JD
Draft June 7, 2009
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to § 240.14a-12
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AXSYS TECHNOLOGIES, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
common stock, par value $0.01 per share
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(2)
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Aggregate number of securities to which transaction applies:
11,622,629 outstanding common stock (includes restricted shares) and options to purchase 294,322 shares of common stock
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(3)
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
$54.00 per outstanding share of common stock plus $11,018,976 in the aggregate to
cash out options to purchase shares of common stock
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(4)
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Proposed maximum aggregate value of transaction: $638,640,940
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(5)
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Total fee paid: $35,636
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Fee paid previously with proxy materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date of
its filing.
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(1)
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Amount previously paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Preliminary Copy
June
[__]
, 2009
Dear Fellow Stockholders:
You are cordially invited to attend a special meeting of stockholders of Axsys Technologies,
Inc., which is referred to as Axsys, to be held on July
[___]
, 2009, at
[10:00 a.m.]
(Eastern Time),
at
[_____________________]
.
At the special meeting, we will ask you to adopt a merger agreement among Axsys, General
Dynamics Advanced Information Systems, Inc., which is referred to as GD AIS, and Vision Merger Sub,
Inc., an indirect, wholly owned subsidiary of General Dynamics Corporation, which is referred to as
General Dynamics, pursuant to which Axsys will become an indirect, wholly owned subsidiary of
General Dynamics and each of your shares of Axsys common stock, subject to certain
exceptions, will be converted into the right to receive $54.00 in cash, without interest.
The proxy statement accompanying this letter is furnished in connection with the solicitation
by the Board of Directors of Axsys of proxies to be used at the special meeting.
The Board of Directors of Axsys, which is referred to as the Board, has carefully reviewed and
considered the terms and conditions of the proposed merger. Based on its review, the Board has
determined that the merger is advisable to and in the best interests of Axsys and its stockholders.
Accordingly, the Board has unanimously approved the merger agreement and unanimously recommends
that you vote FOR the adoption of the merger agreement.
Your vote is very important. The merger cannot be completed unless holders of at least a
majority of shares of Axsys common stock outstanding and entitled to vote at the special meeting
vote to adopt the merger agreement.
Only holders of record of Axsys common stock at the close of business on June
[___]
, 2009, will
be entitled to vote at the special meeting. Please complete, sign, date and return your proxy. If
you hold your shares in street name, you should instruct your broker how to vote in accordance
with your voting instruction form. Completing a proxy now will not prevent you from being able to
vote at the special meeting by attending in person and casting a vote. Failure to submit a signed
proxy or to vote in person at the special meeting will have the same effect as a vote against the
adoption of the merger agreement.
The
proxy statement accompanying this letter explains the proposed merger and the merger agreement and provides
specific information concerning the special meeting. Please read the entire proxy statement
carefully.
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Sincerely,
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Stephen W. Bershad
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Chairman of the Board of Directors and
Chief Executive Officer
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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY [__], 2009
To Stockholders of Axsys Technologies, Inc.
A special meeting of stockholders of Axsys Technologies, Inc., which is referred to as Axsys,
will be held at
[10:00 a.m.]
(Eastern Time), on July
[___]
, 2009, at
[______________________________]
, unless postponed to a later date. The special
meeting is being held to consider and vote upon the following proposals:
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1.
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To adopt the Agreement and Plan of Merger, dated as of
June 4, 2009, as such
agreement may be amended from time to time in accordance with its terms, by and among
Axsys, General Dynamics Advanced Information Systems, Inc. and Vision Merger Sub, Inc.,
an indirect, wholly owned subsidiary of General Dynamics Corporation, which is General
Dynamics Advanced Information Systems, Inc.s ultimate parent. As a result of the
merger, Axsys will become an indirect, wholly owned subsidiary of General Dynamics
Corporation and each outstanding share of Axsys common stock, subject to certain
exceptions, will be converted into the right to receive $54.00 in cash, without
interest.
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2.
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To approve adjournments of the special meeting, if necessary, to permit further
solicitation of proxies if there are not sufficient votes at the time of the special
meeting to adopt the merger agreement.
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Only holders of record of shares of Axsys common stock at the close of business on June
[___]
,
2009, the record date for the special meeting, are entitled to notice of, and to vote at, the
special meeting and any adjournments or postponements thereof. Each share of common stock is
entitled to vote on all matters that properly come before the special meeting and is entitled to
one vote on each matter properly brought before the special meeting.
The Board of Directors of Axsys unanimously recommends that Axsys stockholders vote FOR the
adoption of the merger agreement.
Axsys cannot complete the merger unless the merger agreement is
adopted by Axsys stockholders. Adoption of the merger agreement requires the affirmative vote of
holders of at least a majority of shares of Axsys common stock outstanding and entitled to vote at
the special meeting. Stephen W. Bershad, who is our Chairman of the Board and Chief Executive
Officer and who owns in the aggregate 1,666,753, or approximately
14.3%, of the shares of our common stock
entitled to vote at the special meeting, has entered into a voting agreement under which he has
agreed to vote or cause to be voted all of his shares of Axsys common stock
FOR
the adoption of the merger agreement.
The attached proxy statement describes the proposed merger and the actions to be taken in
connection with the merger and provides additional information about the parties involved.
Whether or not you plan to attend the special meeting, please complete, sign and date the
enclosed proxy and return it promptly in the enclosed postage-paid return envelope, or give your
proxy by telephone or over the Internet by following the instructions on the proxy card. You may
revoke the proxy at any time prior to its exercise at the special meeting in the manner described
in the attached proxy statement. Completing a proxy now will not prevent you from being able to vote at
the special meeting by attending in person and casting a vote. Your vote at the special meeting
will supersede any previously submitted proxy.
If you fail to return your proxy or to attend the special meeting in person, your shares will
not be counted for purposes of determining whether a quorum is present at the special meeting and
will have the same effect as a vote AGAINST the adoption of the merger agreement.
Please do not send any stock certificates at this time.
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By order of the Board of Directors,
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Cynthia McNickle
Secretary
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June
[___]
, 2009
TABLE
OF CONTENTS
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iii
ANNEXES
Annex A Agreement and Plan of Merger
Annex B Voting Agreement
Annex C Opinion of Jefferies & Company, Inc.
Annex D Section 262 of the General Corporation Law of the State of Delaware
v
PRELIMINARY COPY
SUMMARY
This summary highlights selected information from this proxy statement and may not contain all
of the information that is important to you. You should carefully read this entire proxy
statement, including the attached annexes, and the other documents to which we have referred you.
We have included page references parenthetically to direct you to a more complete description of
the topics presented in this summary.
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Information About the Merger Parties
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Axsys Technologies, Inc.
Axsys Technologies, Inc., which is referred to as Axsys, we, us or the Company, designs and
manufactures precision optical solutions for defense, aerospace, homeland security, and commercial
applications. Our principal executive offices are located at 175 Capital Boulevard, Suite 103,
Rocky Hill, Connecticut 06067, and our telephone number is (860) 257-0200.
General Dynamics Advanced Information Systems, Inc.
General Dynamics Advanced Information Systems, Inc., which is referred to as GD AIS, is an
indirect, wholly owned subsidiary of General Dynamics Corporation. GD AIS designs, develops,
manufactures, integrates, operates and maintains mission systems for defense, space, intelligence,
surveillance, reconnaissance, homeland security and homeland defense customers. Headquartered in
Fairfax, Va., GD AIS specializes in ground systems; imagery processing; mission payloads; space
vehicles; maritime subsurface, surface and airborne mission systems; and tasking, collection,
processing, exploitation and dissemination programs for national intelligence. GD AIS principal
executive offices are located c/o General Dynamics Corporation at 2941 Fairview Park Drive, Suite
100, Falls Church, Virginia 22042, and its telephone number is (703) 876-3000.
Vision Merger Sub, Inc.
Vision Merger Sub, Inc., a Delaware corporation, which we refer to as Merger Sub, is an
indirect, wholly owned subsidiary of General Dynamics Corporation formed solely for the purpose of
effecting the merger with Axsys. Merger Sub has not conducted any unrelated activities since its
organization. Merger Subs principal executive offices are located c/o General Dynamics
Corporation at 2941 Fairview Park Drive, Suite 100, Falls Church, Virginia 22042, and its telephone
number is (703) 876-3000.
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The Special Meeting (page [12])
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We are furnishing this proxy statement to our stockholders as part of the solicitation of
proxies by our Board for use at the special meeting.
Date, Time and Place
The special meeting of stockholders of Axsys will be held at
[10:00 a.m.]
(Eastern Time), on
July
[___]
, 2009, at
[
]
, unless postponed to a later date.
1
Purpose
You
will be asked to consider and vote upon a proposal to adopt the
Agreement and Plan of Merger, which is referred to as the merger agreement. The
merger agreement provides that Merger Sub will merge with and into Axsys, and Axsys will become an
indirect, wholly owned subsidiary of General Dynamics. Each share of Axsys common stock that you
own immediately prior to the effective time of the merger will be converted into the right to
receive $54.00 in cash, without interest, subject to certain exceptions.
You will also be asked to vote to approve adjournments of the special meeting, if necessary,
to permit further solicitation of proxies if there are not sufficient votes at the time of the special meeting to adopt the merger agreement.
Record Date; Stockholders Entitled to Vote
You are entitled to vote at the special meeting if you owned shares of Axsys common stock as
of the close of business on June
[___]
, 2009, the record date for the special meeting. As of the
record date, there were [11,622,629] shares of Axsys common stock outstanding. You will have one
vote on each matter submitted to a vote at the special meeting for each share of Axsys common stock
that you owned as of the close of business on the record date.
Voting and Proxies
Stockholders can vote or submit a proxy for their shares of Axsys common stock on the matters
presented at the special meeting in four ways. See and read carefully Proposals to be Considered
at the Special Meeting Voting Voting and Proxies beginning on page
[14]
.
(a)
By Proxy
. You can cause your shares to be voted by signing, dating and returning the
enclosed proxy card. If you do this, the proxies will vote your shares of Axsys common stock in
the manner you indicate. All properly executed proxies that we receive prior to the vote at the
special meeting, and that are not revoked, will be voted in accordance with the instructions
indicated on the proxies. If you do not indicate instructions on the card, your shares of Axsys
common stock will be voted
FOR
the adoption of the merger agreement.
(b)
By Telephone
. After reading the proxy materials and with your proxy and voting
instruction form in front of you, you may call the toll-free number
[###]
using a touch-tone
telephone. You will be prompted to enter your control number from your proxy and voting
instruction form. This number will identify you and Axsys. Then you can follow the simple
instructions that will be given to you to record your proxy.
(c)
Over the Internet
. After reading the proxy materials and with your proxy and voting
instruction form in front of you, you may use your computer to access the Web site
http://
[URL]
. You will be prompted to enter your control number from your proxy and voting
instruction form. This number will identify you and Axsys. Then you can follow the simple
instructions that will be given to you to record your proxy.
(d)
In Person
. You may attend the special meeting and cast your vote in person.
The Internet and telephone proxy submission procedures have been set up for your convenience
and have been designed to authenticate your identity, allow you to give voting instructions and
confirm that those instructions have been recorded properly.
If you are a participant in the Axsys 401(k) Retirement Plan and hold shares of Axsys common
stock within the 401(k) plan, you will receive a proxy card that covers shares credited to your
plan
2
account. This proxy card serves as a voting instruction for the trustee of the plan in which
you are a participant. Participants who wish to vote via the Internet may submit their voting
instructions at
[http://www.proxyvoting.com/axys-esop]
. If you do not return this proxy card
to the plan trustee, or do not provide voting instructions via the Internet, the trustee will not vote the Axsys shares
credited to your account.
The trustee will vote unallocated shares of Axsys common stock held in the 401(k) plan in
direct proportion to the voting of allocated shares in the plan for which voting instructions have
been received unless otherwise required by applicable law.
Brokers or banks holding shares of Axsys common stock in street name may vote your shares of
Axsys common stock on the adoption of the merger agreement and adjournments of the special meeting, if necessary,
only
if you provide instructions on how to vote. Brokers or banks will provide you
with directions on how to instruct the broker or bank to vote your shares of Axsys common stock,
and you should carefully follow these instructions.
You may revoke your proxy at any time prior to the vote at the special meeting by delivering
to Axsys Corporate Secretary a signed notice of revocation or submitting a later-dated, signed
proxy (either manually, telephonically or over the Internet) following the instructions provided on the proxy card. You also may revoke your proxy by attending the special meeting and voting in person.
Attendance at the special meeting will not, in and of itself, result in the revocation of a proxy
or cause your shares of Axsys common stock to be voted.
Quorum
A quorum of stockholders is necessary to hold a valid meeting. Under our Amended and Restated
By-Laws, the holders of a majority of the outstanding shares of Axsys common stock, present in
person or by proxy, constitute a quorum.
If a quorum is not present,
the special meeting will be postponed until the holders of the number of votes required to constitute a quorum
attend.
If you submit a properly executed proxy card, even if you abstain from voting, your shares of
Axsys common stock will be counted for purposes of determining whether a quorum is present at the
special meeting. In the event that a quorum is not present at the special meeting or additional
votes must be solicited to adopt the merger agreement, it is expected that the meeting will be
adjourned or postponed to solicit additional proxies.
Vote Required
Adoption of the
merger agreement requires the affirmative vote of holders of at least a
majority of shares of Axsys common stock outstanding and entitled to vote at the special meeting.
If a quorum is present, a proposal to approve an adjournment of the special meeting requires the
affirmative vote of a majority of the votes cast by the stockholders entitled to vote, present in
person or by proxy at the special meeting. As of the record date, there were [11,622,629] shares of
Axsys common stock outstanding. Mr. Bershad, who owns in the aggregate 1,666,753, or approximately
14.3%, of the shares of our common stock entitled to vote at the special meeting, has entered into a
voting agreement under which he has agreed to vote or cause to be voted all of his shares
FOR
the adoption of the merger
agreement.
Effect of Abstentions and Broker Non-Votes on Voting
Abstentions and shares not in attendance and not voted at the special
meeting will have the same effect as a vote
AGAINST
the proposal to adopt the merger agreement
and will have no effect on the proposal to adjourn the special meeting. Because brokers or banks holding shares of Axsys common stock
in street name may vote your shares of Axsys common stock on the adoption of the merger agreement and adjournments of the special meeting, if necessary, only if you provide instructions on how to vote, there cannot be any broker non-votes
occurring in connection with either proposal at the special meeting. It
is very
3
important that
ALL
of our stockholders vote their shares of Axsys common stock, so please
promptly complete and return the enclosed proxy card.
Expenses of Proxy Solicitation
Our directors, officers and other employees may solicit proxies in person, by telephone,
electronically, by mail or other means, but they will not be specifically compensated for these
services. Brokers, banks and other persons will be reimbursed by us for expenses they incur in
forwarding proxy material to obtain voting instructions from beneficial stockholders. We have also
hired Georgeson, Inc., which is referred to as Georgeson, to assist in the solicitation of proxies. The total cost of solicitation of
proxies will be borne by us. For a description of the costs and expenses to us of soliciting
proxies, see Proposals to be Considered at the Special Meeting Solicitation Costs on page
[15]
.
Stockholders should not send in their stock certificates with their proxies.
A letter of
transmittal with instructions for the surrender of certificates representing shares of Axsys common
stock will be mailed to stockholders if the merger is completed.
Board Recommendation (page [22])
The Board has found and declared that the merger agreement and the merger are advisable to and in
the best interests of the Company and its stockholders, has unanimously approved the merger
agreement and unanimously recommends that our stockholders vote
FOR
the adoption of the merger
agreement. The Board also unanimously recommends that you vote
FOR
any adjournment of the special
meeting, if necessary, to permit solicitation of further proxies if there are not sufficient votes
at the time of the special meeting to adopt the merger agreement.
The Merger and the Merger Agreement (pages [17] & [41])
The rights and obligations of the parties to the merger agreement are governed by the specific
terms and conditions of the merger agreement and not by any summary or other information in this
proxy statement. Therefore, the information in this proxy statement regarding the merger agreement
and the merger is qualified in its entirety by reference to the merger agreement, a copy of which
is attached as
Annex A
to this proxy statement. We encourage you to read the merger
agreement carefully and in its entirety because it is the principal legal agreement that governs
the merger.
Structure of the Merger
At the effective time of the merger, Merger Sub, an indirect, wholly owned subsidiary of
General Dynamics, will be merged with and into Axsys. Axsys will continue as the surviving
corporation of the merger and become an indirect, wholly owned subsidiary of General Dynamics.
Axsys Common Stock, Including Restricted Common Stock
Subject to certain exceptions,
at the effective time of the merger, each outstanding share of Axsys common stock, including
restricted stock, which will become fully vested, will be converted into the right to receive
$54.00 in cash, without interest, less any applicable withholding tax. After the effective time of the
merger, shares of Axsys common stock will no longer be publicly traded.
4
Axsys Stock Options
Pursuant to the merger agreement, at the effective time of the merger, each option outstanding
immediately prior to the effective time of the merger will become fully vested and will be
converted into the right to receive the excess, if any, of $54.00 (without interest) over the
exercise price per share of the stock option multiplied by the number of shares of Axsys common
stock subject to the stock option, less any applicable withholding tax.
No consideration will be payable in respect of any options with an exercise price per share equal to or in excess of $54.00
as of immediately prior to the effective time of the merger, and all such options will be cancelled automatically at the effective time of the merger.
Opinion of Jefferies & Company, Inc.
Jefferies & Company, Inc., which is referred to as Jefferies, has delivered its opinion to the
Board to the effect that, as of June 3, 2009 and based upon and subject to the various
considerations and assumptions set forth therein, the merger consideration to be received by the
holders of shares of Axsys common stock pursuant to the merger agreement was fair, from a financial
point of view, to those holders. The full text of the written opinion of Jefferies, dated June 3,
2009, is attached to this proxy statement as
Annex C
.
We urge you to read that opinion
carefully and in its entirety. Jefferies opinion was provided to the Board in connection with the
Boards consideration of the merger and addresses only the fairness, from a financial point of view
and as of the date of Jefferies opinion, of the merger consideration to be received by the holders
of Axsys common stock pursuant to the merger agreement and does not address any other aspect of the
merger. Jefferies opinion does not constitute a recommendation as to how any holder of Axsys
common stock should vote on the merger or any matter related thereto.
Axsys has agreed to pay
Jefferies a fee for its services, a portion of which was earned upon delivery of Jefferies opinion,
and the balance of which is payable contingent upon consummation of the merger, as described in
greater detail on page
[22].
Conditions to the Merger
A number of conditions must be satisfied or waived before the merger can be completed. See
and read carefully The Merger Agreement Conditions of the Merger beginning on page
[55]
. We
can offer no assurance that all of the conditions will be satisfied or waived or that the merger
will occur.
Termination of the Merger Agreement and Termination Fees
The merger agreement may be terminated by the mutual written consent of us and GD AIS, or by
either us or GD AIS, under certain specified circumstances. Upon termination of the merger
agreement under certain specified circumstances, we may be required to pay a termination fee of
$23.6 million to GD AIS and/or may be required to reimburse GD AIS and General Dynamics for certain expenses incurred in
connection with the merger of up to $2.0 million. See and read carefully The Merger Agreement
Termination beginning on page
[56]
, The Merger Agreement Termination Fees beginning on page
[57]
and The Merger Agreement Effect of Termination beginning on page
[58]
.
No Solicitation
The merger agreement restricts our ability to solicit or engage in discussions or negotiations
with third parties regarding proposals to acquire a significant interest in us. However, subject
to specified conditions, we may furnish information to, or enter into discussions or negotiations
with a third party in response to an unsolicited acquisition proposal from such third party if our
Board determines in good faith (after consultation with outside legal counsel and its financial
advisor) such actions would reasonably be expected to result in such acquisition proposal becoming
a superior proposal and the Board determines in good faith that the failure to take such actions
would violate its fiduciary duties. See and
5
read carefully The Merger Agreement Covenants and Agreements No Solicitation beginning
on page
[51]
.
Governmental Review
The merger is subject to review under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, which is referred to as the HSR Act. Under the provisions of the HSR Act, the
merger cannot be completed until the companies have made required notifications, given certain
information and materials to the U.S. Federal Trade Commission, which is referred to as the FTC,
and to the antitrust division of the U.S. Department of Justice, which is referred to as the
Antitrust Division, and a required 30-day waiting period has expired or been terminated. We and GD
AIS filed the notifications required under the HSR Act with the FTC and the Antitrust Division on
June 8, 2009. The 30-day waiting period, which cannot expire on a Saturday, Sunday or a U.S.
federal holiday, will expire at 11:59 p.m. Eastern Time on July 8, 2009, unless the FTC or the
Antitrust Division earlier terminates the waiting period or makes a request for more information
related to the merger. See and read carefully The Merger Governmental and Regulatory Matters beginning on page
[34]
.
