1
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
AMONG
▇▇▇▇▇▇▇ COMMUNICATION SYSTEMS, INC.,
▇▇▇▇▇▇ ACQUISITION CORP.
AND
▇▇▇▇▇▇ CORPORATION
DATED: DECEMBER 6, 1995
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER .......................................... 1
Section 1.1 The Merger .................................... 1
Section 1.2 Effective Time ................................ 1
Section 1.3 Effects of the Merger ......................... 1
Section 1.4 Articles of Organization and By-Laws .......... 1
Section 1.5 Board of Directors; Officers .................. 1
Section 1.6 Conversion of Shares and Options .............. 2
Section 1.7 Closing ....................................... 2
Section 1.8 Escrow Fund ................................... 3
ARTICLE II DISSENTING SHARES; SURRENDER OF SHARES
AND PAYMENT THEREFOR ............................... 3
Section 2.1 Dissenting Shares ............................. 3
Section 2.2 Surrender and Payment ......................... 3
Section 2.3 Shareholders Meeting; Preparation of Proxy
Statement ..................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES ..................... 6
Section 3.1 Representations and Warranties of ▇▇▇▇▇▇ ...... 6
(a) Corporate Standing and Authority; Binding Agreement . 6
(b) Capitalization ...................................... 6
(c) Directors, Officers, Key Employees and Other
Employees ........................................... 7
(d) Absence of Conflicting Agreements or Required
Consents ............................................ 7
(e) Financial Statements ................................ 7
(f) Undisclosed Liabilities ............................. 8
(g) Taxes ............................................... 8
(h) Inventories ......................................... 10
(i) Non-Infringement of Patents, Trademarks and Other
Intellectual Property ............................... 10
(j) Operations and Use of Properties .................... 11
(k) Licenses ............................................ 11
(l) Insurance ........................................... 11
(m) Environmental Matters ............................... 11
(n) Employees and Labor Laws ............................ 12
(o) Product Labeling, Product Liability and Product
Warranty ............................................ 13
(p) Validity and Existence of Agreements ................ 13
(q) Employee Benefit Plans .............................. 14
(r) Controlled Group Status ............................. 18
(s) No Multiemployer Plans .............................. 18
(t) Debts and Capitalized Leases ........................ 18
(u) Litigation .......................................... 18
(v) Continuation of Business ............................ 18
(w) Management Personnel ................................ 19
(x) Absence of Changes .................................. 19
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(y) Delivery of Exhibits ............................... 19
(z) No Side Agreements ................................. 19
(aa) Suppliers and Tooling .............................. 19
(ab) Title to and Location of Assets .................... 20
(ac) Machinery and Equipment ............................ 20
(ad) Product Design and Drawings; Absence of Defects .... 20
(ae) Government Assistance .............................. 20
(af) Arrangements with Professionals .................... 20
(ag) No Loss Contracts .................................. 21
(ah) Customer Relations ................................. 21
(ai) Delivery Schedules ................................. 21
(aj) Financial Records .................................. 21
(ak) Guaranties ......................................... 21
(al) Dividends .......................................... 21
(am) No Power of Attorney ............................... 22
(an) SEC Reports ........................................ 22
(ao) Proxy Statement .................................... 22
(ap) Management Shares .................................. 22
(aq) Status of Flow Vision .............................. 22
(ar) Truth of Representations ........................... 22
Section 3.2 Representations and Warranties
of ▇▇▇▇▇▇▇ and NEWCO ........................... 23
(a) Corporate Standing and Authority ................... 23
(b) Litigation ......................................... 23
(c) Proxy Statement .................................... 23
(d) Truth of Representations ........................... 24
ARTICLE IV COVENANTS .......................................... 24
Section 4.1 Conduct of Business of ▇▇▇▇▇▇ ................. 24
Section 4.2 Access to Information ......................... 25
Section 4.3 Best Efforts .................................. 26
Section 4.4 Consents ...................................... 26
Section 4.5 Public Announcements .......................... 27
Section 4.6 Certain Payments .............................. 27
Section 4.7 Funding of NEWCO .............................. 27
Section 4.8 Insurance ..................................... 27
ARTICLE V CONDITIONS TO CONSUMMATION OF THE MERGER ............. 27
Section 5.1 Conditions to ▇▇▇▇▇▇'▇ Obligation to Close .... 27
(a) Representations and Warranties ..................... 27
(b) No Litigation ...................................... 28
(c) Merger Consideration ............................... 28
(d) Approval of ▇▇▇▇▇▇'▇ Stockholders .................. 28
(e) Receipt of Consents ................................ 28
(f) Opinion of ▇▇▇▇▇▇▇ and NEWCO's Counsel ............. 28
Section 5.2 Conditions to ▇▇▇▇▇▇▇'▇ and NEWCO's
Obligation to Close ........................... 28
(a) Representations, Warranties and Covenants .......... 28
(b) No Litigation ...................................... 28
(c) Approval of ▇▇▇▇▇▇'▇ Stockholders .................. 29
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(d) Receipt of Consents ................................ 29
(e) Opinion of ▇▇▇▇▇▇'▇ Counsel ........................ 29
(f) Resignation Letters ................................ 29
(g) Continuation of Insurance .......................... 29
(h) Environmental Study ................................ 29
(i) Stock Options ...................................... 29
Section 5.3 Other Conditions .............................. 29
Section 5.4 No Solicitation ............................... 29
ARTICLE VI TERMINATION; AMENDMENTS; WAIVER .................... 31
Section 6.1 Termination ................................... 31
Section 6.2 Effect of Termination ......................... 32
Section 6.3 Amendment ..................................... 33
Section 6.4 Extension; Waiver ............................. 33
ARTICLE VII MISCELLANEOUS ...................................... 33
Section 7.1 Survival of Representations and Warranties .... 33
Section 7.2 Brokerage Fees; Commissions and Expenses ...... 33
Section 7.3 Entire Agreement; Assignment .................. 33
Section 7.4 Validity ...................................... 34
Section 7.5 Notices ....................................... 34
Section 7.6 Governing Law ................................. 35
Section 7.7 Descriptive Headings .......................... 35
Section 7.8 Counterparts .................................. 35
Section 7.9 Expenses ...................................... 35
Section 7.10 Specific Performance .......................... 35
Section 7.11 Certain Definitions ........................... 35
Section 7.12 Performance by NEWCO .......................... 36
Section 7.13 Parties in Interest ........................... 36
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
December 6, 1995, is among ▇▇▇▇▇▇ CORPORATION, a Massachusetts corporation
("▇▇▇▇▇▇"), ▇▇▇▇▇▇ Acquisition Corp., a Massachusetts corporation and a
wholly-owned subsidiary of ▇▇▇▇▇▇▇ Communication Systems, Inc., ("NEWCO"), and
▇▇▇▇▇▇▇ COMMUNICATION SYSTEMS, INC., a Delaware corporation ("▇▇▇▇▇▇▇").
The respective Boards of Directors of ▇▇▇▇▇▇▇, NEWCO and ▇▇▇▇▇▇ have
duly approved the acquisition of ▇▇▇▇▇▇ by ▇▇▇▇▇▇▇ by means of a merger of
NEWCO with and into ▇▇▇▇▇▇ pursuant to the terms of this Agreement. It is
therefore agreed as follows:
ARTICLE 1
THE MERGER
Section 1.1 THE MERGER. Upon the terms and subject to the
conditions hereof, and in accordance with the relevant provisions of the
Massachusetts Business Corporation Law (the "Massachusetts Act") including,
without limitation, any required vote of shareholders of ▇▇▇▇▇▇ as described in
SECTION 2.3 of this Agreement, NEWCO shall be merged with and into ▇▇▇▇▇▇ (the
"Merger") as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article V hereof. Following the
Merger, ▇▇▇▇▇▇ shall continue as the surviving corporation (the "Surviving
Corporation") under the laws of the Commonwealth of Massachusetts and the
separate corporate existence of NEWCO shall cease.
Section 1.2 EFFECTIVE TIME. The Merger shall be consummated by
filing the Articles of Merger with the Massachusetts Secretary of State in a
form mutually agreeable to the parties hereto (the "Articles of Merger") (the
time that such filing is accomplished is referred to herein as the "Effective
Time").
Section 1.3 EFFECTS OF THE MERGER. The Merger shall have the
effects set forth in Section 80 of the Massachusetts Act.
Section 1.4 ARTICLES OF ORGANIZATION AND BY-LAWS. The Articles of
Organization and By-Laws of ▇▇▇▇▇▇, both as in effect at the Effective Time,
shall be the Articles of Organization and By-Laws of the Surviving Corporation.
Section 1.5 BOARD OF DIRECTORS; OFFICERS. As of the Effective
Time, the directors of NEWCO in office immediately prior to the Effective Time
shall be the directors of the Surviving Corporation until their respective
successors are duly
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elected and qualified. The officers of NEWCO immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until their
successors are duly elected and qualified.
Section 1.6 CONVERSION OF SHARES AND OPTIONS.
(a) Each share of common stock, $.10 par value per share
("Shares" or "▇▇▇▇▇▇ Common Stock"), of ▇▇▇▇▇▇ issued and outstanding
immediately prior to the Effective Time (other than Shares held by ▇▇▇▇▇▇ as
treasury stock, which shall be cancelled) shall, by virtue of the Merger and
without any action on the part of any holder thereof, be converted into the
right to receive a cash payment in the amount of four dollars and fifty-four
cents ($4.54) (the "Merger Consideration"). The Merger Consideration shall be
payable upon surrender of the certificates formerly representing Shares in
accordance with SECTION 2.2.
(b) Each Share held in the treasury of ▇▇▇▇▇▇ immediately
prior to the Effective Time shall, at the Effective Time, by virtue of the
Merger and without any action on the part of ▇▇▇▇▇▇, be cancelled and retired
and cease to exist and no payment shall be made with respect thereto.
(c) Each share of common stock of NEWCO issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of ▇▇▇▇▇▇▇, be converted into and become one
fully paid and nonassessable share of common stock of the Surviving
Corporation.
(d) ▇▇▇▇▇▇ shall make arrangements with each holder of an
option to purchase shares of ▇▇▇▇▇▇ Common Stock outstanding immediately prior
to the Effective Time ("Stock Options") to exercise such options and purchase
shares of Common Stock. Such option exercises may be accomplished by payment
of the exercise price in Common Stock, including stock acquired upon exercise
of such option, valued at the Merger Consideration, with such exercise being
contingent upon the conditions to the consummation of the Merger set forth in
Article V hereof being satisfied or waived. To the extent that a shareholder
vote is not required, all stock option plans of ▇▇▇▇▇▇ shall terminate as of
the Effective Time, and ▇▇▇▇▇▇ shall ensure that no holder of an option to
purchase ▇▇▇▇▇▇ Common Stock shall have any rights under outstanding options or
under the relevant stock option plans except to receive the cash payment as a
stockholder entitled to payment under subsection (a) above.
Section 1.7 CLOSING. Upon the terms and subject to the conditions
hereof, as soon as practicable after the satisfaction of all conditions
described in Article V, ▇▇▇▇▇▇ and NEWCO shall hold a closing (the "Closing")
at the offices of ▇▇▇▇▇▇ & Dodge in Boston, Massachusetts (or such other place
as
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the parties may agree), for the purpose of implementing all
transactions described in this Agreement. At the Closing, the parties shall
arrange for the filing of the Articles of Merger with the Massachusetts
Secretary of State and shall take such other and further actions as may be
required by law to make the Merger effective. The parties presently
contemplate that the Closing will be held immediately following the Special
Meeting described in SECTION 2.3.
Section 1.8 ESCROW FUND. The parties acknowledge that ▇▇▇▇▇▇▇ has
deposited $1,000,000 (the "Escrow Fund") in cash with M&T Securities, Inc. (the
"Escrow Agent") pursuant to an Escrow Agreement among ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and the
Escrow Agent. The Escrow Fund will be disbursed by the Escrow Agent as
provided for in the Escrow Agreement.
