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EXHIBIT 2.2
AGREEMENT AND PLAN
OF REORGANIZATION AND MERGER
BY AND AMONG
REMEC, INC., RTI ACQUISITION CORPORATION AND
RADIAN TECHNOLOGY, INC.
FEBRUARY 24, 1997
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS........................................................... 1
ARTICLE II MERGER, CLOSING AND CONVERSION OF SHARES.............................. 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................................... 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB........................................................17
ARTICLE V COVENANTS OF THE COMPANY..............................................21
ARTICLE VI COVENANTS OF PARENT AND MERGER SUB....................................23
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF PARENT
AND MERGER SUB........................................................25
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE
COMPANY...............................................................26
ARTICLE IX COVENANTS OF THE COMPANY, PARENT AND
MERGER SUB............................................................27
ARTICLE X MISCELLANEOUS.........................................................28
LIST OF EXHIBITS
EXHIBIT A Form of Agreement of Merger
EXHIBIT 3.3 Shareholder and Investment Letter
EXHIBIT 5.9 Form of Affiliate's Letter
EXHIBIT 5.11 Form of Registration Rights Agreement
EXHIBIT 7.4 Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇
EXHIBIT 7.11 Forms of Employment Agreements
EXHIBIT 8.4 Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
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AGREEMENT AND PLAN OF
REORGANIZATION AND MERGER
This Agreement and Plan of Reorganization and Merger (the "Agreement")
is made as of February 24, 1997 by and among REMEC, Inc., a California
corporation ("Parent"), RTI Acquisition Corporation, a California corporation
and wholly owned subsidiary of Parent ("Merger Sub") and Radian Technology,
Inc., a California corporation (the "Company").
Background
Parent, Merger Sub and the Company desire that Merger Sub be merged with
and into the Company; that the Company be the surviving corporation and become a
wholly owned subsidiary of Parent and that each share of the Common Stock of the
Company which is outstanding immediately prior to the effective time of the
merger be converted as set forth in this Agreement and the Agreement of Merger
into shares of the Common Stock of Parent. Parent, Merger Sub and the Company
intend that the merger constitute a "reorganization" under Section 368(a)(1)(A),
by application of Section 368(a)(2)(E), of the Internal Revenue Code of 1986, as
amended.
THE PARTIES AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
1.1 Definitions. The terms defined in this Article I, whenever used
herein, shall have the following meanings for all purposes of this Agreement:
"Affiliate" means, with respect to any corporation, any person or entity
which controls, is controlled by or is under common control with such
corporation.
"Agreement of Merger" means the agreement of merger between the Company
and Merger Sub, together with the related officers' certificates required by
Section 1103 of the Corporations Code, in the form attached to this Agreement as
Exhibit A.
"Audited Balance Sheet" means the balance sheet included in
the Audited Financials.
"Audited Financials" means the balance sheets of the Company at December
31, 1995 and December 27, 1996 and the related statements of income,
shareholders' equity and cash flows for the two years then ended, including the
notes thereto, in each case accompanied by an unqualified report of Ireland San
Filippo, LLP, certified public accountants.
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"Closing" means the delivery by the Company, Parent and Merger Sub of
the various documents contemplated by this Agreement and otherwise required in
order to consummate the Merger.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Radian Technology, Inc., a California corporation.
"Company Common" means shares of Company Common Stock, no par value.
"Company Options" means the options to purchase shares of Company Common
outstanding as of the date of this Agreement.
"Corporations Code" means the Corporations Code of the State of
California.
"Dissenting Shares" means those shares of Company Common which at any
time become "dissenting shares" within the meaning of Section 1300(b) of the
Corporation Code.
"Effective Time" means the time when the Agreement of Merger is filed
with the Secretary of State of the State of California and the Merger becomes
effective.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Exchange Ratio" shall have the meaning ascribed to it in
Section 2.3 of this Agreement.
"GAAP" means generally accepted accounting principles and practices as
promulgated by the Accounting Research Board, Accounting Principles Board and
Financial Accounting Standards Board or any superseding or supplemental
documentation of equal authority promulgating generally accepted accounting
principles and practices, all as in effect from time to time.
"Hazardous Material" means any material, substance, waste or component
thereof which is identified to be "hazardous" or "toxic" or otherwise poses an
actual or potential risk to public health and safety or to the environment by
virtue of being actually or potentially toxic, corrosive, bioaccumulative,
reactive, ignitable, radioactive, infectious or otherwise harmful to public
health and safety or the environment, the handling or disposal of, or exposure
to which, is regulated under any applicable United States federal, state or
local environmental or health and safety law, rule or regulation.
"Holder" means the holder of shares of Company Common immediately prior
to the Effective Time.
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"Merger Sub Common" means the Common Stock of Merger Sub, par value
$.01.
"1933 Act" means the Securities Act of 1933, as amended, and the rules,
regulations and forms of the SEC promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and
the rules, regulations and forms of the SEC promulgated thereunder.
"Parent Common" means the Common Stock of Parent, par value $.01.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means, with respect to any entity, any corporation or other
organization, whether incorporated or unincorporated, of which at least a
majority of the securities or interests having by their terms ordinary voting
power to elect a majority of the board of directors or others performing similar
functions is owned, directly or indirectly, by such entity.
ARTICLE II
MERGER, CLOSING AND CONVERSION OF SHARES
2.1 Merger. Subject to and in accordance with the terms and conditions
of this Agreement and the Agreement of Merger, the Company and Merger Sub shall
execute and file the Agreement of Merger with the Secretary of State of the
State of California, whereupon Merger Sub shall be merged with and into the
Company pursuant to Sections 1100 et seq. of the Corporations Code.
2.2 Closing. The Closing shall take place at the offices of ▇▇▇▇▇▇
▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at
11:00 a.m. California time, on February 28, 1997 or at such other place, date or
time as the Company, Parent and Merger Sub shall agree writing (the "Closing
Date") after all of the conditions to the parties' obligations to consummate the
Merger set forth in Articles VII and VIII of this Agreement have been satisfied
or waived. The Company and Merger Sub shall file the Agreement of Merger with
the Secretary of State of the State of California immediately after the Closing.
2.3 Conversion of Shares. In accordance with the Merger Agreement, (i)
each share of Merger Sub Common issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the part
of the holder thereof, be converted at and as of the Effective Time, into one
share of Company Common, and (ii) each share of Company Common outstanding
immediately prior to the Effective Time (except those shares of Company Common
which are Dissenting Shares and whose holder and the Company do not thereafter
agree in writing should not be treated as Dissenting Shares) shall, by
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virtue of the Merger and without any action on the part of the holder thereof be
converted, at and as of the Effective Time into the right to receive .13755818
of a share of Parent Common (the "Exchange Ratio") for each share of Company
Common. Holders of Company Common shall receive only whole shares of Parent
Common; in lieu of any fractional share of Parent Common, Holders shall receive
in cash the fair market value of such fractional share valuing Parent Common at
the average of the closing prices of the Parent Common on the Nasdaq National
Market on the five trading days immediately preceding the Closing Date as listed
in The Wall Street Journal.