Voting Agreement (page [59])
In connection with the merger agreement, Mr. Bershad, who beneficially owns 1,666,753, or
approximately 14.3%, of the shares of our common stock entitled to vote at the special meeting, entered
into a voting agreement with GD AIS and Merger Sub and agreed to vote or cause to be voted all of his shares of Axsys
common stock at the time of the special meeting for the adoption of the merger agreement at the
special meeting. The information in this proxy statement regarding the voting agreement is
qualified in its entirety by reference to the voting agreement, a copy of which is attached as
Annex B
to this proxy statement.
Certain United States Federal Income Tax Consequences (page [34])
Generally, a holder of shares of Axsys common stock will recognize taxable gain or loss for
United States federal income tax purposes equal to the difference between (1) the amount of cash
such holder receives and (2) the adjusted tax basis of such holders shares of Axsys common stock
exchanged therefor.
You should read The Merger Certain United States Federal Income Tax Consequences
beginning on page
[34]
for a more complete discussion of certain United States federal income tax
consequences of the merger. Tax matters can be complicated, and the tax consequences of the merger
to you will depend on your particular circumstances. We urge you to consult your own tax advisor
to fully understand the tax consequences of the merger to you (including the application and effect
of any state, local, or foreign income and other tax laws).
Interests of Axsys Directors and Executive Officers in the Merger (page [30])
When considering the recommendation of the Board with respect to the adoption of the merger
agreement, you should be aware that some of our directors and executive officers have interests in
the merger that may be different from, or in addition to, their interests as stockholders and the
interests of stockholders generally. The Board was aware of these interests during its
deliberations on the merits of the merger and in deciding to recommend that you vote for the
adoption of the merger agreement at the special meeting. For a more detailed discussion of these
interests, see The Merger Interests of Axsys Directors and Executive Officers in the Merger
beginning on page
[30]
.
6
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|
Appraisal Rights of Axsys Stockholders (page [36])
|
Holders of shares of Axsys common stock who do not wish to accept the consideration payable
pursuant to the merger agreement may seek, under Section 262 of the General Corporation Law of the
State of Delaware, which is referred to as the DGCL, judicial appraisal of the fair value of their shares by the
Delaware Court of Chancery. This value could be more than, less than, or the same as the merger
consideration for shares of Axsys common stock. Failure to strictly comply with all procedures
required by Section 262 of the DGCL will result in a loss of the right to appraisal.
Merely voting against the adoption of the merger agreement will not preserve your right to
appraisal under the DGCL. Also, because a submitted proxy not marked against or abstain will
be voted for the proposal to adopt the merger agreement, the submission of a proxy not marked
against or abstain will result in the waiver of appraisal rights. If you hold shares in the
name of a broker or other nominee, you must cause your nominee to take the steps necessary to
enable you to demand appraisal for your shares.
Annex D
to this proxy statement contains the full text of Section 262 of the DGCL,
which relates to appraisal rights. We encourage you to read these provisions carefully and in
their entirety.
7
QUESTIONS AND ANSWERS ABOUT THE
SPECIAL MEETING AND THE MERGER
The Merger
Q.
|
|
Why am I receiving this proxy statement?
|
|
A.
|
|
GD AIS has agreed to acquire Axsys, under the terms of the merger
agreement that is described in this proxy statement. A copy of the merger agreement is
attached to this proxy statement as
Annex A
.
|
|
|
|
In order to complete the merger, our stockholders must vote to adopt the merger agreement.
We are seeking to obtain this approval at the special meeting to be held on July
[___]
, 2009.
The approval of this proposal by our stockholders is a condition to the effectiveness of
the merger. See The Merger Agreement Conditions of the Merger beginning on page
[55]
.
|
|
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|
This proxy statement, which you should read carefully, contains important information about
the merger, the merger agreement and the special meeting of our stockholders. The enclosed
voting materials allow you to vote your shares without attending the special meeting.
|
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Your vote is very important. We encourage you to vote as soon as possible.
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Q.
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What is the position of the Board regarding the merger?
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A.
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The Axsys Board of Directors, which is referred to as the Board, has unanimously approved the
merger agreement and the transactions contemplated by the merger agreement, including the
merger, and has determined that the merger is advisable to and in the best interests of Axsys
and its stockholders. The Board unanimously recommends that Axsys stockholders vote
FOR
the
proposal to adopt the merger agreement at the special meeting. See The Merger Axsys
Reasons for the Merger beginning on page
[19]
.
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|
Q.
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|
What vote of Axsys stockholders is required to adopt the merger agreement?
|
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A.
|
|
The adoption of the merger agreement requires the affirmative vote of the holders of at least
a majority of the shares of Axsys common stock outstanding and entitled to vote at the special
meeting. If an Axsys stockholder does not vote, it will have the same effect as a vote
AGAINST
the adoption of the merger agreement. Mr. Bershad, who is our Chairman of the
Board and Chief Executive Officer and who owns in the aggregate 1,666,753, or approximately
14.3%, of the shares of our common stock entitled to vote at the special meeting, has entered into a
voting agreement under which he has agreed to vote or cause to be voted all of his shares of Axsys common stock
FOR
the adoption of the merger agreement.
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Q.
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|
How do Axsys directors and executive officers intend to vote their shares of Axsys common
stock in respect of adoption of the merger agreement?
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A.
|
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All of our directors and all of our executive officers, who collectively own 16.1% of the shares of
our common stock entitled to vote at the special meeting, have informed us that they currently
intend to vote all of their shares of Axsys common stock
FOR
the adoption of the merger
agreement.
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Q.
|
|
What will happen to my shares of Axsys common stock after the merger?
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8
A.
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Upon completion of the merger, each issued and outstanding share of Axsys common stock, subject to certain exceptions, will
automatically be converted into the right to receive $54.00 in cash, without interest, which is referred to as the merger consideration.
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Q.
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Should I send in my stock certificates now?
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A.
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No. If the merger is completed, you will receive a separate letter of transmittal with
instructions for the surrender of your Axsys stock certificates. Please do not send in your
stock certificates with your proxy.
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Q.
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When does Axsys expect the merger to be completed?
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A.
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We are working to complete the merger as quickly as reasonably practical. In addition to
obtaining stockholder approval, we must satisfy all other closing conditions, including the
expiration or termination of applicable regulatory waiting periods. We currently expect to
complete the merger in the third quarter of 2009.
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Q.
|
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Who can help answer my questions about the merger?
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A.
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If you have any questions about the merger or if you need additional copies of this proxy
statement or the enclosed proxy card, you should contact us at: Axsys Technologies, Inc., 175
Capital Boulevard, Suite 103, Rocky Hill, Connecticut 06067, Attention: Corporate Secretary,
or you may contact Georgeson, our proxy solicitor,
at:
|
Georgeson, Inc.
199 Water Street 26
th
Floor
New York, NY 10038
Other Special Meeting Proposals
Q.
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|
On what other proposals am I being asked to vote at the special meeting?
|
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A.
|
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At the special meeting, in addition to voting on the adoption of the merger agreement, Axsys
stockholders will be asked to approve adjournments of the special meeting, if necessary, to
permit further solicitation of proxies if there are not sufficient votes at the time of the
special meeting to adopt the merger agreement.
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Q.
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What vote is necessary to approve an adjournment of the special meeting?
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A.
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If a quorum is present, a proposal to approve adjournments of the special meeting requires
the affirmative vote of a majority of the votes cast by the stockholders entitled to vote,
present in person or by proxy at the special meeting. If an Axsys stockholder does not vote,
it will have no effect on the outcome of any vote to adjourn the special meeting.
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Procedures
Q.
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|
When and where is the special meeting?
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A.
|
|
The special meeting will be held at
[10:00 a.m.]
(Eastern Time), on July
[___]
, 2009, at
[
]
.
|
9
Q.
|
|
If I am going to attend the special meeting, should I return my proxy card(s)?
|
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A.
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Yes. Returning your signed and dated proxy card(s) ensures that your shares will be
represented and voted at the special meeting. You may revoke your proxy at any time prior to
the vote at the special meeting by delivering to our Corporate Secretary a signed notice of
revocation or submitting a later-dated, signed proxy (either manually, telephonically or over
the Internet) following the instructions provided on the proxy card. You also may revoke your
proxy by attending the special meeting and voting in person. See Summary The Special
Meeting Voting and Proxies on page
[2]
.
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Q.
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If my Axsys shares are held in street name by my broker or bank, will my broker or bank
vote my shares for me?
|
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A.
|
|
Your broker or bank will vote your shares of Axsys common stock for you on the adoption of
the merger agreement and approval of an adjournment of the special meeting, if necessary,
only
if you provide
instructions on how to vote. You should follow the directions provided by your broker or bank
regarding how to instruct your broker or bank to vote your shares of Axsys common stock. If
you do not provide instructions to your bank or broker, your shares of Axsys common stock will
not be voted on the proposal to adopt the merger agreement, which will have the effect of a vote
AGAINST
the adoption of the merger agreement. If you do not provide instructions to your bank or
broker, your shares of Axsys common stock will not be voted on a
proposal to adjourn the special meeting, if necessary; however,
this will have no effect on the outcome of any vote to adjourn the special meeting.
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Q.
|
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How do I vote my Axsys common stock held in the Axsys
401(k)
Retirement Plan?
|
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A.
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If you are a participant in the Axsys 401(k) Retirement Plan and hold shares of Axsys common
stock within the 401(k) plan, you will receive a proxy card that covers shares credited to
your plan account. This proxy card serves as a voting instruction for the trustee of the plan
in which you are a participant. Participants who wish to vote via the Internet may submit
their voting instructions at
[
http://www.proxyvoting.com/axys-esop]
. If you do not
return the proxy card to the plan trustee, or do not provide voting instructions via the Internet, the trustee will
not vote the Axsys shares credited to your account.
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The trustee will vote unallocated shares of Axsys common stock held in the 401(k) plan in
direct proportion to the voting of allocated shares in the plan for which voting
instructions have been received unless otherwise required by applicable law.
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Q.
|
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Where can I find more information about Axsys?
|
|
A.
|
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You can find more information about us from various sources described in Additional
Information on page
[64]
.
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10
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE
Certain statements and assumptions in this proxy statement are based on forward-looking
information and involve risks and uncertainties. We believe that such statements are
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements include those that may predict, forecast, indicate or imply future results,
performance or achievements. These statements are subject to numerous risks, assumptions and
uncertainties that could cause actual results, performance or achievements to differ materially
from those suggested by our forward-looking statements. Although we believe that the assumptions
on which our forward-looking statements are based are reasonable, any of those assumptions could
prove to be inaccurate, and, as a result, the forward-looking statements could be incorrect. Such
risks, assumptions and uncertainties include the ability to obtain required regulatory approvals
for the transaction; the failure of Axsys stockholders to approve the transaction; the occurrence
of any event, change or other circumstance that could give rise to the termination of the merger
agreement; the outcome of any legal proceeding that may be instituted against us and others
following the announcement of the merger agreement; the failure to close for any other reason; the
amount of the costs, fees, expenses and charges related to the merger; the effect of the
announcement of the merger on our customer relationships, operating results and business generally,
including the ability to retain key employees; and disruption from the transaction making it more
difficult to maintain relationships with customers, employees or suppliers. Additional important
factors, which could cause actual results to differ materially, include without limitation: changes
in the U.S. federal government spending priorities including, without limitation, as a result of
the current economic downturn; the Companys ability to compete in the industries in which it
operates, including the introduction of competing products or technologies by other companies
and/or pricing pressures from competitors and/or customers; the potential for the Companys backlog
to be reduced or cancelled; the Companys ability to implement its acquisition strategy and
integrate its acquired companies successfully; the Companys ability to manage costs under the
Companys fixed-price contracts effectively; and changes in general economic and business
conditions. These statements reflect the Companys current beliefs and are based upon information
currently available to the Company. We do not undertake any obligation to update or release any
revisions to any forward-looking statements or to report any events or circumstances after the date
of this proxy statement or to reflect the occurrence of unanticipated events, except as required by
law.
Words such as anticipates, believes, estimates, expects, intends, plans, hopes,
targets or similar expressions are intended to identify forward-looking statements, which speak
only as to the date of this proxy statement. It is not possible to predict all risk factors or to
estimate the impact of these factors. Accordingly, stockholders should not place undue reliance on
our forward-looking statements.
11
THE SPECIAL MEETING
We are furnishing this proxy statement to our stockholders as part of the solicitation of the
enclosed proxy card by our Board for use at the special meeting in connection with the proposed
merger and the other items to be voted on at the special meeting. This proxy statement provides
our stockholders with the information they need to know to be able to vote or instruct their vote
to be cast at the special meeting.
Date, Time and Place
We will hold the special meeting on July
[
]
, 2009 at
[10:00 a.m.]
(Eastern Time), at
[
]
.
Record Date; Stockholders Entitled to Vote
The record date for the special meeting is June
[___]
, 2009. Record holders of shares of Axsys
common stock at the close of business on the record date are entitled to vote or have their votes
cast at the special meeting. On the record date, there were [11,622,629] outstanding shares of Axsys
common stock. Stockholders will have one vote for the merger and any other matter properly brought
before the special meeting for each share of Axsys common stock they owned on the record date.
Quorum
A quorum of stockholders is necessary to hold a valid meeting. Under our Amended and Restated
By-Laws, the holders of a majority of the outstanding shares of Axsys common stock, present in
person or by proxy, constitute a quorum. Abstentions are counted as present for establishing
a quorum.
If
a quorum is not present, the special meeting will be postponed until the holders of the number of votes required to constitute a quorum attend.
If you submit a properly executed proxy card, even if you abstain from voting or vote against
the adoption of the merger agreement, your shares of Axsys common stock will be counted for
purposes of calculating whether a quorum is present at the special meeting. If a quorum is not
present at the special meeting or additional votes must be solicited to adopt the merger agreement,
it is expected that the meeting will be adjourned or postponed to solicit additional proxies.
12
PROPOSALS TO BE CONSIDERED AT THE SPECIAL MEETING
ITEM 1 THE MERGER
As discussed elsewhere in this proxy statement, our stockholders will consider and vote on a
proposal to adopt the merger agreement. You should read carefully this proxy statement in its
entirety for more detailed information concerning the merger agreement and the merger. In
particular, you should read in its entirety the merger agreement, which is attached as
Annex
A
to this proxy statement.
The Board unanimously recommends that Axsys stockholders vote FOR the adoption of the merger
agreement.
If you return a properly executed proxy card but do not indicate instructions on your proxy
card, your shares of Axsys common stock represented by such proxy card will be voted
FOR
the
adoption of the merger agreement.
ITEM 2 APPROVE ADJOURNMENT OF THE
SPECIAL MEETING, IF NECESSARY, TO PERMIT
FURTHER SOLICITATION OF PROXIES
Stockholders may be asked to vote on a proposal to adjourn the special meeting, if necessary,
to permit further solicitation of proxies if there are not sufficient votes at the time of the
special meeting to adopt the merger agreement.
The Board unanimously recommends that stockholders vote FOR a proposal to adjourn the
special meeting.
If you return a properly executed proxy card but do not indicate instructions on your proxy
card, your shares of Axsys common stock represented by such proxy card will be voted
FOR
a
proposal to adjourn the special meeting.
Stockholder Vote Required to Adopt the Proposals at the Special Meeting
Adoption of the merger agreement requires the affirmative vote of holders of at least a
majority of shares of Axsys common stock outstanding and entitled to vote at the special meeting.
Mr. Bershad, who owns in the aggregate 1,666,753, or approximately 14.3%, of the shares of our
common stock entitled to vote at the special meeting, has entered into a voting agreement under
which he has agreed to vote or cause to be voted all of his shares
FOR
the adoption of the merger agreement.
Abstentions and shares not in attendance at the special meeting will have
the same effect as a vote
AGAINST
the proposal to adopt the merger agreement. An abstention occurs when a
stockholder marks a proxy card to abstain from voting for or against a proposal.
A broker non-vote occurs when a beneficial owner fails to provide voting instructions to his
or her broker as to how to vote the owners shares held by the broker in street name and the broker does
not have discretionary authority to vote without instructions. Since a broker does not have discretionary authority to vote uninstructed shares on either proposal to be considered at the special meeting, a broker non-vote cannot occur.
If a quorum is present, approval of adjournments of the special meeting requires the
affirmative vote of a majority of the votes cast by the stockholders entitled to vote present in
person or represented
13
by proxy at the special meeting. Abstentions, broker non-votes and shares not in attendance at
the special meeting will have no effect on the outcome of any vote to adjourn the special meeting.
If
a quorum is not present, the special meeting will be postponed until the holders of the number of votes required to constitute a quorum
attend.
It is very important that ALL of our stockholders vote their shares of Axsys common stock,
so please promptly complete and return the enclosed proxy card.
Voting
Voting and Proxies
Stockholders who hold shares of Axsys common stock can vote or submit a proxy for shares on
matters presented at the special meeting in four ways:
(a)
By Proxy
. You can cause your shares to be voted by signing, dating and returning the
enclosed proxy card. If you do this, the proxies will vote your shares of Axsys common stock in
the manner you indicate. All properly executed proxy cards that we receive prior to the vote at the
special meeting, and that are not revoked, will be voted in accordance with the instructions
indicated on the proxy cards. If you sign, date and return but do not indicate instructions on the card, your shares of Axsys
common stock will be voted
FOR
the adoption of the merger agreement.
(b)
By Telephone
. After reading the proxy materials and with your proxy and voting
instruction form in front of you, you may call the toll-free number
[###]
using a touch-tone
telephone. You will be prompted to enter your control number from your proxy and voting
instruction form. This number will identify you and Axsys. Then you can follow the simple
instructions that will be given to you to record your proxy.
(c)
Over the Internet
. After reading the proxy materials and with your proxy and voting
instruction form in front of you, you may use your computer to access the Web site
http://
[URL]
. You will be prompted to enter your control number from your proxy and voting
instruction form. This number will identify you and Axsys. Then you can follow the simple
instructions that will be given to you to record your proxy.
(d)
In Person
. You may attend the special meeting and cast your vote in person.
The Internet and telephone proxy submission procedures have been set up for your convenience
and have been designed to authenticate your identity, allow you to give voting instructions and
confirm that those instructions have been recorded properly.
If you are a participant in the Axsys 401(k) Retirement Plan and hold shares of Axsys common
stock within the 401(k) plan, you will receive a proxy card that covers shares credited to your
plan account. This proxy card serves as a voting instruction for the trustee of the plan in which
you are a participant. Participants who wish to vote via the Internet may submit their voting
instructions at [
http://www.proxyvoting.com/axys-esop
]. If you do not return the proxy card
to the plan trustee, or do not provide voting instructions via the Internet, the trustee will not vote the Axsys shares
credited to your account.
14
The trustee will vote unallocated shares of Axsys common stock held in the 401(k) plan in
direct proportion to the voting of allocated shares in the plan for which voting instructions have
been received unless otherwise required by applicable law.
Brokers or banks holding shares of Axsys common stock in street name may vote your shares of
Axsys common stock on the adoption of the merger agreement and adjournments of the special meeting, if necessary,
only
if you provide instructions on how
to vote. Brokers or banks will provide you with directions on how to instruct the broker or bank
to vote your shares of Axsys common stock, and you should carefully follow these instructions. If
you do not provide instructions to your bank or broker, your shares of Axsys common stock will not
be voted on the proposal to adopt the merger agreement, which will have the effect of a vote
AGAINST
adoption of the merger agreement. If you do not provide instructions to your bank or broker, your shares of Axsys common stock will not be voted on a proposal to adjourn the special
meeting, if necessary; however, this will have no effect on the outcome of any vote to adjourn the special meeting.
If you have any questions about how to vote or direct a vote in respect of your shares of
Axsys common stock, you may contact our Investor Relations Department by phone at
1-860-594-5751
or by
submitting a question to Georgeson at:
Georgeson, Inc.
199 Water Street 26
th
Floor
New York, NY 10038
Stockholders should not send in their stock certificates with their proxy cards.
A letter of
transmittal with instructions for the surrender of certificates representing shares of Axsys common
stock will be mailed to stockholders if the merger is completed.
Revocation of Proxies
Any proxy given by an Axsys stockholder may be revoked at any time before it is voted at the
special meeting by doing any of the following:
|
|
|
delivering a written notice bearing a date later than the date of the first proxy to
Axsys Corporate Secretary stating that the first proxy is revoked;
|
|
|
|
|
completing, signing and delivering a proxy card (either manually, telephonically or
over the Internet) relating to the same shares of Axsys common stock and bearing a
later date than the date of the previous proxy; or
|
|
|
|
|
attending the special meeting and voting in person.
|
Solicitation Costs
We are soliciting the enclosed proxy card on behalf of our Board. In addition to solicitation
by mail, our directors, officers and employees may solicit proxies in person, by telephone or by
electronic means. These persons will not be specifically compensated for doing this.
