AGREEMENT AND PLAN OF MERGER
by and among
L-3 COMMUNICATIONS CORPORATION,
ANGEL ACQUISITION CORPORATION
and
AYDIN CORPORATION
March 1, 1999
TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER AND MERGER..................................................1
Section 1.1 The Offer................................................1
Section 1.2 Company Actions...........................................3
Section 1.3 Directors................................................4
Section 1.4 The Merger...............................................5
Section 1.5 Effective Time...........................................6
Section 1.6 Closing..................................................6
Section 1.7 Directors and Officers of the Surviving Corporation......7
Section 1.8 Stockholders' Meeting....................................7
Section 1.9 Merger Without Meeting of Stockholders...................7
ARTICLE II
CONVERSION OF SECURITIES..............................................8
Section 2.1 Conversion of Capital Stock..............................8
Section 2.2 Exchange of Certificates.................................8
Section 2.3 Lost Certificates.......................................10
Section 2.4 Dissenting Shares.......................................10
Section 2.5 Company Option Plans....................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................11
Section 3.1 Organization............................................11
Section 3.2 Capitalization..........................................11
Section 3.3 Authorization; Validity of Agreement; Company Action....12
Section 3.4 Consents and Approvals; No Violations...................13
Section 3.5 SEC Reports and Financial Statements....................14
Section 3.6 No Undisclosed Liabilities..............................14
Section 3.7 Absence of Certain Changes..............................14
Section 3.8 Employee Benefit Plans; ERISA...........................15
Section 3.9 Litigation..............................................17
Section 3.10 No Default; Compliance with Applicable Laws............17
Section 3.11 Taxes..................................................17
Section 3.12 Real Property..........................................18
Section 3.13 Environmental Matters..................................18
Section 3.14 Information in Schedule 14D-1..........................19
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Section 3.15 State Takeover Laws....................................19
Section 3.16 Voting Requirements....................................19
Section 3.17 Year 2000..............................................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER...........................................20
Section 4.1 Organization............................................20
Section 4.2 Authorization; Validity of Agreement; Necessary Action..20
Section 4.3 Consents and Approvals; No Violations...................21
Section 4.4 Information in Proxy Statement; Schedule 14D-9..........22
Section 4.5 Financing...............................................22
Section 4.6 Purchaser's Operations..................................22
Section 4.7 No Recourse.............................................22
ARTICLE V
COVENANTS............................................................22
Section 5.1 Interim Operations of the Company.......................22
Section 5.2 Approvals and Consents; Cooperation.....................25
Section 5.3 Access to Information...................................26
Section 5.4 Employee Benefits.......................................26
Section 5.5 No Solicitation.........................................27
Section 5.6 Brokers or Finders......................................28
Section 5.7 Publicity...............................................28
Section 5.8 Notification of Certain Matters.........................28
Section 5.9 Directors' and Officers' Insurance and Indemnification..29
Section 5.10 Stockholder Litigation.................................30
Section 5.11 Further Assurances.....................................30
Section 5.12 State Takeover Statutes................................31
ARTICLE VI
CONDITIONS...........................................................31
Section 6.1 Conditions to Each Party's
Obligation To Effect the Merger.........................31
ARTICLE VII
TERMINATION..........................................................32
Section 7.1 Termination.............................................32
Section 7.2 Effect of Termination...................................34
Section 7.3 Termination Fee.........................................34
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ARTICLE VIII
MISCELLANEOUS........................................................35
Section 8.1 Amendment and Modification..............................35
Section 8.2 Nonsurvival of Representations and Warranties...........35
Section 8.3 Notices.................................................35
Section 8.5 Interpretation..........................................37
Section 8.6 Counterparts............................................37
Section 8.7 Entire Agreement; Third Party Beneficiaries.............37
Section 8.8 Severability............................................37
Section 8.9 Governing Law...........................................38
Section 8.10 Jurisdiction...........................................38
Section 8.11 Assignment.............................................38
Section 8.12 Guarantee..............................................38
ANNEX A
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 1, 1999 (the
"Agreement"), by and among L-3 Communications Corporation, a Delaware
corporation ("Parent"), Angel Acquisition Corporation, a Delaware corporation
and a direct, wholly owned subsidiary of Parent (the "Purchaser"), and Aydin
Corporation, a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent, the
Purchaser and the Company each approved the acquisition of the Company on the
terms and subject to the conditions set forth herein;
WHEREAS, as a first step in the acquisition, the
Company and Parent each desire that Parent cause Purchaser to commence an offer
(the "Offer") to purchase all of the issued and outstanding shares of common
stock, $1.00 par value, of the Company (the "Shares"), on the terms and subject
to the conditions set forth in this Agreement and the Offer Documents (as
defined below) and the Board of Directors of the Company (the "Company Board")
has unanimously approved the Offer and has determined to recommend that the
Company's stockholders accept the Offer and tender their Shares pursuant
thereto;
WHEREAS, to complete the acquisition, the respective
Boards of Directors of Parent, Purchaser and the Company have approved the
merger of Purchaser with and into the Company, wherein each issued and
outstanding Share not owned directly or indirectly by Parent, Purchaser or the
Company will be converted into the right to receive the Merger Consideration (as
defined below) on the terms and subject to the conditions of this Agreement (the
"Merger"); and
WHEREAS, the parties desire to make certain
representations, warranties and covenants in connection with the Merger and the
Offer and also to prescribe various conditions to the Merger and the Offer.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer. (a) Subject to the terms and conditions
of this Agreement, as promptly as practicable (but in no event later than five
business days after the public announcement of the execution hereof), the
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) the Offer to purchase for
cash all of the issued and outstanding Shares, at a price of $13.50 per Share,
net to the seller in cash (such price, or such higher price per Share as may be
paid in the Offer, being referred to herein as
the "Offer Price"). The Offer shall be subject to there being validly tendered
and not withdrawn prior to the expiration of the Offer, at least a majority of
the Shares outstanding on a fully diluted basis as of the expiration of the
Offer (the "Minimum Condition") and to the other conditions set forth in Annex A
hereto (including the Minimum Condition, herein referred to as the "Offer
Conditions"). The Purchaser shall, subject to the terms of this Agreement,
including the prior satisfaction or waiver (except that the Minimum Condition
may not be waived without the consent of the Company) of the Offer Conditions,
accept for payment and pay for any Shares tendered and not withdrawn pursuant to
the Offer as soon as possible after the expiration thereof. The Offer shall be
made by means of an offer to purchase (the "Offer to Purchase") containing the
Offer terms set forth in this Agreement. The Purchaser expressly reserves the
right, in its sole discretion, to waive any such condition and make any other
changes in the terms and conditions of the Offer not inconsistent with the
provisions of this Agreement, provided that, the Purchaser shall not amend or
waive the Minimum Condition and shall not decrease the Offer Price or decrease
the number of Shares sought, or amend any other condition of the Offer in any
manner adverse to the holders of the Shares without the prior written consent of
the Company (such consent to be authorized by the Company Board or a duly
authorized committee thereof). Notwithstanding the foregoing, the Purchaser
shall, and Parent agrees to cause the Purchaser to, extend the Offer at any time
up to May 10, 1999 for one or more periods of not more than 10 business days,
or, if longer, for any period required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer, if at the initial expiration date of the Offer,
or any extension thereof, any condition to the Offer (other than the Minimum
Condition) is not satisfied or waived. In addition, the Offer Price may be
increased and the Offer may be extended to the extent required by law in
connection with such increase in each case without the consent of the Company.
Subject to the foregoing, it is agreed that the Offer Conditions are for the
benefit of the Purchaser and may be asserted by the Purchaser regardless of the
circumstances giving rise to any such condition (including any action or
inaction by the Purchaser or Parent not inconsistent with the terms hereof) or,
except with respect to the Minimum Condition, may be waived by the Purchaser, in
whole or in part at any time and from time to time, in its sole discretion.
(b) As soon as reasonably practicable on the date the
Offer is commenced, Parent and the Purchaser shall file with the Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1 will
include, as exhibits, the Offer to Purchase and a form of letter of transmittal
and summary advertisement (collectively, together with any amendments and
supplements thereto, the "Offer Documents"). The Offer Documents will comply in
all material respects with the provisions of applicable federal securities laws
and, on the date filed with the SEC and on the date first published, sent or
given to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation is made by Parent or the Purchaser with respect to information
supplied by the Company for inclusion in the Offer Documents. Each of Parent and
the Purchaser further agrees to take all steps necessary to cause the Offer
Documents to be filed with the SEC and to be
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disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. Each of Parent and the Purchaser, on the one
hand, and the Company, on the other hand, agrees promptly to correct any
information provided by it for use in the Offer Documents if and to the extent
that it shall have become false and misleading in any material respect and the
Purchaser further agrees to take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. The Company and its counsel shall be given the
opportunity to review the initial Schedule 14D-1 before it is filed with the
SEC. In addition, Parent and the Purchaser agree to provide the Company and its
counsel in writing with any comments or other communications that Parent, the
Purchaser or their counsel may receive from time to time from the SEC or its
staff with respect to the Offer Documents promptly after the receipt of such
comments or other communications.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to
the Offer and represents that (i) the Company Board, at a meeting duly called
and held, has, subject to the terms and conditions set forth herein, unanimously
(A) determined this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (collectively, the "Transactions") are fair
to and in the best interests of the holders of the Shares and approved the
Transactions, and (B) declared this Agreement and the Merger advisable and
resolved to recommend that the stockholders of the Company accept the Offer,
tender their Shares thereunder to the Purchaser and approve and adopt this
Agreement and the Merger and (ii) PricewaterhouseCoopers Securities LLC (the
"Financial Advisor") has delivered to the Company Board its written opinion (or
oral opinion to be confirmed in writing) that the consideration to be received
by holders of Shares pursuant to the Offer and the Merger is fair from a
financial point of view. The Company has been authorized by the Financial
Advisor to permit, subject to prior review and consent by such Financial Advisor
(such consent not to be unreasonably withheld), the inclusion of such fairness
opinion (or a reference thereto) in the Offer Documents and in the Schedule
14D-9 referred to below and the Proxy Statement referred to in Section 1.8. The
Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company Board described in this Section 1.2(a). The
Company represents that the actions set forth in this Section 1.2(a) and all
other actions it has taken in connection therewith are, assuming that Parent and
its affiliates do not own any Shares, sufficient to render the relevant
provisions of Section 203 of the Delaware General Corporation Law (the "DGCL")
inapplicable to the Offer, the Merger and the Tender Agreements (as defined in
Section 8.4(b)).
(b) Concurrently with the commencement of the Offer,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule 14D-9") which shall contain the
recommendation referred to in clause (B) of Section 1.2(a) hereof, provided,
that in the event of a Superior Proposal (as defined in Section 5.5) prior to
such filing, the Company shall not be required to make such filing with such
recommendations if a majority of the Company
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Board determines in good faith, after receiving advice from its financial
advisor and outside counsel, that making such filing would constitute a breach
of the fiduciary duties of the Company Board under applicable law. The Schedule
14D-9 will comply in all material respects with the provisions of applicable
federal securities laws and, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, shall not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or the Purchaser in writing for inclusion in the
Offer Documents. The Company further agrees to take all steps necessary to cause
the Schedule 14D-9 to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it shall
have become false and misleading in any material respect and the Company further
agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected
to be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities laws.