ARTICLE II
DISSENTING SHARES; SURRENDER OF SHARES
AND PAYMENT THEREFORE
Section 2.1 DISSENTING SHARES. Section 85 of the Massachusetts Act
provides dissenter's rights in connection with the Merger to the shareholders
of ▇▇▇▇▇▇.
Section 2.2 SURRENDER AND PAYMENT.
(a) Prior to the Closing, ▇▇▇▇▇▇ shall appoint an agent
(the "Paying Agent") for the purpose of paying the Merger Consideration in
exchange for certificates representing shares or options to purchase shares of
▇▇▇▇▇▇ Common Stock ("Certificates"). As soon as practicable after the
Effective Time, the Paying Agent shall send a notice and transmittal form
(which shall specify that delivery shall be effected, and risk of loss and
title to Certificate(s) shall pass, only upon delivery of such Certificate(s)
to the Paying Agent and shall be in a form and have such other provisions as
▇▇▇▇▇▇ may reasonably specify) to each Holder of a Certificate(s) theretofore
evidencing shares of ▇▇▇▇▇▇ Common Stock, outstanding immediately prior to the
Effective Time, advising each such holder of the effectiveness of the Merger
and the procedure for surrendering to the Paying Agent such Certificates for
payment of the Merger Consideration.
(b) The Surviving Corporation shall transmit by wire or other
acceptable means to the Paying Agent prior to the Effective Time the funds
necessary for all exchanges in accordance with this Agreement. The Paying
Agent shall agree to deliver such funds (in the form of checks of the Paying
Agent) in accordance with this SECTION 2.2 and such additional terms as may be
agreed upon by the Paying Agent and ▇▇▇▇▇▇. Any portion of such funds which
has not been paid pursuant to this SECTION 2.2 by six months after the
Effective Time shall promptly be paid to the Surviving Corporation, and
thereafter any stockholders of
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▇▇▇▇▇▇ who have not theretofore complied with this SECTION 2.2 shall
look only to the Surviving Corporation for payment of the amount to which they
are entitled in the Merger.
(c) Each holder of a Certificate(s) theretofore representing
shares of ▇▇▇▇▇▇ Common Stock which are converted into the right to receive the
Merger Consideration, upon surrender to the Paying Agent of such Certificate(s)
for cancellation, together with a duly completed transmittal form and such
other documents as may be reasonably requested by the Paying Agent, will be
entitled promptly to receive a check representing cash in the amount of the
Merger Consideration times the number of shares of ▇▇▇▇▇▇ Common Stock
represented by such Certificate(s) less any amount required to be withheld
under applicable Federal income tax regulations ("Back Withholding").
(d) If payment of the Merger Consideration (or any portion
thereof) is to be made to a person other than the person in whose name the
Certificate(s) surrendered in exchange therefor is registered, it shall be a
condition of such payment that the Certificate(s) so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that
the person requesting such payment shall pay to the Paying Agent any transfer
or other taxes required by reason of such payment, or shall establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Paying Agent nor any
party hereto shall be liable to any person claiming the right to receive the
Merger Consideration for any cash delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law. If any
Certificate(s) shall not have been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which any payment
pursuant to this Article II would otherwise escheat to or become the property
of any Federal, state or local government agency or court, administrative
agency or commission or other governmental authority or agency, domestic or
foreign, the payment in respect of such Certificate(s) shall, to the extent
permitted by applicable law, become the property of the Surviving Corporation,
free and clear of all claims or interest of any person previously entitled
thereto.
(e) In the event any Certificate(s) theretofore representing
shares of ▇▇▇▇▇▇ Common Stock to be exchanged for the Merger Consideration has
been lost, stolen or destroyed, the Paying Agent shall pay to the person
claiming that such Certificate(s) has been lost, stolen or destroyed the cash
into which the shares theretofore represented by such Certificate(s) have been
converted as provided under the terms of this Agreement (less any required
Backup Withholding), upon receipt of evidence of ownership of such
Certificate(s) and appropriate indemnification in each case satisfactory to the
Paying Agent.
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(f) Until surrendered as contemplated by this SECTION 2.2,
each Certificate shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the amount of cash,
without interest, into which the shares of ▇▇▇▇▇▇ Common Stock theretofore
represented by such Certificate shall have been converted pursuant to
SECTION 1.6. No interest shall accrue or be paid on any portion of the Merger
Consideration.
Section 2.3 SHAREHOLDERS MEETING; PREPARATION OF PROXY STATEMENT.
(a) ▇▇▇▇▇▇ will duly call, give notice of, convene and hold
a special meeting of the holders of ▇▇▇▇▇▇ Common Stock (the "Special Meeting")
for the purpose of approving this Agreement as soon as practicable after the
date hereof. Subject to the requirements of applicable fiduciary duties,
▇▇▇▇▇▇ will, through its Board of Directors, recommend to its stockholders
approval of this Agreement.
(b) ▇▇▇▇▇▇ will prepare and file a preliminary Proxy
Statement with the SEC and will use its best efforts to respond to any
comments of the SEC or its staff and to cause the Proxy Statement to be mailed
to ▇▇▇▇▇▇'▇ stockholders as promptly as practicable after responding to all
such comments to the satisfaction of the staff. ▇▇▇▇▇▇ will notify ▇▇▇▇▇▇▇
promptly of the receipt of any comments from the SEC or its staff and of any
requests by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and will supply ▇▇▇▇▇▇▇ with copies of
all correspondence between ▇▇▇▇▇▇ or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Special Meeting there
shall occur any event that should be set forth in an amendment or supplement
to the Proxy Statement, ▇▇▇▇▇▇ will promptly prepare and mail to its
stockholders such an amendment or supplement. ▇▇▇▇▇▇ will not mail any Proxy
Statement, or any amendment or supplement thereto, to which ▇▇▇▇▇▇▇ reasonably
objects.
(c) ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ agree that ▇▇▇▇▇▇ shall engage Beacon
Hill Partners as the proxy solicitor for the Special Meeting.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇. ▇▇▇▇▇▇
represents and warrants to ▇▇▇▇▇▇▇ and NEWCO that:
(a) CORPORATE STANDING AND AUTHORITY; BINDING AGREEMENT.
▇▇▇▇▇▇ is a corporation duly organized, validly existing and in good standing
under the laws of the Commonwealth of Massachusetts. ▇▇▇▇▇▇ has full power to
own all of its properties and assets that are owned by it and to conduct its
business as it is now being conducted, and neither its ownership or leasing of
property nor the conduct of its business requires it to be qualified as a
foreign entity in any jurisdiction in which it is not qualified where the
failure to qualify would have a Material Adverse Effect (as defined in
SECTION 7.11(a) hereof) on ▇▇▇▇▇▇'▇ business. The execution of this Agreement
and consummation of the transactions contemplated herein will not violate any
provision of ▇▇▇▇▇▇'▇ Articles of Organization or By-laws, and ▇▇▇▇▇▇ has
obtained all necessary authorization and approval from its Board of Directors
for the execution of this Agreement and the consummation of the transactions
contemplated hereby. This Agreement is a legal, valid and binding agreement
of ▇▇▇▇▇▇, enforceable against it in accordance with its terms, subject to the
laws of bankruptcy, insolvency and moratorium and other laws or equitable
principles generally affecting creditors' rights and to general equitable
principles. Complete and correct copies of the Articles of Organization and
By-Laws of ▇▇▇▇▇▇ have been made available to ▇▇▇▇▇▇▇.
(b) CAPITALIZATION. The entire authorized capital stock of
▇▇▇▇▇▇ consists of 8,000,000 shares of ▇▇▇▇▇▇ Common Stock and 2,000,000 Shares
of Preferred Stock. As of the date of this Agreement, 2,733,794 shares of
▇▇▇▇▇▇ Common Stock are issued and outstanding and 393,087 shares of ▇▇▇▇▇▇
Common Stock are held by ▇▇▇▇▇▇ in its treasury. As of the date of this
Agreement there are no shares of ▇▇▇▇▇▇ Preferred Stock outstanding. Of the
authorized shares of ▇▇▇▇▇▇ Common Stock, 695,500 are reserved for issuance
upon the exercise of certain Stock Options (as defined in SECTION 1.6(d)). All
of the issued and outstanding shares of ▇▇▇▇▇▇ Common Stock and the shares of
▇▇▇▇▇▇ Common Stock which may be sold pursuant to the exercise of the Stock
Options have been duly authorized and are (or, in the case of shares which may
be sold pursuant to the exercise of StockOptions, will be when so sold)
validly issued, fully paid, and nonassessable. Except for the Stock Options
there are no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights or other agreements or
commitments to which ▇▇▇▇▇▇ is a party or by which it is bound providing for
the issuance, disposition, redemption, repurchase or acquisition of any of its
capital stock. EXHIBIT 3.1(b) sets forth with respect to each Stock Option, (i)
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the name of the owner of such option, (ii) the date of the grant, (iii)
the expiration date and (iv) the exercise price. ▇▇▇▇▇▇ has no equity interest
in and has not made advances to any corporation, association, partnership,
joint venture or other entity other than the subsidiaries described in
EXHIBIT 3.1(b).
EXHIBIT 3.1(b) sets forth the name, the number of
shares of authorized capital stock and the number of issued and outstanding
shares of capital stock or other indicia of ownership of each direct or
indirect Subsidiary of ▇▇▇▇▇▇, as well as the current status of such
Subsidiary. Except as set forth in such Exhibit, all of the outstanding shares
of capital stock of each of the Subsidiaries are owned, directly or
indirectly, by ▇▇▇▇▇▇, beneficially and of record. All such shares of capital
stock of the Subsidiaries are owned free and clear of all liens, charges,
encumbrances, rights of others, mortgages, pledges or security interests, and
are not subject to any agreements or understandings among any persons with
respect to the voting or transfer of such shares. There are no outstanding
subscriptions, options, convertible securities, warrants or claims of any kind
issued or granted by or binding on ▇▇▇▇▇▇ to purchase or otherwise acquire any
security of or equity interest in any of such Subsidiaries. All of the
outstanding shares of capital stock of each such Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable, and none
has been issued in violation of the preemptive rights of any stockholder.
(c) DIRECTORS, OFFICERS, KEY EMPLOYEES AND OTHER EMPLOYEES.
Attached hereto as EXHIBIT 3.1(c) is a list of all employees of ▇▇▇▇▇▇ showing
their names, positions and current annual salaries or rate of compensation
(including commitments or understandings with respect to bonus, overtime
entitlement and incentive compensation). The directors, officers and the
employees reporting directly to them of ▇▇▇▇▇▇ are separately identified in
EXHIBIT 3.1(c).
(d) ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
The execution, delivery and performance of this Agreement by ▇▇▇▇▇▇ does not
and will not: (i) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to ▇▇▇▇▇▇ or by which it is bound or affected,
(ii) result in any breach of or constitute a default under any note, bond,
mortgage, indenture, lease, license, franchise or other instrument or
obligation to which ▇▇▇▇▇▇ is a party, or (iii) except as set forth in
EXHIBIT 3.1(d), require ▇▇▇▇▇▇ to obtain any novation, consent, approval,
authorization or permit of, or filing with or notification to, any governmental
or regulatory authority, domestic or foreign, or any person or entity not a
party to this Agreement.