We have retained Georgeson to assist in the solicitation process. We will pay Georgeson a fee
of $
[
]
plus reimbursement of out-of-pocket costs and expenses. We also have agreed to indemnify
Georgeson against various liabilities and expenses that relate to or arise out of its solicitation
of proxies (subject to certain exceptions).
We will ask banks, brokers and other custodians, nominees and fiduciaries to forward our proxy
solicitation materials to the beneficial owners of shares of Axsys common stock held of record by
such
15
nominee holders. We will reimburse these nominee holders for their customary clerical and
mailing expenses incurred in forwarding the proxy solicitation materials to the beneficial owners.
Exchange of Stock Certificates
Our stockholders should not send stock certificates with their proxies. Separate transmittal
documents for the surrender of certificated shares of Axsys common stock in exchange for the
merger consideration will be mailed to our stockholders promptly following completion of the
merger. See The Merger Agreement Payment for Shares beginning on page
[42]
.
16
THE MERGER
The discussion in this proxy statement of the merger and the principal terms of the merger
agreement is subject to, and is qualified in its entirety by reference to, the merger agreement, a
copy of which is attached to this proxy statement as
Annex A
. You should read the entire
merger agreement carefully.
Background of the Merger
The Board, as part of its ongoing oversight and planning, regularly reviews and evaluates
Axsys business strategy and strategic alternatives with the goal of enhancing stockholder value.
As part of these reviews and evaluations, the Board and management on various occasions have
received advice from outside financial advisors and have periodically considered a sale of the
Company. In that regard, the Board had instructed management to continually evaluate when a sale
might be opportune.
In late 2008, Stephen W. Bershad, Chairman and Chief Executive Officer of Axsys, had multiple
conversations with David Baxt, Group Head, Aerospace & Defense, at Jefferies, regarding whether it
might be an appropriate time to consider selling Axsys. Mr. Baxt had previously worked with Mr.
Bershad and Axsys for several years.
Based on these conversations with the Board and Jefferies, management decided to evaluate the
level of potential interest in an acquisition of Axsys in a structured manner and engage a
financial advisor to assist it in running a formal process. Subsequently, on January 26, 2009,
Axsys engaged Jefferies to provide financial advice and assistance in connection with a possible
sale or other business transaction involving Axsys.
In early February 2009, Jefferies, on behalf of Axsys, began contacting a number of
defense and aerospace companies and private equity firms in order to determine whether any of those
entities would be interested in considering an acquisition of Axsys. The entities selected to be
contacted were chosen based on factors including perceived interest in the businesses in which
Axsys operates, familiarity with the defense and aerospace industries, financial position and
ability to consummate an acquisition of Axsys.
In total, Jefferies contacted or had initial discussions with 24 parties potentially
interested in a transaction involving Axsys, including General Dynamics and 17 other potential
strategic buyers and six private equity firms. Sixteen of these parties, which did not include
General Dynamics but included 10 other potential strategic buyers and six private equity firms,
executed confidentiality agreements. Each of these 16 parties received certain summary non-public
information regarding Axsys and were requested to provide a non-binding, preliminary indication of
interest by March 10, 2009.
On March 11, 2009, in response to press reports, Axsys announced that it had retained
Jefferies as its financial advisor to explore a possible sale of the Company. Within the next few
days, three strategic bidders delivered oral indications of possible valuation ranges at which they
might be interested in buying Axsys.
The Board next met for a regularly scheduled meeting on March 12, 2009, and considered, among
other items, the preliminary indications of interest received to date. Management also discussed
the status of the various bidders participation in the process. After extensive discussion with
Jefferies, the Board authorized management and Jefferies to continue discussions with potential
bidders.
17
Following the press reports and Axsys confirmation that it was considering a possible sale of
the Company, Jefferies had discussions with an additional 11 parties, including seven potential
strategic buyers and four private equity firms, to explore their possible interest in acquiring
Axsys. Of this group, four entities, including one potential strategic buyer and three private
equity firms, executed confidentiality agreements and received the summary non-public information
regarding Axsys that had previously been distributed to other potential bidders.
On April 13, 2009, General Dynamics executed a confidentiality agreement with Axsys and
received the summary non-public information regarding Axsys that had previously been distributed to
other potential bidders.
Throughout the remainder of March and April, the bidders continued their financial and legal
due diligence review of Axsys, which included discussions and meetings with Axsys management and
review of certain non-public information pursuant to the terms of the confidentiality agreements
between the bidders and the Company. In addition, four parties, consisting of General Dynamics and
the three parties that had submitted oral indications of interest, attended presentations conducted
by Axsys management.
On April 30, 2009, a final bid instruction letter, which enclosed a draft merger agreement,
was distributed to the four bidders who had attended the management presentations. These bidders
were requested to submit final bids by May 12, 2009. These parties also continued their respective
due diligence investigations of Axsys, to varying degrees, during this period.
On May 7, 2009, the Board met for a regularly scheduled meeting and received an update from
management on the sale process. In particular, management discussed the status of the various
bidders remaining in the process and the reasons why other bidders dropped out of, or passed on the
opportunity to participate in, the sale process.
On
May 13, 2009, General Dynamics submitted an offer of $645 million, which equated to approximately
$53.00 per share, to purchase 100% of the outstanding equity of
Axsys. General Dynamics also delivered a markup of the merger agreement.
On May 15, 2009, one other bidder submitted an offer to purchase 100% of the outstanding
equity of Axsys, while the two other bidders who had received bid packages declined to make final
bids.
Between receipt of the two bids and May 21, 2009, representatives of Axsys, including
representatives of Jefferies, had multiple conversations with representatives of General Dynamics and the
other bidder concerning price and various due diligence matters. During these conversations, General Dynamics and the other bidder were requested to provide their best and final offers. On
May 20, 2009, General Dynamics raised its bid to $53.50 per share subject to the resolution of certain third party contract liability issues. The other bidder declined to increase its offer.
On May 21, 2009, the Board met with management, outside legal counsel and Jefferies to
consider the two final bids that had been submitted. Management updated the Board on the process
since the May 7, 2009 Board meeting and gave a general overview of the bids and discussions with
the bidders. Axsys legal counsel reviewed with the Board members their fiduciary duties in the
context of a sale transaction and discussed the possible timeline until a possible closing. In
addition to summarizing each of the bids and updating the Board on the status of discussions with
each of the bidders, Jefferies reviewed with the Board its preliminary valuation analysis of each
proposal. At the conclusion of the meeting, the Board authorized management, Jefferies and legal
counsel to negotiate with General Dynamics and its advisors to arrive at a final negotiated deal by
Wednesday, June 3, 2009, at or above $53.50 per share.
18
General Dynamics had previously informed Axsys that General Dynamics Board of Directors would not be able to meet
before June 3, 2009 to formally approve the acquisition of Axsys.
Later in the day on May 21, 2009, General Dynamics adjusted its bid price to $54.00
per share based on information provided to it with respect to the correct number of fully diluted Axsys shares outstanding.
Between May 22, 2009 and June 3, 2009, legal counsel to Axsys and legal counsel to General Dynamics
negotiated the terms of the merger agreement and General Dynamics concluded its due diligence review of
Axsys.
On the morning of June 3, 2009, the Board convened a meeting to consider the proposed merger
with General Dynamics. The Board reviewed with Axsys management and legal and financial advisors the status
of negotiations with General Dynamics and the proposed terms and conditions of the merger. Axsys legal
counsel reviewed with the Board members the material terms and conditions of the merger agreement,
as reflected in the then current draft. Counsel also summarized certain contractual obligations,
conditions and termination rights relating to obtaining antitrust and other regulatory approvals,
as well as the provisions and termination fees applicable in situations in which the transaction
was made the subject of competitive bids from third parties or in which the Board withdrew its
recommendation of the merger. Representatives of Jefferies then reviewed the financial aspects of
the proposed merger. At the conclusion of its presentation, Jefferies delivered its opinion to the
Board to the effect that, as of June 3, 2009 and based upon and subject to the various
considerations and assumptions set forth therein, the merger consideration to be received by the
holders of shares of Axsys common stock pursuant to the merger agreement was fair, from a financial
point of view, to those holders. Following a thorough discussion, the Board unanimously determined
that the merger is advisable to, and in the best interests of, Axsys and its stockholders and
approved and adopted the merger and the merger agreement, resolved to recommend that Axsys
stockholders vote to adopt the merger agreement, and authorized its executive officers
to execute and deliver the merger agreement.
Later that day, the Boards of Directors of
General Dynamics and GD AIS approved the merger agreement.
In addition, later that day, the parties agreed that GD AIS and Merger Sub would be parties to the merger agreement, with General Dynamics providing a guaranty of their respective
obligations under the merger agreement.
On June 4, 2009, the parties executed and delivered the merger agreement and announced the
signing of the merger agreement.
Axsys Reasons for the Merger
During the course of reaching its decision to adopt and approve the merger and the
transactions contemplated by the merger agreement, the Board considered a number of factors and
consulted the Companys senior management and outside financial and legal advisors.
The Board considered a number of potentially positive factors in its deliberations, including,
among other matters:
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discussions with management regarding the Companys business, financial condition,
results of operations, competitive position, business strategy, strategic options and
prospects, as well as the risks involved in achieving these prospects, the nature of
the Companys business and the industry in which it competes, and current industry,
economic and market conditions, both on a historical and on a prospective basis, which
led the Board to conclude that the merger presented an opportunity for Axsys
stockholders to realize greater value than the value likely to be realized by
stockholders over the short to medium term in the event the Company remained
independent;
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19
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the review of the possible alternatives to a sale of Axsys, including the prospects
of continuing to operate Axsys in accordance with the existing business plan, the value
to stockholders of such alternatives and the timing and likelihood of actually
achieving additional value from these alternatives, and the Boards assessment that
none of these options was reasonably likely to create value for stockholders in the
short to medium term greater than the merger consideration;
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that the merger was agreed to only after a lengthy auction process pursuant to which
a total of 35 potential purchasers were contacted, which process included, for certain
parties, management presentations, due diligence sessions, the submission of three
non-binding preliminary indications of interest, and the submission of two final bids;
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the merger was agreed to by the Board after the announcement by Axsys on March 11,
2009, announcing that Axsys was evaluating the possible sale of the Company and had
engaged Jefferies as its financial advisor, which created significant publicity
concerning the possibility that the Company may be sold, and the passage of a
significant period of time between issuance of the press release and adoption and
approval of the merger agreement;
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the fact that no other offers to acquire Axsys were made following our March 11,
2009 press release regarding the possible sale of the Company, other than offers from
potential purchasers involved in the auction process;
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the current and historical market prices of Axsys shares relative to the $54.00 per
share merger consideration, and the fact that the merger consideration represents a
7.2% premium over the closing price of shares of Axsys common stock on June 2, 2009
(the last full trading day prior to the Boards approval of the merger) and a 97.3% premium
over the closing price of shares of Axsys common stock on March 10, 2009 (the last
full trading day prior to the press release announcing that Axsys was evaluating the
possible sale of the Company and had engaged Jefferies as its financial advisor);
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the Boards assessment that Axsys common stock price was not likely to remain above
the $54.00 per share merger consideration were the merger not consummated;
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the belief of the Board, after consulting with Jefferies and management regarding
the discussions and negotiations conducted with General Dynamics, that the Board had obtained the
highest price per share that General Dynamics was willing to pay;
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the fact that the merger consideration consists entirely of cash, which provides
certainty of value to holders of shares of Axsys common stock compared to a transaction
in which stockholders receive stock or other securities;
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the financial analyses of Jefferies presented to the Board on June 3, 2009 as well
as the opinion of Jefferies, dated as of June 3, 2009, to the Board as to the fairness,
from a financial point of view and as of the date of the opinion, of the merger
consideration to be received by the holders of shares of Axsys common stock pursuant to
the merger agreement, as more fully described below under the caption Opinion of
Jefferies & Company, Inc. beginning on page
[22]
;
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the fact that Axsys stockholders will have appraisal
rights, as described in the section entitled Appraisal Rights of Axsys
Stockholders beginning on page
[36]
;
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the terms of the merger agreement, as reviewed by the Board with the Companys legal
advisors, including:
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20
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sufficient operating flexibility for the Company to conduct its business in
the ordinary course between the execution and delivery of the merger agreement and
consummation of the merger;
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the fact that the completion of the merger is not conditioned on GD AIS
obtaining financing;
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the fact that the conditions required to be satisfied prior to completion of
the merger are customary and can be expected to be fulfilled in the ordinary
course and the corresponding likelihood that the merger will be consummated;
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the Companys ability to furnish information to and conduct negotiations
with third parties under certain circumstances, as more fully described in The
Merger Agreement Covenants and Agreements No Solicitation beginning on
page
[51]
; and
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the Boards ability to recommend a more favorable unsolicited acquisition
proposal to Company stockholders and the Companys corresponding right to
terminate the merger agreement upon the payment of a $23.6 million termination
fee to GD AIS and reimbursement up to an aggregate of $2.0 million for certain
out-of-pocket expenses of GD AIS and General Dynamics incurred in connection with the merger;
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General Dynamics financial capability, as indicated by its market capitalization of
over $22 billion, cash and cash equivalents on its balance sheet as of December 31,
2008 of over $1.6 billion and its investment grade corporate credit rating; and
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the view of the Board, based upon the advice of senior management after consultation
with legal counsel, that the regulatory approvals necessary to complete the merger
could be obtained.
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The Board also considered a number of potentially negative factors in its deliberations
concerning the merger, including, but not limited to:
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the risk that, notwithstanding the likelihood of the merger being completed, the
merger might not be completed, including the effect of the pendency of the merger and
such failure to be completed may have on:
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the trading price of shares of Axsys common stock;
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Axsys operating results, including the costs incurred in connection with
the merger;
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Axsys ability to attract and retain key personnel; and
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Axsys ability to maintain sales;
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that the Company will no longer exist as a publicly traded company and that
stockholders will no longer participate in the future growth of the business;
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that, under the terms of the merger agreement, the Company cannot solicit other
acquisition proposals, the Company must pay GD AIS a termination fee and/or reimburse
certain expenses incurred in connection with the merger if the merger agreement is
terminated under certain circumstances, which may deter other parties from proposing an
alternative transaction that may be more advantageous to stockholders;
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the fact that gains from an all-cash transaction would generally be taxable to
stockholders for United States federal income tax purposes;
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21
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that if the merger does not close, the Companys employees will have expended
extensive time and efforts to attempt to complete the transaction and will have
experienced significant distractions from their work during the pendency of the
transaction;
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the conditions to GD AIS obligation to complete the merger, and the right of GD AIS
to terminate the merger agreement under certain circumstances, see The Merger
Agreement Termination beginning on page
[56]
; and
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risks and contingencies related to the announcement and pendency of the merger,
including the likely impact on customer relationships and the potential effect of the
merger on existing relationships with other third parties.
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During its consideration of the merger with General Dynamics, the Board was also aware that some of our
directors and executive officers have interests in the merger that may be in addition to or differ
from those of our stockholders generally, as described in Interests of Axsys Directors and
Executive Officers in the Merger beginning on page
[30]
.
This summary is not meant to be an exhaustive description of the information and factors
considered by the Board but is believed to address the material information and factors considered
by the Board. In view of the wide variety of factors considered by the Board, it is not possible
to quantify or to give relative weights to the various factors. After taking into consideration
all of the factors set forth above, as well as other factors not specifically described above, the
Board unanimously concluded that the merger is advisable to, and in the best interests of, Axsys
and its stockholders and approved and adopted the merger agreement and the transactions
contemplated by the merger agreement.
Recommendation of the Board
At its meeting on June 3, 2009, the Board met to consider the merger
agreement and after due consideration, unanimously adopted and approved the merger agreement and determined that the merger
agreement and the related transactions are advisable to and in the best interests of Axsys and its
stockholders, and the Board unanimously recommends that Axsys stockholders vote
FOR
the adoption of
the merger agreement.
Opinion of Jefferies & Company, Inc.
Jefferies served as Axsys financial advisor in connection with the merger. On June 3, 2009,
Jefferies rendered to the Board its opinion as investment bankers to the effect that, as of that
date and based upon and subject to the various considerations and assumptions set forth therein,
the merger consideration of $54.00 per share in cash to be received by holders of Axsys common
stock pursuant to the merger agreement was fair, from a financial point of view, to those holders.
The full text of Jefferies opinion, which sets forth the assumptions made, matters considered
and limitations on the scope of review undertaken by Jefferies in rendering its opinion, is
attached to this proxy statement as
Annex C
. Axsys encourages stockholders to read the
Jefferies opinion carefully and in its entirety. Jefferies opinion was provided to the Board in
connection with the Boards consideration of the merger and addresses only the fairness, from a
financial point of view and as of the date of Jefferies opinion, of the merger consideration to be
received by the holders of Axsys common stock pursuant to the merger agreement and does not address
any other aspect of the merger. Jefferies opinion does not constitute a recommendation as to how
any holder of Axsys common stock should vote on the merger or any matter related thereto.
In arriving at its opinion, Jefferies, among other things:
22
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reviewed a draft dated June 3, 2009 of the merger agreement and a draft dated
June 3, 2009 of the voting agreement,
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reviewed certain publicly available financial and other information about
Axsys,
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reviewed certain information furnished to Jefferies by Axsys management,
including financial forecasts and analyses, relating to the business, operations and
prospects of Axsys,
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held discussions with members of senior management of Axsys concerning the
matters described in the prior two bullet points,
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reviewed the share trading price history and valuation multiples for Axsys
common stock and compared them with those of certain publicly traded companies that
Jefferies deemed relevant,
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compared the proposed financial terms of the merger with the financial terms of
certain other transactions that Jefferies deemed relevant, and
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conducted such other financial studies, analyses and investigations as
Jefferies deemed appropriate.
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In Jefferies review and analysis and in rendering its opinion, Jefferies assumed and relied
upon, but did not assume any responsibility to independently investigate or verify, the accuracy
and completeness of all financial and other information that was supplied or otherwise made
available by Axsys to it or that was publicly available (including, without limitation, the
information described above), or that was otherwise reviewed by it. In its review, Jefferies
relied on assurances of the management of Axsys that management was not aware of any facts or
circumstances that would make such information inaccurate or misleading. In its review, Jefferies
did not obtain any independent evaluation or appraisal of any of the assets or liabilities of, nor
did Jefferies conduct a physical inspection of any of the properties or facilities of, Axsys.
Jefferies was not furnished with any such evaluations or appraisals of such physical inspections
and did not assume any responsibility to obtain any such evaluations or appraisals.
With respect to the financial forecasts provided to and examined by Jefferies, Jefferies
opinion noted that projecting future results of any company is inherently subject to uncertainty.
Axsys informed Jefferies, however, and Jefferies assumed, that such financial forecasts were
reasonably prepared on bases reflecting the best currently available estimates and good faith
judgments of the management of Axsys as to the future financial performance of Axsys. Jefferies
expressed no opinion as to Axsys financial forecasts or the assumptions on which they were made.
Jefferies opinion was based on economic, monetary, regulatory, market and other conditions
existing and which could be evaluated as of the date of its opinion. Jefferies expressly disclaimed
any undertaking or obligation to advise any person of any change in any fact or matter affecting
Jefferies opinion of which Jefferies became aware after the date of its opinion.
Jefferies made no independent investigation of any legal or accounting matters affecting
Axsys, and Jefferies assumed the correctness in all respects material to Jefferies analysis of all
legal and accounting advice given to Axsys and the Board, including, without limitation, advice as
to the legal, accounting and tax consequences of the terms of, and transactions contemplated by,
the merger agreement to Axsys and its stockholders. In addition, in preparing its opinion,
Jefferies did not take into account any tax consequences of the transaction to any holder of Axsys
common stock. In rendering its opinion, Jefferies assumed that the final form of the merger
agreement and the voting agreement would be
23
substantially similar to the last drafts reviewed by it. Jefferies also assumed that in the
course of obtaining the necessary regulatory or third party approvals, consents and releases for
the merger, no delay, limitation, restriction or condition would be imposed that would have an
adverse effect on Axsys or the contemplated benefits of the merger in any way meaningful to
Jefferies analysis.