Parent and its counsel shall be given the opportunity to review the initial
Schedule 14D-9 before it is filed with the SEC. In addition, the Company agrees
to provide Parent, the Purchaser and their counsel in writing with any comments
or other communications that the Company or its counsel may receive from time to
time from the SEC or its staff with respect to the Schedule 14D-9 promptly after
the receipt of such comments or other communications.
(c) In connection with the Offer, the Company will
promptly furnish or cause to be furnished to the Purchaser mailing labels,
security position listings and any available listing or computer file containing
the names and addresses of the record holders of the Shares as of a recent date,
and shall furnish the Purchaser with such information and assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
stockholders of the Company. Except for such steps as are necessary to
disseminate the Offer Documents, Parent and the Purchaser shall hold in
confidence the information contained in any of such labels and lists and the
additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will upon request of the Company, deliver or cause to be delivered
to the Company all copies of such information then in its possession or the
possession of its agents or representatives.
Section 1.3 Directors.
(a) Promptly upon the purchase of and payment for
Shares by Parent or any of its subsidiaries which represent at least a majority
of the outstanding Shares (on a fully diluted basis), and from time to time
thereafter, the Purchaser shall be entitled to designate such number of
directors, rounded up to the next whole number, on the Company Board as is equal
to the product of the total number of directors on such Board (giving effect to
the directors designated by Parent pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares
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beneficially owned by the Purchaser, Parent and any of their affiliates bears to
the total number of Shares then outstanding (such number being the "Board
Percentage"). The Company shall, upon request of the Purchaser, cause
Purchaser's designees to satisfy the Board Percentage, including without
limitation increasing the size of the Company Board and securing resignations of
such number of its incumbent directors as is necessary to enable Parent's
designees to be so elected to the Company Board, and shall cause Parent's
designees to be so elected. Notwithstanding the foregoing, until the Effective
Time (as defined in Section 1.5 hereof), the Company shall retain as members of
the Company Board at least two directors who are directors of the Company on the
date hereof (the "Company Designees"); provided, that subsequent to the purchase
of and payment for Shares pursuant to the Offer, Parent shall always have its
designees represent at least a majority of the entire Company Board. If at any
time prior to the Effective Time there are less than two Company Designees on
the Company Board, Parent, Purchaser and the Company shall either (i) use their
reasonable efforts to appoint successors who are not affiliated with Parent or
the Purchaser or (ii) permit the resigning Company Designee to appoint his or
her successors in his or her reasonable discretion. The Company will use its
reasonable best efforts to cause persons designated by Purchaser to constitute
the same percentage as is on the Company Board of (i) each Committee of the
Company Board, (ii) each board of directors of each Subsidiary of the Company
and (iii) each committee of each such board, in each case only to the extent
permitted by law. The Company's obligations under this Section 1.3(a) shall be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. Parent or the Purchaser will supply the Company any information with
respect to either of them and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1. Upon receipt of such information from
Parent or the Purchaser, the Company shall include in the Schedule 14D-9 (as an
annex or otherwise) the information required by Section 14(f) and Rule 14f-1 as
is necessary to enable Parent's designees to be elected to the Company Board.
(b) From and after the time, if any, that Parent's
designees constitute a majority of the Company Board, any amendment of this
Agreement, any termination of this Agreement by the Company, any extension of
time for performance of any of the obligations of Parent or the Purchaser
hereunder, any waiver of any condition or any of the Company's rights hereunder
or other action by the Company hereunder may be effected only by the action of a
majority of the directors of the Company then in office who either were
directors of the Company on the date hereof or are not affiliated with Parent or
the Purchaser, which action shall be deemed to constitute the action of the full
Company Board; provided, that if there shall be no such directors, such actions
may be effected by unanimous vote of the entire Company Board.
Section 1.4 The Merger. Subject to the terms and conditions
of this Agreement, and in accordance with the DGCL, at the Effective Time (as
defined in Section 1.5 hereof), the Company and the Purchaser shall consummate
the Merger pursuant to which (a) the Purchaser shall be merged with and into the
Company and the separate corporate existence of the Purchaser shall thereupon
cease, (b) the Company shall be the successor or surviving corporation in the
Merger (the "Surviving Corporation"). The Surviving Corporation shall possess
all the rights, privileges, powers and franchises and shall be subject to all of
the restrictions, disabilities, duties, debts and obligations of
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the Company and the Purchaser, all as provided in the DGCL. At Parent's election
(provided that such election shall not adversely affect the ability of the
Company to consummate the transactions contemplated hereby, or cause a delay in
the transactions contemplated hereby, and provided, further, that the Company
shall not be deemed to have breached any of its representations or warranties
herein if and to the extent such breach results from such election), the Merger
may alternatively be structured so that (i) the Company and/or its Subsidiaries
are merged with and into Parent, the Purchaser or any other direct or indirect
subsidiary of Parent or (ii) any direct or indirect subsidiary of Parent other
than Purchaser is merged with and into the Company. In the event of such an
election, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect such election. Pursuant to the Merger, and without
any further action on the part of the Company and the Purchaser, (x) the
Certificate of Incorporation of the Purchaser, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation; provided, however, that Article FIRST of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read in its
entirety as follows: "FIRST: The name of the corporation is L-3 Communications
Aydin Corporation." and, as so amended shall be the Certificate of Incorporation
of the Surviving Corporation until thereafter amended as provided by law and
such Certificate of Incorporation, and (y) the By-laws of the Purchaser, as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation until thereafter amended as provided by law and such
By-laws. The Merger shall have the effects set forth in the DGCL. Without
limiting the generality of the foregoing and subject thereto, at the Effective
Time all the property, rights, privileges, immunities, powers and franchises of
the Company and the Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities and duties of the Company and the Purchaser shall become the
debts, liabilities and duties of the Surviving Corporation.
Section 1.5 Effective Time. As soon as practicable after
satisfaction of the conditions in Article VI, Parent, the Purchaser and the
Company will cause a certificate of merger in the form required by the DGCL (the
"Certificate of Merger") to be executed and filed on the date of the Closing (as
defined in Section 1.6 hereof) (or on such other date as Parent and the Company
may agree) with the Secretary of State of the State of Delaware (the "Secretary
of State"). The Merger shall become effective on the date on which the
Certificate of Merger has been duly filed with the Secretary of State or such
time as is agreed upon by the parties and specified in the Certificate of
Merger, and such time is hereinafter referred to as the "Effective Time."
Section 1.6 Closing. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VI hereof (the "Closing
Date"), at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, unless another date or place is agreed to in writing by the
parties hereto. The parties realize that time is of the essence to the
transactions contemplated by this Agreement. Each of the parties thus undertakes
to use its reasonable best efforts, either alone or in cooperation with the
other parties, to ensure that the Merger occurs as soon as practicable following
the date on which the Purchaser consummates the Offer.
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Section 1.7 Directors and Officers of the Surviving
Corporation. The directors and officers of the Purchaser at the Effective Time
shall, from and after the Effective Time, be the directors and officers,
respectively, of the Surviving Corporation until their successors shall have
been duly elected or appointed or qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
Certificate of Incorporation and By-laws.
Section 1.8 Stockholders' Meeting.
(a) If required by applicable law in order to
consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable law:
(i) duly call, give notice of, convene and
hold a special meeting of its stockholders (the "Special Meeting") as
soon as practicable following the acceptance for payment and purchase
of Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon the approval of the Merger and the
adoption of this Agreement;
(ii) prepare and file with the SEC under the
Exchange Act and the rules and regulations promulgated thereunder a
preliminary proxy or information statement relating to the Merger and
this Agreement and use its reasonable efforts to obtain and furnish the
information required to be included in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond
promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and to have the Proxy
Statement cleared by the SEC and cause a definitive proxy or
information statement (the "Proxy Statement") to be mailed to its
stockholders;
(iii) use its reasonable efforts to obtain
the necessary approvals of the Merger and this Agreement by its
stockholders; and
(iv) subject to the fiduciary obligations of
the Company Board under applicable law as advised by independent
counsel, include in the Proxy Statement the recommendation of the
Company Board that stockholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement and, subject
to the approval of the Financial Advisor, the written opinion of the
Financial Advisor that the consideration to be received by the
stockholders of the Company pursuant to the Offer and the Merger is
fair from a financial point of view.
(b) Parent agrees that it will vote, or cause to be
voted, all of the Shares then owned by it, the Purchaser or any of its other
subsidiaries and affiliates in favor of the approval of the Merger and the
adoption of this Agreement.
Section 1.9 Merger Without Meeting of Stockholders.
Notwithstanding Section 1.8 hereof, in the event that Parent, the Purchaser or
any other subsidiary of Parent shall acquire, together
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with the Shares owned by Parent, the Purchaser or any other subsidiary of
Parent, at least 90% of the outstanding shares of each class of capital stock of
the Company, pursuant to the Offer or otherwise, the parties hereto agree to
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or shares of common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) Purchaser Common Stock. Each issued and
outstanding share of Purchaser Common Stock shall be converted into and become
one fully paid and nonassessable share of common stock of the Surviving
Corporation with the result that the Surviving Corporation will be a wholly
owned subsidiary of Parent.
(b) Cancellation of Treasury Stock and Parent-Owned
Stock. All Shares that are owned by the Company as treasury stock and any Shares
owned by Parent, the Purchaser or any other wholly owned Subsidiary (as defined
in Section 8.4 hereof) of Parent shall be canceled and retired and shall cease
to exist and no consideration shall be delivered in exchange therefor.
(c) Exchange of Shares. Each issued and outstanding
Share (other than Shares to be canceled in accordance with Section 2.1(b) and
any Dissenting Shares (if applicable and as defined in Section 2.4 hereof)),
shall be converted into and become the right to receive, the Offer Price,
payable to the holder thereof, without interest (the "Merger Consideration"),
upon surrender of the certificate formerly representing such Share in the manner
provided in Section 2.2, less any required withholding taxes. As of the
Effective Time by virtue of the Merger and without any action on the part of any
holder, all such Shares shall no longer be outstanding and shall automatically
be canceled and retired and shall cease to exist, and each holder of a
certificate representing any such Shares shall cease to have any rights with
respect thereto, except the right to receive the Merger Consideration therefor
upon the surrender of such certificate in accordance with Section 2.2, or to
perfect any appraisal rights that such holder may have pursuant to Section 262
of the DGCL.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Parent shall designate a bank or
trust company reasonably acceptable to the Company to act as agent for the
holders of Shares in connection with the Merger (the "Paying Agent") to receive
the funds to which holders of Shares shall become entitled pursuant to Section
2.1(c). Such funds shall be invested by the Paying Agent as directed by Parent
or the Surviving Corporation. Any net profit resulting from, or interest or
income produced
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by, such investments will be payable to the Surviving Corporation or Parent, as
Parent directs from time to time.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, with the Company using its reasonable best
efforts to cause the paying Agent to do so within three business days
thereafter, the Paying Agent shall mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding Shares (the "Certificates"), whose Shares were converted
pursuant to Section 2.1 into the right to receive the Merger Consideration, (i)
a letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon delivery of
the Certificates to the Paying Agent and shall be in such form and have such
other provisions as Parent and the Company may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment of the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly completed
and validly executed, and such other documents as may be required pursuant to
the instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration for each Share formerly
represented by such Certificate and the Certificate so surrendered shall
forthwith be canceled. If payment of the Merger Consideration is to be made to a
person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Article II, each Certificate shall be deemed
at any time after the Effective Time to represent only the right to receive the
Merger Consideration as contemplated by this Article II. No interest shall be
paid or accrued for the benefit of holders of the Certificates on the Merger
Consideration payable upon the surrender of the Certificates.