(e) FINANCIAL STATEMENTS. ▇▇▇▇▇▇ has furnished or will furnish
Chelton with: (i) independently audited
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financial statements as at May 31, 1993, 1994 and 1995 and for the
fiscal years then ended; (ii) financial statements as at August 31, 1995 and
for the period then ended and (iii) an interim balance sheet as of the end of
the month immediately preceding the Closing and statement of profit and loss
and supporting schedules of expenses for the period then ended and notes, as
appropriate (collectively, the "Financial Statements"). Except as set forth in
the notes to the Financial Statements, the Financial Statements have been or
will be, as the case may be, prepared in accordance with generally accepted
accounting principles consistently applied ("GAAP"), and fairly present or
will fairly present, as the case may be, the results of the operations of
▇▇▇▇▇▇ and ▇▇▇▇▇▇'▇ financial position for the periods indicated other than,
with respect to the interim financial statements, for non-material changes
resulting from normal year-end adjustments. There shall be no changes made in
the accounting principles used in preparing any Financial Statements for
periods subsequent to May 31, 1995, nor shall there be any changes in the
method of application of same.
(f) UNDISCLOSED LIABILITIES. ▇▇▇▇▇▇ is not liable for or
subject to any Liabilities (as hereinafter defined), except (a) Liabilities
adequately disclosed or reserved for in the most recent Financial Statements
and not heretofore paid or discharged, (b) Liabilities under any contract,
commitment or agreement specifically disclosed in EXHIBIT 3.1(p) or not
required to be disclosed thereon, none of which Liabilities under any such
contract, commitment or agreement were required under GAAP to have been
adequately and specifically disclosed or reserved for in the most recent
Financial Statements, or (c) Liabilities incurred, consistent with past
practice, in or as a result of the ordinary course of business of ▇▇▇▇▇▇, and
in accordance with this Agreement, since the date of the most recent Financial
Statements which individually do not exceed $25,000 and in the aggregate do not
exceed $175,000. As used in this Agreement, the term "Liabilities" shall
include any direct or indirect liability, indebtedness, obligation, guarantee
or endorsement (other than endorsements of notes, bills and checks presented to
banks for collection or deposit in the ordinary course of business), whether
known or unknown, accrued, absolute, contingent or otherwise.
(g) TAXES. (i) ▇▇▇▇▇▇ has delivered to ▇▇▇▇▇▇▇ copies of the
federal income tax returns of ▇▇▇▇▇▇ for each of the last three fiscal years
and all schedules and exhibits thereto. ▇▇▇▇▇▇ has duly and timely filed in
correct form all material federal, state and local information returns and tax
returns ("Returns") required to be filed by it on or prior to the date hereof
(all such Returns being accurate and complete in all material respects), and
has duly paid or made provision for the payment of all material taxes and other
governmental charges which have been incurred or are due or claimed to be due
from them by any governmental authority (including, without
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186599 -8-
13
limitation, those due in respect of ▇▇▇▇▇▇'▇ properties, income,
business, capital stock, franchises, licenses, sales and payrolls) other than
taxes or other charges (i) which are not yet delinquent or are being contested
in good faith and (ii) have not been finally determined. The liabilities and
reserves for taxes in the Financial Statements are sufficient in the aggregate
for the payment of all material unpaid federal, state and local taxes
(including any interest or penalties thereon), whether or not disputed or
accrued, for the period ended May 31, 1995 or for any year or period prior
thereto, and for which ▇▇▇▇▇▇ may be liable in its own right or as transferee
of the assets of, or successor to, any corporation, person, association,
partnership, joint venture or other entity. For purposes hereof, "Tax" or
"Taxes" shall mean all taxes, levies, assessments, charges or fees of any kind
or character, including without limitation U.S. federal, state, local and
foreign income, profits, capital gains, franchise, sales, use, service, gross
receipts, occupation, property, property transfer, lease, capital stock,
premium, excise, payroll, withholding, estimated taxes and other governmental
charges imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof, including any interest, additions
to tax and penalties thereon.
(ii) Except as disclosed in EXHIBIT 3.1(g), (a) proper and
accurate amounts have been withheld by the Company from its employees and
others for all prior periods in compliance in all material respects with the
tax withholding provisions of applicable federal, state and local laws and
regulations, and proper due diligence steps have been taken in connection with
back-up withholding, (b) Returns which are accurate and complete in all
material respects have been filed by ▇▇▇▇▇▇ for all periods for which Returns
were due with respect to income tax withholding, Social Security and
unemployment taxes and (c) the amounts shown on such Returns to be due and
payable have been paid in full, or adequate provision therefor has been
included by the ▇▇▇▇▇▇ in the most recent Financial Statements.
(iii) TAX AUDITS. Except as disclosed in EXHIBIT 3.1(g),
(a) no audit of any material Return of ▇▇▇▇▇▇ is currently in progress, nor has
▇▇▇▇▇▇ been notified that such an audit is contemplated by any taxing
authority, (b) ▇▇▇▇▇▇ has not extended any statute of limitations with respect
to the period for assessment of any federal, state or local Tax, (c) ▇▇▇▇▇▇
does not contemplate the filing of an amendment to any Return, which amendment
would have a Material Adverse Effect on ▇▇▇▇▇▇ and (d) ▇▇▇▇▇▇ does not have any
actual or potential material liability for any Tax obligation of any taxpayer
(including, without limitation, any affiliated group of corporations or other
entities which included ▇▇▇▇▇▇ during a prior period) other than ▇▇▇▇▇▇.
Except as disclosed in the Financial Statements or EXHIBIT 3.1(g), there are no
material Tax claims pending against ▇▇▇▇▇▇, to the best of ▇▇▇▇▇▇'▇ knowledge,
there are no material
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186599 -9-
14
Tax claims threatened to be asserted against ▇▇▇▇▇▇, and there are no
material issues which have been raised in prior periods or audits which by
application of similar principles are expected to result in a material Tax
claim for any other period.
(h) INVENTORIES. ▇▇▇▇▇▇'▇ inventory: (i) complies in all
material respects with all applicable federal laws and regulations and
with all applicable laws and regulations of each of the states of the United
States into which any product would be shipped directly by ▇▇▇▇▇▇; (ii) does
not contain any Hazardous Materials (as hereinafter defined) and (iii) does
not consist of any damaged or obsolete items which are material in amount.
The inventories reflected in the Financial Statements have been or will be
acquired in the ordinary course of business of ▇▇▇▇▇▇ in accordance with its
normal inventory practices and are or will be stated in accordance with GAAP
and on a basis that is consistent with the valuation of same in ▇▇▇▇▇▇'▇ May
31, 1995 balance sheet.
(i) NON-INFRINGEMENT OF PATENTS, TRADEMARKS AND OTHER
INTELLECTUAL PROPERTY. EXHIBIT 3.1(i) contains a complete list of all of the
patents, copyrights, trademarks, trade names, and service marks and names of
▇▇▇▇▇▇ (the "Intellectual Property"). To the knowledge of ▇▇▇▇▇▇, the
Intellectual Property does not infringe on or violate the rights of any person
or entity. ▇▇▇▇▇▇ is not aware of any claim of infringement or violation of
the rights of others with respect to the Intellectual Property; nor is ▇▇▇▇▇▇
aware of any use or exploitation by another person or entity which would
conflict with ▇▇▇▇▇▇'▇ claim to ownership of and right to use any of the
Intellectual Property or which is similar to such Intellectual Property so as
to create a reasonable possibility of confusion as to the source or ownership
of any Intellectual Property by any member of the public, other than those
licenses or alleged infringements disclosed on EXHIBIT 3.1(i). Except as
disclosed in EXHIBIT 3.1(i), ▇▇▇▇▇▇ has not licensed or permitted any other
person or entity to use or exploit any Intellectual Property currently or at
any time in the future, nor has ▇▇▇▇▇▇ known of the existence of any such
exploitation. Except as disclosed in EXHIBIT 3.1(i), ▇▇▇▇▇▇ has not, within
the prior ten years, been involved in any controversy with another person or
entity involving the use or exploitation of any Intellectual Property. EXHIBIT
3.1(i) contains a listing of all registrations in any governmental office or
registry with respect to any Intellectual Property. ▇▇▇▇▇▇'▇ right to use or
exploit any Intellectual Property is not dependent upon any license, permit,
grant or agreement except as set forth in any registration listed in EXHIBIT
3.1(i). ▇▇▇▇▇▇ is not obligated to make any royalty or other payments with
respect to any Intellectual Property. ▇▇▇▇▇▇ owns all Intellectual Property
necessary for the conduct of its business as it is conducted on the date
hereof.
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186599 -10-
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(j) OPERATIONS AND USE OF PROPERTIES. To ▇▇▇▇▇▇'▇ knowledge,
▇▇▇▇▇▇'▇ operations, business and properties, including leased properties, are
in conformity in all material respects with all applicable laws or orders or
other governmental or administrative laws, ordinances, regulations or orders,
including without limitation zoning, land use and building codes and motor
vehicle registration, permitting, inspection and operation. ▇▇▇▇▇▇'▇ assets
are sufficient for the conduct of ▇▇▇▇▇▇'▇ business as it currently is
conducted and as it is proposed to be conducted in accordance with ▇▇▇▇▇▇'▇
current commitments. ▇▇▇▇▇▇ does not own or lease, directly or indirectly,
any real property other than the real property listed on EXHIBIT 3.1(j). There
are no foreseeable costs payable by ▇▇▇▇▇▇ upon the scheduled expiration of any
real property lease.
(k) LICENSES. ▇▇▇▇▇▇ has all licenses, permits, approvals
and other governmental authorizations necessary to own all of its properties
and assets and to carry on its business as it is now being conducted except
such as do not materially interfere with the conduct of its business, all of
which are listed in EXHIBIT 3.1(k) (collectively, the "Licenses"). Each
License is valid and in full force and effect. Upon obtaining any required
consents, the continuation, validity and effectiveness of each License will in
no way be affected by the consummation of the transactions contemplated by this
Agreement. ▇▇▇▇▇▇ has not breached any provision of, is not in default under
the terms of, and has not engaged in any activity that would cause revocation
or suspension of, any License and no action or proceeding looking to or
contemplating the revocation or suspension of any License is pending or, to the
knowledge of ▇▇▇▇▇▇, threatened.
(l) INSURANCE. ▇▇▇▇▇▇ is covered by valid and currently
effective insurance policies as set forth in EXHIBIT 3.1(l). Any insurance
for which the current policy period by its terms extends beyond the Closing
shall be kept in place by ▇▇▇▇▇▇ and not terminated for any reason.
(m) ENVIRONMENTAL MATTERS. ▇▇▇▇▇▇ has been and currently is
in full compliance with all Environmental Laws as hereinafter defined (i) at
all the property leased by ▇▇▇▇▇▇ during the past eight years ("▇▇▇▇▇▇'▇
Facilities") and (ii) in connection with all of ▇▇▇▇▇▇'▇ operations conducted
at ▇▇▇▇▇▇'▇ Facilities. Except as set forth in EXHIBIT 3.1(m), there is not
now, and has not been since ▇▇▇▇▇▇ commenced operations, any presence,
disposal, release or threatened release of any Hazardous Materials at ▇▇▇▇▇▇'▇
Facilities, and to ▇▇▇▇▇▇'▇ knowledge, no such event or condition occurred at
▇▇▇▇▇▇'▇ Facilities prior to ▇▇▇▇▇▇'▇ occupancy of same. To the knowledge of
▇▇▇▇▇▇, no asbestos, urea-formaldehyde foam or other forms of urea formaldehyde
have been installed on or are included in the furnishing or construction of any
building or other improvement at ▇▇▇▇▇▇'▇ Facilities. To the knowledge of
▇▇▇▇▇▇, ▇▇▇▇▇▇ has
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186599 -11-
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made no disposal of any Hazardous Materials at any site currently
listed pursuant to 42 U.S.C sec. 9605(a)(8)(B) (or pursuant to any similar
state or local law identifying hazardous sites) or any site currently being
investigated for such listing pursuant to any such federal, state or local
law. To the knowledge of ▇▇▇▇▇▇, there are no pending or threatened claims
with respect to Hazardous Materials relating to ▇▇▇▇▇▇'▇ Facilities or
relating to any operations of ▇▇▇▇▇▇ at ▇▇▇▇▇▇'▇ Facilities, and ▇▇▇▇▇▇ does
not know of any basis for a claim being made against ▇▇▇▇▇▇ with respect to
any Hazardous Materials or under any Environmental Laws. ▇▇▇▇▇▇ has never
used nor owned any underground storage tanks.