Jefferies opinion was for the use and benefit of the Board in its consideration of the
merger, and Jefferies opinion did not address the relative merits of the transactions contemplated
by the merger agreement as compared to any alternative transaction or opportunity that might be
available to Axsys, nor did it address the underlying business decision by Axsys to engage in the
merger or the terms of the merger agreement or the documents referred to therein. Jefferies
opinion does not constitute a recommendation as to how any holder of shares of Axsys common stock
should vote on the merger or any matter relating thereto. In addition, Jefferies was not asked to
address, and its opinion did not address, the fairness to, or any other consideration of, the
holders of any class of securities, creditors or other constituencies of Axsys, other than the
holders of Axsys common stock. Jefferies expressed no opinion as to the price at which shares of
Axsys common stock will trade at any time. Jefferies did not express any view or opinion as to the
fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be
received by any of Axsys officers, directors or employees, or any class of such persons, in
connection with the merger relative to the merger consideration to be received by holders of shares
of Axsys common stock.
In preparing its opinion, Jefferies performed a variety of financial and comparative analyses.
The preparation of a fairness opinion is a complex process involving various determinations as to
the most appropriate and relevant quantitative and qualitative methods of financial analysis and
the applications of those methods to the particular circumstances and, therefore, is not
necessarily susceptible to partial analysis or summary description. Jefferies believes that its
analyses must be considered as a whole. Considering any portion of Jefferies analyses or the
factors considered by Jefferies, without considering all analyses and factors, could create a
misleading or incomplete view of the process underlying the conclusion expressed in Jefferies
opinion. In addition, Jefferies may have given various analyses more or less weight than other
analyses, and may have deemed various assumptions more or less probable than other assumptions, so
that the range of valuations resulting from any particular analysis described below should not be
taken to be Jefferies view of Axsys actual value. Accordingly, the conclusions reached by
Jefferies are based on all analyses and factors taken as a whole and also on the application of
Jefferies own experience and judgment.
In performing its analyses, Jefferies made numerous assumptions with respect to industry
performance, general business, economic, monetary, regulatory, market and other conditions and
other matters, many of which are beyond Axsys and Jefferies control. The analyses performed by
Jefferies are not necessarily indicative of actual values or actual future results, which may be
significantly more or less favorable than suggested by such analyses. In addition, analyses
relating to the per share value of Axsys common stock do not purport to be appraisals or to reflect
the prices at which Axsys common stock may actually be sold. The analyses performed were prepared
solely as part of Jefferies analysis of the fairness, from a financial point of view, of the
merger consideration to be received by holders of Axsys common stock pursuant to the merger, and
were provided to the Board in connection with the delivery of Jefferies opinion.
The following is a summary of the material financial and comparative analyses performed by
Jefferies in connection with Jefferies delivery of its opinion. The financial analyses summarized
below include information presented in tabular format. In order to fully understand Jefferies
financial analyses, the tables must be read together with the text of each summary. The tables
alone do not constitute a complete description of the financial analyses. Considering the data
described below without considering the full narrative description of the financial analyses,
including the methodologies and assumptions underlying the analyses, could create a misleading or
incomplete view of Jefferies financial analyses.
24
Transaction Overview
Based upon the approximately 11.8 million shares of Axsys common stock that were outstanding
as of May 19, 2009 on a fully diluted basis (calculated using the treasury stock method), Jefferies
noted that the merger consideration of $54.00 per share implied an equity value of approximately
$638.6 million. Net of approximately $26.1 million of cash and cash equivalents (as of March 28,
2009), Jefferies noted that the merger consideration implied an enterprise value of approximately
$612.5 million. Jefferies also noted that the merger consideration of $54.00 per share of Axsys
common stock represented:
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a premium of 8.2% over the closing price per share of Axsys common
stock on June 1, 2009 of $49.93,
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a premium of 97.3% over the closing price per share of Axsys common
stock on March 10, 2009 of $27.37, which was the last trading day
prior to the issuance of Axsys press release announcing that Axsys
was evaluating the possible sale of the Company and had engaged
Jefferies as its financial advisor,
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a premium of 121.8% over the lowest intra-day trading price per share
of Axsys common stock on March 10, 2009 of $24.35, which was the
lowest trading price of Axsys common stock during the 52-week period
ending June 1, 2009, and
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a discount of 32.2% over the highest intra-day trading price per share
of Axsys common stock on August 13, 2008 of $79.69, which was the
highest trading price of Axsys common stock during the 52-week period
ending June 1, 2009.
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Historical Trading Analysis
Jefferies reviewed the share price trading history of Axsys common stock for the two-year
period ending June 1, 2009 on a stand-alone basis and also in relation to the NASDAQ
Composite, the Standard & Poors 500 Index, and a composite index consisting of the
following enterprise companies in the defense electronics, intelligence, surveillance and
reconnaissance (ISR) and homeland security markets, which are referred to as the Axsys
Selected Comparable Companies:
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Applied Signal Technology, Inc.,
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Argon ST, Inc.,
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FLIR Systems Inc.,
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L-3 Communications Holdings, Inc., and
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Raytheon Company.
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This analysis showed that during the two-year period ending June 1, 2009, the trading price of
Axsys common stock rose 141.3%, the NASDAQ Composite Index declined 30.0%, the Standard &
25
Poors
500 Index declined 38.6%, and the composite index consisting of the Axsys Selected Comparable
Companies declined 16.9%.
Comparable Public Company Analysis
Using publicly available information and information provided by Axsys management, Jefferies
analyzed the trading multiples of Axsys and the corresponding trading multiples of the Axsys
Selected Comparable Companies. In its analysis, Jefferies derived and compared multiples for Axsys
and the Axsys Selected Comparable Companies, calculated as follows:
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the enterprise value divided by latest twelve months, or LTM, earnings
before interest, taxes, depreciation and amortization, or EBITDA,
which is referred to as Enterprise Value/LTM EBITDA, and
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the enterprise value divided by estimated EBITDA for calendar year
2009, which is referred to as Enterprise Value/2009E EBITDA.
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This analysis indicated the following:
Comparable Public Company Multiples
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Benchmark
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High
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Low
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Mean
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Median
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Enterprise Value/LTM EBITDA
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9.8x
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5.9x
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8.5x
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9.5x
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Enterprise Value/2009E EBITDA
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9.3x
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5.5x
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7.9x
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9.0x
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Using a reference range of 8.5x to 10.0x Axsys LTM EBITDA, Jefferies determined an implied
enterprise value for Axsys, then added cash and cash equivalents to determine an implied equity
value. After accounting for the vesting of in-the-money stock options (using the treasury stock
method), this analysis indicated a range of implied values per share of Axsys common stock of
approximately $37.46 to $43.62 using LTM EBITDA, compared to the merger consideration of $54.00 per
share of Axsys common stock.
Using a reference range of 8.0x to 9.5x
Axsys 2009E EBITDA, Jefferies determined an implied
enterprise value for Axsys, then added cash and cash equivalents to determine an implied equity
value. After accounting for the vesting of in-the-money stock options (using the treasury stock
method), this analysis indicated a range of implied values per share of Axsys common stock of
approximately $40.78 to $47.95 using 2009E EBITDA, compared to the merger consideration of
$54.00 per share of Axsys common stock.
No company utilized in the comparable company analysis is identical to Axsys. In evaluating
the selected companies, Jefferies made judgments and assumptions with regard to industry
performance, general business, economic, market and financial conditions and other matters, many of
which are beyond Axsys and Jefferies control. Mathematical analysis, such as determining the mean
or median, is not in itself a meaningful method of using comparable company data.
26
Selected Comparable Transactions Analysis
Using publicly available information and other information, Jefferies examined the following
nine transactions involving companies providing services and products to the defense electronics,
ISR and homeland security markets with enterprise values between $27.0 million and $5.2 billion
since July 26,
2006. The transactions considered and the month and year each transaction was announced were
as follows:
|
|
|
|
|
Month and
|
|
|
|
|
Year Announced
|
|
Target
|
|
Acquiror
|
|
|
|
July 2006
|
|
Rockwell Scientific Company LLC
|
|
Teledyne Technologies Incorporated
|
October 2006
|
|
Overwatch Systems, LLC
|
|
Textron Inc.
|
April 2007
|
|
Cineflex, LLC
|
|
Axsys Technologies, Inc.
|
September 2007
|
|
Cedip Infrared Systems
|
|
FLIR Systems, Inc.
|
March 2008
|
|
Northrop Grummans
Electro-Optical Systems (EOS)
business
|
|
L-3 Communications Corporation
|
May 2008
|
|
Radyne Corp.
|
|
Comtech Telecommunications Corp.
|
May 2008
|
|
M/A-COM, Inc.
|
|
Cobham plc
|
May 2008
|
|
DRS Technologies, Inc.
|
|
Finmeccanica SpA
|
December 2008
|
|
Racal Acoustics Global Limited
|
|
Esterline Technologies Corporation
|
Using publicly available estimates and other information for each of these transactions,
Jefferies reviewed the enterprise value as a multiple of the target companys LTM EBITDA
immediately preceding announcement of the transaction, which is referred to below as Enterprise
Value/LTM EBITDA.
This analysis indicated the following:
Selected Comparable Transactions Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benchmark
|
|
High
|
|
Low
|
|
Mean
|
|
Median
|
Enterprise Value/LTM EBITDA
|
|
|
13.6x
|
|
|
|
6.8x
|
|
|
|
10.8x
|
|
|
|
10.9x
|
|
Using a reference range of 10.0x to 12.0x Axsys LTM EBITDA, Jefferies determined an implied
enterprise value for Axsys, then added cash and cash equivalents to determine an implied equity
value. After accounting for the vesting of in-the-money stock options (using the treasury stock
method), this analysis indicated a range of implied values per share of Axsys common stock of
approximately $43.62 to $51.83, compared to the merger consideration of $54.00 per share of Axsys
common stock.
No transaction utilized as a comparison in the comparable transaction analysis is identical to
the merger. In evaluating the merger, Jefferies made numerous judgments and assumptions with regard
to industry performance, general business, economic, market, and financial conditions and other
matters, many of which are beyond Axsys and Jefferies control. Mathematical analysis, such as
determining the average or the median, is not in itself a meaningful method of using comparable
transaction data.
Discounted Cash Flow Analysis
Jefferies performed a discounted cash flow analysis to estimate the present value of the free
cash flows of Axsys through the fiscal year ending December 31, 2013 using Axsys managements
financial projections, discount rates ranging from 11.0% to 12.0%, and perpetual growth rates of
free cash flow after fiscal year 2013 ranging from 3.0% to 5.0%. To determine the implied total
equity value for Axsys,
27
Jefferies added cash and cash equivalents to the implied enterprise value
for Axsys. After accounting for the vesting of in-the-money stock options, this analysis indicated
a range of implied values per share of Axsys common stock of approximately $33.35 to $47.00,
compared to the merger consideration of $54.00 per share of Axsys common stock.
Premiums Paid Analysis
Using publicly available information, Jefferies analyzed the premiums offered in selected
merger and acquisition transactions over the past five years within selected industries, including
aerospace & defense and government services.
For each of these transactions, Jefferies calculated the premium represented by the offer
price over the target companys closing share price one day and four weeks prior to the
transactions announcement. This analysis indicated the following median premiums for those time
periods prior to announcement:
|
|
|
|
|
|
|
Median
|
Time Period Prior to Announcement
|
|
Premium
|
|
1 day
|
|
|
23.8
|
%
|
4 weeks
|
|
|
28.3
|
%
|
Using these median premia and the closing prices per share of Axsys common stock 1-day and
4-weeks prior to March 11, 2009, which was the date that Axsys announced it was evaluating the
possible sale of the Company and had engaged Jefferies as its financial advisor, this analysis
indicated a range of implied value per share of Axsys common stock of approximately $33.55 to
$49.14, compared to the merger consideration of $54.00 per share of Axsys common stock.
Jefferies also performed a premiums paid analysis using the adjusted closing prices per share
of Axsys common stock on the dates 1-day and 4-weeks prior to June 2, 2009, respectively. The
closing prices per share of Axsys common stock were adjusted to reflect the average change in the
trading prices of the Axsys Selected Comparable Companies during the period from March 10, 2009, to
May 5, 2009 (which was the date four weeks prior to the date of Jefferies analysis) and to June 1,
2009 (which was the date one day prior to the date of Jefferies analysis), respectively. This
analysis indicated a range of median implied values per share of Axsys common stock of
approximately $43.14 to $47.67, compared to the merger consideration of $54.00 per share of Axsys
common stock.
In addition, Jefferies performed a premiums paid analysis using the closing prices per share
of Axsys common stock for the periods 1-day and 4-weeks prior to June 2, 2009 which was the date one day
prior to the date of Jefferies analysis. This analysis indicated a range of median implied value
per share of Axsys common stock of approximately $55.55 to $62.39, compared to the merger
consideration of $54.00 per share of Axsys common stock. However, Jefferies noted that this
analysis was not particularly meaningful because Axsys common stock was likely trading in
anticipation of a transaction announcement following the announcement by Axsys on March 11, 2009
that it was evaluating a potential sale.
Jefferies opinion was one of many factors taken into consideration by the Board in making its
determination to approve the merger and should not be considered determinative of the views of the
Board or management with respect to the merger or the merger consideration.
Jefferies was selected by the Board based on Jefferies qualifications, expertise and
reputation. Jefferies is an internationally recognized investment banking and advisory firm.
Jefferies, as part of its
28
investment banking business, is regularly engaged in the valuation of
businesses and securities in connection with mergers and acquisitions, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities, private
placements, financial restructurings and other financial services.
In the ordinary course of business, Jefferies and its affiliates may trade or hold securities
of Axsys or General Dynamics and/or their respective affiliates for its own account and for the
accounts of its customers and, accordingly, may at any time hold long or short positions in those
securities.
Pursuant to an engagement agreement between Axsys and Jefferies dated January 26, 2009, Axsys
has agreed to pay Jefferies a fee for its services, based upon a percentage of the transaction
value, in the amount of approximately $7 million, of which $1.5 million was earned upon delivery of
Jefferies opinion, and the balance of which is payable contingent upon consummation of the merger.
In addition, Axsys has agreed to reimburse Jefferies for reasonable expenses incurred, including
certain fees and disbursements of Jefferies legal counsel. Axsys also has agreed to indemnify
Jefferies and certain related parties against liabilities arising out of or in connection with the
services rendered and to be rendered by it under its engagement, including liabilities arising under federal securities laws.
Certain Financial Information
In the course of the sale process described under Background of the Merger, we provided
General Dynamics and certain other potential purchasers who signed confidentiality agreements selected,
non-public financial projections prepared by our senior management. Axsys does not as a matter of
course make public projections as to future performance or earnings, and the portions of these
financial projections set forth below are included in this proxy statement only because this
information was provided to General Dynamics and certain other potential purchasers on a confidential basis
in connection with Axsys sale process. You should note that these financial projections
constitute forward-looking statements. See Forward-Looking Statements May Prove Inaccurate on
page
[11]
.
Axsys advised the recipients of the financial projections that such projections are subjective
in many respects. The financial projections are based on a variety of estimates and assumptions of
our senior management regarding our business, industry performance, general business, economic,
market and financial conditions and other matters, all of which are difficult to predict and many
of which are beyond our control. In particular, these forward-looking statements were prepared on
the assumption that Axsys remained a stand alone company and were based on numerous other
assumptions that are now out-dated. You should not regard the inclusion of these projections in
this proxy statement as an indication that Axsys, General Dynamics, Jefferies or any of their respective
affiliates or representatives considered or consider the projections to be a reliable prediction of
actual future events, and you should not rely on the projections as such. Accordingly, there can
be no assurance that the assumptions made in preparing the projections will prove accurate. If the
assumptions do not prove accurate, the projections will not be accurate. It is expected that there
will be differences between actual and projected results, and actual results may be materially
greater or less than those contained in the projections. It is highly likely that the contribution
of Axsys business to the consolidated results of General Dynamics will be different from Axsys
performance on a stand alone basis. In addition, if the merger is not consummated, we may not be
able to achieve these financial projections. None of Axsys, General Dynamics or any of their respective
affiliates or representatives has made or makes any representations to any person regarding the
ultimate performance of Axsys compared to the information contained in the projections.
The financial projections have been prepared by Axsys senior management. Neither Axsys
independent auditors, nor any other independent accountants, have compiled, examined or performed
any procedures with respect to the financial projections set forth below, nor have they expressed
any opinion or any other form of assurance with respect thereto. The financial projections were
not prepared with a
29
view toward public disclosure or compliance with the guidelines established by
the American Institute of Certified Public Accountants for preparation and presentation of
prospective financial information. We do not intend to update these out-dated financial
projections or to make other projections public in the future.
The financial projections included (in millions of dollars):
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
2010
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
280.0
|
|
|
$
|
322.4
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
$
|
97.6
|
|
|
$
|
113.7
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
64.6
|
|
|
$
|
75.3
|
|
In
mid-April 2009, Axsys revised its 2009 projections, adjusting revenue to $278.0 million and
gross profits to $96.5 million.
The foregoing financial projections are based upon numerous estimates and assumptions
including, without limitation, the following:
|
|
|
continued positive trends within Axsys target markets;
|
|
|
|
|
continued development and expansion of Axsys product offering, particularly with
regard to integrated camera and gyrostabilized systems;
|
|
|
|
|
further penetration of Axsys growing end markets, such as the asymmetric warfare,
homeland security, intelligence and commercial sectors;
|
|
|
|
|
movement up the value chain on defense and space programs related to both new
initiatives and refurbishment of existing platforms;
|
|
|
|
|
expansion of international sales channels;
|
|
|
|
|
continued improvement in Axsys gross profit margins; and
|
|
|
|
|
continued improvements in Axsys EBITDA margins.
|
Interests of Axsys Directors and Executive Officers in the Merger
In considering the Boards recommendation to vote for the proposal to adopt the merger
agreement, Axsys stockholders should be aware that some of the directors and executive officers of
Axsys have interests in the merger that may be different from, or in addition to, the interests of
Axsys stockholders generally and that may create potential conflicts of interest. The Board was
aware of and considered the interests of the Companys directors and executive officers when the Board considered,
adopted and approved the merger agreement and determined to recommend to Axsys stockholders that
they vote for the proposal to adopt the merger agreement.
Treatment of Stock Options
Under the terms of the merger agreement, each outstanding stock option held by our employees
(including our executive officers) and directors that is outstanding and unexercised as of
immediately prior to the effective time of the merger (whether or not such stock option is vested
and exercisable prior
30
to the effective time) will be canceled and converted into the right to
receive a cash payment equal to the number of shares underlying the option multiplied by the amount
(if any) by which $54.00 exceeds the option exercise price, less any applicable withholding taxes,
and without interest.
The following table shows, for our directors and executive officers, the aggregate number of
shares subject to outstanding options, the cash-out value of the outstanding options with a per
share exercise price less than $54.00, the aggregate number of shares subject to outstanding
unvested options and the cash-out value of such unvested options. The information in the table is
as of June 2, 2009.
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
Aggregate
|
|
|
Shares
|
|
Cash-Out
|
|
|
Subject to
|
|
Value of
|
Name
|
|
All Options
|
|
All Options
|
|
|
|
|
|
|
|
|
|
Stephen W. Bershad
|
|
|
67,500
|
|
|
$
|
2,378,675
|
|
David A. Almeida
|
|
|
60,000
|
|
|
|
2,279,255
|
|
Scott B. Conner
|
|
|
34,200
|
|
|
|
1,273,184
|
|
Anthony J. Fiorelli, Jr.
|
|
|
9,220
|
|
|
|
409,815
|
|
Eliot M. Fried
|
|
|
9,024
|
|
|
|
427,644
|
|
Richard F. Hamm, Jr.
|
|
|
8,779
|
|
|
|
384,037
|
|
Robert G. Stevens
|
|
|
13,474
|
|
|
|
607,580
|
|
Treatment of Restricted Stock
Under the terms of the merger agreement, each outstanding restricted share of common stock
held by our employees (including our executive officers) and directors that is outstanding as of
immediately prior to the effective time of the merger will cease to be subject to any restrictions
and will be canceled and converted into the right to receive a cash payment equal to $54.00, less
any applicable withholding taxes, and without interest.