2.4 Company Options. At the Effective Time, each outstanding option to
purchase Company Common ("Company Option"), whether vested or unvested, issued
under the Company's 1987 Stock Option Plan (the "Company Plan") shall thereafter
entitle the holder thereof to receive, upon exercise thereof, that number of
Parent Common (rounded down to the nearest whole number) equal to the product of
the number of shares of Company Common that were purchasable under the Company
Option immediately prior to the Effective Time multiplied by the Exchange Ratio,
at an exercise price for each full share of Parent Common equal to the quotient
obtained by dividing (i) the exercise price per share of Company Common with
respect to such Company Option, by (ii) the Exchange Ratio, which exercise price
per share shall be rounded up to the nearest one cent. The number of shares of
Parent Common that may be purchased by a holder on the exercise of any Company
Option shall not include any fractional share of Parent Common but shall be
rounded down to the next lower whole share of Parent Common. Parent shall assume
in full the Company Plan, Company Options outstanding under the Company Plan,
and shall register the underlying shares of Parent Common issued under the
Company Plan under the 1933 Act on a Registration Statement on Form S-8 within
30 days following the Effective Time. The assumption of a Company Option by
Parent shall not terminate or modify (except as required hereunder) any right of
first refusal, right of repurchase, vesting schedule, or other restriction on
transferability relating to the Company Option. Continuous employment with the
Company prior to the Effective Time shall be credited to an optionee for
purposes of determining the number of shares subject to exercise, vesting or
repurchase after the Effective Time. After such assumption, Parent shall issue,
upon any partial or total exercise of any Company Option, in lieu of shares of
Company Common, the number of shares of Parent Common to which the holder of the
Company Option is entitled pursuant to this Agreement. The assumption by Parent
of Company Options shall not give the holders of such Company Options any
additional benefits under their respective Company Options, which such holder
did not have immediately prior to the Effective Time nor shall such assumption
cause such holders to forego any existing rights or benefits under such Company
Options other than as specifically provided in this Section 2.4. Nothing
contained in this Section 2.4 shall require Parent to offer or sell shares of
Parent Common upon the exercise prior to the Effective Time of Company Options
assumed by Parent if, in the reasonable judgment
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of Parent and its counsel, such offer or sale might not be in accordance with
applicable federal or state securities laws.
2.5 Rights After the Effective Time. As soon as practicable after the
Effective Time, each holder of record of a certificate or certificates which,
prior to the Effective Time, represented outstanding shares of the Company
Common shall be entitled, upon surrender of such certificate or certificates to
Parent (or in the case of certificates that have been lost, stolen or destroyed,
lost certificate affidavits therefor and indemnification in connection
therewith) or to an exchange agent designated by Parent, in form suitable for
transfer, to receive a certificate or certificates representing the number of
whole shares of Parent Common to which such shareholder is entitled under this
Article II together with cash in lieu of any fractional share of Parent Common
in an amount calculated in accordance with Section 2.3.
2.6 Dissenting Shares. Holders of Dissenting Shares shall have those
rights, but only those rights, of holders of "dissenting shares" under Sections
1300 et seq. of the Corporations Code. The Company shall give Parent prompt
notice of any demand, purported demand or other communication received by the
Company with respect to any Dissenting Shares or shares claimed to be Dissenting
Shares, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such shares. The Company agrees that, without the
prior written consent of Parent, it shall not voluntarily make any payment with
respect to, or settle or offer to settle, any demand or purported demand
respecting such shares.
2.7 Adjustments. Appropriate adjustments shall be made in this
Agreement, the Agreement of Merger and the number and type of securities into
which shares of the Company Common shall be converted in connection with the
Merger and which shall be issued upon exercise of the Company Options to be
assumed by Parent, in order to reflect any recapitalization, reclassification,
split-up, merger, consolidation, exchange, stock dividend, stock split or
similar event made, declared or effected with respect to Parent Common between
the date of this Agreement and the date such shares are issued.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter, a true and correct copy of
which has been delivered to Parent on or prior to the date of this Agreement
(the "Company Disclosure Letter"), the Company represents to Parent that:
3.1 Organization and Authority. The Company: (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement and all agreements to which the Company is or will be
a party that are exhibits to this Agreement; and (iii) is qualified to do
business in all jurisdictions in which the failure to so qualify would have a
material adverse effect on its business or financial condition. The Company does
not have any Subsidiaries and does not directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity. The Company
has delivered to Parent and its representatives complete and correct copies of
its Articles of Incorporation, as amended, and Bylaws as in effect on the date
of this Agreement, certified as true, complete and correct copies by the
Company's Secretary. Such Articles of Incorporation and Bylaws are in full force
and effect. The Company is not in violation of any provisions of its Articles of
Incorporation or Bylaws.
3.2 Capitalization.
3.2.1 The authorized capital stock of the Company consists of
25,000,000 shares of Common Stock, of which 4,604,250 shares are issued and
outstanding. The Company has no shares of Preferred Stock outstanding. A list of
all of the shareholders of the Company, with the number of shares owned by each
of them as of the date of this Agreement, is contained in Section 3.2 of the
Company Disclosure Letter. All such issued and outstanding shares have been duly
authorized and validly issued, and are fully paid and nonassessable, and have
been issued in compliance with all applicable federal and state securities laws.
The Company has outstanding options to purchase 657,500 shares of Company Common
pursuant to the Company Plan of which options to purchase 484,506 are fully
vested as of the date of this Agreement. Except as set forth in the preceding
sentence, there are no outstanding warrants, options, agreements, convertible or
exchangeable securities or other commitments pursuant to which the Company is or
may become obligated to issue, sell, purchase, retire or redeem any shares of
capital stock or other securities.
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3.2.2 All Company Options have been issued in accordance with the
Company Option Plan and all applicable securities laws, including pursuant to
valid permits or exemptions therefrom. The Company Plan and all amendments
thereto have been approved by all requisite Company shareholder action. The
Company does not have in effect any stock appreciation rights plan and no stock
appreciation rights are currently outstanding. The consummation of the Merger
shall not cause an acceleration in the vesting of any Company's capital stock.
3.2.3 There is no right of first refusal, co-sale right, right of
participation, right of first offer, option or other restriction on transfer
applicable to any shares of Company capital stock which apply to or survive the
transactions contemplated by this Agreement.
3.2.4 The Company is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between or among any
persons that affects or relates to the voting or giving of written consent with
respect to any outstanding security of the Company.
3.3 Authority Relating to this Agreement; No Violation of Other
Instruments.
3.3.1 The execution and delivery of this Agreement and all
agreements to which the Company is or will be a party that are exhibits to this
Agreement and the performance hereunder and thereunder by the Company have been
duly authorized by all necessary corporate action on the part of the Company,
and, assuming execution of this Agreement and such other agreements by each of
the other parties thereto, this Agreement and such other agreements will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject as to enforcement:
(i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other
laws of general applicability relating to or affecting creditors' rights; and
(ii) to general principles of equity, whether such enforcement is considered in
a proceeding in equity or at law. The Company has obtained executed copies of
the Shareholder and Investment Letter in the form attached hereto as Exhibit 3.3
(the "Investment Letter") from the persons identified in Section 3.3 of the
Company Disclosure Letter.
3.3.2 Neither the execution of this Agreement or any other agreement
to which the Company or any Shareholder is or will be a party that is an exhibit
to this Agreement nor the performance of any of them by the Company will: (i)
conflict with or result in any breach or violation of the terms of any decree,
judgment, order, or to its knowledge, any law or regulation of any court or
other governmental body now in effect applicable to the Company; (ii) conflict
with, or result in, with or without the passage of time or the giving of notice,
any breach of any of the terms, conditions and provisions of, or
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constitute a default under or otherwise give another party the right to
terminate, or result in the creation of any lien, charge, or encumbrance upon
any of the assets or properties of the Company pursuant to, any material
indenture, mortgage, lease, agreement or other instrument to which the Company
is a party or by which it or any of its assets or properties are bound; (iii)
permit the acceleration of the maturity of any indebtedness of the Company or of
any other person secured by the assets or properties of the Company; or (iv)
violate or conflict with any provision of the Company's Articles of
Incorporation, Bylaws, or similar organizational instruments.
3.3.3 No consent from any third party and no consent, approval or
authorization of, or declaration, filing or registration with, any government or
regulatory authority is required to be made or obtained by the Company in order
to permit the execution, delivery or performance of this Agreement or any other
agreement to which the Company is or will be a party that is an exhibit to this
Agreement, or the consummation of the transactions contemplated by this
Agreement and such other agreements.