For purposes of this Agreement, the term "Hazardous Material" shall
mean any hazardous or toxic chemical, waste, byproduct, pollutant,
contaminant, compound, product or substance, including, without limitation,
asbestos, polychlorinated biphenyls, petroleum (including crude oil or any
fraction thereof), radioactive substances and any material the manufacture,
possession, presence, use, generation, storage, transportation, treatment,
release, disposal, abatement, cleanup, removal, remediation or handling of
which is prohibited, controlled or regulated by any law, including without
limitation the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. sec. 9601, et seq.; the Hazardous
Materials Transportation Act, 49 U.S.C. sec. 1801, et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. sec. 6901, et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. sec. 1251, et seq.; the Safe Drinking Water
Act, 42 U.S.C. sec. 300f, et seq.; Toxic Substances Control Act, 15 U.S.C. sec.
2601, et seq.; Occupational Safety and Health Act, 29 U.S.C. sec. 651, et
seq.; Clean Air Act, 42 U.S.C. sec. 7401, et seq.; and comparable provisions of
applicable local county and city ordinances, or any substances so defined or
stated in any of the regulations adopted and publications promulgated pursuant
to those laws as they may have been amended from time to time on or before the
date hereof (collectively, "Environmental Laws").
(n) EMPLOYEES AND LABOR LAWS. ▇▇▇▇▇▇ has not experienced
any strikes, lockouts, grievances or other material labor disputes or demands
for recognition of a union as collective bargaining agent for all or any part
of ▇▇▇▇▇▇'▇ employees, and ▇▇▇▇▇▇ is not and has never been a party to any
collective bargaining or other labor agreement. Except as disclosed in
EXHIBIT 3.1(n), ▇▇▇▇▇▇ has no written agreements of employment and no oral
agreements or understandings with any employee as to any specific period of
employment. ▇▇▇▇▇▇ is in compliance in all material respects with all
federal, state and local governmental laws and regulations relating to the
employment of labor, including provisions relating to wages, fringe benefits,
hours, working conditions, occupational safety and health, safety of the
premises, collective bargaining, payment of social security and unemployment
taxes, civil rights
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186599 -12-
17
and discrimination in hiring, retention, promotion, pay and other
conditions of employment; and ▇▇▇▇▇▇ is not liable for arrearages on wages or
any tax or penalties for failure to comply with those laws or regulations.
There are no oral agreements or understandings with employees except as to
current salary or wage rates and no other oral agreements or understandings
which will affect ▇▇▇▇▇▇'▇ employment practices or operations. ▇▇▇▇▇▇ is in
compliance with the Immigration Reform and Control Act of 1986. Employees are
generally required to work 40 hours a week.
(o) PRODUCT LABELING, PRODUCT LIABILITY AND PRODUCT WARRANTY.
▇▇▇▇▇▇ is in compliance in all material respects with all federal and state
laws and regulations relating to product labeling, product safety and public
health and safety. ▇▇▇▇▇▇ has not received any notice of any claim that any
product now or heretofore offered for sale or sold by it or distributed by it
in connection with product sales is injurious to the health and safety of any
person or is not in conformity with its specifications or not suitable for any
purpose or application for which it is offered for sale, sold or distributed.
Attached as EXHIBIT 3.1(o) are complete and correct copies of all product
warranties with ▇▇▇▇▇▇'▇ customers and instances where ▇▇▇▇▇▇ has obligated
itself to provide repair and product support services at no cost (or discounted
cost) to its customers and such obligation is currently outstanding and will be
outstanding as of the Effective Time. There are no outstanding returns of
product from customers of ▇▇▇▇▇▇ which have not been recorded in ▇▇▇▇▇▇'▇
books or issues relating to products delivered by ▇▇▇▇▇▇ that could give rise
to product returns. Where contractually required, products sold by ▇▇▇▇▇▇ have
been released in conformance with ▇▇▇▇▇▇'▇ own certification of conformity.
(p) VALIDITY AND EXISTENCE OF AGREEMENTS. EXHIBIT 3.1(p) sets
forth all the following with respect to ▇▇▇▇▇▇ (collectively referred to as the
"Agreements"):
(1) All written agreements, contracts, arrangements,
commitments, understandings or obligations to which ▇▇▇▇▇▇ is a party or by
which it or its properties is or may be bound which involve more than $25,000
in the aggregate;
(2) All written agreements, contracts, arrangements,
commitments, understandings or obligations, limiting in any respect the freedom
of ▇▇▇▇▇▇ or any of its key employees to compete in any line of business or
with any person or to do business with any particular customers or class of
customers or to carry on business in any geographic area;
(3) All written agreements, contracts, arrangements,
commitments, understandings or obligations with respect to the payment by
▇▇▇▇▇▇ of commissions which involve more than $25,000 in the aggregate;
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Agreement and Plan of Merger Page 13
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(4) ▇▇▇▇▇▇'▇ published standard conditions of purchase
and sale;
(5) All written agreements of ▇▇▇▇▇▇ with
distributors and sales agents or representatives;
(6) All written agreements of ▇▇▇▇▇▇ with customers
relating to the return of products previously sold; and
(7) To ▇▇▇▇▇▇'▇ knowledge, all oral agreements,
contracts, arrangements, commitments, understandings or obligations to which
▇▇▇▇▇▇ is a party or by which it or its properties is or may be bound which
involve more than $25,000 in the aggregate.
▇▇▇▇▇▇ has delivered or made available to ▇▇▇▇▇▇▇ a
true and complete copy of each of the written Agreements that involve more than
$25,000, which copies accurately reflect the understanding of ▇▇▇▇▇▇ with
respect to the Agreements. ▇▇▇▇▇▇ has delivered or made available to ▇▇▇▇▇▇▇
a fair and accurate summary of each of the oral Agreements listed on EXHIBIT
3.1(p) that involve more than $25,000. Each of the Agreements listed on
EXHIBIT 3.1(p) is a valid and binding obligation of ▇▇▇▇▇▇ in accordance with
its respective terms, ▇▇▇▇▇▇ has performed and complied in all material
respects with the provisions thereof, and no party is in default or would be in
default with the lapse of time or notice under the terms of, any of the
Agreements.
(q) EMPLOYEE BENEFIT PLANS.
(1) EXHIBIT 3.1(q) lists all employee pension
benefit plans (as defined in section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) ("Pension Plan"), all employee
welfare benefit plans (as defined in sec. 3(1) of ERISA) ("Welfare Plan"), all
specified fringe benefit plans (as defined in section 6039D(d) of the Internal
Revenue Code of 1986, as amended (the "Code")), and all executive compensation,
retirement, supplemental retirement, deferred compensation, incentive, bonus,
severance, compensation associated with change in control, perquisite, health
care, death benefit, medical insurance, disability insurance, life insurance,
vacation pay, sick pay or other plans, programs, and arrangements to which
▇▇▇▇▇▇ is or has during the prior six years been a party, with respect to which
▇▇▇▇▇▇ has an obligation, or that have been or are maintained, contributed to,
or sponsored by ▇▇▇▇▇▇ for the benefit of any current or former employee,
officer, or director (such plans, programs, and arrangements to be referred to
collectively as "Employee Benefit Plans"), that relate to ▇▇▇▇▇▇ and are in
effect or in connection with which any obligation remains on the date of this
Agreement or that by their present terms will become effective after the date
of this Agreement. The Financial Statements accurately reflect all
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186599 -14-
19
commitments of ▇▇▇▇▇▇ with respect to the Employee Benefit Plans to the
extent required by GAAP, and EXHIBIT 3.1(q) sets forth a description of the
actuarial and accounting valuation of each plan as of October 31, 1995 and
August 31, 1995, respectively.
(2) ▇▇▇▇▇▇ has furnished to ▇▇▇▇▇▇▇ a complete and
accurate copy of each Employee Benefit Plan document (including all amendments)
and a complete and accurate copy of all documents relating to such Employee
Benefit Plan, including, if applicable: (A) each trust agreement, insurance or
annuity contract, investment management agreement, custodial agreement, and
other agreement relating to the funding of the Employee Benefit Plan, and all
amendments to them; (B) the most recent summary plan description and any
subsequent summary of material modifications; (C) the three most recently filed
annual return reports (Form 5500 series), including all applicable schedules;
(D) the most recent determination letter issued by the Internal Revenue
Service, if the Employee Benefit Plan is intended to be qualified under section
401(a) of the Code, the application submitted for it, any correspondence with
the Internal Revenue Service in connection with the determination letter or
application, and any pending application for a determination letter; (E) the
three most recent financial statements; and (F) the three most recent actuarial
valuation reports. Attached as EXHIBIT 3.1(q)(2) are correct and complete
copies of the following plans: (a) ▇▇▇▇▇▇ Corporation Employee Stock
Ownership Plan; (b) 401(k) Plan Adoption Agreement and ▇▇▇▇▇▇▇ ▇▇▇▇▇
Prototype Defined Contribution Plan Base Plan Document; (c) ▇▇▇▇▇▇ Corporation
Supplemental Executive Retirement Plan; (d) Executive Deferral Plan; (e)
Objective Setting and Management Incentive Compensation Program; (f) Executive
Severance Agreements with (i) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, (ii) ▇▇▇▇ ▇▇▇▇▇, (iii)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, (iv) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, (v) ▇▇▇▇ ▇. ▇▇▇▇; (vi) ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇; (vii) D. ▇▇▇▇▇ ▇▇▇▇▇▇ and (viii) ▇▇▇▇▇▇ ▇▇▇▇▇▇; (g) Retirement
Benefit to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇; (h) Employment Agreement with ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; (i)
Split Dollar Whole Life Insurance Policy for ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇; (k)
Executive Supplemental Disability Income Policy and (l) a Letter Agreement
dated November 10, 1995 among ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ regarding severance
payments.
(3) Each Employee Benefit Plan is now and always has
been operated in all material respects in accordance with its terms and the
requirements of all applicable laws, including, without limitation, ERISA, all
provisions of the Code applicable to secure intended tax consequences, and
federal securities law, and all regulations and rulings under such laws. All
persons who participate in the operation of the Employee Benefit Plans and all
Employee Benefit Plan fiduciaries have always acted in all material respects in
accordance with the provisions of all applicable law, including, without
limitation, ERISA, the Code, and federal securities law, and all regulations
and rulings under such laws. ▇▇▇▇▇▇ has performed all
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Agreement and Plan of Merger Page 15
186599 -15-
20
obligations required to be performed by it under, is not in any
material respect in default under or in violation of, and has no knowledge of
any material default or violation by any party to, any Employee Benefit Plan.
No legal action, suit, claim, or governmental proceeding or investigation is
pending or, to the knowledge of ▇▇▇▇▇▇, threatened or imminent with respect to
any Employee Benefit Plan (other than claims for benefits in the ordinary
course) and, to the knowledge of ▇▇▇▇▇▇, no fact or event exists that could
give rise to any such action, suit, claim, or governmental proceeding or
investigation.
(4) The administrator of each Employee Benefit Plan
that is an "employee benefit plan" as defined in section 3(3) of ERISA ("ERISA
Plan") has complied with all applicable reporting and disclosure requirements
under Part 1 of Title I of ERISA. Each summary plan description and summary
of material modifications with respect to each such ERISA Plan describes the
ERISA Plan accurately and comprehensively in accordance with the requirements
of ERISA and each annual report/return filed with respect to each such ERISA
Plan, including all schedules and attachments, are correct and accurate as of
the date of filing.
