, or (ii)
the release of such Records is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction. Each holder
of Registrable Securities agrees that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, allow the Company to undertake appropriate action
and to prevent disclosure of the Records deemed confidential; and
(j) use its best efforts to obtain a "comfort" letter
from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by
"comfort" letters as the holders of a majority of the Registrable
Securities being sold reasonably request.
Each holder, upon receipt of any notice from the
Company of the happening of any event of the kind described in
subsection (d) of this Section 7, will immediately discontinue
disposition of the Registrable Securities until its receipt of
the copies of the supplemented or amended prospectus contemplated
by subsection (d) of this Section 7 or until it is advised in
writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by the Company
such holder will, or will request the managing underwriter, if
any, to deliver to the Company (at the Company's expense) all
copies, other than permanent file copies then in such holder's
possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the time periods
mentioned in subsection (b) of this Section 7 shall be extended
by the number of days during the period from and including the
date of the giving of such notice to and including the date when
each seller of Registrable Securities covered by such
registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by subsection (d)
of this Section 7 hereof or the Advice.
8. Registration Expenses.
The Company will bear all Commission and securities
exchange or National Association of Securities Dealers, Inc.
registration and filing fees, fees and expenses of compliance
with securities or blue sky laws, printing expenses, messenger
and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the fees and
expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed, fees
and disbursements of counsel for the Company and its independent
certified public accountants (including the expenses of any
special audit or "comfort" letters required by or incident to
such performance), securities acts liability insurance (if the
Company elects to obtain such insurance), the reasonable fees and
expenses of any special experts retained by the Company in
connection with such registration, and all fees and expenses of
other Persons retained by the Company. The holders of
Registrable Securities shall pay for all fees and expenses
incurred with respect to any separate counsel, advisors or
accountants retained by such holders in connection with the
exercise of a registration right hereunder, together with any
underwriting discounts or commissions attributable to the sale of
Registrable Securities. The Company and the holders of
Registrable Securities shall be responsible for their respective
expenses even if the registration statement with respect thereto
is not declared effective.
9. Indemnification; Contribution.
9.1 Indemnification by the Company. The Company
agrees to indemnify, protect and hold harmless, to the full
extent permitted by law, each holder of Registrable Securities
and each underwriter of Registrable Securities being sold by such
holder, its officers, directors, employees and agents, and any
agent or investment adviser of such holder or underwriter,
against all losses, claims, damages, liabilities and expenses
(including reasonable legal expenses and expenses of
investigation) arising out of or based on any untrue or allegedly
untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission
or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein (in
the case of a prospectus, in light of the circumstances under
which they were made) not misleading or any violation by the
Company of any rule or registration promulgated under the Act
applicable to the Company, except insofar as the same are caused
by or contained in any information with respect to such holder or
underwriter furnished in writing to the Company by such holder or
underwriter expressly for use therein or by such holder's or
underwriter's failure to deliver a copy of the prospectus or any
amendments or supplements thereto after the Company has furnished
such holder or underwriter with a sufficient number of copies of
the same. The Company will enter into indemnification agreements
with each such holder and underwriter containing customary
provisions, including provisions for contribution, as any such
holder or underwriter should reasonably request.
9.2 Indemnification by Holders of Registrable
Securities. In connection with any registration statement in
which a holder of Registrable Securities is participating, each
such holder will furnish to the Company in writing such
information and affidavits with respect to itself as the Company
reasonably requests for use in connection with any such
registration statement or prospectus and agrees to indemnify, to
the extent permitted by law, the Company, its directors,
officers, employees and agents against any losses, claims,
damages, liabilities and expenses resulting from any untrue or
allegedly untrue statement of a material fact or any omission or
alleged omission of a material fact required to be stated in the
registration statement or prospectus or any amendment thereof or
supplement thereto or necessary to make the statements therein
(in the case of a prospectus, in the light of the circumstances
under which they were made) not misleading, to the extent, but
only to the extent, that such untrue statement or omission is
contained in any information or affidavit with respect to such
holder so furnished in writing by such holder specifically for
inclusion in any prospectus or registration statement.
9.3 Conduct of Indemnification Proceedings. Any
Person entitled to indemnification hereunder agrees to give
prompt written notice to the indemnifying party after the receipt
by such Person of any written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof made
in writing for which such Person will claim indemnification or
contribution pursuant to this Agreement and, unless in the
reasonable judgment of such indemnified party a conflict of
interest may exist between such indemnified party and the
indemnifying party with respect to such claim, permit the
indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to such indemnified party.
Whether or not such defense is assumed by the indemnifying party,
the indemnifying party will not be subject to any liability for
any settlement made without its consent (but such consent will
not be unreasonably withheld or delayed). No indemnifying party
will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of
such claim or litigation. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim, it
will not be obligated to pay the fees and expenses of more than
one counsel with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may
exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
9.4 Contribution. If the indemnification provided for
in this Section 9 from the indemnifying party is unavailable to
an indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and
indemnified parties in connection with the actions which resulted
in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified parties shall be
determined by reference to, among other things, whether any
action in question, including any untrue or allegedly untrue
statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or indemnified
parties, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall
be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9.4 were
determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation. No holder of Registrable
Securities shall be liable under this Section 9 for any losses,
costs, damages or expenses exceeding in the aggregate the
proceeds to such holder in such offering.