3.4 Compliance With Law. The Company holds all licenses, permits and
authorizations necessary for the lawful conduct of the Company's business as
currently conducted pursuant to all applicable statutes, laws, ordinances, rules
and regulations of all governmental bodies, agencies and subdivisions having,
asserting or claiming jurisdiction over the Company or over any part of the
Company's operations, and the Company knows of no violation thereof, other than
any such violation that would not have a material adverse effect on the
Company's business or financial results. The Company is not in violation of any
decree, judgment, order, or to its knowledge, any law or regulation, of any
court or other governmental body (including without limitation, applicable
environmental protection legislation and regulations, equal employment and civil
rights regulations, wages, hours and the payment of social security taxes and
occupational health and safety legislation), which violation would reasonably be
expected to have a material adverse effect on the condition, financial or
otherwise, assets, liabilities, business or results of operations of the
Company. Section 3.4 of the Company Disclosure Letter contains a true and
complete list of all licenses, permits and authorizations necessary for the
lawful conduct of the Company's business wherever conducted pursuant to all
applicable statutes, laws, ordinances, rules and regulations of all governmental
bodies, agencies and subdivisions having, asserting or claiming jurisdiction
over the Company or over any part of the Company's operations.
3.5 Investments in Others. The Company does not have any investment in
or advance or loan to or guarantee of, or any commitment to make any investment
in, advance or loan to or guarantee of, any person.
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3.6 Financial Statements. The Audited Financials: (i) have been prepared
in accordance with the books and records of the Company; (ii) fairly present the
financial position, results of operations, owners equity and cash flow of the
Company as of the dates and for the periods indicated therein; and (iii) have
been prepared in accordance with GAAP consistently applied.
3.7 Absence of Undisclosed Liabilities. Except for obligations incurred
in the ordinary course of business which are not required under GAAP to be
reflected on a balance sheet or set forth in the notes thereto, the Company does
not have any indebtedness or any other liability (absolute, contingent, asserted
or known) which is not reflected on or provided for in full on the Audited
Balance Sheet.
3.8 Tax Returns and Payments. All tax returns, reports and forms
required to be filed by, or with respect to any activities or income of, the
Company have been or will be timely filed, all such returns are true and correct
in all material respects, and all taxes, fees, penalties, interest and other
material governmental charges of any nature whatsoever which were shown to be
due or claimed to be due on such returns, reports and forms or which otherwise
may be owed have been paid or adequate provision for the payment thereof has
been made. Section 3.8 of the Company Disclosure Letter includes a complete and
correct list of all such returns, reports and forms filed in connection with any
year or portion thereof which ended on or after December 31, 1991. The Company
has no knowledge of any assessment of deficiency or additional tax or other
governmental charge respecting the Company or its business or affairs, or any
knowledge of any completed, pending or threatened tax audit or investigation
respecting the Company or its business or affairs by any taxing or other
governmental authority, and no waivers of statutes of limitations have been
requested with respect to the Company or any of its corporate Affiliates. The
amounts provided for taxes on the Audited Balance Sheet are sufficient for the
payment of all accrued and unpaid U.S. federal, state, or local taxes, interest,
penalties, assessments and deficiencies for all periods prior to the dates of
such balance sheets.
3.9 Absence of Certain Changes and Events. Since the date of the Audited
Balance Sheet there has not been, and prior to the Closing there will not be:
(i) any transaction entered into by the Company other than in the
ordinary course of business or as contemplated by this Agreement or any
loss or damage to any of the manufacturing facilities of the Company due
to fire or other casualty, whether or not insured, amounting to more
than $50,000 in aggregate replacement value; any event that materially
and adversely affects the ability of the Company to operate its business
as a whole in a manner consistent with the way in which such business
has been conducted prior to December 27, 1996 or any change in the
financial position, assets, liabilities, results of operations or
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business of the Company other than changes in the ordinary course of
business which in the aggregate have not been materially adverse;
(ii) any declaration, payment or setting aside of any dividend or
other distribution to or for the holder of any capital stock of the
Company;
(iii) any lawsuit, proceeding or governmental investigation which is
likely to have a material adverse effect on the business of the Company;
(iv) any event or condition of any character which had or is
reasonably likely to have a material adverse effect on the financial
position, assets, liabilities, results of operations or business of the
Company that has not been disclosed in the Company Disclosure Letter;
(v) any increase or decrease in the rates of compensation payable or
to become payable by the Company to any director, officer, employee,
agent or consultant, or any bonus, percentage compensation, service
award or other benefit, granted, made or accrued to or to the credit of
any such person, or any welfare, pension, retirement or similar payment
or arrangement made or agreed to by the Company other than salary
adjustments for non-officer employees in accordance with past practice;
(vi) any modification or rescission of, or waiver by the Company of
rights under, any existing contract which has had or is reasonably
likely to have a material adverse effect on its business;
(vii) any discharge or satisfaction by the Company of any lien or
encumbrance, or any payment of any obligation or liability (absolute or
contingent) other than current liabilities shown on the Audited Balance
Sheet and current liabilities incurred since the date of the Audited
Balance Sheet in the ordinary course of business; or
(viii) any mortgage, pledge, imposition of any security interest,
claim, encumbrance or other restriction on any of the assets, tangible
or intangible, of the Company.
3.10 Payables; Receivable.
3.10.1 All accounts payable and notes payable by the Company to
third parties as of the date of the Audited Balance Sheet, arose in the ordinary
course of business.
3.10.2 The accounts receivable reflected on the Audited Balance
Sheet are based on the Company's reasonable judgment and its normal credit
review procedures, business practices and GAAP and are collectible in accordance
with their
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terms in an amount not less than their aggregate book value. "Aggregate book
value," for this purpose, shall mean the recorded amounts of such accounts
receivable less any recorded allowance for doubtful accounts, trade allowances
and return allowances, all as established in accordance with GAAP consistently
applied.
3.11 Inventories. The inventories reflected on the Audited Balance Sheet
are valued in accordance with GAAP consistently applied and as described in
clause (i) of Section 3.6 of this Agreement.
3.12 Interests in Real Property. Section 3.12 of the Company Disclosure
Letter comprises a complete and correct list and a brief description of all real
property leased by the Company. The Company owns no real property. All real
property leases to which the Company is a party are valid and enforceable
(subject, as to the enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws affecting creditors'
rights, and, with respect to the remedy of specific performance, equitable
doctrines applicable thereto) and no party thereto is in default of any material
provision thereof. All improvements and fixtures on real properties leased by
the Company conform to all applicable material health, fire, safety,
environmental, zoning and building laws and ordinances. All materials,
buildings, structures and fixtures used by the Company in the conduct of its
business are in good operating condition and repair, ordinary wear and tear
excepted, and are sufficient for the type and magnitude of their respective
operations.
3.13 Personal Property. The Company has good and marketable title, free
and clear of all title defects, security interests, pledges, options, claims,
liens, encumbrances and restrictions of any nature whatsoever (except for such
non-monetary imperfections of title and encumbrances, if any, as do not
materially detract from the value of or materially interfere with the present
use of such property) to (or, in the case of leased properties and assets, valid
leasehold interests in) all inventory and receivables and to any item of
machinery, equipment, or tangible or intangible personal property reflected on
the Audited Balance Sheet or used in the Company's business (regardless of
whether reflected on the Audited Balance Sheet). Section 3.13 of the Company
Disclosure Letter sets forth a list of all items of machinery, equipment, and
other personal tangible property used in the Company's business. Except as shown
on Section 3.13 to the Company Disclosure Letter, all the machinery, equipment
and other tangible personal property is in good operating condition and repair,
normal wear and tear excepted, and is sufficient for the type and magnitude of
their operations as currently conducted. At the Closing Date, the Company will
possess all of the personal property wherever located used to conduct its
business as conducted prior to the Closing.