(5) With respect to any Pension Plan intended to
qualify under section 401(a) of the Code, each such Pension Plan is qualified
under section 401(a) of the Code and any trust through which such Pension Plan
is funded is exempt from federal income tax under section 501(a) of the Code;
a favorable determination letter has been received from the Internal Revenue
Service as to the qualified status of such Pension Plan and trust under the
Internal Revenue Code as amended by the Tax Reform Act of 1986 and subsequent
legislation. Nothing has occurred that could adversely affect the qualified
status of such Pension Plan or trust.
(6) There has been no prohibited transaction (within
the meaning of section 406 of ERISA or section 4975 of the Code) with respect
to any ERISA Plan, other than any transaction subject to a statutory or
administrative exemption. No person has acted or failed to act in connection
with any Employee Benefit Plan in a manner that would subject ▇▇▇▇▇▇ to direct
or indirect liability, by indemnity or otherwise, for a breach of any fiduciary
duty.
(7) ▇▇▇▇▇▇ has not incurred liability for any excise
tax arising under section 4971, 4972, 4980, or 4980B of the Code, and no fact
or event exists that could give rise to any such liability.
(8) ▇▇▇▇▇▇ has not incurred liability under Title IV
of ERISA (other than liability for premiums to the Pension Benefit Guaranty
Corporation ("PBGC") arising in the ordinary course), and, to its knowledge, no
fact or event exists
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21
that could give rise to such liability. No complete or partial
termination has occurred within the past five years with respect to any Pension
Plan. No reportable event (within the meaning of section 4043 of ERISA) or
event described in section 4063(a) of ERISA has occurred or is expected to
occur with respect to any Pension Plan subject to Title IV of ERISA. No
proceeding has been instituted by the PBGC to terminate any Pension Plan, nor
has any notice of intent to terminate any Pension Plan been filed with the
PBGC. All premiums due the PBGC have been paid in full on a timely basis.
(9) No Pension Plan (subject to section 302 of ERISA
or section 412 of the Code) has had an accumulated funding deficiency (within
the meaning of section 302 of ERISA or section 412 of the Code), whether or not
waived. No asset of ▇▇▇▇▇▇ is the subject of a lien arising under section
302(f) of ERISA or section 412(n) of the Code. ▇▇▇▇▇▇ has not been required
to post security under section 307 of ERISA or section 401(a)(29) of the Code,
and no fact or event exists that could give rise to such a lien or requirement
to post any such security.
(10) All contributions, insurance premiums, or payments
required to be made with respect to the Employee Benefit Plans have been made
by their due dates.
(11) As to each Pension Plan that is a defined
benefit plan (as defined in section 3(35) of ERISA) and that is subject to
section 302 of ERISA or section 412 of the Code, the most recent actuarial
valuation report accurately reflects the value of the plan assets and
liabilities on an on- going basis as of the date of such valuation based on the
funding method and actuarial assumptions specified in the report, all employee
census data furnished to the plan's actuary by ▇▇▇▇▇▇ in connection with such
valuation and prior valuations has been accurate and complete in all material
respects, and nothing has occurred since the date of such valuation that would
have a materially adverse effect on the funding condition of the Pension Plan.
(12) Except as disclosed on EXHIBIT 3.1(q), no Employee
Benefit Plan, and no other commitment or agreement, provides for the payment of
separation, severance, or similar benefits to any person solely as a result of
any transaction contemplated by this Agreement or as a result of a "change in
control", within the meaning of such term under section 280G of the Code, and
the consummation of the transaction contemplated by this Agreement will not
accelerate the time of payment or vesting of, or increase the amount of, any
compensation due to any employee. ▇▇▇▇▇▇ has no liability under the Executive
Severance Agreement among ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, which is referenced
in EXHIBIT 3.1(n).
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186599 -17-
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(13) Except as disclosed on EXHIBIT 3.1(q), ▇▇▇▇▇▇
has no liability with respect to any employee or former employee for
post-employment benefits, other than those associated with the Pension Plans,
and other than as required by section 4980B of the Code and Part 6 of Title I
of ERISA.
(14) There has been no representation made to or
communication with any employee that is not in accordance with the existing
terms and limitations of the Employee Benefit Plans. ▇▇▇▇▇▇ has made no
commitment to modify any, or create any other, Employee Benefit Plan.
(r) CONTROLLED GROUP STATUS. ▇▇▇▇▇▇ has never been a member
of either (i) a controlled group (within the meaning of section 414(b) or (c)
of the Code or (ii) an affiliated service group (within the meaning of section
414(m) or (o) of the Code).
(s) NO MULTIEMPLOYER PLANS. ▇▇▇▇▇▇ has never had any
obligation to contribute to any multiemployer plan within the meaning of
section 3(37) or 4001(a)(3) of ERISA with respect to any of its employees.
▇▇▇▇▇▇ is not and could not become subject to any withdrawal liability within
the meaning of section 4201 of ERISA with respect to any multiemployer plan.
▇▇▇▇▇▇ has never been a substantial employer within the meaning of section
4001(a)(2) of ERISA with respect to any single-employer plan within the meaning
of section 4001(a)(15) of ERISA for which an employer could incur liability
under section 4063 or 4064 of ERISA.
(t) DEBTS AND CAPITALIZED LEASES. EXHIBIT 3.1(t) contains a
list of all liabilities under any capitalized lease of ▇▇▇▇▇▇. The
consummation of the transactions contemplated by this Agreement will not cause
the acceleration of or otherwise adversely affect the terms or conditions of
any such liabilities or obligations.
(u) LITIGATION. Except as disclosed on EXHIBIT 3.1(u),
there are no (i) claims, suits, actions, citations, administrative or
arbitration or other proceedings or governmental investigations pending or, to
the knowledge of ▇▇▇▇▇▇, threatened against ▇▇▇▇▇▇ or to which ▇▇▇▇▇▇ is a
party or relating to any of the properties, businesses or business practices
of ▇▇▇▇▇▇ or the transactions contemplated by this Agreement (including but not
limited to proceedings and investigations related to Environmental Laws, civil
rights, discrimination in employment and occupational safety and health) or
(ii) judgments, orders, writs, injunctions or decrees of any court or
administrative agency naming the Seller or directly affecting its assets or
business.
(v) CONTINUATION OF BUSINESS. Except as otherwise disclosed
in this Agreement, ▇▇▇▇▇▇ does not know of
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Agreement and Plan of Merger Page 18
186599 -18-
23
any facts or circumstances which it reasonably expects to have a
Material Adverse Effect (as defined in SECTION 7.11(a)) on the continuance of
▇▇▇▇▇▇'▇ business after the Closing in the same manner as such business was
conducted by ▇▇▇▇▇▇ prior to the Closing.
(w) MANAGEMENT PERSONNEL. To the knowledge of ▇▇▇▇▇▇, none
of the management personnel of ▇▇▇▇▇▇ have (i) been convicted of a criminal act
(other than a minor traffic violation) during the ten-year period immediately
preceding the date of this Agreement, or (ii) any health problem which might
prevent the individual from fulfilling his or her work responsibilities in the
foreseeable future.
(x) ABSENCE OF CHANGES. Since May 31, 1995, and except as
otherwise disclosed in this Agreement, there has not been (i) any material
adverse change in the financial condition, assets (excluding normal wear and
tear and obsolescence) or business of ▇▇▇▇▇▇, (ii) any material damage to,
destruction of or loss of the assets, whether or not covered by insurance,
(iii) any material changes in compensation or bonus payments or arrangements
for any employees of ▇▇▇▇▇▇ except as provided in SECTION 4.6, (iv) any sale or
transfer of any assets of ▇▇▇▇▇▇ other than in the ordinary course of its
business and consistent with past practice, (v) any cancellation or compromise
of any debts or claims owed to ▇▇▇▇▇▇ other than in the ordinary course of its
business and consistent with past practice, (vi) any transaction not in the
ordinary course of ▇▇▇▇▇▇'▇ business and consistent with past practice, or
(vii) any amendment or termination of any contract or agreement which
materially and adversely affects the assets or business of ▇▇▇▇▇▇.
(y) DELIVERY OF EXHIBITS. All exhibits referred to in this
SECTION 3.1 or any other exhibits referred to in this Agreement and all
documents listed in those exhibits have been delivered to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
acknowledges receipt thereof.
(z) NO SIDE AGREEMENTS. Except as separately listed in EXHIBIT
3.1(p), ▇▇▇▇▇▇ is not a party to any agreement calling for any action by ▇▇▇▇▇▇
outside of the ordinary course of business; no agreement or understanding
exists calling for any payment or consideration from a customer or supplier of
▇▇▇▇▇▇ to an officer, director or shareholder of ▇▇▇▇▇▇ respecting any
transaction between ▇▇▇▇▇▇ and such supplier or customer; and no affiliate of
▇▇▇▇▇▇, directly or through any business concern affiliated with such
affiliate, transacts any business with ▇▇▇▇▇▇ except for employment covered by
SECTION 3.1(n) hereof.
(aa) SUPPLIERS AND TOOLING. Except as set forth in EXHIBIT
3.1(aa), there are no sole source suppliers for any of ▇▇▇▇▇▇'▇ purchased parts
or sub-assemblies in respect of current sales or projected sales by ▇▇▇▇▇▇.
EXHIBIT 3.1(aa) also sets forth a list of all tooling and castings used in the
manufacture
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186599 -19-
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of the parts or sub-assemblies ▇▇▇▇▇▇ procures from its suppliers, as
well as where the tooling is located, who owns it and whether there is any
restriction on ▇▇▇▇▇▇ taking possession of or relocating same.
(ab) TITLE TO AND LOCATION OF ASSETS. Except as disclosed in
EXHIBIT 3.1(ab), there are no liens, claims, security interests, mortgages,
easements, restrictions, charges or encumbrances affecting any of ▇▇▇▇▇▇'▇
assets or ▇▇▇▇▇▇'▇ leasehold interests and ▇▇▇▇▇▇ has good and marketable title
to or a valid leasehold interest in all of its assets. Except as disclosed in
EXHIBIT 3.1(ab), all of ▇▇▇▇▇▇'▇ assets are located at ▇▇▇▇▇▇'▇ facility at ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇.
(ac) MACHINERY AND EQUIPMENT. ▇▇▇▇▇▇'▇ machinery and
equipment is in good operating condition and repair sufficient to permit the
conduct of its business consistent with past practice. The machinery and
equipment owned by ▇▇▇▇▇▇ at the Closing will be sufficient for the conduct of
▇▇▇▇▇▇'▇ business and the fulfillment of ▇▇▇▇▇▇'▇ existing orders and will
constitute substantially all machinery and equipment used by ▇▇▇▇▇▇ in its
business as of May 31, 1995, except for unnecessary items or items which have
been replaced with substantially equivalent items.
(ad) PRODUCT DESIGN AND DRAWINGS; ABSENCE OF DEFECTS. ▇▇▇▇▇▇
has sufficient documentation to support the manufacture of the products
manufactured by ▇▇▇▇▇▇ during the past 60 months. ▇▇▇▇▇▇ is not aware of any
design defect which may adversely affect the performance or safety of any of
▇▇▇▇▇▇'▇ products or the ability to manufacture those products profitably.
(ae) GOVERNMENT ASSISTANCE. EXHIBIT 3.1(ae) attached hereto
describes any agreements, loans, other funding arrangements and assistance
programs (collectively called "Government Assistance Programs") which have been
provided to ▇▇▇▇▇▇ from any federal, state, municipal or other government or
governmental agency, board, commission or authority, domestic or foreign
(collectively called "Government Agencies"). ▇▇▇▇▇▇ has performed all of its
obligations under the Government Assistance Programs, and no basis exists for
any Government Agencies to seek payment or repayment of any amount or benefit
provided under any of the Government Assistance Programs.
(af) ARRANGEMENTS WITH PROFESSIONALS. Any arrangements of
▇▇▇▇▇▇ with attorneys, accountants or other professional advisors can be
terminated by ▇▇▇▇▇▇ at or after the Closing without penalty by ▇▇▇▇▇▇ (except
with respect to unbilled services rendered prior to the date of such
termination).