If indemnification is available under this Section 9,
the indemnifying parties shall indemnify each indemnified party
to the full extent provided for herein without regard to the
relative fault of said indemnifying party or the indemnified
party or any other equitable consideration provided for herein.
10. Participation in Underwritten Registrations.
No holder of Registrable Securities may participate in
any underwritten registration hereunder unless such holder (a)
agrees to sell its securities on the basis provided in any
underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
11. Rule 144.
The Company covenants that it will file the reports
required to be filed by it under the Act and the Exchange Act and
the rules and regulations adopted by the Commission thereunder
(or, if the Company is no longer required to file such reports,
it will, upon the request of any holder of Registrable
Securities, make publicly available sufficient information, for
so long as necessary to permit sales under Rule 144 under the
Act), and the Company will take such further action as any holder
of Registrable Securities may reasonably request, all to the
extent required from time to time to enable such holder to sell
Registrable Securities without registration under the Act within
the limitation of the exemptions provided by (a) Rule 144 under
the Act, as such Rule may be amended from time to time, or (b)
any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
The Company will take such actions, and instruct its transfer
agent or depositary to take such actions, as are reasonably
necessary to comply with all reasonable requirements of holders
of Registrable Securities in order to complete the orderly
transfer of Restricted Securities of such persons under Rule 144.
12. Registrable Securities.
Shares shall cease to be Registrable Securities, and
all rights to have such shares registered under Section 4 and 5
hereof shall cease, at such time as such Shares are freely
saleable, without restriction or volume limitation, pursuant to
Rule 144(k) under the Act, or otherwise.
13. Rights Plan.
So long as Stockholder owns Shares constituting more
than 15% of the outstanding Voting Securities of the Company, the
Company will not, without the consent of Stockholder, adopt a
Shareholder Rights Plan which would result in the issuance or
separation and exercisability of rights on the transfer of Shares
by Stockholder or any similar arrangement which would interfere
with the sale of Stockholder's shares.
14. Miscellaneous.
14.1 Legend. Each certificate representing Shares of
Common Stock owned by the Stockholder shall contain the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO THE PROVISIONS OF A STOCKHOLDERS
AGREEMENT DATED MARCH 17, 1995, BY AND BETWEEN THE
COMPANY AND THE STOCKHOLDER, WHICH INCLUDES,
WITHOUT LIMITATION, THE GRANTING OF CERTAIN VOTING
RIGHTS, A COPY OF WHICH WILL BE FURNISHED BY THE
COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST
AND WITHOUT CHARGE.
14.2 Notices. All notices or other communications
required or permitted to be delivered hereunder shall be in
writing signed by the party giving the notice to the Company at
1363 South State College Boulevard, Anaheim, California, 92806
Attention: President, and to the Stockholder at 345 South High
Street, Muncie, Indiana 47305. The Company or Stockholder may at
any time change the address to which notice to it shall be mailed
by giving notice of such change to the Company and to the other
party, and such notice shall be deemed given when received by the
other party hereto.
15. Entire Agreement and Amendments. This Agreement
constitutes the entire agreement of the parties with respect to
the matters contemplated herein. This Agreement supersedes any
and all prior understandings as to the subject matter of this
Agreement. Amendments, waivers and consents with respect to this
Agreement must be signed by all the parties hereto. In the event
the Registrable Securities are held by more than one Person, any
amendment of this Agreement may be made by the Company and the
holders of a majority of the Registrable Securities.
16. Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the personal
representatives and successors of the respective parties hereto.
Stockholder's rights hereunder (other than those set forth in
Section 2 and Section 13 hereof which may only be assigned by
Stockholder to its parent, Ball Corporation) may be assigned by
Stockholder or any transferee of the Shares without the consent
of the Company to any person to whom Stockholder or its
transferees transfers any Shares and Stockholder and such
transferees will be entitled to enforce all such rights against
the Company.
17. Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Delaware, irrespective
of such state's choice-of-law principles.
18. Severability. If any provision of this Agreement shall
be found by any court of competent jurisdiction to be invalid or
unenforceable, the parties hereby waive such provision to the
extent that it is found to be invalid or unenforceable. Such
provision shall, to the maximum extent allowable by law, be
modified by such court so that it becomes enforceable, and, as
modified, shall be enforced as any other provision hereof, all
the other provisions hereof continuing in full force and effect.
19. Counterparts. This Agreement may be executed in
counterparts, all of which together shall constitute one and the
same instrument.
20. Attorneys' Fees. In the event of any controversy,
claim or dispute among the parties hereto arising out of or
relating to this Agreement, or breach hereof, the prevailing
party shall be entitled to recover from the losing party
reasonable attorneys' fees, expenses and costs.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be duly executed as of the date first above written.
DATUM INC.
/s/ LOUIS B. HORWITZ
Louis B. Horwitz
Chairman and President
EFRATOM HOLDING INC.
/s/ DONOVAN B. HICKS
Donovan B. Hicks
President