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3.14 Directors and Officers. Section 3.14 of the Company Disclosure
Letter sets forth a complete and correct list of all present officers and
directors of the Company.
3.15 Certain Transactions. No Affiliate is presently a party to any
agreement or arrangement with the Company: (i) providing for the furnishing of
raw materials, products or services to or by, or (ii) providing for the sale or
rental of real or personal property to or from, any such entity.
3.16 Patents, Trademarks, Etc. All rights, patents, trademarks, trade
names, service marks, mask work rights, copyrights, processes, designs,
formulas, inventions, trade secrets, know-how, technology or other intellectual
rights and any applications or registrations therefor, and all mask works, net
lists, schematics, source code, computer software programs and all other
tangible and intangible information or material (collectively, the "Intellectual
Property Rights") which are necessary to the current conduct of the Company's
business are owned, licensed or possessed, by the Company. To the Company's
knowledge, the current conduct of the Company's business does not infringe any
Intellectual Property Rights of any other person. No litigation is pending or,
to the knowledge of the Company, has been threatened against the Company or any
officer, director, shareholder, employee or agent of the Company, for the
infringement of any Intellectual Property Rights of any other party or for the
misuse or misappropriation of any Intellectual Property Rights owned by any
other party nor does any basis exist for such litigation. To the Company's
knowledge, there has been no infringement or unauthorized use by any other party
of any Intellectual Property Rights belonging to the Company. Section 3.16 of
the Company Disclosure Letter sets forth a list of all Intellectual Property
Rights belonging to or used by the Company.
3.17 Litigation and Other Proceedings. Neither the Company nor any of
its officers or directors in such capacity is a party to any pending or, to the
best knowledge of the Company, threatened action, suit, claim, proceeding or
investigation in the United States (including the Defense Contract Audit Agency,
the Inspector General or the General Accounting Office) or elsewhere, and the
Company is not subject to any order, writ, judgment, decree or injunction which
materially adversely affects or may reasonably be expected to so affect the
business or assets of the Company or which prevents or may reasonably be
expected to prevent completion of the Merger. Section 3.17 to the Disclosure
Letter contains a complete list of all claims brought against the Company since
December 31, 1991, together with a brief statement of the nature and amount of
the claim, the court and jurisdiction in which the claim was brought, the
resolution (if resolved), and the availability of insurance to cover the claim.
3.18 Contracts. Section 3.18 to the Company Disclosure Letter lists all
currently effective contracts to which the Company is a party or by which the
Company or any of its
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respective properties or assets are bound which (i) involve the payment by the
Company of more than $25,000 over the remaining term of the contract; (ii) are
financing documents, loan agreements or promissory notes; (iii) are otherwise
material to the business of the Company and are not for the purchase or sale of
goods or services in the ordinary course of business; or (iv) are
distributorship or other agreements relating to the marketing of products. The
Company, and to the knowledge of the Company, all of the other parties to such
agreements, are in compliance with all material provisions of all such
agreements in which failure to so comply would have a material adverse effect on
the condition, financial or otherwise, assets, liabilities, business or results
of operations of the Company, and to the knowledge of the Company no fact exists
which is, or with the passage of time is reasonably likely to become, a material
default under any of them.
3.19 Insurance and Banking Facilities. Section 3.19 to the Company
Disclosure Letter sets forth a complete and correct list of (i) all contracts of
insurance and indemnity of or relating to the Company (except insurance related
to employee benefits) in force at the date of this Agreement (including name of
insurer or indemnitor, agent, annual charge, coverage and expiration date); (ii)
the names and locations of all banks in which the Company has accounts; and
(iii) the names of all persons authorized to draw on such accounts. All premiums
and other payments due with respect to all contracts of insurance or indemnity
in force as of the date of this Agreement have been or will be paid.
3.20 Personnel. Section 3.20 to the Company Disclosure Letter sets forth
a complete and correct list of (i) all employment contracts, collective
bargaining agreements, and all compensation plans, agreements, programs,
practices, commitments or other arrangements of any type, including bonus,
profit sharing, incentive compensation, pension and retirement agreements
respecting or affecting any employees of the Company; and (ii) all insurance,
health, medical, hospitalization, dependent care, severance, fringe or other
employee benefit plans, agreements, programs, practices, commitments or other
arrangements of any type in effect for employees of the Company; provided,
however, that clauses (i) and (ii) of this Section shall be deemed inapplicable
to any employee benefit plan which is required to be listed in Section 3.25 of
the Company Disclosure Letter. Section 3.20 of the Disclosure Letter includes a
list of all employees of the Company and their compensation levels sorted by
exempt and non-exempt status. The Company has been and is in compliance with the
terms of, and any material laws or regulations applicable to, all such plans,
agreements, practices, commitments or programs.
3.21 Powers of Attorney and Suretyships. The Company does not have any
power of attorney outstanding (other than a power of attorney issued in the
ordinary course of business with respect to tax matters or to customs agents and
customs brokers), and, except for obligations as an endorser of negotiable
instruments
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incurred in the ordinary course of business, the Company does not have any
obligations or liabilities (absolute or contingent) as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise respecting the obligation
of any other person.
3.22 Minutes and Stock Records. The Company has provided Parent and
Merger Sub and their representatives complete and correct copies of the minute
books and stock records of the Company. Such items contain an accurate and
correct record of all proceedings and actions taken at all meetings of, and all
actions taken by written consent by, the holders of capital stock of the Company
and its Board of Directors and any committees thereof, and all original
issuances and subsequent transfers and repurchases of its capital stock.
3.23 Governmental Compliance and Consents. The Company has complied with
all laws and regulations of the United States Department of Defense and other
governmental agencies with which Company has contracts, directly or indirectly,
relating to contracts including estimation of costs and reporting. Except as
described in the Company Disclosure Letter, the Company has not been audited by
any agency of the United States, including the Defense Investigative Service,
the Criminal Defense Investigative Service, the Inspector General or the Defense
Contract Administrative Agency. Section 3.23 to the Company Disclosure Letter
comprises a complete and correct list of all consents, approvals, orders and
authorizations from, and all registrations, qualifications, designations,
declarations and rulings with, any United States federal, state or local
governmental authority, required by or with respect to the Company in connection
with the consummation of the transactions contemplated by this Agreement or, to
the extent not listed in Section 3.4 to the Disclosure Letter, necessary to
enable the Company to conduct its business as it was conducted immediately
before the Closing.
3.24 Product Warranties. Attached to the Company Disclosure Letter are
copies of the standard forms of agreements containing warranties or guarantees
relating to the catalog products of the Company. No agreement to which the
Company is a party provides any warranty for a period longer than three years
from the date of the agreement.
3.25 Compliance with ERISA. Section 3.25 to the Company Disclosure
Letter sets forth a complete and correct list of all "employee pension benefit
plans" and all "employee welfare benefit plans" ("Plans") of the Company or in
which any of its employees participate. To the Company's knowledge, each such
Plan intended to qualify under Section 401(a) or Section 501(c)(9) of the Code
has received a favorable determination letter as to its qualification and has
been administered in compliance with ERISA and the Code and to the knowledge of
the Company no fact or circumstance exists which would preclude continuing, good
faith reliance on such determination letter or would adversely affect the
qualified status of any such Plan. No fact or circumstance exists, including,
without limitation, any
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"reportable event" (within the meaning of ERISA), in connection with any such
Plan which would reasonably be expected to constitute grounds for termination of
such Plan by the Pension Benefit Guaranty Corporation (the "PBGC") or of the
appointment by a court of a trustee to administer such Plan. The Company has not
incurred any liability to the PBGC (other than for payment of premiums which
have been timely paid), and the Company has complied in full with the minimum
funding requirements and in all material respects with the reporting, disclosure
and fiduciary requirements of ERISA and the Code.