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186599 -20-
25
(ag) NO LOSS CONTRACTS. Except as disclosed in
EXHIBIT 3.1(ag), to ▇▇▇▇▇▇'▇ knowledge, ▇▇▇▇▇▇ does not have any Contract with
any customer that will result in a loss to ▇▇▇▇▇▇ as determined under GAAP.
For purposes of this Agreement, "Contract" or "Contracts" shall mean those
contracts and purchase and sales commitments and orders to which ▇▇▇▇▇▇ is a
party or by which ▇▇▇▇▇▇ or the properties of ▇▇▇▇▇▇ is or may be bound,
including, without limitation, contracts and orders providing for the purchase,
receipt, sale or distribution of goods, products or services by ▇▇▇▇▇▇, all
prepaid items and deposits of ▇▇▇▇▇▇ with respect to those contracts and
▇▇▇▇▇▇'▇ health insurance and disability plan (but excluding all contracts of
employment and contracts relating to employees).
(ah) CUSTOMER RELATIONS. Except as set forth on EXHIBIT
3.1(ah), since May 31, 1995, no customer of ▇▇▇▇▇▇ has terminated or
communicated to ▇▇▇▇▇▇ the intention or threat to terminate its relationship
with ▇▇▇▇▇▇, or the intention to substantially reduce the quantity of products
or services it purchases from ▇▇▇▇▇▇, or its dissatisfaction with the products
or services sold by ▇▇▇▇▇▇, nor has ▇▇▇▇▇▇ terminated or communicated to any
customer the intention or threat to terminate its relationship with the
customer. No amounts of money are or will become repayable to any of ▇▇▇▇▇▇'▇
customers under any of the Contracts relating to performance of those
Agreements prior to the Closing.
(ai) DELIVERY SCHEDULES. ▇▇▇▇▇▇ and its customers are in
agreement with respect to all delivery schedules under ▇▇▇▇▇▇'▇ Agreements with
its customers, and there are no material delivery delays, to its knowledge, or
other non-compliance by ▇▇▇▇▇▇ with the terms of those Agreements that could
give rise to penalties or cancellation of the Agreement.
(aj) FINANCIAL RECORDS. ▇▇▇▇▇▇ makes and keeps accurate books
and records reflecting its assets and maintains internal accounting controls
that provide reasonable assurance that (i) transactions are executed with
management's authorization, (ii) transactions are recorded as necessary to
permit preparation of ▇▇▇▇▇▇'▇ financial statements and to maintain
accountability for its assets, and (iii) the book records of its assets is
compared with its actual assets at reasonable intervals.
(ak) GUARANTIES. ▇▇▇▇▇▇ is not a party to any guaranty or
other credit accommodation which accommodates the credit of another person.
(al) DIVIDENDS. Since May 31, 1995, ▇▇▇▇▇▇ has not declared
or paid any dividends in cash or in kind upon any of its capital stock or
returned any capital to its stockholders in the form of cash or other property
or paid or made any distribution of cash or other property to the stockholders.
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Agreement and Plan of Merger Page 21
186599 -21-
26
(am) NO POWER OF ATTORNEY. There are no outstanding powers
of attorney granted by ▇▇▇▇▇▇ except with respect to checking accounts and
those listed on EXHIBIT 3.1(am).
(an) SEC REPORTS. ▇▇▇▇▇▇ has filed all required forms,
reports and documents with the SEC ("▇▇▇▇▇▇ SEC Reports") required to be filed
by it pursuant to the federal securities laws and the SEC rules and regulations
thereunder, all of which have complied in all material respects with all
applicable requirements of the Securities Act of 1933 (the "Securities Act")
and the Securities and Exchange Act of 1934 (the "Exchange Act"), and the rules
and interpretive releases promulgated thereunder. None of such ▇▇▇▇▇▇ SEC
Reports, including without limitation any financial statements, notes, or
schedules included therein, at the time filed, contained nor contains, or, if
to be filed in the future will contain, any untrue statement of a material
fact, or omitted, omits or will 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.
(ao) PROXY STATEMENT. The Proxy Statement required for the
consummation of the Merger will comply in all material respects with the
Exchange Act, except that no representation will be made by ▇▇▇▇▇▇ with respect
to information supplied in writing by ▇▇▇▇▇▇▇ or any affiliate of ▇▇▇▇▇▇▇
specifically for inclusion in the Proxy Statement. None of the information
relating to ▇▇▇▇▇▇ and its Subsidiaries shall, at the time the Proxy Statement
is mailed or at the time of the Special Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(ap) MANAGEMENT SHARES. The officers, directors and ▇▇▇▇▇▇
Corporation Employee Stock Ownership Plan, own, in the aggregate, 13.7% of the
outstanding ▇▇▇▇▇▇ Stock.
(aq) STATUS OF FLOW VISION. Attached hereto as EXHIBIT 3.1(aq)
is a copy of all correspondence relating to pending claims under the agreement
by which ▇▇▇▇▇▇ sold most of the assets of Flow Vision Inc. (a Massachusetts
corporation) (the "Flow Vision Agreement"). To ▇▇▇▇▇▇'▇ knowledge, there are
no past or current events or circumstances that could give rise to claims
against ▇▇▇▇▇▇ under the provisions of the Flow Vision Agreement. ▇▇▇▇▇▇ has
received written confirmation from the purchaser under the Flow Vision
Agreement that there can be no further claims against ▇▇▇▇▇▇ for product
warranty claims under the Flow Vision Agreement; a copy of this written
confirmation is included in EXHIBIT 3.1(aq).
(ar) TRUTH OF REPRESENTATIONS. On the date of this Agreement
and on the date of the Closing, no representation
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Agreement and Plan of Merger Page 22
186599 -22-
27
or warranty of ▇▇▇▇▇▇ in this Agreement, nor any written statement or
certificate executed by ▇▇▇▇▇▇ and furnished or to be furnished to ▇▇▇▇▇▇▇
pursuant to this Agreement or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made,
not misleading.
Section 3.2 REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇ AND NEWCO.
▇▇▇▇▇▇▇ and NEWCO, each jointly and severally, represent and warrant to ▇▇▇▇▇▇
that:
(a) CORPORATE STANDING AND AUTHORITY. ▇▇▇▇▇▇▇ and NEWCO are
corporations duly organized, validly existing and in good standing
under the laws of the State of Delaware and Massachusetts, respectively, and
have full corporate power and authority to carry on their current business
operations and consummate the transactions contemplated by this Agreement.
The execution of this Agreement and consummation of the transactions
contemplated herein will not violate any provision of ▇▇▇▇▇▇▇'▇ or NEWCO's
By-Laws, or Certificate of Incorporation or Articles of Incorporation or any
law, regulation or ordinance or any provision of any contract, instrument,
order, award, judgment or decree to which ▇▇▇▇▇▇▇ or NEWCO is a party or by
which ▇▇▇▇▇▇▇ and NEWCO are bound. This Agreement is a legal, valid and
binding agreement of ▇▇▇▇▇▇▇ and NEWCO enforceable against ▇▇▇▇▇▇▇ and NEWCO
in accordance with its terms, subject to the laws of bankruptcy, insolvency
and moratorium and other laws or equitable principles generally affecting
creditors' rights and to general equitable principles. ▇▇▇▇▇▇▇ and NEWCO have
obtained all necessary authorization and approval by their Boards of
Directors and, in the case of NEWCO, by its sole stockholder, for the
execution of this Agreement and the consummation of the transactions
contemplated hereby, and no other corporate action is necessary by either
▇▇▇▇▇▇▇ or NEWCO for the execution of this Agreement and the consummation of
the transactions contemplated hereby. No consent, authorization, order or
approval of any person, governmental authority or any court is required in
connection with the execution and delivery by ▇▇▇▇▇▇▇ and NEWCO of this
Agreement or the consummation by ▇▇▇▇▇▇▇ and NEWCO of the transactions
contemplated hereby other than as contemplated by Section 5.2(g) hereof.
(b) LITIGATION. There is no litigation pending or, to the
knowledge of ▇▇▇▇▇▇▇ or NEWCO, threatened against ▇▇▇▇▇▇▇ or NEWCO which seeks
to prevent, or if successful would prevent, ▇▇▇▇▇▇▇ or NEWCO from consummating
the Merger.
(c) PROXY STATEMENT. None of the information furnished in
writing by ▇▇▇▇▇▇▇ relating to ▇▇▇▇▇▇▇, NEWCO and their subsidiaries for use in
the Proxy Statement shall, at the time the Proxy Statement is mailed or at the
time of the Special
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Agreement and Plan of Merger Page 23
186599 -23-
28
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(d) TRUTH OF REPRESENTATIONS. On the date of this Agreement
and on the date of the Closing, no representation or warranty of ▇▇▇▇▇▇▇ or
NEWCO in this Agreement, nor any written statement or certificate executed by
▇▇▇▇▇▇▇ and furnished or to be furnished to ▇▇▇▇▇▇ pursuant to this Agreement
or in connection with the transactions contemplated hereby contains or will
contain any untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements contained therein not
misleading.
ARTICLE IV
COVENANTS
Section 4.1 CONDUCT OF BUSINESS OF ▇▇▇▇▇▇. Except as otherwise
contemplated by this Agreement or disclosed in the Exhibits hereto,
during the period from the date of this Agreement to the Effective Time,
▇▇▇▇▇▇ and its Subsidiaries will each conduct their operations according to
their ordinary and usual course of business and consistent with past practice.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement or disclosed in the Exhibits hereto,
neither ▇▇▇▇▇▇ nor any of its Subsidiaries will, prior to the Effective Time,
without the prior written consent of ▇▇▇▇▇▇▇ (a) issue, sell or pledge, or
authorize or propose the issuance, sale or pledge of (i) additional shares of
capital stock of any class, or securities convertible into any such shares, or
any rights, warrants or options to acquire any such shares or other
convertible securities, other than pursuant to commitments outstanding at the
date hereof, or (ii) any other securities in respect of, in lieu of or in
substitution for, capital stock outstanding on the date hereof, (b) purchase
or otherwise acquire, or propose to purchase or otherwise acquire, any of its
outstanding securities, (c) declare or pay any dividend or distribution on any
shares of its capital stock, (d) authorize, recommend, propose or announce an
intention to authorize, recommend or propose, or enter into an agreement in
principle or an agreement with respect to, any merger, consolidation or
business combination (other than the Merger), any acquisition of a material
amount of assets or securities, any disposition of a material amount of assets
or securities or any material change in its capitalization, or any entry into
a material contract or any release or relinquishment of any material contract
rights, not in the ordinary course of business, (e) propose or adopt any
amendments to its charter or by-laws, (f) enter into, assign or terminate, or
amend in any material respect, any Agreement other than in the ordinary course
of business, (g) acquire, dispose of, encumber or relinquish any
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Agreement and Plan of Merger Page 24
186599 -24-
29
material asset other than in the ordinary course of business, (h)
waive, compromise or settle any right or claim that would adversely affect the
ownership, operation or value of any material asset, (i) make any material
capital expenditures other than pursuant to existing capital expenditure
programs that are disclosed in EXHIBIT 4.1(i), (j) allow or permit the
expiration, termination or cancellation at any time prior to the Effective
Time of any of the insurance policies or coverages or surety bonds currently
maintained by or on behalf of ▇▇▇▇▇▇ unless replaced with a policy, coverage or
bond having substantially the same coverage and similar terms and conditions,
(k) waive, settle or compromise any material litigation or other material claim
on a basis materially adverse to ▇▇▇▇▇▇ or its Subsidiaries, (l) agree in
writing or otherwise to take any of the foregoing actions or any action which
would make any representation or warranty in this Agreement untrue or incorrect
in any material respect or (m) incur any indebtedness for borrowed money
(other than any indebtedness in place at the date of this Agreement).
Section 4.2 ACCESS TO INFORMATION.