(c) Transfer Books; No Further Ownership Rights in
Shares. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates evidencing ownership of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time
following one year after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
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thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate has not been surrendered prior to the expiration
of the applicable statute of limitations after the Effective Time (or
immediately prior to such earlier date on which any Merger Consideration payable
to the holder of such Certificate representing Shares pursuant to this Article
II would otherwise escheat to or become the property of any Governmental Entity
(as hereinafter defined)), any such Merger Consideration in respect of such
Certificate will become the property of the Surviving Corporation, free and
clear of all claims or interest of any individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity (a "Person") previously entitled thereto.
Section 2.3 Lost Certificates. If any Certificate is lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such Person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration, in accordance with the provisions of this
Agreement.
Section 2.4 Dissenting Shares. Notwithstanding anything in
this Agreement to the contrary, Shares outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL (the "Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration, unless such holder
fails to perfect or withdraws or otherwise loses his right to receive payment
for such Dissenting Shares according to the DGCL. If, after the Effective Time,
such holder fails to perfect or withdraws or loses his right to exercise
dissenters' rights, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive the Merger Consideration,
without interest thereon.
Section 2.5 Company Option Plans. Parent and the Company
shall take all actions necessary to provide that, effective as of the Effective
Time, (i) each outstanding stock option to purchase Shares (collectively,
"Options") granted under the Company's 1996 Equity Incentive Plan, 1994
Incentive Stock Option Plan, and 1984 Non-Qualified Stock Option Plan and those
non-plan options referenced in subsection 3.2(iv) of this Agreement, whether or
not then exercisable or vested, shall become fully exercisable and vested, (ii)
each Option that is then outstanding shall be canceled and (iii) in
consideration of such cancellation, and except to the extent that Parent or the
Purchaser and the holder of any such Option otherwise agree, the Company (or at
Parent's option, the Purchaser) shall pay to such holders of Options an amount
in respect thereof equal to the product of (A) the excess, if any, of the Merger
Consideration over the exercise price of each such Option and
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(B) the number of Shares subject to such Option (such payment to be net of
applicable withholding taxes).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and the
Purchaser as follows:
Section 3.1 Organization. Each of the Company and its
Subsidiaries is a corporation, partnership or other entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization and has all requisite corporate or other power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to have such governmental approvals would not, either individually or in
the aggregate, have a "Company MAE" (as defined in Section 8.4(b). The Company
and each of its Subsidiaries is duly qualified or licensed to do business and in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to be so duly
qualified or licensed and in good standing would not, either individually or in
the aggregate, have a Company MAE. The Company has delivered to Parent prior to
the execution of this Agreement complete and correct copies of its certificate
of incorporation and by-laws and has made available to Parent the certificate of
incorporation and by-laws (or comparable organizational documents) of each of
its Subsidiaries, in each case as amended to date. Neither the Company nor any
of its Subsidiaries is in violation of any material provision of its Certificate
of Incorporation or by-laws (or comparable organizational documents). Exhibit 21
to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 sets forth a complete list of the Company's active Subsidiaries.
Section 3.2 Capitalization. (a) The authorized capital stock
of the Company consists of 7,500,000 Shares. As of the date hereof, (i)
5,220,936 Shares are issued and outstanding, (ii) 0 Shares are issued and held
in the treasury of the Company, (iii) 421,550 Shares are reserved for issuance
upon exercise of outstanding Options granted under the Company Option Plans (as
hereinafter defined) (iv) 11,000 Shares are reserved for issuance upon exercise
of certain individual stock options granted to employees and directors of the
Company, and (v) 200,000 Shares are reserved for issuance upon exercise of
outstanding warrants to purchase common stock. All the outstanding Shares are,
and all shares which may be issued pursuant to the exercise of outstanding
Options when issued in accordance with the respective terms thereof will be,
duly authorized, validly issued, fully paid and nonassessable. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its Subsidiaries issued and outstanding. Except (a) as disclosed on
Schedule 3.2, (b) as set forth above, and (c) for the transactions contemplated
by this Agreement, as of the date hereof, (i) there are no shares of capital
stock of the Company authorized, issued or outstanding, (ii) there are no
existing options, warrants, calls, preemptive rights, subscriptions or other
rights,
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agreements, arrangements or commitments of any character, relating to the issued
or unissued capital stock of the Company or any of its Subsidiaries, obligating
the Company or any of its Subsidiaries to issue, transfer or sell or cause to be
issued, transferred or sold any shares of capital stock or Voting Debt of, or
other equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment, (iii) there are no outstanding contractual
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any Shares, or capital stock of the Company or any subsidiary
or affiliate of the Company or to provide funds to make any investment (in the
form of a loan, capital contribution or otherwise) in any such subsidiary, other
than those required in the ordinary course of business of such subsidiaries, or
any other entity and (iv) there are no equity equivalents, interests in the
ownership or earnings of the Company or other similar rights.
(b) All the outstanding shares of capital stock of
each Subsidiary have been validly issued and are fully paid and nonassessable
and, except as disclosed on Schedule 3.2, are owned directly or indirectly by
the Company free and clear of all security interests, liens, claims, pledges,
agreements, limitations in voting rights, charges or other encumbrances of any
nature whatsoever ("Liens"). Except as disclosed on Schedule 3.2, no entity in
which the Company owns, directly or indirectly, less than a 50% equity interest
is, individually or when taken together with all such other entities, material
to the business of the Company and its subsidiaries taken as a whole.
(c) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries. None of the Company or its Subsidiaries is required to redeem,
repurchase or otherwise acquire shares of capital stock of the Company, or any
of its Subsidiaries, respectively, as a result of the transactions contemplated
by this Agreement.
Section 3.3 Authorization; Validity of Agreement; Company
Action. (a) The Company has full corporate power and authority to execute and
deliver this Agreement and, subject, in the case of the Merger, to obtaining the
necessary approval of its stockholders, to consummate the transactions
contemplated hereby. The execution, delivery and performance by the Company of
this Agreement, and the consummation by it of the transactions contemplated
hereby, have been duly authorized by the Company Board and, except for those
actions obtaining the approval of the Merger from its stockholders as
contemplated in Section 1.8, no other corporate action on the part of the
Company is necessary to authorize the execution and delivery by the Company of
this Agreement and the consummation by it of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company, and
assuming due and valid authorization, execution and delivery hereof by the
Parent and the Purchaser), is a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except that (i)
such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (ii) the remedy of specific
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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.
(b) The Company Board has approved and taken all
corporate action required to be taken by the Company Board for the consummation
of the transactions contemplated by this Agreement, including the Transactions.
The Company Board has also approved the transactions contemplated by this
Agreement, including the Transactions, for the purposes of rendering the
provisions of Section 203 of the DGCL inapplicable to such transactions and the
Tender Agreements.
Section 3.4 Consents and Approvals; No Violations. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated hereby and compliance with the provisions hereof will
not, conflict with, breach or result in any violation of, or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
material benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries under, (i) the
certificate of incorporation or by-laws of the Company or the comparable
organizational documents of any of its Subsidiaries, (ii) except as disclosed on
Schedule 3.4, any loan or credit agreement, note, bond, mortgage, indenture,
lease or other contract, agreement, instrument, permit, concession, franchise or
license applicable to the Company or any of its Subsidiaries or their respective
properties or assets ("Contracts"), or (iii) subject to the governmental filings
and other matters referred to in the following sentence, any judgment, order or
decree ("Order"), or statute, law, ordinance, rule or regulation ("Law")
applicable to the Company or any of its Subsidiaries or their respective
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or Liens that,
either individually or in the aggregate, would not have a Company MAE or prevent
or materially delay the consummation of the Offer or the Merger. No Order,
consent, approval, authorization or permit of, or registration, declaration or
filing with, any federal, state, local or foreign government or any court,
administrative or regulatory agency or commission or other governmental
authority, agency or instrumentality (a "Governmental Entity") is required by or
with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby except for (1) the filing of
a premerger notification and report form by the Company under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); (2) the filing with the SEC of (A) the Proxy Statement relating to the
Special Meeting as contemplated by Section 1.8 hereof, (B) the Schedule 14D-9,
and (C) such reports under the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated hereby; (3) the filing of
the Certificate of Merger with the Secretary of State and appropriate documents
with the Pennsylvania Securities Commission required to comply with an exemption
from the Pennsylvania Takeover Disclosure Law; and (4) such filings, consents,
approvals, Orders or authorizations the failure of which to be made or obtained
would not, either individually or in the aggregate, have a Company MAE or
prevent or materially delay the consummation of the Offer or the Merger.
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Section 3.5 SEC Reports and Financial Statements. The
Company has filed with the SEC, and has heretofore made available to Parent true
and complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since December 31, 1996 under the Exchange
Act (as such documents have been amended since the time of their filing,
collectively, the "Company SEC Documents"), each of which (except to the extent
revised or superceded by a subsequently filed Company SEC Document) complied as
to form in all material respects with the requirements of the Exchange Act. As
of their respective dates or, if amended, as of the date of the last such
amendment, the Company SEC Documents, including, without limitation, any
financial statements or schedules included therein did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. None of the
Subsidiaries is required to file any forms, reports or other documents with the
SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements
of the Company (the "Company Financial Statements") included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997
(including the related notes thereto) (the "Company Form 10-K") and in the
quarterly reports on Form 10-Q for the three fiscal quarters occurring since the
Company Form 10-K have been prepared from, and are in accordance with, the books
and records of the Company and its consolidated subsidiaries, comply in all
material respects with applicable accounting requirements and with the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto and subject, in the case of unaudited interim
financial statements, to normal year end adjustments) and fairly present the
consolidated financial position and the consolidated results of operations and
cash flows of the Company and its consolidated Subsidiaries as at the dates
thereof or for the periods presented therein.
Section 3.6 No Undisclosed Liabilities. Except (a) as
disclosed in the Company SEC Documents filed and publicly available prior to the
date of this Agreement (the "Pre-Signing Company SEC Documents") or on Schedule
3.6 hereto, and (b) for liabilities incurred in the ordinary course of business
and consistent with past practice since September 30, 1998 which would not,
either individually or in the aggregate, have a Company MAE, neither the Company
nor any of its Subsidiaries has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) which would be required by
GAAP to be reflected on a consolidated balance sheet of the Company and its
Subsidiaries (including the notes thereto) and could, either individually or in
the aggregate, be reasonably expected to have a Company MAE.