3.26 Labor Matters. The Company is and has been in material compliance
with all applicable laws respecting employment and employment practices, terms
and conditions of employment and wages and hours, including, without limitation,
any such laws respecting employment discrimination, occupational safety and
health, and unfair labor practices. There is no unfair labor practice complaint
against the Company pending or, to the knowledge of the Company, threatened
before the National Labor Relations Board, Office of Federal Contract Compliance
Programs, or any comparable state, local or foreign agency. There is no (i)
labor strike, dispute, slowdown or stoppage actually pending, or, to the
knowledge of the Company, threatened against or directly affecting the Company;
(ii) grievance or arbitration proceeding pending and, to the knowledge of the
Company, no claims therefor exist; (iii) agreement which is binding on the
Company which restricts the Company from relocating or closing any of its
operations. The Company has not experienced any material work stoppage in the
last 18 months. The Company is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them or amounts required to be
reimbursed to such employees. Upon termination of the employment of any of the
employees of the Company before or after the Closing Date, neither the Company
nor Parent will be liable to such employee for severance pay. The Company is not
a party to or bound by any collective bargaining agreements.
3.27 Hazardous Materials. Except as set forth in Section 3.27 of the
Company Disclosure Letter:
(i) the Company has not caused, and is not causing or threatening
to cause, any disposals or releases of any Hazardous Material on or
under any properties which it (A) leases, occupies or operates or (B)
previously owned, leased, occupied or operated and to the Company's
knowledge, no such disposals or releases occurred prior to the Company
having taken title to, or possession or operation of, any of such
properties; and no such disposals or releases are (and in case of such
disposals or releases referred to in (B) above to the Company's
knowledge) migrating or have migrated off of such properties in
subsurface soils, groundwater or surface waters;
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(ii) the Company has neither (A) arranged for the disposal or
treatment of Hazardous Material at any facility owned or operated by
another person, or (B) accepted any Hazardous Material for transport to
disposal or treatment facilities or other sites selected by the Company
from which facilities or sites there has been a release or there is a
release or threatened release of a Hazardous Material; any facility
identified in Section 3.27 of the Company Disclosure Letter under (A)
above has represented to the Company that it was duly licensed in
accordance with applicable law and that such facility was operated in
accordance with applicable laws and, to the Company's knowledge, has not
been listed in connection with the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA) by the United States
Environmental Protection Agency's Comprehensive Environmental Response,
Compensation, and Liability Information System (CERCLIS) or National
Priorities List (NPL) or any equivalent or like listing of sites under
state or local law (whether for potential releases of substances listed
in CERCLA or other substances).
(iii) the Company has no actual knowledge of, or any reason to
believe or suspect that, any release or threatened release of any
Hazardous Material originating from a property other than those leased
or operated by the Company has come to be (or may come to be) located on
or under properties leased, occupied or operated by the Company;
(iv) the Company has never installed, used, buried or removed any
surface impoundment or underground tank or vessel on properties owned,
leased, occupied or operated by the Company;
(v) the Company is and has been in compliance in all material
respects for the last three years with all federal, state, local or
foreign laws, ordinances, regulations, permits, approvals and
authorizations relating to air, water, industrial hygiene and worker
health and safety, anti-pollution, hazardous or toxic wastes, materials
or substances, pollutants or contaminants, and, to the Company's
knowledge, no condition exists on any of the real property owned by or
used in the business of the Company that would constitute a violation of
any such law or that constitutes or threatens to constitute a public or
private nuisance; and
(vi) There has been no litigation, administrative proceedings or
investigations or any other actions, claims, demands notices of
potential responsibility or requests for information brought or, to the
knowledge of the Company, threatened against the Company or any
settlement reached with any person or persons alleging the presence,
disposal, release or threatened release of any Hazardous Material on,
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from or under any of such properties or as otherwise relating to
potential environmental liabilities.
3.28 Order Backlog; Customer Complaints. Section 3.28 of the Company
Disclosure Letter contains a list of the aggregate backlog of orders for the
Company's products as of January 24, 1997, and identifies for each such order
the customer, product and price.
3.29 Brokers and Finders. The Company has not retained any broker or
finder in connection with the transactions contemplated by this Agreement.
3.30 Accuracy of Documents and Information. Neither the representations
or warranties made by the Company in this Agreement, nor those contained in any
document or written information prepared by the Company or its representatives,
financial statement, certificate, schedule or exhibit furnished or to be
furnished (or caused to be furnished) by the Company to Parent pursuant to this
Agreement, taken together as a whole contain or will contain any untrue
statement of a material fact, or omit or will omit a material fact necessary to
make the statements or facts contained herein or therein, in light of the
circumstances under which they were made, not misleading.
3.31 Collapsible Corporation; Parachute Payments. No election has been
made to treat the Company as a "consenting corporation" under Section 341(f) of
the Code, and the Company is not a party to any written or oral, formal or
informal, agreement or contract with a "disqualified individual" (as defined in
Section 280G(c) of the Code) which could result in a disallowance of the
deduction for any "excess parachute payment" (as defined in Section 280G(b)(1)
of the Code) under Section 280G of the Code.
3.32 Credit Cards. Section 3.33 of the Company Disclosure Letter sets
forth a complete and correct list of all credit cards issued or caused to be
issued by the Company to any person, firm or entity or under which the Company
is or may be liable for charges or payments.
3.33 Business Practices. The Company has not made, offered or agreed to
offer anything of value to any government official, political party or candidate
for government office nor has it taken any action which would cause it to be in
violation of the Foreign Corrupt Practices Act of 1977.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Except as set forth in the disclosure letter, a true and correct copy of
which has been delivered to Company on or prior to the date of this Agreement
(the "Parent Disclosure Letter"), Parent and Merger Sub represent to the Company
that:
4.1 Organization and Authority. Each of Parent and Merger Sub (i) is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California; (ii) has all necessary corporate power to own and
lease its properties, to carry on its business as now being conducted and to
enter into and perform this Agreement; and (iii) is qualified to do business in
all jurisdictions in which the failure to so qualify would have a material
adverse effect on its business or financial condition.
4.2 Capitalization. (i) The authorized capital stock of Parent is
5,000,000 shares of Preferred Stock, none of which are issued and outstanding,
and 40,000,000 shares of Parent Common, of which 11,502,655 shares were issued
and outstanding as of January 31, 1997. All such issued and outstanding shares
have been duly authorized and validly issued, and are fully paid and
nonassessable. As of January 31, 1997, Parent had outstanding options to
purchase 403,163 shares of Parent Common pursuant to its existing plans. Except
as set forth in the preceding sentence, there are no outstanding warrants,
options, agreements, convertible or exchangeable securities or other commitments
pursuant to which the Company is or may become obligated to issue, sell,
purchase, retire or redeem any shares of capital stock or other securities. The
Parent has delivered to the Company copies of its Articles of Incorporation, as
amended, and Bylaws as in effect on the date of this Agreement.
(ii) The authorized capital stock of Merger Sub is One Million
(1,000,000) shares of Merger Sub Common, of which One Thousand (1,000) shares
are issued and outstanding. All such issued and outstanding shares have been
duly authorized and validly issued, are fully paid an nonassessable, and are
held by Parent. There are no outstanding warrants, options, agreements,
convertible or exchangeable securities or other commitments pursuant to which
Merger Sub is or may become obligated to issue, sell, purchase, retire or redeem
any shares of stock or other securities.
4.3 Authority Relating to this Agreement; No Violation of Other
Instruments.