(a) Between the date of this Agreement and the Effective Time,
▇▇▇▇▇▇ will afford to ▇▇▇▇▇▇▇ and its authorized representatives full access
during normal business hours to the real estate, offices, warehouses or other
facilities and to the books and records of ▇▇▇▇▇▇ and its Subsidiaries, will
permit ▇▇▇▇▇▇▇ and its representatives to make such inspections as they may
require during normal business hours and will cause ▇▇▇▇▇▇'▇ officers to
furnish Chelton and its representatives with such financial and operating data,
environmental assessments and other information with respect to the business
and real property of ▇▇▇▇▇▇ and its Subsidiaries as ▇▇▇▇▇▇▇ and its
representatives may from time to time reasonably request. No inspection or
examination by ▇▇▇▇▇▇▇ will constitute a waiver of any claim against ▇▇▇▇▇▇ for
misrepresentation or breach of this Agreement.
(b) The parties will hold and will cause their
representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process (as to which it will give the other party
notice and an opportunity to contest disclosure), or, in the opinion of
counsel, by other requirements of law, all documents and information concerning
the parties furnished to them and their representatives in connection with the
transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (i) in the public domain through no fault
of the parties or their representatives or (ii) later lawfully acquired by the
parties or their representatives from other sources, which acquisition can be
demonstrated in writing by the disclosing party, unless they or their
representatives know that such other sources are not entitled to disclose such
information) and will not use such information or release or disclose such
information to any other person, except their auditors, attorneys, financial
advisors and
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Agreement and Plan of Merger Page 25
186599 -25-
30
other consultants and advisors in connection with this Agreement,
provided that such person shall have first been advised of the confidentiality
provision of this SECTION 4.2. If the transactions contemplated by this
Agreement are not consummated, such confidence shall be maintained except to
the extent such information can be shown to have been (i) in the public domain
through no fault of ▇▇▇▇▇▇▇, NEWCO or ▇▇▇▇▇▇, as the case may be, or their
respective representatives or (ii) later lawfully acquired by the parties or
representatives from other sources, which acquisition can be demonstrated in
writing by the disclosing party, and, if requested, either party will, and will
cause its agents, auditors, consultants, representatives and advisors to return
to the other, or destroy, all copies of written information furnished.
(c) ▇▇▇▇▇▇ agrees to furnish Chelton at the time of filing
with copies of all reports and filings (including exhibits and schedules) filed
by ▇▇▇▇▇▇ with the SEC between the date hereof and the Closing.
Section 4.3 BEST EFFORTS. Subject to the terms and conditions
herein provided, and to the fiduciary duties of the Boards of Directors of the
parties under applicable law, each of the parties hereto agrees to use its best
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. In case at any time after the ffective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall take
all such necessary action.
Section 4.4 CONSENTS. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ each will use its best
efforts to obtain such consents of third parties to agreements which would
otherwise be violated by any provisions hereof, to take all actions necessary
to effect the transactions contemplated hereby, and to make such filings with
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement including, without limitation, (a) the vigorous defense of
any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transaction contemplated
hereby unless in the good faith judgment of the party against whom the lawsuit
or other legal proceeding is brought the claims against such party have a
reasonable likelihood of success, including seeking to have any stay or
temporary restraining order entered by any court or governmental authority
vacated or reviewed, and (b) the execution and delivery of any additional
instruments reasonably necessary to consummate the transactions contemplated by
this Agreement.
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Section 4.5 PUBLIC ANNOUNCEMENTS. Except as required by law or
other regulatory body, neither party shall make any news releases or other
public announcement pertaining to the existence of this Agreement or the Merger
without the prior consent of the other party hereto. To the extent such a
release or announcement is required by law, the party making the same shall
give the other party advance notice of, and an opportunity to comment on, the
proposed release or announcement.
Section 4.6 CERTAIN PAYMENTS. The parties agree that ▇▇▇▇▇▇ will be
permitted to make certain payments in connection with the Merger as follows:
(a) up to $100,000, in the aggregate, to the staff of ▇▇▇▇▇▇,
to be apportioned as determined by ▇▇▇▇▇▇'▇ Board of Directors, as set forth in
EXHIBIT 4.6(a); and
(b) up to $256,033, in the aggregate, to ▇▇▇▇▇▇'▇ non-employee
directors in full and final payment for their services on behalf of ▇▇▇▇▇▇ as
set forth in EXHIBIT 4.6(b).
Section 4.7 FUNDING OF NEWCO. Prior to the Closing, ▇▇▇▇▇▇▇ shall
cause NEWCO to be funded with an amount of cash sufficient to pay the aggregate
Merger Consideration for the outstanding Shares and Stock Options.
Section 4.8 INSURANCE. ▇▇▇▇▇▇▇ shall use its best efforts to obtain
and maintain for a period of one year after the Effective Time an endorsement
extending the period in which claims may be made under ▇▇▇▇▇▇'▇ directors' and
officers' liability insurance policy in effect on the date of this Agreement,
or a policy of such other responsible carrier as ▇▇▇▇▇▇▇ may elect, with
respect to causes of action that arise out of facts or omissions occurring on
or before the Effective Time; provided, however, that in no event shall ▇▇▇▇▇▇▇
be required to expend pursuant to this section more than an amount per year
equal to 125% of current annual premiums paid by ▇▇▇▇▇▇ for such insurance.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 5.1 CONDITIONS TO ▇▇▇▇▇▇'▇ OBLIGATION TO CLOSE. The
obligations of ▇▇▇▇▇▇ at Closing shall be subject to satisfaction of the
following conditions at Closing:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of ▇▇▇▇▇▇▇ and NEWCO set forth in SECTION 3.2 hereof shall be true
and correct as of the date of this Agreement and as of Closing as though those
representations and warranties had been made at and as of that time, and ▇▇▇▇▇▇
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shall have received at Closing a certificate signed by ▇▇▇▇▇▇▇'▇
President to that effect.
(b) NO LITIGATION. There shall not have been instituted or
threatened on or before Closing any action or proceeding to restrict or
prohibit the transactions contemplated by this Agreement.
(c) MERGER CONSIDERATION. NEWCO shall present evidence
reasonably satisfactory to ▇▇▇▇▇▇ that, immediately prior to the Closing, it
has cash on hand equal to or greater than the aggregate Merger Consideration
for the outstanding Shares and Stock Options.
(d) APPROVAL OF ▇▇▇▇▇▇'▇ STOCKHOLDERS. The approval of
▇▇▇▇▇▇'▇ stockholders of this Agreement and the Merger as required by the
Massachusetts Act shall have been obtained.
(e) RECEIPT OF CONSENTS. Any consents from third parties
required to be obtained by ▇▇▇▇▇▇ to effect the Merger shall have been obtained
by ▇▇▇▇▇▇.
(f) OPINION OF ▇▇▇▇▇▇▇ AND NEWCO'S COUNSEL. ▇▇▇▇▇▇▇ and
NEWCO shall have delivered to ▇▇▇▇▇▇ an opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ &
Mugel, dated as of the Closing, in form and substance satisfactory to ▇▇▇▇▇▇,
with respect to the matters set forth in SECTIONS 3.2(a), (b) and (d) of this
Agreement.
Section 5.2 CONDITIONS TO ▇▇▇▇▇▇▇'▇ AND NEWCO'S OBLIGATION TO CLOSE.
The obligations of ▇▇▇▇▇▇▇ and NEWCO at Closing shall be subject to
satisfaction of the following conditions at Closing:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of ▇▇▇▇▇▇ set forth in SECTION 3.1 hereof shall
be true and correct as of the date of this Agreement and as of Closing as
though those representations and warranties had been made at and as of that
time, the covenants contained in SECTIONS 2.3, 4.1 and 4.2(a), hereof shall
have been performed, and ▇▇▇▇▇▇▇ and NEWCO shall have received at Closing a
certificate signed by each of ▇▇▇▇▇▇'▇ officers (currently, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇) to that effect.
(b) NO LITIGATION. There shall not have been instituted or
threatened any action, proceeding or investigation to restrict or prohibit the
transactions contemplated by this Agreement or which would give rise to
material damages to ▇▇▇▇▇▇ or have a Material Adverse Effect on the value of
the assets of ▇▇▇▇▇▇.
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(c) APPROVAL OF ▇▇▇▇▇▇'▇ STOCKHOLDERS. The approval of
▇▇▇▇▇▇'▇ stockholders of this Agreement and the Merger as required by the
Massachusetts Act shall have been obtained.
(d) RECEIPT OF CONSENTS. All consents from third parties
required to be obtained by ▇▇▇▇▇▇ to effect the Merger shall have been
obtained by ▇▇▇▇▇▇ in form and substance reasonably satisfactory to ▇▇▇▇▇▇▇
and NEWCO.
(e) OPINION OF ▇▇▇▇▇▇'▇ COUNSEL. ▇▇▇▇▇▇ shall have delivered
to ▇▇▇▇▇▇▇ and NEWCO an opinion of ▇▇▇▇▇▇ & Dodge, dated as of the Closing, in
form and substance reasonably satisfactory to ▇▇▇▇▇▇▇ and NEWCO, with respect
to the matters set forth in SECTIONS 3.1(a) (other than as to qualification as
a foreign corporation or the last sentence of that section) and (d) of this
Agreement, as well as whether there exists, to ▇▇▇▇▇▇ & Dodge's knowledge, any
pending litigation which seeks to prevent, or if successful would prevent,
▇▇▇▇▇▇ from consummating the Merger.
(f) RESIGNATION LETTERS. ▇▇▇▇▇▇ shall have obtained letters
of resignation from each officer and director in office immediately prior to
the Effective Time.
(g) CONTINUATION OF INSURANCE. ▇▇▇▇▇▇▇ shall have
received confirmation from ▇▇▇▇▇▇'▇ insurers that the insurance policies
listed in EXHIBIT 3.1(l) will continue in effect after the Closing
notwithstanding the Merger.
(h) ENVIRONMENTAL STUDY. ▇▇▇▇▇▇▇ shall have received an
environmental study from an environmental consulting firm approved by ▇▇▇▇▇▇▇
relating to ▇▇▇▇▇▇'▇ Facilities that, in ▇▇▇▇▇▇▇'▇ reasonable judgment,
indicates that there are no significant risks associated with Hazardous
Materials or violations of any Environmental Laws at ▇▇▇▇▇▇'▇ Facilities.
(i) STOCK OPTIONS. At or prior to the Closing, all Stock
Options shall have been exercised (or terminated) as described in SECTION
1.6(d).
Section 5.3 OTHER CONDITIONS. The respective obligations of each
party to effect the Merger are subject to the condition that no statute, rule,
regulation, executive order, decree, or injunction shall have been enacted,
entered, promulgated or enforced by any court of competent jurisdiction in
the United States or domestic governmental authority which prohibits or
restricts the consummation of the Merger.
Section 5.4 NO SOLICITATION.
(a) Other than as required by their fiduciary responsibilities,
the Board of Directors of ▇▇▇▇▇▇ shall not
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negotiate an Acquisition Proposal (as defined below) with a Third
Party unless and until this Agreement has been terminated in accordance with
the provisions hereof.