Section 3.7 Absence of Certain Changes. Except as disclosed
in the Pre-Signing Company SEC Documents or on Schedule 3.7 hereto, since
September 30, 1998, the Company and its Subsidiaries have conducted their
respective businesses in the ordinary course of business in a manner consistent
with past practice and there has not been (i) any changes in the financial
condition, results of operations, assets, business or operations of the Company
or any of its Subsidiaries that would reasonably likely materially delay or
impair the ability of the Company to effect the closing of the transactions
contemplated hereby or would reasonably be likely to cause a Company MAE,
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(ii) any condition, event or occurrence, other than such conditions, events or
occurrences which, either individually or in the aggregate, have not had and
would not have a Company MAE, (iii) any declaration, setting aside or payment of
any dividend or other distribution (whether in cash, stock or property) with
respect to the equity interests of the Company or of any of its Subsidiaries;
(iv) any change by the Company or any of its Subsidiaries in accounting
principles or methods, except insofar as may be required by a change in GAAP;
(v) any split, combination or reclassification of any of the Company's capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
Company's capital stock; (vi) any change by the Company or any of its
Subsidiaries of any actuarial or other assumption used to calculate funding
obligations with respect to any Company pension plans, or change in the manner
in which contributions to any Company pension plans are made or the basis on
which such contributions are determined; (vii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any assets of the Company
or any of it Subsidiaries, either individually or in the aggregate, in excess of
$1.0 million; (viii) any labor dispute or any labor union organizing activity,
or any actual or threatened strike, work stoppage, slowdown or lockout, or any
material change in its relationship with employees, customers, distributors or
suppliers; (ix) any revaluation by the Company of any of its material assets,
including but not limited to writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course of business; (x)
any entry by the Company or any of its Subsidiaries into any commitment or
transactions material to the Company and its Subsidiaries taken as a whole other
than in the ordinary course of business; (xi) receipt of any notice of
termination or the occurrence of a default or the breach of any material
Contract; and (xii) any other action which, if it had been taken after the date
hereof, would have required the consent of Parent under Section 5.1 hereof.
Section 3.8 Employee Benefit Plans; ERISA.
(a) Schedule 3.8 hereto sets forth a list of all
employee benefit plans, (including but not limited to plans described in section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), or severance, stock, bonus, option, profit sharing or change of
control plans maintained by the Company, any of its Subsidiaries or any trade or
business, whether or not incorporated (an "ERISA Affiliate"), which together
with the Company would be deemed a "single employer" within the meaning of
section 4001(b)(15) of ERISA ("Benefit Plans") and all material employment and
severance agreements with employees of the Company ("Employee Agreements"). True
and complete copies of all Employee Agreements have been delivered to Parent by
the Company.
(b) With respect to each Benefit Plan, the Company
has delivered to Parent a current, accurate and complete copy (or, to the extent
no such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan
description and other written communications (or a description of any oral
communications) by the Company or its Subsidiaries to their employees concerning
the extent of the benefits provided under a Benefit Plan; and (iv) for the two
most recent years (A) the Form 5500 and attached schedules, (B) audited
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financial statements, (C) actuarial valuation reports and (D) attorney's
response to an auditor's request for information.
(c) With respect to each Benefit Plan, except as
otherwise disclosed to Parent: (i) if intended to qualify under section 401(a)
or 401(k) of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder (the "Code"), such plan has received a
determination letter from the Internal Revenue Service stating that it so
qualifies and that its trust is exempt from taxation under section 501(a) of the
Code; (ii) such plan has been administered in all material respects in
accordance with its terms and applicable law; (iii) no breaches of fiduciary
duty have occurred which might reasonably be expected to give rise to material
liability on the part of the Company; (iv) no disputes are pending, or, to the
knowledge of the Company, threatened that might reasonably be expected to give
rise to material liability on the part of the Company; (v) no prohibited
transaction (within the meaning of Section 406 of ERISA) or "reportable event"
(as defined in Section 4043 of ERISA) has occurred that might reasonably be
expected to give rise to material liability on the part of the Company; (vi) all
contributions required to be made to such plan as of the date hereof (taking
into account any extensions for the making of such contributions) have been made
in full; and (vii) for each Benefit Plan with respect to which a Form 5500 has
been filed, no material change has occurred with respect to the matters covered
by the most recent Form since the date thereof.
(d) Except as disclosed on Schedule 3.8, no Benefit
Plan is a "multiemployer pension plan," as defined in section 3(37) of ERISA,
nor is any Benefit Plan a plan described in section 4063(a) of ERISA.
(e) Except as disclosed on Schedule 3.8, no liability
under Title IV of ERISA has been incurred by the Company or any ERISA Affiliate
that has not been satisfied in full, and no condition exists that presents a
material risk to the Company or any ERISA Affiliate of incurring a material
liability under such Title. No Benefit Plan has incurred an accumulated funding
deficiency, as defined in section 302 of ERISA or section 312 of the Code,
whether or not waived.
(f) With respect to each Benefit Plan that is a
"welfare plan" (as defined in section 3(1) of ERISA), no such plan provides
medical or death benefits with respect to current or former employees of the
Company or any of its Subsidiaries beyond their termination of employment (other
than to the extent required by applicable law).
(g) Except as set forth in Section 2.5 or as
disclosed on Schedule 3.8, no Benefit Plan exists that would result in the
payment to any present or former employee of the Company or any of its
Subsidiaries of any money or other property or accelerate or provide any other
rights or benefits to any present or former employee of the Company or its
Subsidiaries as a result of the transactions contemplated by this Agreement,
whether or not such payment would constitute a parachute payment within the
meaning of Code section 280G.
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Section 3.9 Litigation. Except as disclosed in the
Pre-Signing Company SEC Documents with reasonable specificity or on Schedule 3.9
hereto, there is no suit, action, claim, investigation or proceeding
("Litigation Matters") pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries or any of their properties or
assets, (i) except for such Litigation Matters as would not, either individually
or in the aggregate, have a Company MAE or (ii) which seeks to delay or prevent
the consummation of the transactions contemplated hereby. Except as disclosed on
Schedule 3.9, neither the Company nor any of its Subsidiaries nor any of their
respective properties is or are subject to any order, writ, judgment,
injunction, decree, determination or award ("Orders") except for Orders which
have not had and would not have, either individually or in the aggregate, a
Company MAE or prevent or materially delay the consummation of the transactions
contemplated hereby.
Section 3.10 No Default; Compliance with Applicable Laws.
Except as set forth on Schedule 3.10 hereto, the business of the Company and
each of its Subsidiaries is not in conflict with, or in default or violation of,
any term, condition or provision of (i) its respective certificate of
incorporation or bylaws or similar organizational documents, (ii) any Contract
or (iii) any federal, state, local or foreign statute, Law, Order, concession,
grant, franchise, permit or license or other governmental authorization or
approval applicable to the Company or any of its Subsidiaries, excluding from
the foregoing clauses (ii) and (iii), defaults or violations which would not,
either individually or in the aggregate, have a Company MAE. The Company and its
Subsidiaries have all permits, licenses, authorizations, exemptions, orders,
consents, approvals and franchises from governmental and regulatory agencies
required to conduct their respective businesses as now being conducted, except
for such permits, licenses, authorizations, exemptions, orders, consents,
approvals and franchises the absence of which would not, either individually or
in the aggregate, have a Company MAE.
Section 3.11 Taxes. (a) The Company and its Subsidiaries
have (i) duly and timely filed (or there has been filed on their behalf) with
the appropriate governmental authorities all Tax Returns (as defined in Section
3.11(e)) required to be filed by them on or prior to the date hereof, other than
those Tax Returns the failure of which to file would not, either individually or
in the aggregate, have a Company MAE, and such Tax Returns are true, correct and
complete in all material respects, and (ii) duly and timely paid in full or made
provision in accordance with generally accepted accounting principles (or there
has been paid or provision has been made on their behalf) for the payment of all
Taxes (as defined in Section 3.11(e)) shown to be due on such Tax Returns.
(b) Except as set forth on Schedule 3.11 hereto,
there are no ongoing federal, state, local or foreign audits or examinations of
any Tax Return of the Company or its Subsidiaries.
(c) Except as set forth on Schedule 3.11 hereto,
there are no outstanding requests, agreements, consents or waivers to extend the
statutory period of limitations applicable to the assessment of any Taxes or
deficiencies against the Company or any of its Subsidiaries, and no power of
attorney granted by either the Company or any of its Subsidiaries with respect
to any Taxes is currently in force.
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(d) Except as set forth on Schedule 3.11, neither the
Company nor any of its Subsidiaries is a party to any agreement providing for
the allocation or sharing of Taxes.
(e) "Taxes" shall mean any and all taxes, charges,
fees, levies or other assessments, including, without limitation, income, gross
receipts, excise, real or personal property, sales, withholding, social
security, occupation, use, service, service use, license, net worth, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the United
States Internal Revenue Service or any taxing authority (domestic or foreign),
including, without limitation, any state, county, local or foreign government or
any subdivision or taxing agency thereof (including a United States possession),
whether computed on a separate, consolidated, unitary, combined or any other
basis; and such term shall include any interest, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments. "Tax Return" shall mean any report, return,
document, declaration or other information or filing required to be supplied to
any taxing authority or jurisdiction (domestic or foreign) with respect to
Taxes.
Section 3.12 Real Property. Except as disclosed on
Schedule 3.12, the Company and the Subsidiaries, as the case may be, have good
and marketable title or valid leasehold rights to all real property purported to
be owned by them or used in the conduct of their respective businesses as
currently conducted free and clear of all Liens with only such exceptions as,
either individually or in the aggregate, would not have a Company MAE.
Section 3.13 Environmental Matters. (a) Except as set forth
in the Company SEC Documents or in Schedule 3.13:
(i) the Company has not received any written
communication from any person or entity (including any Governmental
Entity) stating or alleging that it may be a potentially responsible
party under Environmental Law (as defined in Section 3.13(b)) with
respect to any actual or alleged environmental contamination; neither
the Company nor, to the Company's knowledge, any Governmental Entity is
conducting or has conducted any environmental remediation or
environmental investigation which could reasonably be expected to
result in liability for the Company under Environmental Law; and the
Company has not received any request for information under
Environmental Law from any Governmental Entity with respect to any
actual or alleged environmental contamination, except, in each case,
for communications, environmental remediation and investigations and
requests for information which would not, either individually or in the
aggregate, have a Company MAE;
(ii) none of the soil or groundwater beneath
the real property now or formerly (to the Company's knowledge) owned or
operated by the Company or its Subsidiaries contains any Hazardous
Substance (as defined by Environmental Law) in quantities or
concentrations requiring investigation or remediation pursuant to
Environmental
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Law, except where the presence of any such Hazardous Substance would
not, either individually or in the aggregate, have a Company MAE.
(iii) the Company has not received any
written communication from any person or entity (including any
Governmental Entity) stating or alleging that the Company may have
violated any Environmental Law, or that the Company has caused or
contributed to any environmental contamination that has caused any
property damage or personal injury under Environmental Law, except, in
each case, for statements and allegations of violations and statements
and allegations of responsibility for property damage and personal
injury which would not, either individually or in the aggregate, have a
Company MAE; and
(iv) all underground storage tanks ("UST's")
on property currently owned by the Company comply with applicable
Environmental Law, except for UST's which would not, either
individually or in the aggregate, have a Company MAE.