4.3.1 The execution and delivery of this Agreement and all other
agreements to which Parent or Merger Sub is a party or will be a party that are
exhibits to this Agreement and the performance hereunder and thereunder by
Parent or Merger Sub have been duly authorized by all necessary corporate action
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on the part of Parent or Merger Sub and, assuming execution of this Agreement
and such other agreements by the Company and each of the parties thereto, this
Agreement and such other agreements will constitute a legal, valid and binding
obligation of Parent or Merger Sub, enforceable against Parent or Merger Sub in
accordance with its terms, subject as to enforcement: (i) to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other laws of general
applicability relating to or affecting creditors' rights; and (ii) to general
principles of equity, whether such enforcement is considered in a proceeding in
equity or at law.
4.3.2 Neither the execution of this Agreement or any other
agreements to which Parent or the Merger Sub is a party or will be a party that
is an exhibit to this Agreement nor the performance of any of them by Parent or
Merger Sub will: (i) conflict with or result in the breach or violation of the
terms of any decree, judgment, order, law or regulation of any court or other
governmental body now in effect applicable to Parent or Merger Sub; (ii)
conflict with, or result in, with or without the passage of time or the giving
of notice, any breach of any of the terms, conditions and provisions of, or
constitute a default under, any material indenture, mortgage, lease, agreement
or other instrument to which Parent or Merger Sub is a party or by which it is
bound; or (iii) violate or conflict with any provisions of Parent's or Merger
Sub's Articles of Incorporation, Bylaws, or similar organizational instruments.
4.3.3 No consent from any third party and no consent, approval or
authorization of, or declaration, filing or registration with, any governmental
or regulatory authority is required to be made or obtained by Parent or Merger
Sub in order to permit the execution, delivery or performance of this Agreement
or any other agreement to which Parent or Merger Sub is a party or will be a
party that is an exhibit to this Agreement, or the consummation of the
transactions contemplated by this Agreement and such other agreements.
4.4 Financial Statements. Parent has delivered the following
consolidated financial statements of Parent (the "Parent Financial Statements")
to the Company:
(i) Balance Sheet of Parent as of November 3, 1996, (unaudited);
(ii) Statement of Income for the period ended November 3, 1996
(unaudited);
(iii) Audited Balance Sheets of Parent dated as of January 31, 1996
together with audited Statements of Operations, Shareholders' Equity and Changes
in Cash Flow during the three years ended January 31, 1996.
Each Parent Financial Statement together with the notes thereto is in accordance
with the books and records of Parent, fairly
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presents the financial position of Parent and the results of operations of
Parent for the period indicated, and has been prepared in accordance with
generally accepted accounting principles consistently applied, except that the
unaudited income statement does not contain all the notes required under
generally accepted accounting principles and comply as to form with applicable
accounting requirements of the SEC.
4.5 Absence of Undisclosed Liabilities. As of November 3, 1996, Parent
had no indebtedness or liability (absolute or contingent) which is not shown or
provided for in full on the Balance Sheet dated November 3, 1996 included in the
Parent Financial Statements. Except as set forth in the Balance Sheet dated
November 3, 1996 included in the Parent Financial Statements, Parent and its
Subsidiaries do not have outstanding on the date of this Agreement, nor will it
have outstanding on the Closing Date, any indebtedness or liability (absolute or
contingent) other than those incurred since November 3, 1996 in the ordinary
course of business.
4.6 Shares Issued in Connection With the Merger. The shares of Parent
Common to be issued to the Holders pursuant to the Merger, when issued in
accordance with this Agreement and the Merger Agreement, will be duly
authorized, validly issued, fully paid and nonassessable. The shares of Parent
Common to be issued to the holders of Company Options upon exercise of the
Company Options after the Merger, when issued upon exercise of the Company
Options in accordance with this Agreement, the Merger Agreement, and the Company
Plan, will be duly authorized, validly issued, fully paid and nonassessable.
4.7 Full Disclosure. All reports, schedules and statements (including
all exhibits and schedules thereto and all documents incorporated by reference
therein) required to be filed by the Parent within the year prior to the date of
this Agreement under the Exchange Act, copies of which have been furnished to
the Company, have been duly filed, were in substantial compliance with the
requirements of their respective forms, and were complete and correct in all
material respects as of the dates at which the information was furnished. As of
the date of filing, no such report contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. Since November 3, 1996, except as contemplated by this
Agreement, Parent has conducted its business in the ordinary course and there
has not been any material adverse change in the business, financial condition or
results or operations or cash flows of Parent.
4.8 Activities of Merger Sub. Merger Sub was formed for the purpose of
participating in the Merger as contemplated in this Agreement. Parent has
carried on no business on behalf of the Merger Sub.
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4.9 Litigation. Except as disclosed to the Company or in Parent's
filings with the SEC, there is no pending or, to the best of Parent's knowledge,
threatened lawsuit, administrative proceeding, arbitration, labor dispute or
governmental investigation to which Parent is a party or by which any material
portion of its assets taken as a whole may be bound, and which, if adversely
determined, would have a material adverse effect on Parent. There are no
outstanding orders, judgments, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against Parent.
4.10 Compliance with Laws. Parent has not violated in any material
respect and is not, to its knowledge, in violation in any material respect of
any law, statute, ordinance or regulation applicable to the business or affairs
of Parent where such violation could reasonably be expected to have a material
adverse effect on Parent.
4.11 Eligibility to Use Form S-3. Parent meets the eligibility
requirements for use of a registration statement on Form S-3.
ARTICLE V
COVENANTS OF THE COMPANY
5.1 Access to Properties and Records. Throughout the period between the
date of this Agreement and the Closing, the Company shall give Parent and its
authorized officers, employees, attorneys, and independent public accountants
and other representatives reasonable access to information and documents
relating to this Agreement and the transactions contemplated by this Agreement,
and shall provide Parent with such financial, technical and operating data and
other information pertaining to the business of the Company as Parent may
request, including the auditors work papers in connection with the Audited
Financials. No investigation by Parent or its representatives made before or
after the date of this Agreement shall affect the representations or warranties
of the Company contained in this Agreement, and all such representations and
warranties shall survive any such investigation to the extent set forth in
Section 11.1 of this Agreement.
5.2 Conduct of Business Prior to Closing. The Company agrees that, after
the date of this Agreement and before the Closing, except as otherwise
permitted, required or contemplated by this Agreement or expressly permitted by
Parent in writing, the business of the Company shall be conducted in the
ordinary course consistent with prior practices and in a prudent, businesslike
fashion. Without limiting in any way the generality of the foregoing and except
as so permitted, required or contemplated, the Company shall not:
(i) merge with or into or consolidate with any other corporation;
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(ii) amend its Articles of Incorporation or Bylaws;
(iii) change its benefit structures or salary rates (other than
normal merit increases or promotions), enter into or materially modify
any employment contracts or severance arrangements, or enter into
collective bargaining or similar agreements;
(iv) make any change in its authorized or outstanding capital stock
or otherwise in its capital structure;
(v) incur any indebtedness for borrowed money;
(vi) issue or deliver any stock, bonds or other securities or debt
instruments, or any options, warrants or other rights calling for the
issuance or delivery thereof;
(vii) declare or make, or agree to declare or make, any payment or
dividends or distributions or purchase or redeem, or agree to purchase
or redeem, any of its capital stock or other securities;
(viii) enter into any transactions other than in the ordinary course
of business (including make any capital expenditure in an amount greater
than $25,000 in the aggregate);
(ix) terminate or amend any material contract, agreement, license or
other instrument to which the Company is a party or by which any of the
Company or any of its assets are bound, except agreements which by their
terms are terminable in the ordinary course of business; or
(x) enter into any contract or commitment in the ordinary course of
business which involves more than $25,000 or has a duration longer than
one year without prior consultation with and consent of Parent which
consent shall not be unreasonably withheld.