The following table shows, for our executive officers and directors, the aggregate number of
restricted shares and the cash-out value of such restricted shares (calculated at $54.00 per
restricted share). The information in the table is as of June 2, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Aggregate
|
|
|
Aggregate
|
|
Cash-Out
|
|
|
Number of
|
|
Value of
|
|
|
Restricted
|
|
Restricted
|
Name
|
|
Shares
|
|
Shares
|
|
|
|
|
|
|
|
|
|
Stephen W. Bershad
|
|
|
49,000
|
|
|
$
|
2,667,600
|
|
David A. Almeida
|
|
|
59,880
|
|
|
|
3,233,520
|
|
Scott B. Conner
|
|
|
59,880
|
|
|
|
3,233,520
|
|
Anthony J. Fiorelli, Jr.
|
|
|
1,500
|
|
|
|
81,000
|
|
Eliot M. Fried
|
|
|
1,500
|
|
|
|
81,000
|
|
Richard F. Hamm, Jr.
|
|
|
1,500
|
|
|
|
81,000
|
|
Robert G. Stevens
|
|
|
1,500
|
|
|
|
81,000
|
|
31
Employment Agreement and Severance Protection Agreements
Axsys entered into an amended and restated employment agreement with Stephen W. Bershad, dated
May 7, 2009, as amended on June 3, 2009, an amended and restated severance protection agreement
with David A. Almeida, dated December 22, 2008, as amended on May 7, 2009 and June 3, 2009, and an
amended and restated severance protection agreement with Scott B. Conner, dated December 22, 2008,
as amended on May 7, 2009 and June 3, 2009. The executives agreements provide for severance
payments to the applicable executive if his employment with Axsys is terminated within the two-year
period following a change in control of Axsys under any of the following circumstances:
|
|
|
Axsys terminates the executives employment without cause (as defined in his
applicable agreement);
|
|
|
|
|
The executive terminates his employment for good reason (as defined in his
applicable agreement); or
|
|
|
|
|
The executive terminates his employment for any reason during the one-month period
(the executives window period) ending on the earlier of:
|
|
|
|
the end of the second month of the calendar year following the
calendar year in which the change in control occurs, or
|
|
|
|
|
the last day of the seventh month following the change in
control.
|
The completion of the merger will constitute a change in control for purposes of these
agreements.
If the executives employment is terminated under any of the circumstances listed above within
the two-year period following a change in control or preceding the change in control if the
executive demonstrates the termination was at the request of a third party that took steps to
effectuate and actually effectuated the change in control or the termination arose in connection
with a change in control, the executive will be entitled to receive all accrued but unpaid salary,
prior years bonus, vacation pay and reimbursable expenses, and the following severance payments
and benefits:
|
|
|
an amount equal to 2.99 times the sum of (A) the highest annual rate of base salary
paid to the executive during the 12-month period immediately prior to the termination
of his employment and (B) the average of the annual cash bonuses paid to the executive
during the three calendar years prior to the year in which the termination of his
employment occurs; and
|
|
|
|
|
continued life insurance, disability, medical, dental, prescription drug and
hospitalization coverages and benefits for 12 months.
|
Each executives agreement provides, with respect to the annual incentive bonus earned in the
year in which the change in control occurs, that if the executives employment is not terminated
prior to the last day of the fiscal year in which the change in control occurs, the executive will
receive the greater of the bonus he would have received for the full year based on actual
achievement of the performance goals or the bonus he would have received for the full year based on
Axsys monthly annual forecast produced immediately prior to the change in control and prorated
based on the number of days in the fiscal year preceding the change in control. Each executives
agreement also provides that if, prior to the last day of the fiscal year in which the change in
control occurs, the executives employment is terminated
32
by Axsys other than for cause, upon death, or by the executive for good reason or for any
reason during the executives window period, the executive will receive a payment for his annual
incentive bonus equal to the greater of the bonus he would have received for the full year based on
Axsys monthly annual forecast produced immediately prior to his termination date and prorated
based on the number of days in the fiscal year preceding his termination date or the bonus he
would have received for the full year based on Axsys monthly annual forecast produced immediately
prior to the change in control and prorated based on the number of days in the fiscal year preceding
the change in control.
Each executives agreement provides that the executive is entitled to a gross-up payment to
make him whole for any federal excise tax imposed under Section 4999 of the Internal Revenue Code
of 1986, as amended, which is referred to as the Code, on change in control payments, severance
payments or benefits received by the executive officer (including the value of accelerated vesting
of stock options and restricted stock upon completion of the merger) that are treated as excess
parachute payments under Section 280G of the Code. The purpose of the gross-up payment is to put
the executive in the same position with respect to the payments and benefits he may receive in
connection with the change in control, as described above, after payment of all federal, state and
local taxes (including income taxes and the excise tax under Section 4999 of the Code), as the
executive would have been in if the excise tax under Section 4999 of the Code had not applied.
Under each executives agreement, Axsys is required to pay all reasonable legal fees and
related expenses (including the costs of experts, evidence and counsel) incurred by the executive
as they become due as a result of or in connection with (a) the executives contesting, defending
or disputing the basis for the termination of the executives employment, (b) the executives
hearing before the Board as contemplated in his agreement in connection with his right to contest a
termination of his employment for cause, or (c) the executives seeking to obtain or enforce any
right or benefit provided by his applicable agreement or by any other plan or arrangement
maintained by Axsys under which the executive is or may be entitled to receive benefits.
The following table summarizes the estimated amount of the change in control and severance
benefits that would be paid to our executive officers if each executive officers employment were
terminated immediately following the merger, as well as the pro rata bonus payments that the
executive officers would receive, as described above, assuming a July 15, 2009 closing date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
Benefits
|
|
Excise Tax and
|
|
Pro Rata
|
|
|
Name
|
|
Payments
|
|
Continuation
|
|
Gross-Up
(1)
|
|
Bonus
|
|
Total
|
Stephen Bershad
|
|
$
|
2,152,811
|
|
|
$
|
37,000
|
|
|
$
|
1,920,575
|
|
|
$
|
148,212
|
|
|
$
|
4,258,598
|
|
David Almeida
|
|
$
|
1,499,339
|
|
|
$
|
33,000
|
|
|
$
|
0
|
|
|
$
|
109,548
|
|
|
$
|
1,641,887
|
|
Scott Conner
|
|
$
|
1,488,033
|
|
|
$
|
34,000
|
|
|
$
|
1,474,770
|
|
|
$
|
109,548
|
|
|
$
|
3,106,351
|
|
|
|
|
(1)
|
|
Under Treasury Regulation Section 1.280G-1, Q&A-25, any payment made pursuant to an agreement
that was entered into within one year before a change in ownership or control is presumed to be
contingent upon that change unless otherwise rebutted by clear and convincing evidence that the
payment was not contingent on the change. As of the date of this proxy statement, it has not been
determined whether the one-year presumption described in Treasury Regulation Section 1.280G-1,
Q&A-25 may be rebutted with respect to the grants of restricted shares made to the executives on
March 11, 2009. For purposes of the calculation of the amount of the gross-up payment, it is
assumed that the one-year presumption described in Treasury Regulation Section 1.280G-1, Q&A-25 may
not be rebutted with respect to the grants of restricted shares made on March 11, 2009. If the
presumption is rebutted by clear and convincing evidence, the amount of the parachute payment
attributable to
|
33
|
|
|
|
|
the accelerated vesting of such shares would be significantly lower for each of the executives,
resulting in a lower amount of a gross-up payment for Mr. Bershad and no gross-up payment for Mr.
Conner.
|
Indemnification; Directors and Officers Insurance
The merger agreement requires that the indemnification provisions of the certificate of
incorporation and bylaws of the surviving corporation as in effect at the effective time of the merger
not be amended, modified or repealed for six years from the effective time of the merger in any
manner that would adversely affect the rights of individuals who immediately prior to the effective
time of the merger were directors, officers or employees of Axsys unless required by law. GD AIS
also has agreed to indemnify the present and former employees, officers and directors of Axsys and
to cause the surviving corporation to provide directors and officers liability insurance coverage for
the benefit of the present and former officers and directors of Axsys that will contain
substantially equivalent scope and amount of coverage as the policy maintained by Axsys immediately
prior to effectiveness of the merger, subject to certain limitations on the amount of premiums
required to be paid for such insurance coverage.
Governmental and Regulatory Matters
Under the HSR Act and the rules that have been promulgated thereunder by the FTC, certain
acquisition transactions may not be consummated unless information has been furnished to the
Antitrust Division and the FTC and certain waiting period requirements have been satisfied. The
merger is subject to these requirements and may not be completed until the expiration of a 30-day
waiting period following the filing of the required Notification and Report Forms, which are
referred to as the forms, with the Antitrust Division and the FTC. Pursuant to the requirements of
the HSR Act, Axsys completed the filing of the forms with the Antitrust Division and the FTC on
June 8, 2009. GD AIS also filed the forms on June 8, 2009. The 30-day waiting period,
which cannot expire on a Saturday, Sunday or a U.S. federal holiday, will expire at 11:59 p.m.
Eastern Time on July 8, 2009, unless the FTC or the Antitrust Division earlier terminates the
waiting period or makes a request for more information related to the merger.
The Antitrust Division and the FTC have the authority to scrutinize the legality of
transactions under the antitrust laws. For example, the FTC could issue requests to Axsys and GD
AIS for additional information regarding the merger. If such requests for additional information
were made, the waiting period referred to above would be extended until the end of the
30
th
day after both Axsys and GD AIS have substantially complied with the requests for
additional information or such later time as is agreed among the parties and the FTC, unless the
waiting period is earlier terminated because the FTC determines to close its review.
Further, at any time before or after the consummation of the merger, the Antitrust Division or
the FTC could take such action under the antitrust laws as it deems necessary or desirable in the
public interest, including seeking to enjoin the merger or seeking divestiture of certain of Axsys
or GD AIS assets. Private parties and state attorneys general may also bring legal actions under
the antitrust laws.
Certain United States Federal Income Tax Consequences
Summary Only
The following is a summary of certain United States federal income tax consequences of the
merger to Axsys stockholders whose shares of common stock are converted into the right to receive
cash under the merger agreement. This summary is based on provisions of the Internal Revenue Code
of 1986, as amended, United States Treasury Regulations promulgated thereunder, judicial opinions
and administrative rulings and published positions of the United States Internal Revenue Service,
each in
34
effect as of the date of this proxy statement and all of which are subject to change, possibly
with retroactive effect.
This summary applies only to stockholders who hold shares of Axsys common stock as capital
assets within the meaning of Section 1221 of the Internal Revenue Code. This summary does not
address the United States federal income tax consequences to any stockholder who, for United States
federal income tax purposes, is a non-resident alien individual, foreign corporation, foreign
partnership or foreign estate or trust. This summary does not address the federal income taxation
of holders of options to purchase Axsys common stock. In addition, no information is provided with
respect to the tax consequences of the merger under applicable state, local, foreign or United
States federal non-income tax laws.
This summary does not purport to consider all aspects of United States federal income taxation
that might be relevant to Axsys stockholders in light of their particular circumstances and does
not apply to stockholders that are subject to special rules under the United States federal income
tax laws (including, for example, insurance companies, tax-exempt organizations, financial
institutions, dealers in securities, persons subject to the alternative minimum tax, persons who
hold or have held shares of Axsys common stock as part of a straddle, hedge, integrated
constructive sale or conversion transaction for tax purposes and persons who acquired shares of
Axsys common stock pursuant to the exercise of an employee stock option or right or otherwise as
compensation). If a partnership (including for this purpose any entity or arrangement treated as a
partnership for United States federal income tax purposes) is a beneficial owner of shares of Axsys
common stock, the tax treatment of a partner in that partnership will generally depend on the
status of the partner and the activities of the partnership.
All holders of shares of Axsys common stock are urged to consult their own tax advisors to
determine the particular tax consequences to them of the merger.
Merger
In general, a stockholder who surrenders shares of Axsys common stock for cash pursuant to the
merger will recognize a capital gain or loss for United States federal income tax purposes equal to
the difference, if any, between the amount of cash received in the merger and the stockholders
adjusted tax basis in shares of Axsys common stock surrendered. Gain or loss will be determined
separately for each block of shares (i.e., shares acquired at the same cost in a single
transaction) surrendered for cash pursuant to the merger. Such gain or loss will be long-term
capital gain or loss if a stockholders holding period for such shares is more than one year at the
time of the completion of the merger. In the case of individuals, long-term capital gain is
currently eligible for reduced rates of United States federal income tax. There are limitations on
the deductibility of capital losses.
Federal backup withholding at a rate of 28% may apply with respect to certain payments,
including cash received in the merger, unless a payee (1) is a corporation or comes within certain
other exempt categories and, when required, demonstrates this fact or (2) provides a correct
taxpayer identification number, certifies as to no loss of exemption from backup withholding and
that such stockholder is a U.S. person (including a U.S. resident alien) and otherwise complies
with applicable requirements of the backup withholding rules. Each of our stockholders and, if
applicable, each other payee should complete and sign the Substitute Form W-9 that will be included
as part of the letter of transmittal to be returned to the paying agent, in order to provide the
information and certification necessary to avoid backup withholding, unless an exemption applies
and is established in a manner satisfactory to the paying agent.
Backup withholding is not an additional tax and any amounts withheld under the backup
withholding rules may be allowed as a refund or a credit against your United States federal income
tax
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liability provided that you furnish the required information to the United States Internal
Revenue Service. Such amounts, once withheld, are not refundable by us or the paying agent.
The summary of certain United States federal income tax consequences set forth above
is for general informational purposes only and is not intended to constitute a complete description
of all tax consequences relating to the merger. Because tax matters are very complicated and
individual tax consequences may differ depending on your facts and circumstances, all stockholders
are urged to consult with their own tax advisors regarding the tax consequences of the merger to
them, including the application of state, local and foreign tax laws.
Appraisal Rights of Axsys Stockholders
Record holders of shares of Axsys common stock who do not vote in favor of the adoption of the
merger agreement, and who otherwise comply with the applicable provisions of Section 262 of the
DGCL, will be entitled to exercise appraisal rights under Section 262 of the DGCL in connection
with the merger. A person having a beneficial interest in shares of Axsys common stock held of
record in the name of another person, such as a broker, bank or other nominee, must act promptly to
cause the record holder to follow the steps summarized below properly and in a timely manner to
perfect appraisal rights.
The following discussion is not a complete statement of the law pertaining to appraisal rights
under the DGCL and is qualified in its entirety by the full text of Section 262 of the DGCL, which
is reprinted in its entirety as
Annex D
and incorporated into this proxy statement by
reference. The following summary does not constitute any legal or other advice nor does it
constitute a recommendation that stockholders exercise their appraisal rights. All references in
Section 262 of the DGCL and in this summary to a stockholder or holder are to the record holder
of the shares of Axsys common stock as to which appraisal rights are asserted.
Holders of shares of Axsys common stock who follow the procedures set forth in Section 262 of
the DGCL will be entitled to have their Axsys common stock appraised by the Delaware Court of
Chancery and to receive, in lieu of the merger consideration, payment in cash of the fair value
of their shares of Axsys common stock, exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with interest, if any, as determined by that
court (described more fully below).
Under Section 262 of the DGCL, when a proposed merger of a Delaware corporation is to be
submitted for adoption at a meeting of its stockholders, the corporation, not less than 20 days
prior to the meeting, must notify each of its stockholders entitled to appraisal that appraisal
rights are so available, and must include in this required notice a copy of Section 262 of the
DGCL.
This proxy statement constitutes the required notice to the holders of the shares of Axsys
common stock in respect of the merger, and Section 262 of the DGCL is attached to this proxy
statement as
Annex D
. Any Axsys stockholder who wishes to exercise appraisal rights in
connection with the merger or who wishes to preserve the right to do so should review the following
discussion and
Annex D
carefully, because failure to comply timely and properly with the
procedures specified in
Annex D
will result in the loss of appraisal rights under the DGCL.
Moreover, because of the complexity of the procedures for exercising the right to seek appraisal
of shares of Axsys common stock, Axsys believes that if a stockholder considers exercising such
rights, such stockholder should seek the advice of legal counsel.
A holder of Axsys common stock wishing to exercise appraisal rights must not vote in favor of
the adoption of the merger agreement, and must deliver to Axsys before the taking of the vote on
the adoption of the merger agreement at the Axsys special meeting a written demand for appraisal
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of their shares of Axsys common stock. This written demand for appraisal must be in addition to and
separate from any proxy or vote on the adoption of the merger agreement. Neither abstaining from
voting or failing to vote on the adoption of the merger agreement or instructing or effecting a
vote against the adoption of the merger agreement will in and of itself constitute a written demand
for appraisal satisfying the requirements of Section 262 of the DGCL. This demand must reasonably
inform Axsys of the identity of the stockholder and of the stockholders intent thereby to demand
appraisal of their shares in connection with the merger. A stockholders failure to make the
written demand prior to the taking of the vote on the adoption of the merger agreement at the
special meeting of stockholders will constitute a waiver of appraisal rights. A holder of Axsys
common stock wishing to exercise appraisal rights must be the record holder of the shares of Axsys
common stock on the date the written demand for appraisal is made and must continue to hold the
shares of Axsys common stock through the effective date of the merger. Accordingly, a holder of
Axsys common stock who is the record holder of Axsys common stock on the date the written demand
for appraisal is made, but who thereafter transfers the shares of Axsys common stock prior to the
effective date of the merger, will lose any right to appraisal in respect of those shares of Axsys
common stock.
A proxy card that is signed and does not contain voting instructions will, unless revoked, be voted
in favor of the adoption of the merger agreement, and it will constitute a waiver of the
stockholders right of appraisal and will nullify any previously delivered written demand for
appraisal.
Therefore, a stockholder who votes by proxy and who wishes to exercise appraisal rights
must vote AGAINST adoption of the merger agreement, or abstain from voting on the adoption of the
merger agreement
.
Only a holder of record of Axsys common stock on the date of the making of a demand for
appraisal will be entitled to assert appraisal rights for the shares of Axsys common stock
registered in that holders name.
A demand for appraisal in respect of shares of Axsys common
stock should be executed by or on behalf of the holder of record, fully and correctly, as the
holders name appears on the holders stock certificates, should specify the holders name and
mailing address and the number of shares registered in the holders name and must state that the
person intends to demand appraisal of the holders shares, in connection with the merger. If the
shares of Axsys common stock are held of record by a person other than the beneficial owner,
including a broker, fiduciary (such as a trustee, guardian or custodian), depository or other
nominee, execution of the demand should be made in that capacity, and if the Axsys common stock is
held of record by more than one holder as in a joint tenancy or tenancy in common, the demand
should be executed by or on behalf of all joint holders. An authorized agent, including an agent
for one or more joint holders, may execute a demand for appraisal on behalf of a holder of record.
The agent, however, must identify the record holder or holders and expressly disclose the fact
that, in executing the demand, the agent is acting as agent for the record holder or holders. A
record holder such as a broker, bank or nominee who holds Axsys common stock as nominee for
several beneficial owners may exercise appraisal rights with respect to the shares of Axsys common
stock held for one or more beneficial owners while not exercising appraisal rights with respect to
the Axsys common stock held for other beneficial owners. In this case, the written demand should
set forth the number of shares of Axsys common stock as to which appraisal is sought. When no
number of shares of Axsys common stock is expressly mentioned, the demand will be presumed to cover
all Axsys common stock in brokerage accounts or other nominee forms held by such record holder, and
those who hold shares in brokerage accounts or other nominee forms and who wish to exercise
appraisal rights under Section 262 of the DGCL are urged to consult with their brokers to determine
the appropriate procedures for the making of a demand for appraisal by such a nominee.
37
All written demands for appraisal pursuant to Section 262 of the DGCL should be sent or
delivered to Axsys Technologies, Inc., 175 Capital Boulevard, Suite 103, Rocky Hill, Connecticut
06067, Attention: Corporate Secretary.
At any time within 60 days after the effective date of the merger, any stockholder who has not
commenced an appraisal proceeding or joined that proceeding as a named party may withdraw his, her
or its demand for appraisal and accept the consideration offered pursuant to the merger agreement
by delivering to Axsys, as the surviving corporation, a written withdrawal of the demand for
appraisal. However, any such attempt to withdraw the demand made more than 60 days after the
effective date of the merger will require written approval of the surviving corporation. No
appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder
without the approval of the Delaware Court of Chancery, and such approval may be conditioned upon
such terms as the Court deems just; provided, however, that any stockholder who has not commenced
an appraisal proceeding or joined that proceeding as a named party may withdraw his, her or its
demand for appraisal and accept the merger consideration offered pursuant to the merger agreement
within 60 days after the effective date of the merger. If the surviving corporation does not
approve a request to withdraw a demand for appraisal when that approval is required, or, except
with respect to any stockholder who withdraws such stockholders right to appraisal in accordance
with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not
approve the dismissal of an appraisal proceeding, the stockholder will be entitled to receive only
the appraised value determined in any such appraisal proceeding, which value could be less than,
equal to or more than the consideration being offered pursuant to the merger agreement.
Within 10 days after the effective date of the merger, Axsys, or the surviving company, will
notify each former Axsys stockholder who has properly asserted appraisal rights under Section 262
of the DGCL, and has not voted in favor of the adoption of the merger agreement, of the date the
merger became effective.