(b) For purposes of this Section 3.13,
"Environmental Law" means all applicable state, federal and local laws,
regulations and rules, including common law, judgments, decrees and orders
relating to pollution, the preservation of the environment, and the release of
materials into the environment.
Section 3.14 Information in Schedule 14D-1. None of the
information supplied or to be supplied by the Company specifically for inclusion
in the Schedule 14D-1, at the time such document is first published, sent or
given, at the date it is first mailed to the Company's stockholders, will
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.
Section 3.15 State Takeover Laws. The Company has taken
all action to exempt the transactions contemplated by this Agreement from all
applicable "moratorium," "control share," "fair price," "business combination,"
or other anti-takeover laws and regulations of the State of Delaware and,
subject to the last sentence of this Section 3.15, the State of Pennsylvania.
The Pennsylvania Takeover Disclosure Law (the "PTDL") also purports to be
applicable to the transactions contemplated by this Agreement since the Company
has its principal place of business and substantial assets located in
Pennsylvania. To qualify for an exemption under the PTDL, the Purchaser shall be
required to make a Section 8(a) filing with the Pennsylvania Securities
Commission and pay the appropriate filing fee in accordance with the PDTL.
Section 3.16 Voting Requirements. The affirmative vote of
the holders of a majority of the voting power of all outstanding Shares, voting
as a single class, at the Special Meeting to adopt this Agreement is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve and adopt this Agreement and the transactions contemplated
hereby in order to effect the Merger.
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Section 3.17 Year 2000. All the computer-based systems of the
Company and its Subsidiaries, including its information data bases, accounting
systems and data processing systems, will not be materially adversely affected
by, and will continue to operate in the same manner as such systems currently
operate notwithstanding Year 2000, except where the failure to so operate would
not, either individually or in the aggregate, have a Company MAE. None of the
Intellectual Property or, other assets of the Company and its Subsidiaries used
in their current products will be materially adversely affected by, and each
thereof will continue to operate in the same manner as it currently operates,
notwithstanding Year 2000, except where the failure to so operate would not,
either individually or in the aggregate, have a Company MAE. Notwithstanding the
foregoing, the Company does not represent and warrant that the databases and
systems of its material suppliers will continue to operate in the same manner as
it currently operates notwithstanding Year 2000. As used herein, the term "Year
2000" means the occurrence of or calculation involving the Year 2000 A.D., or
other calendar dates occurring after December 31, 1999.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and
warrant to the Company as follows:
Section 4.1 Organization. Each of Parent and the Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate or
other power and authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not be reasonably
expected to have a material adverse effect on the business, operations, assets,
condition (financial or otherwise) or results of operations of Parent and its
Subsidiaries, taken as a whole, or on the ability of Parent and Purchaser to
perform their respective obligations under this Agreement (any such effect, a
"Parent MAE"). Parent and the Purchaser are duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not, either individually
or in the aggregate, have a Parent MAE.
Section 4.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent and the Purchaser has full corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by Parent and the
Purchaser of this Agreement, and the consummation of the transactions
contemplated hereby, have been duly authorized by their Boards of Directors and
no corporate action on the part
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of Parent and the Purchaser is necessary to authorize the execution and delivery
by Parent and the Purchaser of this Agreement and the consummation by them of
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and the Purchaser, as the case may be, and, assuming due and
valid authorization, execution and delivery hereof by the Company, is a valid
and binding obligation of each of Parent and the Purchaser, as the case may be,
enforceable against them in accordance with its respective terms, except that
(i) such enforcement may be subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws, now or
hereafter in effect, affecting 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.
Section 4.3 Consents and Approvals; No Violations. The
execution and delivery of this Agreement does not, and the consummation of the
transactions contemplated thereby and compliance with the provisions thereof
will not, (i) conflict with or result in any breach of any provision of the
respective certificate of incorporation or bylaws or similar organizational
documents of Parent, any of its subsidiaries or the Purchaser, (ii) require on
the part of Parent or the Purchaser any filing with, or permit, authorization,
consent or approval of, any Governmental Entity, except as set forth below and
except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not have a material adverse effect on
Parent and its Subsidiaries taken as a whole, (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent, any of its Subsidiaries or the Purchaser is a party or by which
any of them or any of their properties or assets may be bound or (iv) violate
any order, writ, injunction, decree, statute, rule or regulation applicable to
Parent, any of its Subsidiaries or the Purchaser or any of their properties or
assets, excluding from the foregoing clauses (iii) or (iv) such violations,
breaches or defaults which would not, either individually or in the aggregate,
have a material adverse effect on Parent, its Subsidiaries or the Purchaser
taken as a whole and will not materially impair the ability of Parent or the
Purchaser to consummate the transactions contemplated hereby. No consent,
approval, Order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Parent or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by Parent and Purchaser or the consummation by Parent and Purchaser of the
transactions contemplated hereby, except for (1) the filing of a premerger
notification and report form by Parent under the HSR Act; (2) the filing with
the SEC of (A) the Schedule 14D-1 and (B) such reports under the Exchange Act as
may be required in connection with this Agreement and the transactions
contemplated hereby; (3) the filing of the Certificate of Merger with the
Secretary of State and appropriate documents with the relevant authorities of
other states in which Parent is qualified to do business and such filings with
Governmental Entities to satisfy the applicable requirements of state securities
or corporate or "blue sky" laws; (4) such other filings and consents as may be
required under any Environmental Law pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions contemplated
by this Agreement; and (5) such
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consents, approvals, Orders or authorizations the failure of which to be made or
obtained would not, either individually or in the aggregate, have a material
adverse effect on Parent and its Subsidiaries taken as a whole.
Section 4.4 Information in Proxy Statement; Schedule 14D-9.
None of the information supplied by Parent or the Purchaser for inclusion in the
Proxy Statement will, at the date mailed to stockholders and at the time of the
meeting of stockholders to be held in connection with the Merger, or for
inclusion in the Schedule 14D-9 will, at the time first sent or given to the
Company's stockholders contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not misleading.
Section 4.5 Financing. Either Parent or the Purchaser has
sufficient funds available (through cash on hand and existing credit
arrangements or otherwise) to purchase all of the Shares to be purchased in the
Offer and to pay all fees and expenses related to the transactions permitted by
this Agreement.
Section 4.6 Purchaser's Operations. The Purchaser has not
engaged in any business activities or conducted any operations other than in
connection with the transactions contemplated hereby.
Section 4.7 No Recourse. Each of Parent and the Purchaser
agrees, to the fullest extent permitted by law (except with respect to claims of
fraud), that none of the Company, its Subsidiaries or any of their respective
directors, officers, employees, stockholders, affiliates, agents or
representatives shall have any liability or responsibility whatsoever to Parent
or the Purchaser on any basis (including without limitation in contract, tort or
otherwise) based upon any information provided or made available, or statements
made, to Parent or the Purchaser prior to the execution of this Agreement.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as permitted by this Agreement, (ii) as
indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the
date hereof, and prior to the time the directors of the Purchaser have been
elected to, and shall constitute a majority of, the Company Board pursuant to
Section 1.3 (the "Appointment Date"):
(a) the business of the Company and its Subsidiaries
shall be conducted only in the ordinary and usual course of business in a manner
consistent with past practice (including payment of accounts payable, collection
of accounts receivable and inventory purchases) and in compliance with
applicable laws and the Company and its Subsidiaries shall each use its
reasonable
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best efforts to (i) preserve substantially intact the business organization and
assets of the Company and its Subsidiaries, (ii) keep available the services of
the present key officers, employees and consultants of the Company and its
Subsidiaries, (iii) preserve the present relationships of the Company and its
Subsidiaries with customers, suppliers and other persons with which the Company
or any of its Subsidiaries has significant business relations, and (iv) maintain
net cash of the Company and its Subsidiaries of at least $10 million (without
giving effect to any transaction-related fees and expenses of the Financial
Advisor, financial printers and outside counsel not exceeding $1.35 million in
the aggregate) as of the close of business on the date of the expiration of the
Offer;
(b) the Company will not, directly or indirectly,
(i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or
capital stock of any of its Subsidiaries beneficially owned by it, either
directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws
or similar organizational documents; or (iii) split, combine or reclassify the
outstanding Shares or any outstanding capital stock of any of the Subsidiaries
of the Company;
(c) except as disclosed on Schedule 5.1(c), neither
the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber
any additional shares of, or securities convertible into or exchangeable for, or
options, warrants, calls, commitments or rights of any kind to acquire, any
shares of capital stock of any class of the Company or its Subsidiaries, or
other ownership interest (including stock appreciation rights and phantom
stock), other than shares of Common Stock reserved for issuance on the date
hereof upon the exercise of outstanding Options; (iii) transfer, lease, license,
sell, mortgage, pledge, dispose of, or encumber any material assets, whether
tangible or intangible, other than sales of products in the ordinary and usual
course of business and consistent with past practice; (iv) incur or modify any
indebtedness or other material liability or issue any debt securities; or (v)
redeem, purchase or otherwise acquire directly or indirectly any of its capital
stock or rights in respect thereof;
(d) except as disclosed on Schedule 5.1(d), neither
the Company nor any of its Subsidiaries shall modify, amend or terminate any of
its Contracts or waive, release or assign any material rights or claims, except
in the ordinary course of business and consistent with past practice;
(e) neither the Company nor any of its Subsidiaries
shall permit any material insurance policy naming it as a beneficiary or a loss
payable payee to be canceled or terminated except that any such policy may be
replaced with a policy with coverage and on terms and conditions no less
favorable to the Company and its Subsidiaries;
(f) neither the Company nor any of its Subsidiaries
shall (i)acquire (by merger, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership or other business organization or
division thereof or any material assets, assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the material obligations of any other person, other than guarantees of
obligations of wholly-owned
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Subsidiaries of the Company in the ordinary course of business; (ii) make any
loans, advances or capital contributions to, or investments in, any other
person, other than to wholly owned Subsidiaries of the Company in the ordinary
course of business and consistent with past practice; (iii) make any bid or
proposal, or enter into or amend in any material respect any contract or
agreement other than in ordinary course of business consistent with past
practice, which in any event would either (a) involve aggregate consideration
under such bid, proposal, contract or agreement in excess of $2 million or (b)
be a bid, proposal or renewal at an amount of which the Company would expect
such bid, proposal or renewal to result in a loss thereunder to the Company,
(iv) authorize any single capital expenditure which is in excess of $250,000 or
capital expenditures which are, in the aggregate, in excess of $1.0 million for
the Company and its Subsidiaries taken as a whole, (v) enter into any
transaction, contract or commitment with any affiliate of the Company; or (vi)
enter into any material commitment or transaction with respect to any of the
foregoing (including, but not limited to, any borrowing, capital expenditure or
purchase, sale or lease of assets);
(g) neither the Company nor any of its Subsidiaries
shall change any of the accounting methods used by it unless required by GAAP;
(h) neither the Company nor any of its Subsidiaries
will adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger);
(i) except to the extent required under existing
employee and director benefit plans, agreements or arrangements as in effect on
the date of this Agreement and disclosed to Parent, increase the compensation or
fringe benefits of any of its directors, officers or employees, except for
increases in salary or wages of employees of the Company or its Subsidiaries who
are not officers of the Company in the ordinary course of business in accordance
with past practice, or grant any retention, severance or termination pay not
currently required to be paid under existing severance plans to or enter into
any employment, consulting or severance agreement or arrangement with any
present or former director, officer or other employee of the Company or any of
its Subsidiaries, or establish, adopt enter into or amend or terminate any
collective bargaining agreement or Company Plan, including, but not limited to,
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the benefit of
any directors, officers or employers;
(j) make or change any Tax election, make or change
any method or accounting with respect to Taxes, file any amended Tax Return or
settle or compromise any material Tax liability;
(k) settle or compromise any pending or threatened
suit, action or claim against the Company or any Subsidiary for an aggregate
amount in excess of $50,000 or which is material or which relates to the
transactions contemplated hereby;
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(l) make any change in the key management structure
of the Company or any of its Subsidiaries, including, without limitation, the
hiring of additional officers or the termination of existing officers;
(m) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent of otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business in accordance with the terms of such obligation
or liability and consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company or incurred in the
ordinary course of business and consistent with past practice;
(n) neither the Company nor any of its Subsidiaries
will take, or agree to commit to take, any action that would make any
representation or warranty of the Company contained herein inaccurate in any
material respect at, or as of any time prior to, the Effective Time (except for
representations made as of a specific date); or
(o) neither the Company nor any of its Subsidiaries
will authorize or enter into an agreement to do any of the foregoing.