Without limiting the generality of the foregoing, the Company shall
continue to pay accounts payable and to collect accounts receivable in the
ordinary course of business in accordance with past practice, to maintain and
preserve customer relations and to maintain insurance; and the Company shall not
change or permit to be changed in any material respect the accounting or
valuation practices applicable to its assets or businesses.
5.3 Notice of Events. Throughout the period between the date of this
Agreement and the Closing, the Company shall promptly advise Parent in writing
of any and all material events and developments concerning its financial
position, assets, liabilities, results of operations or business or any of the
items or matters covered by the Company's representations and warranties
contained in this Agreement.
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5.4 Shareholders Approval and Board Recommendation. The Company shall
submit this Agreement and the Merger to its shareholders for approval in
accordance with all applicable laws and the Articles of Incorporation and Bylaws
of the Company.
5.5 No Other Negotiations. Prior to the Closing, the Company shall not
conduct negotiations or discussions with any other party regarding a possible
acquisition of the Company or of all or a substantial part of its business or
assets.
5.6 Cooperation. The Company shall cooperate with Parent in preparing
and making all filings or submissions to governmental agencies required in
connection with the transactions contemplated by this Agreement. The Company, at
any time before or after the Closing, shall execute, acknowledge and deliver any
further assignments, assurances, documents and instruments of transfer
reasonably requested by Parent and Merger Sub and shall take any other action
consistent with the terms of this Agreement that may reasonably be requested by
Parent and Merger Sub for the purpose of consummating the Merger.
5.7 Employees. The Company shall use its best efforts to assist Parent
and Merger Sub in retaining the continued services of its key employees.
5.8 Best Efforts to Close. The Company shall use its best efforts to
fulfill the conditions set forth in Article 5 of this Agreement over which it
has control or influence, and to complete the transactions contemplated by this
Agreement.
5.9 Agreements with Respect to Affiliates. The Company shall deliver to
Parent a letter (the "Affiliate Letter") identifying all persons who are
"affiliates" of the Company under the 1933 Act. The Company shall use its best
efforts to cause each person who is identified as an "affiliate" in the
Affiliate Letter to deliver to Parent, prior to the Effective Time a written
agreement (an "Affiliate Agreement") in connection with restrictions on
affiliates in respect of pooling of interests accounting treatment, in
substantially the form of Exhibit 5.9.
5.10 Shareholder Agreement and Investment Letter. The Company shall use
its best efforts to cause each shareholder of the Company to execute the
Investment Letter concurrently with the execution of this Agreement or as
promptly as practicable after (i) the date of this Agreement (with respect to
shareholders as of the date of this Agreement) or (ii) the date such persons
become a shareholder.
5.11 Registration Rights Agreement. The Company shall use
its best efforts to cause each Holder to execute and deliver the
Registration Rights Agreement ("Rights Agreement") in the form
attached hereto as Exhibit 5.11.
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ARTICLE VI
COVENANTS OF PARENT AND MERGER SUB
6.1 Access to Properties and Records. Throughout the period between the
date of this Agreement and the Closing, Parent shall give the Company and its
authorized officers, employees, attorneys, and independent public accountants
and other representatives reasonable access to information and documents
relating to this Agreement and the transactions contemplated by this Agreement,
and shall provide the Company with such financial, technical and operating data
and other information pertaining to the business of Parent as the Company may
request, including the auditors work papers in connection with Parent's
financial statements. No investigation by the Company or its representatives
made before or after the date of this Agreement shall affect the representations
or warranties of Parent contained in this Agreement, and, subject to Section
10.1, all such representations and warranties shall survive any such
investigation.
6.2 Information. Parent shall supply to the Company such information as
the Company shall reasonably request in connection with the Company's
solicitation of shareholder approval of this Agreement and the Merger.
6.3 Notice of Events. Throughout the period between the date of this
Agreement and the Closing, Parent shall promptly advise the Company in writing
of any and all material events and developments concerning its financial
position, assets, liabilities, results of operations or business or any of the
items or matters covered by the Parent's representations and warranties
contained in this Agreement.
6.4 Employee Benefits. With respect to the employees of the Company at
the Closing Date, Parent and Merger Sub shall continue coverage of such
employees under employee benefit plans of the Company as they exist at the
Closing Date or shall include such employees under benefit plans of Parent. Such
employees who become covered under Parent's plans shall receive credit for
length of service for the period of their continuous service as employees of the
Company.
6.5 Best Efforts to Close. Parent and Merger Sub shall use their best
efforts to fulfill all of the conditions set forth in Article 6 of this
Agreement over which they have control or influence, and to complete the
transactions contemplated by this Agreement.
6.6 Nasdaq Listing. Parent shall file with the National Association of
Securities Dealers, Inc. a Notification Form for Listing of Additional Shares on
the Nasdaq Stock Market of the Parent Common to be received by the Holders in
the Merger and upon exercise of the Company options assumed by Parent.
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6.7 No Actions Inconsistent with Tax-Free Reorganization. Parent and
Merger Sub shall (and, following the Effective Time, Parent shall cause the
Company to) take no action with respect to the capital stock, assets or
liabilities of the Company that would cause the Merger to fail to qualify as a
"reorganization" within the meaning of Sections 368(a)(1)(A) and (a)(2)(E) of
the Code. Without limitation on the generality of the foregoing, following the
Effective Time, Parent shall cause the Company to either continue the historic
business of the Company or use a significant portion of the Company's historic
business assets in a business.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to consummate the Merger are
subject to the fulfillment, at or before the Closing, of each and every one of
the following conditions, any one or more of which may be waived by Parent and
Merger Sub.
7.1 Representations and Warranties True at Closing. Each of the
representations and warranties of the Company contained in this Agreement shall
be deemed to have been made again at and as of the Effective Time and shall be
true and correct in all material respects.
7.2 Performance of Covenants. All of the covenants required to be
performed by the Company at or before the Closing pursuant to the terms of this
Agreement shall have been duly performed.
7.3 Certificate. Parent and Merger Sub shall have received a certificate
signed by the Company to the effect that the conditions set forth in Sections
7.1 and 7.2 have been satisfied.
7.4 Opinion of Counsel. Parent and Merger Sub shall have received the
opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to the Company, in form
attached hereto as Exhibit 7.4.
7.5 Resignations of Directors. Parent shall have received from each
director of the Company a duly executed resignation of such director effective
as of the Effective Time.
7.6 Material Changes. Between the date of this Agreement and the Closing
there shall not have occurred any event or transaction of the nature described
in Section 3.9 of this Agreement.
7.7 Consents. Parent shall have received, in writing and in form and
substance reasonably acceptable to Parent, all necessary consents, approvals and
waivers with respect to the consummation of the transactions contemplated by
this Agreement.
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7.8 Shareholder Approval; Potential Dissenting Shares. The Agreement and
the Merger shall have been duly approved by the shareholders of the Company in
accordance with all applicable laws, the Articles of Incorporation and Bylaws of
the Company and otherwise and there shall be no Dissenting Shares.
7.9 Pooling Letter from Accountants. The Board of Directors of Parent
shall have received a letter from each of Ernst & Young LLP and Ireland San
Filippo, dated as of the Closing in form and substance satisfactory to Parent,
stating that the Merger will be treated as a pooling of interests for financial
accounting purposes.
7.10 No Action to Prevent Completion. Parent shall not have determined,
in the reasonable exercise of its discretion, that the transactions contemplated
by this Agreement have become inadvisable or impractical by reason of the
institution or threat of institution, by any federal, state, local or foreign
governmental authority or any other person or entity, of litigation or other
proceedings with respect to or affecting the transactions contemplated by this
Agreement.