Within 120 days after the effective date of the merger, but not thereafter, the surviving
company or any former Axsys stockholder who has complied with the statutory requirements summarized
above and is entitled to appraisal rights under Section 262 of the DGCL may commence an appraisal
proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the
surviving corporation in the case of a petition filed by the stockholder, demanding a determination
of the fair value of the shares of Axsys common stock that are entitled to appraisal rights. None
of GD AIS, the surviving company or Axsys is under any obligation to and none of them has any
present intention to file a petition with respect to the appraisal of the fair value of the shares
of Axsys common stock, and stockholders seeking to exercise appraisal rights should not assume that
the surviving company, Axsys or GD AIS will file a petition. Accordingly, it is the obligation of
Axsys stockholders wishing to assert appraisal rights to take all necessary action to perfect and
maintain their appraisal rights within the time prescribed in Section 262 of the DGCL.
Within 120 days after the effective date of the merger, any former Axsys stockholder who has
complied with the requirements for exercise of appraisal rights will be entitled, upon written
request, to receive from the surviving company a statement setting forth the aggregate number of
shares of Axsys common stock not voted in favor of adopting the merger agreement, and with respect
to which demands for appraisal have been received and the aggregate number of former holders of
these shares of Axsys common stock. The statement must be mailed within 10 days after a written
request therefor has been received by the surviving company or within 10 days after expiration of
the period for delivery of demands for appraisal under Section 262 of the DGCL, whichever is later.
Notwithstanding the foregoing, a person who is the beneficial owner of shares of Axsys common
stock held either in a voting trust or by a nominee on behalf of such person may, in such persons
own name, file a petition or request from the surviving corporation the statement described in this
paragraph.
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If a petition for an appraisal is filed timely with the Delaware Court of Chancery by a former
Axsys stockholder and a copy thereof is served upon the surviving company, the surviving company
will then be obligated within 20 days of service to file with the Delaware Register in Chancery a
duly verified list containing the names and addresses of all former Axsys stockholders who have
demanded appraisal of their shares of Axsys common stock and with whom agreements as to the value
of their shares have not been reached. After notice to such former Axsys stockholders as required
by the Delaware Court of Chancery, the Delaware Court of Chancery is empowered to conduct a hearing
on such petition to determine those former Axsys stockholders who have complied with Section 262 of
the DGCL and who have become entitled to appraisal rights thereunder. The Delaware Court of
Chancery may require the former Axsys stockholders who demanded appraisal of their shares of Axsys
common stock to submit their stock certificates to the Delaware Register in Chancery for notation thereon of
the pendency of the appraisal proceeding. If any former stockholder fails to comply with such
direction, the Delaware Court of Chancery may dismiss the proceedings as to that former
stockholder.
After determining which, if any, former Axsys stockholders are entitled to appraisal, the
appraisal proceeding shall be conducted in accordance with the rules of the Delaware Court of
Chancery, including any rules specifically governing appraisal proceedings, and the Delaware Court
of Chancery will appraise such holders shares of Axsys common stock, determining their fair value,
exclusive of any element of value arising from the accomplishment or expectation of the merger,
together with interest, if any, to be paid upon the amount determined to be the fair value. Unless
the Delaware Court of Chancery in its discretion determines otherwise for good cause shown,
interest from the effective date of the merger through the date of payment of the judgment shall be
compounded quarterly and shall accrue at 5% over the Federal Reserve discount rate (including any
surcharge) as established from time to time during the period between the effective date of the
merger and the date of payment of the judgment. Axsys stockholders considering seeking appraisal
should be aware that the fair value of their shares of Axsys common stock as determined under
Section 262 of the DGCL could be more than, the same as, or less than the value of the
consideration they would receive pursuant to the merger agreement if they did not seek appraisal of
their shares of Axsys common stock and that the investment banking opinion as to fairness from a
financial point of view included in this proxy statement is not necessarily an opinion as to fair
value under Section 262 of the DGCL. Although Axsys believes that the merger consideration is fair,
no representation is made as to the outcome of the appraisal of fair value as determined by the
Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result
in a determination of a value higher or lower than, or the same as, the merger consideration.
Neither GD AIS nor Axsys anticipate offering more than the applicable merger consideration to any
stockholder of Axsys exercising appraisal rights, and reserve the right to assert, in any appraisal
proceeding, that for purposes of Section 262 of the DGCL, the fair value of a share of Axsys
common stock is less than the applicable merger consideration. The Delaware courts have stated
that the methods which are generally considered acceptable in the financial community and otherwise
admissible in court may be considered in the appraisal proceedings.
In determining fair value, the Delaware Court of Chancery is required to take into account
all relevant factors. In
Weinberger
v.
UOP, Inc.
, the Delaware Supreme Court discussed the factors
that could be considered in determining fair value in an appraisal proceeding, stating that proof
of value by any techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court should be considered and that [f]air price obviously
requires consideration of all relevant factors involving the value of a company. The Delaware
Supreme Court has stated that in making this determination of fair value the court must consider
market value, asset value, dividends, earnings prospects, the nature of the enterprise and any
other facts which could be ascertained as of the date of the merger which throw any light on future
prospects of the merged corporation. Section 262 of the DGCL provides that fair value is to be
exclusive of any element of value arising from the accomplishment or expectation of the merger.
In
Cede & Co.
v.
Technicolor, Inc.
, the
39
Delaware Supreme Court stated that such exclusion is a narrow exclusion [that] does not
encompass known elements of value, but which rather applies only to the speculative elements of
value arising from such accomplishment or expectation. In
Weinberger
, the Delaware Supreme Court
construed Section 262 of the DGCL to mean that elements of future value, including the nature of
the enterprise, which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered.
In addition, Delaware courts have decided that a stockholders statutory appraisal remedy may
or may not be a dissenters exclusive remedy, depending on the factual circumstances.
If a petition for appraisal is not timely filed, then the right to an appraisal will cease.
The costs of the appraisal action (which do not include attorneys fees or the fees and expenses of
experts) may be determined by the Delaware Court of Chancery and levied upon the parties as the
Delaware Court of Chancery deems equitable under the circumstances. Upon application of a former
Axsys stockholder, the Delaware Court of Chancery may also order that all or a portion of the
expenses incurred by any former Axsys stockholder in connection with an appraisal proceeding,
including, without limitation, reasonable attorneys fees and the fees and expenses of experts used
in the appraisal proceeding, be charged pro rata against the value of all of the shares of Axsys
common stock entitled to appraisal.
Any holder of Axsys common stock who has duly demanded an appraisal in compliance with Section
262 of the DGCL will not, after the consummation of the merger, be entitled to vote the shares of
Axsys common stock subject to this demand for any purpose or be entitled to the payment of
dividends or other distributions on those shares of Axsys common stock (except dividends or other
distributions payable to holders of record of Axsys common stock as of a record date prior to the
effective date of the merger).
If any stockholder who properly demands appraisal of his, her or its Axsys common stock under
Section 262 of the DGCL fails to perfect, or effectively withdraws or loses, his, her or its right
to appraisal, as provided in Section 262 of the DGCL, that stockholders shares of Axsys common
stock will be deemed to have been converted at the effective date of the merger into the right to
receive the merger consideration payable (without interest) pursuant to the merger agreement. An
Axsys stockholder will fail to perfect, or effectively lose, his, her or its right to appraisal if,
among other things, no petition for appraisal is filed within 120 days after the effective date of
the merger. In addition, as indicated above, a stockholder may withdraw his, her or its demand for
appraisal in accordance with Section 262 of the DGCL and accept the merger consideration offered
pursuant to the merger agreement.
Failure to follow strictly the steps required by Section 262 of the DGCL for perfecting
appraisal rights will result in the loss of these rights, in which event the shares held by the
Axsys stockholder will be deemed to have been converted into the right to receive the merger
consideration payable (without interest) pursuant to the merger agreement.
Any stockholder wishing to exercise appraisal rights is urged to consult with legal counsel
prior to attempting to exercise such rights.
Termination of Listing of Shares of Axsys Common Stock
Shares of Axsys common stock are currently authorized for listing on the Nasdaq Global Select
Market under the symbol AXYS. Upon the consummation of the merger, the listing of shares of
Axsys common stock on the Nasdaq Global Select Market will terminate.
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THE MERGER AGREEMENT
The following description of the merger agreement describes the material provisions of the
merger agreement but does not purport to describe all of the terms of the merger agreement. The
full text of the merger agreement is attached to this proxy statement as
Annex A
and
incorporated by reference into this proxy statement. You are urged to read the merger agreement in
its entirety because it is the legal document that governs the merger.
The provisions contained in the merger agreement are intended to govern the contractual rights
and relationships, and to allocate risks, between Axsys and GD AIS with respect to the merger. The
representations and warranties made by Axsys and GD AIS to one another in the merger agreement were
negotiated between the parties, and any inaccuracies in the representations and warranties may be
waived by the beneficiary of such representations and warranties. Moreover, the representations
and warranties are qualified in a number of important respects, including through the use of
exceptions for certain matters disclosed by the party that made the representations and warranties
to the other party. None of the representations and warranties will survive the closing of the
merger.
The Merger
At the effective time of the merger, Merger Sub, an indirect, wholly owned subsidiary of
General Dynamics, will merge with and into Axsys. The separate corporate existence of Merger Sub
will cease and Axsys will continue as the surviving corporation and will become an indirect, wholly
owned subsidiary of General Dynamics. Merger Sub was created solely for purposes of the merger and
has no material assets or operations of its own.
Closing and Effective Time of the Merger
The merger will become effective at the time a certificate of merger is filed with the
Secretary of State of the State of Delaware or such later date or time as Axsys and GD AIS mutually
agree and specify in the certificate of merger, which is referred to as the effective time of the
merger.
The closing of the merger will take place on the second business day after satisfaction or
waiver of the conditions described below under Conditions of the Merger beginning on page
[55]
(other than those conditions that by their nature are to be satisfied at the closing but subject to
the fulfillment or waiver of those conditions), unless otherwise agreed by Axsys and GD AIS.
Consideration to be Received in the Merger
The merger agreement provides that, at the effective time of the merger, each issued and
outstanding share of Axsys common stock immediately prior to the effective time of the merger,
subject to certain exceptions, will be converted into the right to receive $54.00 in cash, without
interest. At that time, except with respect to dissenting shares as
described below, each holder of shares of Axsys common stock will no longer have any rights with
respect to such shares of common stock, except for the right to receive the merger consideration.
Cancellation of Shares
Each share of Axsys common stock held by Axsys (including as treasury stock), General
Dynamics, GD AIS, Merger Sub and any of their respective subsidiaries immediately prior to the
effective time of the merger automatically will be cancelled and will not be entitled to any merger
consideration nor any other payment or distribution.
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Treatment of Stock Options and Restricted Stock
Only stock options and shares of restricted stock have been issued and are outstanding under Axsys stock
incentive plan. At the effective time of the merger, each restricted share of Axsys common stock
outstanding as of immediately prior to the effective time of the merger will become fully vested
and then will be cancelled and converted into the right to receive $54.00 in cash, without interest,
less any applicable withholding tax.
At the effective time of the merger, each option outstanding as of immediately prior to the
effective time of the merger will become fully vested and then will be cancelled and converted into
the right to receive the excess, if any, of $54.00 over the exercise price per share of the stock
option multiplied by the number of shares of Axsys common stock subject to the stock option,
without interest, less any applicable withholding tax. No consideration will be payable in respect
of any options with an exercise price per share equal to or in excess of $54.00 as of immediately prior to the
effective time of the merger, and all such options will be cancelled automatically at the effective
time of the merger.
GD AIS will, or will cause the surviving corporation to, pay to holders of Axsys stock options
and restricted shares the option consideration or restricted share consideration, as the case may
be, payable as described above as soon as practicable after the effective time of the merger and in
any case within five business days thereafter.
Dissenters Shares
Shares of Axsys common stock held by any Axsys stockholder that neither votes in favor of the
adoption of the merger agreement nor consents thereto in writing and that properly demands payment for its shares in
compliance with the appraisal rights under Section 262 of the DGCL will not be converted into the
right to receive the merger consideration. Axsys stockholders properly exercising appraisal rights
will be entitled to payment as further described above under The Merger Appraisal Rights of
Axsys Stockholders beginning on page
[36]
. However, if any Axsys stockholder withdraws his or her
demand for appraisal (in accordance with Section 262 of the DGCL) or otherwise loses the right to
appraisal, then that Axsys stockholder will not be paid in accordance with Section 262 of the DGCL,
and the shares of Axsys common stock held by such Axsys stockholder will be converted as of the
effective time of the merger into the right to receive the merger consideration, without interest.
Payment for Shares
Prior to the effective time of the merger, Axsys and GD AIS will mutually agree upon a
disbursing agent to act as paying agent for the payment of the merger consideration. Prior to the
effective time of the merger, GD AIS will deposit, or cause to be deposited, with the paying agent
funds sufficient to pay the merger consideration.
Promptly after the effective time of the merger, but in no event later than two business days
after the effective time of the merger, the disbursing agent will mail or deliver to all record
holders of shares of Axsys common stock as of immediately prior to the time of the completion of
the merger a letter of transmittal containing instructions on how to surrender stock certificates in
exchange for the merger consideration. Upon delivery of a stock certificate for cancellation along with
a valid letter of transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such certificate will promptly be provided with, in exchange for the stock
certificate, cash in an amount equal to the merger consideration in respect of the shares of Axsys
common stock represented by such certificate, without interest.
Each certificate representing
shares of Axsys common stock that is surrendered will be cancelled. Do not send stock certificates
with your proxy card.
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Payment of the merger consideration may be made to a person other than the person in whose
name the surrendered certificate is registered if:
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the person requesting the payment shall pay any transfer or other taxes resulting
from the payment of the merger consideration to a person other than the registered
holder of that certificate, or required for any other reason relating to such holder or
requesting person, or shall establish to the reasonable satisfaction of the paying
agent that any such tax has been paid or is inapplicable; and
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the certificate is properly endorsed or otherwise in proper form for transfer.
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Notwithstanding the foregoing, the procedures described above will not apply to restricted
stock, which will be governed by the procedures set forth above under Treatment of Stock Options and
Restricted Stock.
After the completion of the merger, no transfers of shares of Axsys common stock will be made
on the transfer books of the surviving corporation.
If your Axsys common stock certificate has been lost, stolen or destroyed, you will be
entitled to obtain payment of the merger consideration only by signing an affidavit (in form and
substance reasonably acceptable to GD AIS) to that effect and, if required by GD AIS or the
disbursing agent, posting a bond in such an amount as GD AIS or the paying agent may direct as
indemnity against claims by any other party related to your lost, stolen or destroyed Axsys common
stock certificate.
From and after the effective time of the merger, the holders of certificates representing shares of
Axsys common stock will cease to have any rights as stockholders of the surviving corporation,
except as otherwise expressly provided in the merger agreement or by applicable law, and GD AIS
will be entitled to treat each certificate that has not yet been surrendered for exchange solely as
evidence of the right to receive the consideration into which the Axsys common stock formerly
evidenced by such certificate has been converted pursuant to the merger.
The merger consideration paid in the merger to any Axsys stockholder will be subject to reduction for the withholding
of any federal taxes payable by such stockholder.
Representations and Warranties
The merger agreement contains a number of representations and warranties made by Axsys,
including representations and warranties relating to:
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corporate organization, good standing, ownership of subsidiaries and similar
matters;
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corporate power and authority to enter into the merger agreement and due execution,
delivery and enforceability of the merger agreement;
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absence of required governmental or third party consents in connection with the
execution and delivery of the merger agreement or the closing of the merger;
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the absence of conflicts with charter documents or certain contracts;
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our capital structure and equity securities;
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accuracy and sufficiency of reports and financial statements filed with the SEC;
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material legal proceedings;
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compliance with applicable law and regulatory matters, including the Sarbanes-Oxley
Act;
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material contracts;
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tax matters;
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employee compensation and benefits matters and matters relating to the Employee
Retirement Income Securities Act of 1974, as amended;
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labor and employee matters;
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environmental matters and compliance with environmental laws;
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intellectual property;
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assets and property, including the leasing of certain real property;
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maintenance of certain insurance policies;
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the inapplicability of state takeover statutes and takeover provisions contained in
our organizational documents;
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the absence of brokers fees payable in connection with the merger;
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receipt of a fairness opinion from Jefferies; and
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material suppliers, material customers, and similar matters.
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The merger agreement also contains a number of representations and warranties by GD AIS and
Merger Sub, including representations and warranties relating to:
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corporate organization, good standing and similar matters;
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corporate power and authority to enter into the merger agreement and due execution,
delivery and enforceability of the merger agreement;
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absence of required governmental or third party consents in connection with the
execution and delivery of the merger agreement or the closing of the merger;
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the absence of conflicts with charter documents or certain contracts;
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capital structure and equity securities of Merger Sub;
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the operations of Merger Sub since its formation;
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ownership of shares of Axsys common stock by GD AIS and Merger Sub;
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the accuracy of information regarding GD AIS, General Dynamics, and Merger Sub
supplied to Axsys for inclusion in this proxy statement;
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sufficiency of financial resources to consummate the transactions through the
closing; and
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acknowledgment by GD AIS that it has had access to Axsys, including to its books,
records and facilities, in connection with the transactions.
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Significant portions of the representations and warranties of Axsys, GD AIS and Merger Sub are
qualified as to materiality or material adverse effect. Under the merger agreement, a material
adverse effect means, when used in connection with Axsys, any effect, event, change,
occurrence, state of facts, development or circumstance that (individually or in the aggregate)
has had, or would reasonably be expected to have, a material adverse effect on (i) the condition
(financial or otherwise), assets, liabilities, results of operations or business of Axsys and its
subsidiaries, taken as a whole, or (ii)
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the ability of Axsys to perform its obligations under the merger agreement or to consummate
the transactions by the termination date except, in the case of clause (i), any such effect
resulting from any of the following:
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changes after the date of the merger agreement in United States generally accepted
accounting principles, which are referred to as GAAP, U.S. regulatory accounting
requirements or applicable laws;
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changes or developments in general economic or political conditions, including acts
of war (whether or not declared), sabotage, insurrection, terrorism and armed
hostilities;
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changes in any financial, banking, credit or securities markets (including any
disruption thereof);
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changes in the stock price or trading volume of the shares of Axsys common stock
(provided that the facts or circumstances giving rise to or contributing to such change
in stock price or trading volume, if not otherwise excluded under the definition of
material adverse effect, may be taken into account in determining whether there has
been, or would reasonably be expected to be, a material adverse effect with respect to
Axsys);
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general changes in industries in which Axsys operates;
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natural disasters;
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any failure of Axsys to meet revenue, backlog or earnings projections or forecasts
(whether internal or published by Axsys or third parties) or any decline in Axsys
credit rating (provided that the facts or circumstances giving rise to or contributing
to such failure to meet revenue, backlog or earnings projections or forecasts or
decline in Axsys credit rating, if not otherwise excluded under the definition of
material adverse effect, may be taken into account in determining whether there has
been, or would reasonably be expected to be, a material adverse effect with respect to
Axsys);
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changes resulting from the announcement of the merger agreement or the consummation
of the merger and the related transactions; or
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any effect arising out of any action taken or omitted to be taken by Axsys with the
prior written consent of GD AIS or Merger Sub,
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except to the extent in the case of first, second, third, fifth or sixth bullet points above that
such change, effect, event, occurrence, state of facts, development or circumstance materially and
disproportionately has had, or would reasonably be expected to have, a greater adverse impact on
Axsys as compared to the adverse impact on the competitors of Axsys, but taking into account in
determining whether there has been, or would reasonably be expected to be, a material adverse
effect with respect to Axsys only such materially disproportionate greater adverse impact.
When used in connection with GD AIS or Merger Sub, a material adverse effect means any change,
effect, occurrence, state of facts, development or circumstance that, individually or in the
aggregate, has had, or would reasonably be expected to have, a material and adverse effect on the
ability of GD AIS or Merger Sub to perform their respective obligations under the merger agreement or
to consummate the transactions by the termination date.
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Covenants and Agreements
Conduct of Business of Axsys
We have agreed that during the period from the date of the merger agreement until the
effective time of the merger or the earlier termination of the merger agreement, subject to certain exceptions, we shall conduct
our business and cause to be conducted the businesses of our subsidiaries in the ordinary course of
business and shall use reasonable best efforts to preserve intact our respective business
organizations, keep available the services of our respective current officers and employees,
preserve the goodwill of those having material business relationships with us and our subsidiaries,
preserve our respective material relationships with customers, creditors and suppliers, maintain
our respective books, accounts and records and comply in all material respects with applicable
laws.