Section 5.2 Approvals and Consents; Cooperation. (a) The
parties hereto shall use their reasonable best efforts, and cooperate with each
other, to obtain all governmental and third party authorizations, approvals,
consents or waivers required in order to consummate the Offer and the Merger.
Each of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate the Offer and the Merger. The
Company further agrees to use its reasonable best efforts to seek to obtain, in
connection with Parent and without cost to the Company, Parent, or the
Purchaser, any consent of a third party on Schedule 3.4 required to avoid a
default or breach of any such contract resulting from this Agreement, the Offer
or the Merger.
(b) The Company and the Parent shall take all
reasonable actions necessary to file as soon as practicable notifications under
the HSR Act and to respond as promptly as practicable to any inquiries received
from the Federal Trade Commission and the Antitrust Division of the Department
of Justice for additional information or documentation and to respond as soon as
practicable to all inquiries and requests received from any Governmental Entity
in connection with antitrust matters. Notwithstanding anything to the contrary
herein (including the other provisions of this Section 5.2), Parent, the
Purchaser and its affiliates shall not be required to divest, or agree to any
restrictions with respect to, any of its businesses or assets or the businesses
or assets to be acquired in connection with the transactions contemplated
hereby. Nothing herein shall prevent the Purchaser, on not more than one
occasion, from withdrawing a notification under the HSR Act if the Purchaser
intends to refile such notification thereafter in accordance with the terms
hereof.
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(c) In furtherance and not in limitation of the
covenants of the parties contained in Sections 5.2(a) and 5.2(b), if any
administrative or judicial action or proceeding, including any proceeding by a
private party, is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement, each of Parent and the Company shall
cooperate in all respects with each other and use its respective reasonable best
efforts to contest and resist any such action or proceeding and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order,
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions contemplated
by this Agreement.
(d) If any objections are asserted with respect to
the transactions contemplated hereby or if any suit is instituted by any
Governmental Entity or any private party challenging any of the transactions
contemplated hereby as violative of any regulatory law, each of Parent and the
Company shall use its reasonable best efforts to resolve any such objections or
challenge as such Governmental Entity or private party may have to such
transactions under such regulatory law so as to permit consummation of the
transactions contemplated by this Agreement.
Section 5.3 Access to Information. Upon reasonable notice, the
Company shall (and shall cause its respective Subsidiaries to) afford to the
officers, employees, accountants, counsel, financing sources and other
representatives of the Parent, access, during normal business hours during the
period prior to the Effective Time, to all their respective officers, employees,
agents, properties, offices, plants and other facilities and books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to the Parent (a) a copy of
each report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of federal or
state securities laws and (b) all other information concerning its business,
financial condition, properties and personnel as Parent may reasonably request.
Unless otherwise required by law and until the Appointment Date, Parent will
hold any such information which is nonpublic in confidence in accordance with
the provisions of the Confidentiality Agreement between the Company and Parent,
dated October 8, 1998 (the "Parent Confidentiality Agreement").
Section 5.4 Employee Benefits.
The Parent shall, or shall cause the Surviving
Corporation to, until at least December 31, 1999, maintain employee benefit
plans, programs and arrangements (other than stock-based plans) which are, in
the aggregate, for the employees who were active full-time employees of the
Company or any Subsidiary immediately prior to the Effective Time and continue
to be active full-time employees of the Purchaser, the Surviving Corporation,
any Subsidiary or any other affiliate of the Purchaser, no less favorable than
those provided by the Company and any Subsidiary immediately prior to the
Effective Time. From and after the Effective Time, for purposes of determining
eligibility, vesting and entitlement to vacation and severance and other
benefits for employees actively employed full-time by the Company or any
Subsidiary immediately prior to the Effective Time and who continue in the
employ of the Company following the Effective Time under any compensation,
severance, welfare, pension, benefit, savings or other Plan of the Parent or any
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of its Subsidiaries in which active full-time employees of the Company and any
Subsidiary become eligible to participate (whether pursuant to this Section 5.4
or otherwise), service with the Company or any Subsidiary (whether before or
after the Effective Time) shall be credited as if such service had been rendered
to the Parent or such Subsidiary (except to the extent necessary to prevent
duplication of benefits). Parent will, and will cause the Surviving Corporation
to, observe all employment, severance agreements or arrangements which provide
for the acceleration of benefits to employees of the Company upon a change of
control, plans or policies of the Company and its Subsidiaries, copies of which
have been made available to Parent pursuant to Section 3.8, in accordance with
their terms.
Section 5.5 No Solicitation. The Company, its Subsidiaries,
its affiliates and their respective officers, directors, employees,
representatives and agents shall immediately cease any existing discussions or
negotiations, if any, with any parties conducted heretofore with respect to any
acquisition or exchange of all or any material portion of the assets of, or any
equity interest in, the Company or any of its Subsidiaries or any business
combination with the Company or any of its Subsidiaries. Neither the Company,
any of its Subsidiaries or affiliates nor their respective officers, directors,
employees, representatives or agents, shall directly or indirectly, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent, any of its affiliates or representatives) concerning any
merger, consolidation, tender offer, exchange offer, sale of all or
substantially all of the Company's direct and indirect assets, sale of shares of
capital stock or similar business combination transactions involving the Company
or any Subsidiary or principal operating or business unit of the Company (an
"Acquisition Proposal"); provided, however, that if, at any time prior to the
purchase of Shares by Purchaser in the Offer, the Company Board by majority vote
determines in good faith, after receiving advice from its financial advisor and
outside counsel, that failing to take such action would constitute a breach of
the fiduciary duties of the Company Board under applicable law, the Company may,
in response to a bona fide written Acquisition Proposal which did not result
from a breach of this Section 5.5 and which the Board determines in good faith
is superior to the Offer (any such bona fide written Acquisition Proposal being
referred to as a "Superior Proposal"), (i) furnish information or provide access
with respect to the Company and each of its Subsidiaries to such Person pursuant
to a customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) and (ii) participate in discussions and
negotiations regarding such Acquisition Proposal. The Company Board agrees that
it will keep the Parent informed, on a current basis, of the status and terms of
any such proposals. In the event that prior to the completion of the Offer, the
Company Board determines in good faith, after the Company has received a
Superior Proposal and receipt of formal advice from its financial advisor and
outside counsel, that failing to take such action would constitute a breach of
its fiduciary duties under applicable law, the Company Board may withdraw or
modify its approval or recommendation of the Offer, the Merger or this
Agreement, approve or recommend a Superior Proposal or terminate this Agreement
in accordance with Section 7.1(c)(i), provided that prior to any such action,
the Company shall (i) have given Parent at least two business days notice of the
effectiveness of such action, and (ii) simultaneously with such action, pay to
Parent the fee referred to in Section 7.3 hereof. Furthermore, nothing contained
in this Section 5.5 shall prohibit the Company or the Company Board from taking
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and disclosing to the Company's stockholders a position with respect to a tender
or exchange offer by a third party pursuant to Rules l4d-9 and l4e-2(a)
promulgated under the Exchange Act or from making such disclosure to the
Company's stockholders or otherwise which, in the judgment of the Company Board
with the advice of independent legal counsel, is required under applicable law
(in accordance with Section 7.1(c)(i)) or rules of any stock exchange. The
Company agrees not to release any third party from, or waive any provisions of,
(i) any standstill agreement to which the Company is a party (other than for the
limited purpose of discussions and negotiations permitted by this Section 5.5)
and (ii) any confidentiality agreement to which the Company is a party.
Section 5.6 Brokers or Finders. (a) The Company represents, as
to itself, its Subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any brokers' or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except PricewaterhouseCoopers Securities LLC, whose fees and expenses will be
paid by the Company in accordance with the Company's agreement with such firm
dated August 20, 1998; and the Company agrees to indemnify and hold Parent and
the Purchaser harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliates.
(b) Parent represents, as to itself, its Subsidiaries
and its affiliates, that no agent, broker, investment banker, financial advisor
or other firm or person is or will be entitled to any brokers' or finders' fee
or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement, and Parent agrees to indemnify and
hold the Company harmless from and against any and all claims, liabilities or
obligations with respect to any other fees, commissions or expenses asserted by
any person on the basis of any act or statement alleged to have been made by
such party or its affiliates.
Section 5.7 Publicity. So long as this Agreement is in effect,
neither the Company nor Parent shall issue or cause the publication of any press
release or other announcement with respect to the Merger, this Agreement or the
other transactions contemplated hereby without the prior consultation of the
other party, except as may be required by law or by any listing agreement with a
national securities exchange.