7.11 Employment and Non-Competition Agreements. Each of ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall have entered into his
respective employment and non-competition agreement (the "Employment Agreement")
with Parent in the form attached hereto as Exhibit 7.11.
7.12 No Material Adverse Changes. There shall have been no material
adverse changes in the Company's financial condition, business, assets or
liabilities (actual or contingent) from the date of this Agreement through the
Closing.
7.13 Agreements with Respect to Affiliates. Parent shall have received
executed Affiliates Letters.
7.14 Investment Letter. Parent shall have received an executed
Investment Letter from each Holder.
7.15 Approval of the Merger. The Board of Directors of Parent and Merger
Sub and the shareholder of Merger Sub shall have approved the Merger.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company under this Agreement are subject to the
fulfillment, at or before the Closing, of each and every one of the following
conditions, any one or more of which may be waived by the Company.
8.1 Representations and Warranties True at Closing. The representations
and warranties of Parent and Merger Sub contained
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in this Agreement shall be deemed to have been made again at and as of the
Effective Time and shall be true in all material respects.
8.2 Performance of Covenants. All of the covenants required to be
performed by Parent and Merger Sub at or before the Closing pursuant to the
terms of this Agreement shall have been duly performed.
8.3 Certificate. At the Closing, the Company shall have received a
certificate signed on behalf of Parent and Merger Sub to the effect that the
conditions set forth in Sections 8.1 and 8.2 have been satisfied.
8.4 Opinion of Counsel. The Company shall have received an opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇, counsel to Parent and Merger Sub, dated as of
the Closing Date in the form attached as Exhibit 8.4.
8.5 Consents. The Company shall have received all necessary consents,
approvals and waivers with respect to the consummation of the transactions
contemplated by this Agreement.
8.7 Shareholder Approval. This Agreement and the Merger shall have been
duly approved by the shareholders of the Company in accordance with all
applicable laws, the Articles of Incorporation and Bylaws of the Company and
otherwise.
8.8 Pooling of Interests. The Board of Directors of the Company shall
have received copies of the letter set forth in Section 7.9 above.
8.9 Employment Agreements. Each of Messrs. Mongillo,
McLaughlin, Matson, Han, Criswell, Johnson, England and ▇▇▇▇▇
shall have entered into his respective Employment Agreement with
Parent.
8.10 Approval of Merger. The Board of Directors of Parent and Merger Sub
and the shareholder of Merger Sub shall have approved the Merger.
8.11 Rights Agreement. Parent shall have entered into the Rights
Agreement with each Holder.
8.12 No Material Adverse Changes. There shall have been no material
adverse changes in Parent's financial condition, business, assets or liabilities
(actual or contingent) from the date of this Agreement through the Closing.
ARTICLE IX
COVENANTS OF THE COMPANY, PARENT AND MERGER SUB
9.1 Press Releases. No party hereto, nor any of their Affiliates, shall
issue any press release, make any public
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announcement or otherwise release any information publicly regarding the Merger,
without the consent of the other parties which shall not be unreasonably
withheld or delayed.
9.2 Confidential Information. Except as otherwise required by applicable
law, each party to this Agreement will keep confidential data, information or
documents it obtains from the other and will not disclose (other than to its
attorneys, accountants, or advisors, who are themselves required to keep such
information confidential) prior to the Closing (or ever, if the Closing does not
occur) to any third party such data, information or documents obtained from the
other or from any director, officer, employee or agent of the other or any data
or documents prepared on the basis of such data, information or documents except
in each case for any data, information or document which: (i) was or is in the
public domain; (ii) was already known prior to its disclosure by the other or
(iii) is disclosed to a party by a third party that is not an agent of the
other.
9.3 Eligibility for Use of S-3. Parent covenants to use its reasonable
best efforts to remain eligible for the use of a Registration Statement on Form
S-3 during the term of the Rights Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Survival of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement, including those contained
in the exhibits, schedules and other documents delivered pursuant to this
Agreement, shall survive until and expire upon the Closing.
10.2 Expenses. Each party to this Agreement shall pay its own costs and
expenses (including all legal, accounting, broker, finder and investment banker
fees) relating to this Agreement, the negotiations leading up to this Agreement
and the transactions contemplated by this Agreement.
10.3 Amendment. This Agreement shall not be amended except by a writing
duly executed by the Company, Parent and Merger Sub. This Agreement may be
amended by the parties hereto at any time before or after the approval of the
Merger by the shareholders of the Company; provided, however, that following
approval of the Merger by the shareholders of the Company, no amendment shall be
made that by law requires the further approval of such shareholders without
obtaining such further approval.
10.4 Entire Agreement. This Agreement and the Agreement or Merger,
including the exhibits, schedules and other documents delivered pursuant to this
Agreement, contain all of the terms and conditions agreed upon by the parties
relating to the subject matter of this Agreement and supersede all prior and
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contemporaneous agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, respecting the subject matter.
10.5 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California.
10.6 Headings. The headings contained in this Agreement are intended
solely for convenience and shall not affect the rights of the parties to this
Agreement.
10.7 Mutual Contribution. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision of
this Agreement shall be construed against any party on the ground that party
drafted the provision or caused it to be drafted.
10.8 Notices. All notices, requests, demands, and other communications
made in connection with this Agreement shall be in writing and shall be deemed
to have been duly given on the date of delivery if delivered by hand delivery or
by facsimile to the persons identified below, two days after dispatch if sent by
a nationally-recognized overnight courier service or five days after mailing if
mailed by certified or registered mail postage prepaid return receipt requested
addressed as follows:
If to Parent or Merger Sub:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
REMEC, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇ White & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
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32
If to the Company:
Radian Technology, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Facsimile: (▇▇▇)-▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇)▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation Number: (▇▇▇) ▇▇▇-▇▇▇▇
Such persons and addresses may be changed, from time to time, by means of a
notice given in the manner provided in this Section.
10.9 Waiver. Waiver of any term or condition of this Agreement by any
party shall not be construed as a waiver of any subsequent breach or failure of
the same term or condition, or a waiver of any other term or condition of this
Agreement.
10.10 Binding Effect; Assignment. The parties agree that this Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns. No party to this Agreement may assign or
delegate, by operation of law or otherwise, all or any portion of its rights,
obligations or liabilities under this Agreement without the prior written
consent of all other parties to this Agreement, which they may withhold in their
absolute discretion.
10.11 No Third Party Beneficiaries. Nothing in this Agreement shall
confer any rights upon any person or entity which is not a party or an assignee
of a party to this Agreement.
10.12 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures to each counterpart were
upon a single instrument. All counterparts shall be deemed an original of this
Agreement.
10.13 Further Assurances. After the Closing the parties to this
Agreement shall take such further actions as they agree may be reasonably
necessary to carry out the transactions contemplated by this Agreement.
10.14 Termination.
10.14.1 Mutual Consent. This Agreement may be terminated at any
time prior to the Closing by means of the written consent of Parent and the
Company.
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10.14.2 Failure to Satisfy Conditions Not Waived. This Agreement
may be terminated by Parent and Merger Sub alone if there is a failure to
satisfy a condition set forth in Article VII which condition is not waived, and
by the Company if there is a failure to satisfy a condition set forth in Article
VIII which condition is not waived.
10.14.3 Closing Has Not Occurred. This Agreement may be terminated
by Parent alone or the Company alone, by written notice, if the Closing shall
not have taken place by March 31, 1997.
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IN WITNESS WHEREOF, REMEC, Inc., RTI Acquisition Corporation and Radian
Technology, Inc. have executed this Agreement and Plan of Reorganization and
Merger as of the first date written above.
REMEC, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and
Chief Executive Officer
RTI ACQUISITION CORPORATION
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and
Chief Executive Officer
RADIAN TECHNOLOGY, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President