Without limiting the generality of the foregoing, except as expressly required by the merger
agreement or as required by applicable law, without the prior written consent of GD AIS, from the
date of the merger agreement until the effective time or the earlier termination of the merger
agreement, Axsys shall not, and shall cause each of its subsidiaries not to:
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enter into any new material line of business or change its material operating
policies;
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other than with respect to certain Axsys stock options or restricted shares of Axsys
common stock, (1) issue, sell, grant or otherwise permit to become outstanding or
dispose of or encumber or pledge, or authorize or propose the creation of, any
additional shares of its capital stock or any other securities (including long term
debt) or any rights with respect to shares of its capital stock or any other
securities, or (2) permit any additional shares of its capital stock to become subject
to new grants under a certain Company stock plan or otherwise;
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(1) make, declare, pay or set aside for payment any dividend on or in respect of, or
declare or make any actual, constructive or deemed distribution on, any shares of its
capital stock, other than dividends from Axsys wholly owned subsidiaries to it or
another of its wholly owned subsidiaries or (2) authorize or effect, directly or
indirectly, any adjustment, split, combination, redemption or reclassification, or
purchase of or otherwise acquire, any shares of its capital stock or any other
securities exercisable or exchangeable for or convertible into shares of its capital
stock, or amend any terms of any outstanding security of Axsys;
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sell, transfer, mortgage, encumber, lease, license or otherwise dispose of any of
its assets, businesses or properties, including any shares of capital stock of its
subsidiaries, except for sales, transfers, mortgages, encumbrances, leases, licenses or
other dispositions in the ordinary course of business pursuant to a transaction that,
together with any other such transactions, is not material to Axsys and its
subsidiaries, taken as a whole;
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other than in the ordinary course of business, acquire (whether by purchase of
assets, purchase of stock, merger or otherwise) (1) all or any portion of the assets,
business, properties or shares of stock or other securities of any other person or
entity or (2) any equity interest of any entity or any business or division of any
business, or enter into any joint venture, partnership agreement, joint development
agreement, strategic alliance agreement or other similar agreement;
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amend or propose to amend its organizational documents, including certificates of
incorporation or bylaws;
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implement or adopt any change in its financial accounting principles, practices or
methods, other than as may be required as a result of changes after the date of the
merger agreement in GAAP or regulatory accounting requirements applicable to U.S.
publicly owned business organizations generally;
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except as expressly required by the terms of certain benefit arrangements: (1)
enter into, amend, modify or renew any employment, consulting, change in control or
similar contract, agreement or arrangement with any director, officer or employee; (2)
increase the compensation payable or to become payable to any director, officer or
employee (excluding increases in cash compensation in the ordinary course of business);
(3) increase any bonus, insurance, pension or other benefit plan, payment or
arrangement made to, for or with any such directors, officers or employees; (4) grant
any severance or termination pay to any executive officer or director, or to any other
employee (excluding payments made in connection with the termination of employees who
are not executive officers in amounts consistent with its policies and past practice or
pursuant to certain written agreements in effect as of the date of the merger
agreement); or (5) issue or grant any stock-based awards;
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enter into, establish, adopt, amend, modify or renew any pension, retirement, stock
option, stock purchase, savings, profit sharing, deferred compensation, bonus, group
insurance or other employee benefit, incentive or welfare contract, plan or arrangement
or any trust agreement in respect of any director, officer or employee or take any
action to accelerate the vesting or exercisability of stock options
or restricted shares of Axsys common stock or other compensation or benefits payable thereunder,
except (1) as may be required by applicable law or by the terms of certain benefit
arrangements or (2) amendments that do not increase benefits or result in increased
administrative costs;
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(1) create, incur, endorse, assume or otherwise become liable for or suffer to exist
any indebtedness for borrowed money or guarantee any such indebtedness other than
borrowings in the ordinary course of business pursuant to Axsys and its subsidiaries
revolving credit arrangements or under capital leases, in each case, in effect on the
date of the merger agreement, (2) issue, sell or amend any debt securities or other
rights to acquire any debt securities of Axsys or any of its subsidiaries, (3)
guarantee any debt securities of others, (4) enter into any keep well or other
covenants to maintain any financial condition or enter into any arrangement having the
economic effect of the foregoing, (5) other than to wholly owned subsidiaries of Axsys,
make any loans, advances or capital contributions to, or material investment in, any
person or entity, (6) pledge or otherwise encumber shares of capital stock of Axsys or
any of its subsidiaries (other than liens permitted by the merger agreement), or (7)
mortgage, pledge or otherwise encumber any of its material assets (other than liens
permitted by the merger agreement);
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make or change any material tax election, settle or compromise any material tax
liability, change in any material respect any accounting method in respect of taxes,
file any amendment to a material tax return, enter into any closing agreement, settle
any material claim or material assessment of taxes, enter into any agreement or waiver
extending the period for assessment or collection of any material taxes of Axsys or any
of its subsidiaries, or fail to pay or withhold, or otherwise properly reserve for, any
material taxes of Axsys or any of its subsidiaries;
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enter into any contract, agreement or commitment (excluding government contracts) of
a character that would constitute a material contract under the merger agreement or be
required to be disclosed to GD AIS pursuant to the merger agreement, if such contract,
agreement or commitment had been entered into prior to the date of the merger
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agreement, or terminate, renew or amend in any material respect any material
contract, in each case, other than in the ordinary course of business;
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enter into any agreement, contract or binding commitment containing any covenant
directly or indirectly limiting the freedom of Axsys or any of its subsidiaries to
engage in any line of business, compete with any person or entity, or sell any product
or service (including any most favored nation clauses), or which, following the
consummation of the merger, could so limit GD AIS or any of its affiliates (including
the surviving corporation), including any contract clause, mitigation plan, or other
limitation with respect to Organizational Conflicts of Interest, as that term is used
in Federal Acquisition Regulation Subpart 9.5;
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enter into any government contract or submit any bid for a government contract that
(1) would reasonably be expected to result in a financial loss greater than $100,000,
(2) involves unusual risk in performance or compliance with schedule requirements or
contains non-customary terms and conditions or (3) would, under the federal rules
covering Organizational Conflicts of Interest, as that term is used in Federal
Acquisition Regulation Subpart 9.5, limit GD AIS, the surviving corporation or any of
their respective subsidiaries from engaging in any line of business, competing with any
person or entity or selling any product or service;
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take, or omit to take, any action that would reasonably be expected to result in any
of the conditions to the merger set forth in the merger agreement not being satisfied in a
timely manner;
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waive, release or assign any material rights, claims or benefits of Axsys or any of
its subsidiaries under any material contract, other than in the ordinary course of
business;
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make any capital expenditures, capital additions or capital improvements in amounts
exceeding $5,000,000 in the aggregate, or manufacture any demonstration equipment with
a cost exceeding $2,000,000 in the aggregate;
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engage in any reportable transaction, including any listed transaction, within
the meaning of Code Section 6011 or any other applicable federal law including any
Internal Revenue Service ruling, procedure, notice or other pronouncement;
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other than in the ordinary course of business, pay, discharge or satisfy any
material claim, liability or obligation, or settle or compromise any material pending
or threatened suit, action or proceeding requiring payments by Axsys in excess of
$250,000 in the aggregate;
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materially change the amount or nature of any insurance coverage, other than in the
ordinary course of business;
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enter into, amend, modify, terminate or engage in any contract, agreement,
commitment or transaction with any executive officer or director of Axsys, or any
person or entity owning 5% or more of the shares of Axsys common stock, or any relative of
any such person or entity directly or indirectly controlled by such person or entity;
or
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enter into any contract or binding commitment with respect to any of the foregoing,
or otherwise resolve or commit to do any of the foregoing.
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Additional Reports
From the date of the merger agreement to the effective time of the merger, Axsys will timely
file with, or furnish to, the SEC all forms, statements, reports, certifications, schedules and
other documents (including all exhibits and amendments thereto) required to be filed or furnished
by it under the Exchange
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Act and/or the Securities Act. Axsys will furnish to GD AIS drafts of all such forms,
statements, reports, certifications, schedules and other documents a reasonable time prior to
filing with, or furnishing to, the SEC, and copies of any such forms, statements, reports,
certifications, schedules and other documents that it files with, or furnishes to, the SEC on or
after the date of the merger agreement.
Reasonable Best Efforts, Antitrust Filings & Cooperation
Subject to certain limitations, we, GD AIS and Merger Sub have each agreed to use our
reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other party in doing, all things, necessary, proper or
advisable to consummate and make effective, as promptly as practicable prior to the termination
date, the transactions in accordance with the terms of the merger agreement and the voting
agreement, including:
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the taking of all acts necessary to cause the conditions to the merger to each be
satisfied as promptly as practicable; and
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the obtaining of all actions or nonactions, waivers, consents and approvals from
governmental authorities and the making of all registrations, notices and filings
(including filings with governmental authorities), in each case, that are required in
connection with the merger agreement and the merger and the taking of all steps as may
be necessary to obtain an approval or waiver from, or to avoid an action or proceeding
by, any governmental authority.
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In addition, we and GD AIS have each agreed to:
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duly file with the FTC and the Antitrust Division the notification and report forms,
referred to as the HSR Filings, required under the HSR Act, which HSR Filings were made by Axsys and GD AIS on June 8, 2009; and
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duly make all notifications and other filings required under any other applicable
antitrust law (together with the HSR Filings, referred to as the antitrust filings) that
Axsys and GD AIS deem advisable or appropriate or that may be required by the
applicable antitrust authority, in each case with respect to the transactions and as
promptly as practicable.
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Axsys and GD AIS will each use its respective reasonable best efforts to obtain
early termination of the applicable waiting period, if any, under all antitrust laws.
Notwithstanding anything to the contrary contained in the merger agreement, nothing
contained in the merger agreement will be deemed to require General Dynamics or GD AIS to enter into any
agreement, consent decree or other commitment requiring General
Dynamics, GD AIS or any of their
subsidiaries to (1) divest, hold separate or otherwise limit the use of any assets of
Axsys or its subsidiaries, or General Dynamics, GD AIS or their subsidiaries, (2) litigate, pursue or
defend any action or proceeding challenging any of the transactions as violative of any
antitrust laws, (3) other than filing fees required by the HSR Act, make any out of
pocket expenditures of more than a de minimis amount or incur any obligations or
liabilities, in each case, in order to comply with the provisions of the merger
agreement or (4) take any other action that would, or would reasonably be expected to,
materially and adversely affect General Dynamics, GD AIS or any of
their subsidiaries (including after the
effective time of the merger, the surviving corporation).
Further, we, GD AIS and Merger Sub, except as prohibited by any applicable representative of
any applicable governmental authority, and subject to any applicable laws, have each agreed to:
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furnish to the other party upon reasonable request all information concerning
itself, its subsidiaries, directors, officers and stockholders and such other matters
as may be reasonably necessary or advisable in connection with any filing, notice or
application made by or on behalf of such other party or any of its subsidiaries with or
to any third party or governmental authority in connection with the merger;
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promptly notify the other parties of any written communication received from any
antitrust authority, any state attorney general or any other governmental authority
relating to the merger agreement or the merger, and permit the other parties a reasonable
opportunity to review in advance any proposed written communication to any of the
foregoing with respect to the merger;
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not participate or agree to participate in any substantive meeting or discussion
with any governmental authority in respect of any filings, investigation or inquiry
concerning the merger agreement or the merger unless it consults with the other parties
in advance and, to the extent permitted by such governmental authority, gives the other
parties the opportunity to attend and participate thereat; and
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furnish the other parties with copies of all correspondence, filings and written
communications (and memoranda setting forth the substance thereof) between such party
and its subsidiaries and their respective representatives, on the one hand, and any
governmental authority or members or their respective staffs, on the other hand, with
respect to the merger agreement and the merger.
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Each party shall respond as promptly as reasonably practicable under the circumstances to any
inquiries received from any antitrust authority for additional information or documentation and to
all inquiries and requests received from any state attorney general or other governmental authority
in connection with antitrust matters relating to the merger agreement or the merger, including the
antitrust filings, and not extend any waiting period under the HSR Act or enter into any agreement
with any antitrust authority not to consummate the merger without the prior written consent of the
other parties.
GD AIS shall cause Merger Sub to comply with all of Merger Subs obligations under or related
to the merger agreement and the merger.
Stockholder Approvals
We have agreed to submit the merger agreement for adoption by Axsys stockholders at the
special meeting as soon as possible after the date of the merger agreement. At the special
meeting, GD AIS and Merger Sub have agreed to cause all shares owned by them and their respective
subsidiaries to be voted in favor of the adoption of the merger agreement.
We have agreed to use our reasonable best efforts to solicit proxies from Axsys stockholders
in favor of the adoption of the merger agreement and take all actions reasonably necessary or
advisable to secure Axsys stockholder approval.
Our obligations will not be affected by the commencement, public proposal, public disclosure
or communication to us of any acquisition proposal or superior proposal or any withdrawal of the
recommendation by the Board. Subject to Axsys withholding, withdrawing, qualifying or modifying
its recommendation pursuant to and in accordance with specific provisions of the merger agreement,
Axsys, acting through its Board, will make its Board recommendation at the special meeting.
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Access to Information; Confidentiality
Subject to certain limitations, prior to the effective time or the earlier termination of the
merger agreement, Axsys will afford to GD AIS and its representatives such access to the officers,
employees, agents, books, records and properties of Axsys and its subsidiaries as GD AIS may
reasonably request. Any information provided will be held in confidence to the extent required by
the provisions of the confidentiality agreement between us and General Dynamics.
No Solicitation
We have agreed that we will not, and we will cause our subsidiaries and our and their
directors, officers, employees and representatives (including any investment banker, attorney,
accountant or other advisor or representative retained by us or any of our subsidiaries) not to
directly or indirectly:
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initiate, facilitate, solicit or knowingly encourage inquiries or proposals that
constitute, or might reasonably be expected to lead to, any acquisition proposal;
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except as permitted below, initiate or engage with any third party in any
discussions or negotiations concerning, or furnish any information to any third party
in connection with, any acquisition proposal or otherwise knowingly facilitate other
inquiries or the making of any proposal that constitutes, or that might reasonably be
expected to lead to, any acquisition proposal; or
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except as permitted below, enter into any letter of intent, agreement, arrangement
or undertaking with respect to any acquisition proposal or approve or resolve to
approve any acquisition proposal, or enter into any agreement, arrangement or
understanding that would require Axsys to abandon, terminate or fail to consummate the
merger or any of the other related transactions.
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The merger agreement provides that if, at any time prior to the time that our stockholders
adopt the merger agreement, we receive an unsolicited acquisition proposal which did not result
from a breach of the merger agreement, we may furnish information to, or enter into discussions or
negotiations with, any person or entity that has made such unsolicited acquisition proposal if, and
only to the extent that:
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the unsolicited acquisition proposal constitutes a superior proposal or our Board,
after consulting with our outside legal counsel and financial advisors, determines in
good faith that, after furnishing such information and entering into such discussions
or negotiations, the acquisition proposal would reasonably be expected to result in a
superior proposal;
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after consultation with our outside legal counsel, our Board determines in good
faith that the failure to take such action would violate its fiduciary duties under
applicable law;
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we are otherwise in compliance with our obligations with respect to the no
solicitation provision of the merger agreement as outlined herein;
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we provide notice to GD AIS that we are furnishing information to, or entering into
discussions or negotiations with, such person or entity, at least two business days
prior to furnishing such information to, or entering into discussions or negotiations
with, such person or entity;
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prior to furnishing such information, we receive from such person an executed
confidentiality agreement on customary terms similar to and no less favorable to us
than those contained in the confidentiality agreement between us and General Dynamics;
and
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we keep GD AIS informed, on a reasonably current basis, of the status of any
discussions or negotiations.
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We shall as promptly as reasonably practicable (and in any event within two business days
after receipt) notify GD AIS of the existence of any proposal or inquiry received by Axsys that has
led to, or might reasonably be expected to lead to, any acquisition proposal, including a copy of
any such proposal or inquiry, and the identity of the third party making the proposal or inquiry.
We will keep GD AIS reasonably apprised of any material developments with respect to such proposal
or inquiry (including providing GD AIS with copies of all drafts and versions of agreements
relating to such acquisition proposal) and promptly make available to GD AIS any non-public
information concerning Axsys or any of its subsidiaries furnished to any third party that has not
previously been provided to GD AIS. We will give GD AIS prompt notice after any determination by
our Board that an acquisition proposal is, or would reasonably be likely to result in, a superior
proposal.
Immediately prior to execution of the merger agreement, we terminated all negotiations that
may lead to an acquisition proposal between Axsys and parties other than GD AIS. We have agreed to
use our commercially reasonable efforts to effect prompt return or destruction of all confidential
information furnished to any third party in connection with a possible acquisition proposal during
the 12-month period ending on the date of the merger agreement.
Prior to the effective time or the earlier termination of the merger agreement, the Board will
not make a Board change of recommendation. However, at any time prior to adoption of the merger
agreement by the Axsys stockholders, the Board may, in response to a material development or change
in circumstances occurring or arising after the date of the merger agreement that was neither known
to the Board nor reasonably foreseeable as of or prior to the date of the merger agreement (and not
relating to any acquisition proposal), which is referred to as an intervening event, make a Board
change of recommendation if the Board has concluded in good faith, after consultation with, and
taking into account the advice of, its outside legal counsel, that, in light of such intervening
event, the failure of the Board to make such Board change of recommendation would result in a
breach of its fiduciary duties under applicable law. Axsys shall not be entitled to exercise its
right to make such a Board change of recommendation unless it has:
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provided to GD AIS at least three business days prior written notice (unless the
intervening event arises fewer than three business days prior to the special meeting)
advising GD AIS that the Board intends to take such action and specifying the reasons;
and
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during such period, if requested by GD AIS, engaged in good faith negotiations with
GD AIS to amend the merger agreement in such a manner that obviates the need for such
Board change of recommendation as a result of the intervening event.
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At any time prior to the merger agreement being adopted by the Axsys stockholders, the Board
may, in response to a superior proposal, cause Axsys to terminate the merger agreement and enter
into a definitive agreement providing for the transactions contemplated by such superior proposal;
provided, however, that Axsys shall not terminate the merger agreement unless:
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Axsys shall have complied with all the no solicitation provisions of the merger
agreement, and with all applicable requirements of the merger agreement (including the
payment of any applicable termination fee and expense reimbursement) in connection with
such superior proposal; and
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after consultation with its outside legal counsel, the Board determines in good
faith that the failure to take such action would violate its fiduciary duties under
applicable law.
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Axsys also may not exercise its right to terminate the merger agreement in this manner until after
the second business day following actual receipt by GD AIS of written notice from Axsys advising GD
AIS that Axsys has received a superior proposal, specifying the material terms and conditions of
the superior
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proposal and attaching the most current versions of the definitive agreement, all exhibits and
other attachments thereto and agreements (such as stockholder agreements) ancillary thereto to
effect such superior proposal, and identifying the party making such superior proposal and stating
that the Board intends to cause Axsys to exercise its right to terminate the merger agreement
(provided that prior to such termination taking effect, an amendment to the price or other material
term of a superior proposal will require a new notice and a new two business day period with respect to the
amended proposal). During such two business day period Axsys will negotiate in good faith with GD
AIS so that GD AIS may propose an adjustment to the merger agreement for the purpose of causing the
acquisition proposal to no longer be a superior proposal. In addition, Axsys may not exercise its
right to terminate the merger agreement in this manner unless either (i) on or before the expiration of the two
business day period following the actual receipt by GD AIS of any notice of a superior proposal, GD
AIS does not make such adjustment in the terms and conditions of the merger agreement so that such
acquisition proposal ceases to constitute a superior proposal or (ii) following receipt of such
adjustment to the merger agreement within the two business day period, the Board concludes in good
faith, after consultation with the Companys outside legal counsel and after taking into
consideration the adjusted merger agreement, that the superior proposal continues to be a superior
proposal.
Nothing described above limits our ability to take actions to comply with our disclosure
obligations under Rule 14e-2(a) of the Exchange Act with regard to an acquisition proposal or
prohibits us from making such disclosure to our stockholders as, in the good faith judgment of the
Board, after receiving advice from counsel, would be inconsistent with applicable law.
A Board change of recommendation, as used herein, means the Board (1) approves or recommends,
or proposes to approve or recommend, any acquisition proposal, (2) causes or permits Axsys to enter
into any letter of intent, agreement in principle, acquisition agreement or similar agreement with
respect to any acquisition proposal, or (3) withdraws, amends or modifies in a manner adverse to GD
AIS or Merger Sub, or publicly proposes to withdraw, amend or modify in a manner adverse to GD AIS
or Merger Sub, the Boards recommendation.