(b) Neither ▇▇▇▇▇▇ nor any of its subsidiaries shall,
directly or indirectly, take (nor shall Kevlin authorize or permit its
subsidiaries, officers, directors, employees, representatives, investment
advisors, bankers, attorneys, accountants or other agents or affiliates, to
take) any action to (i) encourage, solicit or initiate the submission of any
Acquisition Proposal (as defined below), (ii) enter into any agreement with
respect to any Acquisition Proposal or (iii) participate in discussions or
negotiations with, or furnish any information to, any person in connection
with any Acquisition Proposal; provided, that, to the extent required by the
fiduciary obligations of the Board of Directors of ▇▇▇▇▇▇ (as determined in
good faith by the Board of Directors of ▇▇▇▇▇▇ based upon written advice of
▇▇▇▇▇▇ & Dodge), upon receipt of (x) an unsolicited and written Superior
Proposal (as defined in SECTION 5.4(c) below) or (y) an unsolicited and
written Potential Superior Proposal (as defined below), ▇▇▇▇▇▇ may: (1) take
the action referred to in clause (ii) of this sentence with respect to such
Superior Proposal or Potential Superior Proposal but only in connection with
a simultaneous termination of this Agreement in accordance with SECTION 6.1,
and (2) take any of the actions referred to in clause (iii) of this sentence
with respect to such Superior Proposal or Potential Superior Proposal. A
"Potential Superior Proposal" shall mean a proposal that a majority of the
disinterested members of the Board of Directors of ▇▇▇▇▇▇ determines in its
good faith judgment to be reasonably likely to lead to a Superior Proposal (as
defined in SECTION 5.4(c) below). "Acquisition Proposal" shall mean, except
for the transactions contemplated by this Agreement, any proposed (i) merger,
consolidation or similar transaction involving ▇▇▇▇▇▇, (ii) sale, lease or
other disposition directly or indirectly by merger, consolidation, share
exchange or otherwise of assets of ▇▇▇▇▇▇ or it subsidiaries representing 10%
or more of the consolidated assets of ▇▇▇▇▇▇ and its subsidiaries, (iii)
issue, sale or other disposition of (including by way of merger,
consolidation, share exchange or any similar transaction) securities (or
options, rights or warrants to purchase, or securities convertible into, such
securities) representing 10% or more of the voting power of ▇▇▇▇▇▇ or (iv)
transaction in which any person shall acquire beneficial ownership (as such
term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership or any "group" (as such term is defined under the
Exchange Act) shall have been formed which beneficially owns or has the right
to acquire beneficial ownership of 10% or more of the outstanding ▇▇▇▇▇▇
Common Stock. ▇▇▇▇▇▇ shall notify ▇▇▇▇▇▇▇ promptly of any Acquisition
Proposal and shall provide ▇▇▇▇▇▇▇ with all available information with respect
thereto.
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(c) The provisions of SECTION 5.4(a) shall not be deemed to
prohibit the Board of Directors of ▇▇▇▇▇▇, prior to the consummation of the
Merger, from withdrawing or modifying its approval or recommendation of the
Merger or this Agreement, if a Superior Proposal is made, provided that (i)
such action is required by the fiduciary obligations of the Board of Directors
of ▇▇▇▇▇▇ as determined in good faith by a majority of the disinterested
members thereof, taking into account (x) the financial and other terms and
conditions of the Superior Proposal and (y) the time period within which the
transactions contemplated by such Superior Proposal can be consummated and
(ii) the Board of Directors of ▇▇▇▇▇▇ shall have received the written opinion
of ▇▇▇▇▇▇ & Dodge to the effect that such action is required by the fiduciary
obligations of the Board of Directors of ▇▇▇▇▇▇. For purposes of this
Agreement, "Superior Proposal" means a bona fide proposal made by a Third
Party to acquire all the outstanding ▇▇▇▇▇▇ Common Stock or all or
substantially all the assets of ▇▇▇▇▇▇ pursuant to a tender or exchange offer,
a merger or otherwise on terms which a majority of the disinterested members
of the Board of Directors of ▇▇▇▇▇▇ determine in its good faith judgment to be
financially superior to ▇▇▇▇▇▇'▇ stockholders than the Merger (based on a good
faith determination that the value of such proposal, as a whole, exceeds the
value of the consideration provided for in the Merger plus the amount of the
Termination Fee, as hereinafter defined). For purposes of this Agreement,
"Third Party" shall mean any corporation, partnership, person or other entity
or "group" (as defined in Section 13(d)(3) of the Exchange Act) other than
▇▇▇▇▇▇▇, any affiliate of ▇▇▇▇▇▇▇ or any of their respective directors,
trustees, officers, employees, representatives and agents or any entity
controlled by one or more such persons.
(d) ▇▇▇▇▇▇ shall pay to ▇▇▇▇▇▇▇ upon demand an amount in
cash equal to $1,000,000 (the "Termination Fee") if: (i) ▇▇▇▇▇▇ terminates
this Agreement pursuant to SECTION 6.1(f) or (ii) ▇▇▇▇▇▇▇ and NEWCO terminate
this Agreement pursuant to SECTION 6.1(c) for the reason that any of the
conditions specified in SECTIONS 5.2(a), have not been met as a result of the
intentional, deliberate or fraudulent misrepresentation or breach of covenant
by ▇▇▇▇▇▇ and are not capable of being met on or before February 28, 1996.
ARTICLE VI
TERMINATION, AMENDMENTS; WAIVER
Section 6.1 TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time, notwithstanding
approval thereof by the shareholders of ▇▇▇▇▇▇, prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards of
Directors of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and NEWCO;
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(b) by ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇ if the Effective Time shall not have
occurred on or before February 28, 1996 (providing the terminating party is
not otherwise in material breach of its representations, warranties or
obligations under this Agreement);
(c) by ▇▇▇▇▇▇▇ and NEWCO if any of the conditions specified in
SECTION 5.2 shall not have been met or waived by them at such time as such
condition is no longer capable of satisfaction;
(d) by ▇▇▇▇▇▇ if any of the conditions specified in
SECTION 5.1 shall not have been met or waived by it at such time as such
condition is no longer capable of satisfaction;
(e) by ▇▇▇▇▇▇▇ or ▇▇▇▇▇▇: (i) if any court of competent
jurisdiction or other governmental authority shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger, (ii) if litigation or proceedings shall be pending
that are reasonably likely to result in any of the foregoing or (iii) the
condition specified in SECTION 5.3 cannot be met;
(f) by ▇▇▇▇▇▇ if all of the following conditions are
satisfied: (i) prior to the consummation of the Merger, ▇▇▇▇▇▇ or its Board
of Directors shall have received a Superior Proposal from a Third Party, (ii)
the Board of Directors of ▇▇▇▇▇▇ shall have received the written opinion of
▇▇▇▇▇▇ & Dodge to the effect that the fiduciary obligations of the Board of
Directors require that ▇▇▇▇▇▇ terminate this Agreement and enter into an
agreement with respect to the Superior Proposal, (iii) the Board of Directors
of ▇▇▇▇▇▇ shall have resolved to enter into definitive documentation with
respect to the Superior Proposal within 48 hours of the termination of this
Agreement and (iv) ▇▇▇▇▇▇ shall have paid to ▇▇▇▇▇▇▇ an amount in cash equal
to the Termination Fee.
Section 6.2 EFFECT OF TERMINATION. In the event of the termination
and abandonment of this Agreement pursuant to SECTION 6.1, this Agreement
shall forthwith become void and have no effect, without any liability on the
part of any party or its directors, officers, or shareholders, except (i) to
the extent applicable, the provisions of SECTIONS 4.2(b), 5.4(d) and 7.9 and
(ii) if the termination is pursuant to SECTIONS 6.1(c) or (d), the
non-terminating party shall reimburse the terminating party for its costs and
expenses incurred in connection with the Merger (including without limitation
legal and accounting fees, travel expenses and other out of pocket expenses
incurred in due diligence investigations and contract negotiations) up to a
maximum of $150,000, which reimbursement shall be made immediately upon
submission to the non-terminating party of the terminating party's written
records with respect to such costs and expenses.
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Section 6.3 AMENDMENT. This Agreement may be amended by action
taken by or on behalf of the Boards of Directors of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and NEWCO
at any time before or after adoption of this Agreement by the stockholders of
▇▇▇▇▇▇ but, after any such approval, no amendment shall be made which
decreases the Merger Consideration per Share or which adversely affects the
rights of ▇▇▇▇▇▇'▇ stockholders hereunder without the approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and NEWCO.
Section 6.4 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken by or on behalf of the respective
Boards of Directors of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and NEWCO may (a) extend the time for
the performance of any of the obligations or other acts of any other
applicable party hereto, (b) waive any inaccuracies in the representations and
warranties contained herein by any other applicable party or in any document,
certificate or writing delivered pursuant hereto by any other applicable
party, or (c) subject to the proviso contained in SECTION 6.3, waive
compliance with any of the agreements of any other applicable party or with
any conditions to its own obligations. Any agreement on the part of any other
applicable party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time. This SECTION 7.1, however, shall not limit any covenant
or agreement of the parties hereto, which by its terms contemplates
performance after the Effective Time.
Section 7.2 BROKERAGE FEES; COMMISSIONS AND EXPENSES. ▇▇▇▇▇▇
hereby represents and warrants to ▇▇▇▇▇▇▇ with respect to ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇
and NEWCO hereby represent and warrant to ▇▇▇▇▇▇ with respect to ▇▇▇▇▇▇▇ and
NEWCO, that, except as set forth in EXHIBIT 7.2, no person or entity is
entitled to receive from ▇▇▇▇▇▇ on the one hand, or ▇▇▇▇▇▇▇ and NEWCO, on the
other hand, any investment banking, brokerage or finder's fee or fees for
financial consulting or advisory services in connection with this Agreement or
the transactions contemplated hereby. Other costs, expenses and liabilities
which may be incurred in connection with the consummation of this Agreement or
the Merger, such as, for example and without limitation, the cost of
professional fees shall be paid by the party incurring the cost.
Section 7.3 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a)
constitutes the entire agreement among the parties
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with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, among the parties
or any of them with respect to the subject matter hereof and (b) shall not be
assigned by operation of law or otherwise.
Section 7.4 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full
force and effect.
Section 7.5 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered by overnight
courier, when sent by confirmed facsimile or three days after being mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such address for a party as shall be specified by
like notice):
If to ▇▇▇▇▇▇:
▇▇▇▇▇▇ Corporation
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Copies of notices to ▇▇▇▇▇▇ shall be sent to:
▇▇▇▇▇▇ & Dodge
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
If to ▇▇▇▇▇▇▇ and NEWCO:
▇▇▇▇▇▇▇ Communication Systems, Inc.
c/▇ ▇▇▇▇▇▇▇ Ltd.
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ Communication Systems, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Copies of notices to ▇▇▇▇▇▇▇ and NEWCO shall
be sent to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ & Mugel
800 Fleet Bank Building
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, Esq.
Section 7.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
Section 7.7 DESCRIPTIVE HEADINGS. The descriptive headings herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
Section 7.8 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 7.9 EXPENSES. Except as otherwise provided herein, each of
the parties shall bear and pay all costs and expenses incurred by it or on its
behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial or other consultants, investment
bankers, accountants and counsel.
Section 7.10 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any court of
the United States or any state having jurisdiction, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 7.11 CERTAIN DEFINITIONS.
(a) "Material Adverse Effect" shall mean any adverse change
in the financial condition, assets, business or operations of any party which
is material to such party and its subsidiaries taken as a whole.
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(b) "Special Meeting" shall mean the special meeting
of the shareholders of the Company called pursuant to the Proxy Statement to
consider approval of the Merger.
(c) "Subsidiary" shall mean, when used with reference to an
entity, any corporation, a majority of the outstanding voting securities of
which are owned directly or indirectly by such entity. Such term shall also
refer to any other partnership, limited partnership, joint venture, trust, or
other business entity in which a party hereto owns a majority interest.
Section 7.12 PERFORMANCE BY NEWCO. ▇▇▇▇▇▇▇ agrees to cause NEWCO to
comply with its obligations hereunder and to cause NEWCO to consummate the
Merger as contemplated herein.
Section 7.13 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person or persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
Each of the parties has caused this Agreement to be
executed on its behalf by its duly authorized officers as of the day and year
set forth above.
▇▇▇▇▇▇ CORPORATION
By:
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chairman
▇▇▇▇▇▇ ACQUISITION CORP.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
▇▇▇▇▇▇▇ COMMUNICATION SYSTEMS, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
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Agreement and Plan of Merger Page 36
186599 -36-