Section 5.8 Notification of Certain Matters. The Company shall
give prompt notice to Parent and Parent shall give prompt notice to the Company,
of (i) the occurrence, or non-occurrence of any event the occurrence, or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the Company or Parent, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.8 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
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Section 5.9 Directors' and Officers' Insurance and
Indemnification. (a) From and after the consummation of the Offer through the
sixth anniversary of the date the Effective Time occurs, Parent shall, and shall
cause the Surviving Corporation to, indemnify, defend and hold harmless any
person who is now, or has been at any time prior to the date hereof, or who
becomes prior to the Effective Time, an officer or director (the "Indemnified
Party") of the Company and its Subsidiaries against all losses, claims, damages,
liabilities, costs and expenses (including reasonable attorneys' fees and
expenses), judgments, fines, and amounts paid in settlement in connection with
any actual or threatened action, suit, claim, proceeding or investigation (each
a "Claim") to the extent that any such Claim is based on, or arises out of, (i)
the fact that such person is or was a director, officer, employee or agent of
the Company or any Subsidiaries or is or was serving at the request of the
Company or any of its Subsidiaries as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, or
(ii) this Agreement, or any of the transactions contemplated hereby, in each
case to the extent that any such Claim pertains to any matter or fact arising,
existing, or occurring prior to or at the Effective Time, regardless of whether
such Claim is asserted or claimed prior to, at or after the Effective Time, to
the full extent permitted under Delaware law or the Company's Certificate of
Incorporation, By-laws or indemnification agreements in effect at the date
hereof, including provisions relating to advancement of expenses incurred in the
defense of any action or suit. Without limiting the foregoing, in the event any
Indemnified Party becomes involved in any capacity in any Claim, then from and
after consummation of the Offer, the Company (or the Surviving Corporation if
after the Effective Time) shall, periodically advance to such Indemnified Party
its legal and other expenses (including the cost of any investigation and
preparation incurred in connection therewith), subject to the provision by such
Indemnified Party of an undertaking to reimburse the amounts so advanced in the
event of a final nonappealable determination by a court of competent
jurisdiction that such Indemnified Party is not entitled thereto. No Indemnified
Party may settle any such claim without the prior approval of Parent or the
Surviving Corporation (such consent not to be unreasonably withheld). In the
event that any claim, action, suit, proceeding or investigation is brought
against more than one Indemnified Party (whether arising before or after the
Effective Time), the Indemnified Parties as a group shall retain one counsel
(plus appropriate local counsel) reasonably satisfactory to Parent or the
Surviving Corporation.
(b) Parent and the Company agree that all rights to
indemnification and all limitations of liability existing in favor of the
Indemnified Party as provided in the Company's Certificate of Incorporation and
By-laws as in effect as of the date hereof shall survive the Merger and shall
continue in full force and effect, without any amendment thereto, for a period
of six years from the Effective Time to the extent such rights are consistent
with the DGCL; provided that, in the event any claim or claims are asserted or
made within such six year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims; provided further, that any determination required to be made with
respect to whether an Indemnified Party's conduct complies with the standards
set forth under Delaware law, the Company's Certificate of Incorporation or
By-laws or such agreements, as the case may be, shall be made by independent
legal counsel selected by the Indemnified Party and reasonably acceptable to
Parent; and provided further, that nothing in this Section 5.9 shall impair any
rights or obligations of any present or former directors or officers of the
Company.
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(c) In the event Parent or the Purchaser or any of
their successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger, or (ii) transfers or conveys all or substantially
all of its properties and assets to any person, then, and in each such case, to
the extent necessary to effectuate the purposes of this Section 5.9, proper
provision shall be made so that the successors and assigns of Parent and the
Purchaser assume the obligations set forth in this Section 5.9 and none of the
actions described in clauses (i) or (ii) shall be taken until such provision is
made.
(d) Parent or the Surviving Corporation shall
maintain the Company's existing directors' and officers' liability insurance
policy ("D&O Insurance") for a period of not less than six years after the
Effective Date; provided, that (i) Parent may substitute therefor policies of
substantially similar coverage and amounts containing terms no less advantageous
to such former directors or officers; (ii) if the existing D&O Insurance expires
or is canceled during such period, Parent or the Surviving Corporation will use
their reasonable best efforts to obtain substantially similar D&O Insurance,
(iii) in no event shall Parent or the Surviving Corporation be required to
expend more than an amount per year in excess of 175% of current annual premiums
paid by the Company (which the Company represents and warrants to be not more
than $156,000) to maintain or procure insurance coverage pursuant hereto; (iv)
if the annual premiums of such insurance coverage would exceed 175% of current
annual premiums, Parent or the Surviving Corporation shall obtain a policy with
the greatest coverage available for a cost not exceeding 175% of current annual
premiums.
Section 5.10 Stockholder Litigation. (a) Each of the Company
and Parent will give the other the reasonable opportunity to participate in the
defense of any stockholder litigation against the Company, Parent or Purchaser,
as applicable, or their respective directors relating to the transactions
contemplated by this Agreement. The Company agrees that it will not settle any
litigation currently pending, or commenced after the date hereof, against the
Company or any of its directors by any stockholder of the Company relating to
the Offer or this Agreement, without prior written consent of Parent, which
shall not be unreasonably withheld.
(b) Except as permitted by Section 5.5 of this
Agreement, the Company will not voluntarily cooperate with any third party which
has sought or may hereafter seek to restrain or prohibit or otherwise oppose the
Offer or the Merger.
Section 5.11 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement. If at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall take or cause to be taken all such necessary
action, including, without limitation, the execution and delivery of such
further
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instruments and documents as may be reasonably requested by the other party for
such purposes or otherwise to consummate and make effective the transactions
contemplated hereby.
Section 5.12 State Takeover Statutes. During the term of this
Agreement, except as permitted by Section 5.5, the Company Board shall not
repeal or otherwise alter the resolutions of the Company Board that render
Section 203 of the DGCL (or any similar provision) inapplicable to the Offer,
the Merger, this Agreement, the Tender Agreement, the other transactions
contemplated hereby and thereby.
Section 5.13 Stop Transfer Order. If requested by Parent, the
Company will instruct the Company's transfer agent that, there is a stop
transfer order with respect to all of the Shares covered by the Tender Agreement
and that the Tender Agreement places limits on the transfer of such Shares.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) Stockholder Approval. This Agreement shall have
been approved and adopted by the requisite vote of the holders of Shares, if
required by the DGCL, in order to consummate the Merger;
(b) Statutes; Consents. No statute, rule, order,
decree or regulation shall have been enacted or promulgated by any foreign or
domestic Governmental Entity or authority of competent jurisdiction which
prohibits the consummation of the Merger and all foreign or domestic
governmental consents, orders and approvals required for the consummation of the
Merger and the transactions contemplated hereby shall have been obtained and
shall be in effect at the Effective Time;
(c) Injunctions. There shall be no order or
injunction (whether temporary, preliminary or permanent) of a foreign or United
States federal or state court or other governmental authority of competent
jurisdiction in effect precluding, restraining, enjoining or prohibiting
consummation of the Merger, which order or injunction is final and
nonappealable;
(d) HSR Act. The applicable time period under the HSR
Act shall have expired or been terminated; and
(e) Consummation of Offer. Parent, Purchaser or their
affiliates shall have purchased Shares pursuant to the Offer.
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ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the
contrary notwithstanding, this Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after stockholder approval thereof:
(a) By the mutual consent of the Board of Directors
of Parent and the Company Board.
(b) By either of the Company Board or the Board of
Directors of Parent:
(i) if Parent or the Purchaser shall have
terminated the Offer or if Shares shall not have been purchased
pursuant to the Offer on or prior to May 10, 1999; provided, however,
that in the event of a delay in the Purchaser's purchase of the Shares
pursuant to the Offer resulting from an inquiry for additional
materials made by a Governmental Entity relating to the HSR Act or
Federal antitrust laws, the right to terminate this Agreement under
this Section 7(b)(i) shall be extended until June 23, 1999; provided,
further, that the right to terminate this Agreement under this Section
7.1(b)(i) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of Parent or the Purchaser, as the case may be, to
purchase Shares pursuant to the Offer on or prior to such date; or
(ii) if any Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties
hereto shall use their reasonable best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and nonappealable and,
with respect to any court or governmental body located outside the
United States, such order, decree, ruling or other action would, either
individually or in the aggregate, have a Company MAE or a material
adverse effect on the business, operations, assets, condition
(financial or otherwise) or results of operations of Parent and its
Subsidiaries taken as a whole;
(c) By the Company Board:
(i) if, prior to the purchase of Shares
pursuant to the Offer, the Company Board shall have (A) received a bona
fide offer which the Company Board determines in good faith is a
Superior Proposal, and (B) determined in good faith, as a result
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of such Superior Proposal, based on the formal advice of outside
counsel to the Company, that the failure to terminate this Agreement
would violate its fiduciary duties to the Company's stockholders under
applicable law (provided that such termination under this clause (c)
shall not be effective until the Company has made payment of the fee
required simultaneous with such termination pursuant to Section 7.3
hereof); or
(ii) if, prior to the purchase of Shares
pursuant to the Offer, Parent or the Purchaser breaches or fails in any
material respect to perform or comply with any of its material
covenants and agreements contained herein or breaches its
representations and warranties in any material respect, and such breach
is not cured within fifteen (15) business days of written notice; or
(iii) if Parent or the Purchaser shall have
terminated the Offer, or the Offer shall have expired, without Parent
or the Purchaser, as the case may be, purchasing any Shares pursuant
thereto; provided that the Company may not terminate this Agreement
pursuant to this Section 7.1(c)(iii) if the Company is in material
breach of this Agreement; or
(iv) if Purchaser shall have failed to
commence the Offer on or prior to five business days following the date
of the initial public announcement of the Offer; provided, that the
Company may not terminate this Agreement pursuant to this Section
7.1(c)(iv) if the Company is in material breach of this Agreement.
(d) By the Board of Directors of Parent:
(i) if Purchaser shall have failed to
commence the Offer on or prior to five business days following the date
of the initial public announcement of the Offer; provided that Parent
may not terminate this Agreement pursuant to this Section 7.1(d)(i) if
Parent is in material breach of this Agreement;
(ii) if, prior to the purchase of Shares
pursuant to the Offer, the Company Board shall have withdrawn, or
modified or changed in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, this Agreement or the Merger
or shall have recommended an Acquisition Proposal or shall have
executed an agreement in principle (or similar agreement) or definitive
agreement relating to an Acquisition Proposal or similar business
combination with a person or entity other than Parent, the Purchaser or
their affiliates (or the Company Board resolves to do any of the
foregoing);
(iii) if following any negotiations by the
Company with any person (other than Parent or Purchaser) of an
Acquisition Proposal, there shall have been a breach of any covenant or
agreement on the part of the Company contained in this Agreement such
that the conditions set forth in clause (b) of Annex A would not be
satisfied;
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(iv) if, prior to the purchase of Shares
pursuant to the Offer, the Company breaches or fails in any material
respect to perform or comply with any of its material covenants and
agreements contained herein or breaches its representations and
warranties in any material respect, and such breach is not cured within
fifteen (15) business days of written notice; or
(v) the Minimum Condition shall not have
been satisfied by the expiration date of the Offer and on or prior to
such date (A) any person (other than Parent or Purchaser) shall have
made and not withdrawn a bona fide proposal or public announcement or
communication to the Company with respect to an Acquisition Proposal or
(B) any person (including the Company or any of its affiliates or
Subsidiaries), other than Parent, the Purchaser or any of their
affiliates shall have become the beneficial owner of more than 25% of
the Shares.
Section 7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void (except Section 7.3), and there shall be no
liability on the part of Parent or the Company except for fraud or for willful
breach of this Agreement.
Section 7.3 Termination Fee. In the event that the Company
Board terminates this Agreement pursuant to Section 7.1(c)(i) or the Board of
Directors of Parent terminates this Agreement pursuant to Section 7.1(d)(ii) or
(v) the Company shall concurrently (or on the following business day if
termination is by Parent) pay to Parent a termination fee of $3.0 million.
In the event that (x) the Company terminates this Agreement pursuant to
Section 7.1(b)(i) at a time when Parent had a right to terminate this Agreement
pursuant to Section 7.1(d)(iii) or Parent terminates this Agreement pursuant to
Section 7.1(d)(iii) and (y) the Company or any of its Subsidiaries enters into
an agreement with respect to a Third Party Acquisition (defined below) (an
"Acquisition Agreement") within 12 months of termination, the Company shall pay
Parent $3.0 million simultaneously with the signing of the Acquisition
Agreement.
"Third Party Acquisition" means the occurrence of any of the following
events: (i) the acquisition of the Company by merger, tender offer or otherwise
by any person or group of persons acting in concert other than Parent, Purchaser
or any affiliate thereof (at a price greater than $13.50 per Share in the case
of an acquisition by a person or group of persons with whom or which the Company
did not have direct or indirect (through affiliates or otherwise) discussions
prior to the termination of the Merger Agreement) (a "Third Party"); (ii) the
acquisition by a Third Party of 35% or more of the assets of the Company and its
Subsidiaries, taken as a whole, in one transaction or a related series of
transactions; (iii) the acquisition by a Third Party or more than 35% of the
outstanding Shares, in one transaction or a related series of transactions; (iv)
the adoption by the Company of a plan of complete liquidation or the declaration
or payment of an extraordinary
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dividend; or (v) the repurchase by the Company or any of its Subsidiaries of 50%
or more of the outstanding Shares.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendment and Modification. Subject to applicable
law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors, at any time prior to the Closing Date
with respect to any of the terms contained herein; provided, however, that after
the approval of this Agreement by the stockholders of the Company, no such
amendment, modification or supplement shall reduce or change the Merger
Consideration or change the timing of the payment of such Merger Consideration.
Section 8.2 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time.
Section 8.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
L-3 Communications Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
with an additional copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
and
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(b) if to the Company, to:
Aydin Corporation
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Steel Partners
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇; and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Section 8.4 Certain Definitions. For purposes of this
Agreement:
(a) An "affiliate" of any Person means another Person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first Person;
(b) a "Company MAE" means any fact, circumstance,
condition or effect which is (i) materially adverse to the business, operations,
assets, condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries, taken as a whole, other than any change,
circumstance or effect relating to the economy or securities markets in general
or the industries in which the Company operates and not specifically relating to
the Company, or (ii) materially adverse to the ability of the Company to perform
any of its material obligations under this Agreement. A "Company MAE" will be
deemed to exist if net cash of the Company and its Subsidiaries is less than $10
million (without giving effect to any transaction-related fees and expenses of
the Financial Advisor, financial printers and outside counsel not exceeding
$1.35 million in the aggregate) as of the close of business on the date of the
expiration of the Offer. Notwithstanding the foregoing, no "Company MAE" will be
deemed to exist solely by reason of the
-36-
liabilities referred to in Schedule 3.6 or Schedule 3.7 (excluding in each case
any references to Schedule 3.9 contained therein).
(c) "Knowledge" of any Person which is not an
individual means the knowledge of any of such Person's executive officers and
directors after reasonable inquiry.
(d) "Person" means an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(e) a "Subsidiary" of any Person means another
Person, an amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no such voting
interests, 50% or more of the equity interests of which) is owned directly or
indirectly by such first Person.
(f) "Tender Agreement" shall mean that certain
agreement entered into by Parent, Purchaser and Steel Partners II, L.P., Sandera
Partners, L.P., and Newcastle Partners, L.P. (collectively, the "Shareholders")
regarding, among other things, the voting of Shares held by the Shareholders.
Section 8.5 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. Whenever the words "include", "includes" or
"including" are used in this Agreement they shall be deemed to be followed by
the words "without limitation". The phrase "made available" in this Agreement
shall mean that the information referred to has been made available if requested
by the party to whom such information is to be made available.
Section 8.6 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties, it being
understood that all parties need not sign the same counterpart.
Section 8.7 Entire Agreement; Third Party Beneficiaries. This
Agreement and the Parent Confidentiality Agreement (including the documents and
the instruments referred to herein and therein): (a) constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof, and (b)
except as provided in Sections 4.7 and 5.9, are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 8.8 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and
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restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
Section 8.9 Governing Law. This Agreement shall be governed
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section 8.10 Jurisdiction. Any legal action or proceeding with
respect to this Agreement or any matters arising out of or in connection with
this Agreement or otherwise, and any action for enforcement of any judgement in
respect thereof shall be brought exclusively in the State of New York or of the
United States of America for the Southern District of New York and, by execution
and delivery of this Agreement, the Company, Parent and the Purchaser each
hereby accepts for itself and in respect of its property, generally and
unconditionally, the exclusive jurisdiction of the aforesaid courts and
appellate courts thereof. The Company, Parent and the Purchaser irrevocably
consent to service of process out of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, or by recognized international express carrier
or delivery service, to the Company, Parent or the Purchaser at their respective
addresses referred to in Section 8.3 hereof. The Company hereby designates
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP as its representative agent for
the service of process, and service upon the Company shall be deemed to be
effective upon service of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & Wolosky LLP.
Subsequent to the Effective Time, the Company may designate another corporate
agent or law firm reasonably acceptable to Parent and located in New York, New
York, as successor agent. The Company, Parent and the Purchaser each hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Agreement or otherwise brought in the courts referred to
above and hereby further irrevocably waives and agrees, to the extent permitted
by applicable law, not to plead or claim in any such court that any such action
or proceeding brought in any such court has been brought in an inconvenient
forum. Nothing herein shall affect the right of any party hereto to serve
process in any other manner permitted by law.
Section 8.11 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Purchaser may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to Parent or to any direct or indirect wholly owned Subsidiary of
Parent. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
Section 8.12 Guarantee. Parent guarantees performance by the
Purchaser of the obligations of Purchaser hereunder.
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IN WITNESS WHEREOF, Parent, the Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
AYDIN CORPORATION
By:/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Chairman
L-3 COMMUNICATIONS CORPORATION
By:/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President &
General Counsel
ANGEL ACQUISITION CORPORATION
By:/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President & Secretary
-39-
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of the Offer, and in
addition to (and not in limitation of) the Purchaser's rights to extend and
amend the Offer at any time in its sole discretion (subject to the provisions of
the Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer if (i) the Minimum Condition has not been satisfied, (ii)
any applicable waiting period under the HSR Act has not expired or terminated
prior to the expiration of the Offer, or (iii) at any time on or after March 1,
1999 and before the time of acceptance of Shares for payment pursuant to the
Offer, any of the following events shall occur:
(a) there shall have been any action or proceeding
taken or instituted and pending, or any statute, rule, regulation, judgment,
order or injunction promulgated, entered, enforced, enacted, issued or deemed
applicable to the Offer or the Merger, or any other action taken, proposed or
threatened, by any domestic or foreign federal or state governmental regulatory
or administrative agency or authority or court or legislative body or commission
which does or could reasonably be expected to (l) prohibit or impose any
material limitations on, Parent's or the Purchaser's ownership or operation of
all or a material portion of the Company's or its Subsidiaries' businesses or
assets compelling Parent, Purchaser or any of their affiliates to dispose of or
hold separate all or any material portion of the business or assets of the
Company or any of its Subsidiaries or Parent, or any of its affiliates, as a
result of the transactions contemplated by the Offer or the Merger Agreement,
(2) prohibit or make illegal the acceptance for payment, payment for or purchase
of Shares or the consummation of the Offer or the Merger, (3) result in a
material delay in or restrict the ability of the Purchaser, or render the
Purchaser unable, to accept for payment, pay for or purchase some or all of the
Shares, or (4) impose material limitations on the ability of the Purchaser or
Parent effectively to acquire or exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's stockholders, provided
that Parent shall have used all reasonable efforts to cause any such judgment,
order or injunction to be vacated or lifted; provided further that the condition
specified in this paragraph (a) shall not be deemed to exist by reason of any
court proceeding pending on the date hereof and known to the Purchaser or
Parent, unless in the reasonable judgement of the Purchaser there is any
material adverse development in any such proceeding after the date hereof, or
before the date hereof if not known to the Purchaser or Parent on the date
hereof, which would result in any of the consequences referred to in clauses (1)
through (4) above;
(b) the representations and warranties of the Company
set forth in the Agreement shall not be true and correct in any respect as of
the date of consummation of the Offer
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as though made on or as of such date or the Company shall have breached or
failed in any material respect to perform or comply with any obligation,
agreement or covenant required by the Agreement to be performed or complied with
by it except, in each case, those representations and warranties that address
matters only as of a particular date which are true and correct as of such date;
(c) the Agreement shall have been terminated in
accordance with its terms;
(d) (i) the Company Board shall have withdrawn, or
modified or changed in a manner adverse to Parent or the Purchaser (including by
amendment of the Schedule 14D-9) its recommendation of the Offer, the Agreement,
or the Merger, or recommended another proposal or offer, or shall have resolved
to do any of the foregoing or (ii) any such corporation, partnership, person or
other entity or group shall have entered into a definitive agreement or an
agreement in principle with the Company with respect to a tender offer or
exchange offer for any Shares or a merger, consolidation or other business
combination with or involving the Company or any of its Subsidiaries;
(e) there shall have occurred any fact that had or
could reasonably be expected to result in a Company MAE;
(f) there shall have occurred (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the counter market in the United
States, (ii) a decline of at least 25% in either the Dow ▇▇▇▇▇ Average of
Industrial Stocks or the Standard & Poor's 500 index from the date hereof, (iii)
any material adverse change or any existing or threatened condition, event or
development involving a prospective material adverse change in United States or
other material international currency exchange rates or a suspension of, or
limitation on, the markets therefor, (iv) a declaration of a banking moratorium
or any suspension of payments in respect of banks in the United States, (v) any
limitation (whether or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic or foreign, on, or
any other event that, in the reasonable judgment of the Purchaser, could
reasonably be expected to materially adversely affect the extension of credit by
banks or other lending institutions, (vi) a commencement of a war or armed
hostilities or other national or international calamity directly or indirectly
involving the United States (except for any such event involving Iraq or Bosnia)
or materially adversely affecting (or materially delaying) the consummation of
the Offer or (vii) in the case of any of the foregoing existing at the time of
commencement of the Offer, a material acceleration or worsening thereof; or
(g) any applicable waiting periods under any material
foreign statutes or regulations shall not have expired or been terminated, or
any material approval, permit, authorization or consent of any domestic or
foreign governmental, administrative, or regulatory agency (federal, state,
local, provincial or otherwise) shall not have been obtained on terms
satisfactory to the Parent in its reasonable discretion;
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which in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by Purchaser or any of its affiliates other than a breach of
the Merger Agreement) giving rise to any such condition, makes it inadvisable to
proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of the
Purchaser and Parent and may be waived by Parent or the Purchaser, in whole or
in part at any time and from time to time in the sole discretion of Parent or
the Purchaser. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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List of Schedules
Schedule 3.2 - Capitalization
Schedule 3.4 - Required Consents and Approvals
Schedule 3.5 - SEC Reports and Financial Statements
Schedule 3.6 - Liabilities
Schedule 3.7 - Absence of Changes
Schedule 3.8 - Employee Benefit Plans
Schedule 3.9 - Litigation
Schedule 3.10 - Defaults and Non-Compliance with Laws
Schedule 3.11 - Taxes
Schedule 3.12 - Real Property
Schedule 3.13 - Environmental Matters
Schedule 5.1(c) - Interim Operations
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