An acquisition proposal, as used herein, means, other than the merger, any inquiry, proposal,
indication of interest or offer (whether written or oral) with respect to any direct or indirect:
(1) purchase or sale of an equity interest (including by means of a tender or exchange offer)
representing more than 15% of the voting power in Axsys or any of its significant subsidiaries; (2)
merger, consolidation, other business combination, reorganization, recapitalization, share
exchange, dissolution, liquidation or similar transaction involving Axsys or any of its significant
subsidiaries; or (3) purchase or sale of assets, businesses, securities or ownership interests
representing more than 15% of the consolidated assets of Axsys and its subsidiaries.
A superior proposal, as used herein, means a bona fide, written, unsolicited acquisition
proposal (with all references to 15% in the definition of acquisition proposal deemed to be a
majority for the purposes of this definition) made by any person that is (1) not received in
violation of the no solicitation provision of the merger agreement, (2) fully financed, (3) on
terms that the Board determines in good faith, after consultation with Axsys financial and legal
advisors, and in light of all relevant circumstances as the Board in good faith considers to be
appropriate, are more favorable to Axsys and its stockholders than the merger from a financial
point of view, and (4) is reasonably likely to be consummated according to its terms.
Takeover Laws and Provisions
Each of Axsys and the Board will take all actions to cause the merger and related transactions
(1) not to be subject to the requirements of any applicable takeover law and will take all necessary
steps within its control to exempt the transactions from any applicable takeover law, and (2) to
comply with any
53
takeover provisions in the constituent documents of Axsys. If any takeover law or takeover
provision becomes applicable to the merger or related transactions, each of Axsys and the Board
will, upon the request of GD AIS or Merger Sub, use its best efforts to ensure that the merger or
related transactions may be consummated as promptly as practicable on the terms contemplated by the
merger agreement and otherwise to minimize the effect of such takeover law or takeover provision on
the merger or related transactions.
Stockholder Litigation
Axsys will give GD AIS the opportunity to participate in the defense or settlement of any
stockholder litigation against Axsys and/or its directors or executive officers relating to the
merger or any related transactions, whether commenced prior to or after the execution and delivery
of the merger agreement. Axsys has agreed that it will not settle or offer to settle in exchange
for the payment of funds any litigation commenced prior to or after the date of the merger
agreement against Axsys or any of its directors or executive officers by any stockholder of Axsys
relating to the merger agreement, the merger or any other related transaction (unless such payment of funds
will be made under Axsys applicable insurance policy), without the prior written consent of GD AIS
(which consent will not be unreasonably withheld, conditioned or delayed).
Indemnification and Insurance
The merger agreement requires that the indemnification provisions of the certificate of
incorporation and bylaws of the surviving corporation as in effect as of the effective time of the
merger not be amended, modified or repealed for six years from the effective time of the merger in
any manner that would adversely affect the rights of any individual who immediately prior to the
effective time of the merger was a director, officer or employee of Axsys unless required by law.
GD AIS also has agreed to indemnify the present and former employees, officers and directors of
Axsys and to cause the surviving corporation to provide directors and officers liability insurance
coverage for the benefit of the present and former officers and directors of Axsys that will
contain substantially equivalent scope and amount of coverage as the policy maintained by Axsys
immediately prior to the effective time of the merger, subject to certain limitations on the amount
of premiums required to be paid for such insurance coverage.
Employee Matters
GD AIS has agreed to provide for the employees and former employees of Axsys and its
subsidiaries as of the effective time of the merger, referred to as the covered employees, employee
benefits and compensation plans (including with respect to salary and bonus but not equity awards and for a period of 12 months thereafter),
programs and arrangements no less favorable, in the aggregate, than those benefits provided by Axsys or
its subsidiaries, as the case may be, immediately prior to the effective time of the merger and for a period of 12
months thereafter.
GD AIS has further agreed to:
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provide all covered employees with service credit for purposes of eligibility to
participate, vesting and benefit accruals under any employee benefit or compensation
plan, program or arrangement adopted, maintained or contributed to by GD AIS or any of
its subsidiaries in which covered employees are eligible to participate, other than
benefit accruals under a defined benefit plan, for all periods of employment with Axsys
or any of its subsidiaries prior to the effective time of the merger to the extent
credited by Axsys for purposes of a comparable plan; and
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54
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with respect to any self-insured welfare benefit plans of GD AIS or any of its
subsidiaries, cause, and with respect to all other welfare benefit plans, use
reasonable best efforts to cause, any pre-existing conditions limitations, eligibility
waiting periods or required physical examinations to be waived with respect to the
covered employees and their eligible dependents to the extent waived under the
corresponding plan (for a comparable level of coverage) in which the applicable covered
employee participated immediately prior to the effective time of the merger.
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If Axsys or any of its subsidiaries medical, vision and/or dental benefit plans for covered
employees are terminated prior to the end of a plan year, covered employees and their dependents
who are then participating in a deductible-based medical, vision and/or dental benefit plan
sponsored by Axsys or any of its subsidiaries will be given credit for deductibles, co-payments and
eligible out-of-pocket expenses incurred toward deductibles, co-payments and out-of-pocket maximums
during the portion of the plan year preceding the termination date (or transfer date) in a
comparable deductible-based medical, vision and/or dental benefit plan of General Dynamics, GD AIS
or any of their subsidiaries for the corresponding Axsys benefit plan year.
GD AIS and Axsys, as the surviving corporation, shall honor, in accordance with their
respective terms, all vested or accrued benefit obligations to, and contractual rights of, covered
employees, including any benefits or rights arising as a result of the merger.
Additional Covenants
The merger agreement contains additional agreements between us and GD AIS relating to, among
other things:
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consultations regarding public announcements;
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preparation and filing of this proxy statement with the SEC;
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confirmation that control of operations of Axsys between the signing of the merger
agreement and the effective time remains with Axsys;
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performance under the voting agreement;
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notification of certain changes; and
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release of certain confidentiality and standstill obligations.
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Conditions of the Merger
The obligation of each party to effect the merger is subject to the satisfaction or written
waiver on or before the closing date of each of the following conditions:
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adoption of the merger agreement by Axsys stockholders;
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no governmental authority shall have enacted, issued, promulgated, enforced or
entered any order that is then in effect and has the effect of making consummation of
the merger illegal or otherwise preventing or prohibiting consummation of the merger,
and no law shall have been adopted that makes consummation of the merger illegal or
otherwise prevented or prohibited; and
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any applicable waiting period under the HSR Act will have terminated or expired.
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55
The obligation of Axsys to effect the merger is also subject to the satisfaction or written
waiver of the following conditions:
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accuracy as of the time of closing of the representations and warranties made by GD
AIS and Merger Sub to the extent specified in the merger agreement;
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each of GD AIS and Merger Sub shall have performed or complied with all of the
agreements, obligations and covenants in the merger agreement in all material respects;
and
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certification by GD AIS to Axsys that the two previous conditions have been
satisfied.
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The obligation of GD AIS and Merger Sub to effect the merger is also subject to the
satisfaction or written waiver of the following conditions:
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accuracy as of the time of the closing of the representations and warranties made by
us to the extent specified in the merger agreement;
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Axsys shall have performed or complied with all of the agreements, obligations and covenants
in the merger agreement in all material respects;
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certification by Axsys to GD AIS that the two previous conditions have been
satisfied;
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no event, change, circumstance, condition, development or effect that has, or would
reasonably be expected to have, a material adverse effect, after the date of the merger
agreement has occurred; and
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no more than 12% of the outstanding shares of Axsys common stock will constitute
dissenting shares.
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We and GD AIS can provide no assurance that all of the conditions precedent to the merger will
be satisfied or waived by the party permitted to do so.
Termination
We and GD AIS may mutually agree in writing, at any time before the effective time of the
merger, to terminate the merger agreement. Also, either GD AIS or we may terminate the merger
agreement, without the consent of the other, before the effective time of the merger if:
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any governmental authority of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order (whether temporary, preliminary or
permanent) that has become final and nonappealable and has the effect of making
consummation of the merger illegal or otherwise preventing or prohibiting consummation
of the merger; provided that a party whose breach of the merger agreement is the
principal cause of such order will not be able to terminate under such provision of the
merger agreement;
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any law shall have been adopted, enacted or promulgated that makes consummation of
the merger illegal or otherwise prohibited;
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the adoption of the merger agreement by the Axsys stockholders shall not have been
obtained at the special meeting or at any adjournment or postponement of the special
meeting; or
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the merger shall not have been consummated on or before November 30, 2009, referred
to as the termination date; provided that a party whose failure to comply in all
respects with any provision of the merger agreement results in a failure of a condition
to the
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56
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consummation of the merger will not be able to terminate under such provision of the
merger agreement.
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GD AIS may terminate the merger agreement before the effective time of the merger if:
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Axsys breaches any representation, warranty, covenant or agreement set forth in the
merger agreement (other than with respect to Axsys no solicitation obligations) which
breach or failure to perform results in the failure of certain conditions of the merger
being satisfied, and such breach is not cured or is incapable of being cured within 15
days after GD AIS gives Axsys written notice of such breach;
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a Board change recommendation has occurred; the Board has failed to include in this
proxy statement the Boards recommendation to adopt the merger agreement; the Board has
failed to reconfirm its recommendation within five business days after requested by GD
AIS, provided that any such request may be made only after notice of any of the
following events (as any of the following events may occur from time to time): (i)
receipt by Axsys of an acquisition proposal, (ii) any material change to an acquisition
proposal and (iii) a public announcement of any transaction to acquire a material
portion of the shares of Axsys common stock by a person or entity other than Merger
Sub, GD AIS or any of their affiliates; or the Board shall have resolved to do either
of the foregoing;
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Axsys violates or breaches in any material respect any of its obligations with
respect to its no solicitation obligations, as set forth in the merger agreement; or
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if for five days or more, Axsys stockholders dissenting from the merger constitute
more than 12% of the outstanding shares of Axsys common stock.
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Axsys may terminate the merger agreement if:
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Axsys enters into a definitive agreement with respect to a superior proposal at any
time prior to obtaining the approval of the stockholders of Axsys of the merger
agreement in accordance with the terms of the merger agreement; provided that prior to
such termination, and as a condition precedent thereof, Axsys pays the termination fee
and expense reimbursement in accordance with the provisions of the merger agreement; or
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GD AIS or Merger Sub breaches any representation, warranty, covenant or agreement
set forth in the merger agreement, which breach or failure to perform results in the
failure of certain conditions of the merger being satisfied, and such breach is not
cured or is incapable of being satisfied within 15 days after Axsys gives GD
AIS written notice of such breach.
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Termination Fees
Axsys must pay to GD AIS a $23.6 million termination fee, referred to as the termination fee,
and reimburse up to an aggregate $2.0 for the documented out-of-pocket expenses of GD AIS and
General Dynamics incurred in connection with the merger, referred to as the expense reimbursement,
if the merger agreement is terminated (1) by Axsys because Axsys terminates the merger agreement to
enter into a definitive agreement with respect to a superior proposal; or (2) by GD AIS because the
Board fails to include the Boards recommendation in this proxy statement, a Board change of
recommendation occurs, or the Board resolves to do either of the foregoing.
If GD AIS terminates the merger agreement because Axsys breaches any representation, warranty,
covenant or agreement set forth in the merger agreement (other than with respect to Axsys no
solicitation obligations), which breach results in the failure of certain conditions of the merger
being
57
satisfied, and such breach is not cured or is incapable of being cured within 15 days after GD
AIS gives Axsys written notice of such breach, then Axsys will pay to GD AIS the expense
reimbursement. If there shall have existed at or prior to the time of such termination an
acquisition proposal (whether or not such offer or proposal has been rejected or has been withdrawn
prior to the time of such termination) and within 12 months after such termination, Axsys or any of
its subsidiaries accepts a written offer for, or otherwise enters into an agreement to consummate
or consummates, an acquisition proposal, then upon the signing of a definitive agreement relating
to such acquisition proposal, or, if no such agreement is signed, then upon consummation of any
such acquisition proposal, in addition to the expense reimbursement Axsys will pay to GD AIS the termination
fee.
If the merger agreement is terminated because (i) the merger has not been consummated on or
before the termination date or (ii) for five days or more, Axsys stockholders dissenting from the
merger constitute more than 12% of the outstanding shares of Axsys common stock, then (1) if prior
to such termination there exists an acquisition proposal (whether or not such offer or proposal has
been rejected or has been withdrawn prior to the time of such termination) and (2) within 12 months
after such termination, Axsys or any of its subsidiaries accepts a written offer for, or otherwise
enters into an agreement to consummate or consummates, an acquisition proposal, then upon the
signing of a definitive agreement relating to such acquisition proposal, or, if no such agreement
is signed, then upon consummation of any such acquisition proposal, Axsys will pay to GD AIS the
expense reimbursement and the termination fee.
In the event that GD AIS terminates the merger agreement because adoption of the merger
agreement shall not have been obtained at the special meeting or at any adjournment or postponement
of the special meeting, Axsys will pay to GD AIS the expense reimbursement.
Effect of Termination
If the merger agreement is terminated by either Axsys or GD AIS in accordance with its terms,
the merger agreement will immediately become void and there will be no liability on the part of any
party or their affiliates, directors, officers or stockholders, except for (i) payment of the
termination fee and/or expense reimbursement by Axsys in certain circumstances (ii) the survival of
certain provisions of the agreement, including those relating to press releases, the effect of
termination and the termination fee and (iii) nothing shall relieve Axsys, on the one had, or GD
AIS or Merger Sub, on the other hand, from liability for fraud or any willful or intentional breach
of the merger agreement or any willful or intentional misrepresentation in the merger agreement.
Amendment
At any time before the effective time of the merger, the merger agreement may be amended by
the parties at any time by an instrument in writing signed on behalf of each of the parties.
However, after the adoption of the merger agreement at the special meeting no such amendment shall
be made or given that requires further approval of Axsys stockholders under the DGCL unless the
required approval is obtained.
Extension; Waiver
At any time before the effective time of the merger, any party may extend the time for the
performance of any of the obligations or acts of the other party, waive any inaccuracies in any
representations or warranties or waive compliance with any of the covenants or conditions contained
in the merger agreement. Any agreement on the part of either party to any such extension or waiver
shall be valid only if in a written instrument signed on behalf of such party.
58
THE VOTING AGREEMENT
In connection with the merger agreement, Mr. Bershad and a holding corporation controlled by
Mr. Bershad, who are referred to as the voting agreement stockholders and collectively own
approximately 14.3% of the shares of our common stock entitled to vote at the special meeting, as of the
close of business on the record date, entered into a voting agreement with GD AIS and Merger Sub.
The following description of the voting agreement describes the material provisions of the voting
agreement but does not purport to describe all of the terms of the voting agreement. The full text
of the voting agreement is attached as
Annex B
to this proxy statement. You are urged to
read the voting agreement in its entirety because it is a legal document that relates to the rights
among the voting agreement stockholders, GD AIS, and Merger Sub and may affect whether the vote
required to adopt the merger agreement will be obtained.
Voting Matters, Grant of Proxy and Waiver of Dissenters Rights
The voting agreement stockholders have agreed to vote (or cause to be voted) all of their
shares of Axsys common stock for the proposal to adopt the merger agreement at the special meeting or any
adjournment thereof or in any other circumstance upon which a vote or other approval with respect
to the proposal to adopt the merger agreement is sought or required.
In addition, the voting agreement stockholders have agreed (unless otherwise directed by GD
AIS) to vote (or cause to be voted), at any Axsys stockholders meeting or any adjournment thereof
or in any other circumstance in which their vote is sought or required, all of their shares of
Axsys common stock against:
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any acquisition proposal;
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any action or agreement that would, or would reasonably be expected to, result in a
breach in any respect of any covenant, agreement, representation or warranty of Axsys
under the merger agreement;
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any extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving Axsys or any of its subsidiaries;
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any sale, lease or transfer of a material amount of assets of Axsys or any of its
subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of
Axsys or its subsidiaries; or
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any change in the Board; any change in the present capitalization of Axsys or any
amendment of Axsys certificate of incorporation or bylaws; any other material change
in Axsys corporate structure or business; or any other action that would, or would
reasonably be expected to, in the case of the items listed above, prevent, impede,
frustrate, interfere with, delay, postpone or adversely affect the merger or the other
transactions or that could facilitate an acquisition proposal or a superior proposal.
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The voting agreement stockholders also appointed GD AIS and Merger Sub during and for the term
of the voting agreement, as their true and lawful attorney-in-fact and proxy to vote, express
consent or dissent, or otherwise utilize such voting power with respect to the voting agreement
stockholders shares in connection with any proposals relating to the above-listed actions.
Pursuant to the terms of the voting agreement, the voting agreement stockholders irrevocably
and unconditionally waived, and agreed to prevent the exercise of, any rights of appraisal, any
dissenters rights and any similar rights relating to the merger or the related transactions that
they may directly or indirectly have by virtue of the ownership of their shares of Axsys common
stock.
59
Transfer and Other Restrictions
The voting agreement stockholders have agreed that, from the date of the voting agreement and
until the earlier of the effective time of the merger or the termination of the merger agreement,
they will not, directly or indirectly:
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sell, transfer or otherwise dispose of or encumber any of their shares of Axsys
common stock (or any economic, voting or other direct or indirect right, title or
interest therein), including, in each case, by operation of law;
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deposit their shares into a voting trust, enter into any other voting agreement or
arrangement with respect to their shares or grant any proxy, power of attorney or other
authorization or consent in or with respect to their shares;
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enter into any contract, option or other arrangement or undertaking with respect to
the direct or indirect acquisition or sale, transfer, disposition of, or encumbrance on,
any interest in or the voting of any shares of Axsys common stock or any other
securities of Axsys (or any economic, voting or other direct or indirect right, title
or interest therein), or any rights with respect thereto;
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take any other action which would, or could reasonably be expected to, result in a
diminution of the voting power represented by their shares or in any way restrict,
limit or interfere in any material respect with the performance of their
obligations under the voting agreement; or
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offer, commit or agree to take any of the foregoing actions.
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Termination
The voting agreement will terminate on the earlier of: (i) the mutual written agreement of the voting agreement stockholders and GD AIS; (ii) in the event the merger is
consummated, the effective time of the merger; or (iii) the date on which the merger agreement is
terminated pursuant to its terms. Certain general provisions will survive the termination and no
party will be relieved for any breach of the voting agreement.
60
MARKET PRICE OF AXSYS COMMON STOCK
Shares of Axsys common stock are listed for trading on the Nasdaq Global Select Market under
the Symbol AXYS. The following table sets forth, for the fiscal quarters indicated, the high and
low sales prices per share of Axsys common stock. No dividends were declared on the shares of Axsys common stock during
the period covered by the table.
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High ($)
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Low ($)
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Fiscal Year Ended December 31, 2007
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First Quarter
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17.93
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15.71
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Second Quarter
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21.42
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15.81
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Third Quarter
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31.26
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20.98
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Fourth Quarter
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43.63
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28.42
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Fiscal Year Ended December 31, 2008
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First Quarter
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52.39
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34.02
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Second Quarter
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63.89
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45.26
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Third Quarter
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79.69
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49.22
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Fourth Quarter
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73.72
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42.10
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Fiscal Year Ending December 31, 2009
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First Quarter
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55.30
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24.35
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Second
Quarter through June [_], 2009
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[53.75]
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39.25
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The closing price of the shares of Axsys common stock on the Nasdaq Global Select Market on June 3, 2009, the
trading day prior to the announcement of the merger, was $50.00 per share. On June
[
_
]
, 2009, the
most recent practicable date before this proxy statement was printed, the closing price for the
shares of Axsys common stock on the Nasdaq Global Select Market was $
[___]
per share.
61
AXSYS COMMON STOCK OWNERSHIP
The information presented below regarding beneficial ownership of shares of our common stock
is based upon representations made to us by our directors and officers, and is not necessarily
indicative of beneficial ownership for any other purpose. In the table below, we have deemed a
person to be a beneficial owner of a security if that person has or shares the power to vote or
direct the voting of the security or the power to dispose of or direct the disposition of the
security. Beneficial ownership includes any security with respect to which a person has the right
to acquire sole or shared voting or investment power within 60 days through the conversion or
exercise of any convertible security, warrant, option or other right. The table sets forth as to
each current director and each named executive officer: (1) the number of shares of common stock,
and (2) the percent of total shares of common stock outstanding, that are beneficially owned. As
of June 2, 2009, there were 11,622,629 shares of common stock outstanding.
Security Ownership of Directors and Named Executive Officers
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Shares of Common
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Stock Beneficially
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Owned (1)
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Name of Beneficial Owner
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Number
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Percent
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Stephen W. Bershad (2)
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1,720,253
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14.7
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%
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David A. Almeida (3)
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121,320
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1.0
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%
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Scott B. Conner (4)
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97,689
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*
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Anthony J. Fiorelli, Jr. (5)
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33,864
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*
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Eliot M. Fried (6)
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32,537
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*
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Richard F. Hamm, Jr. (7)
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14,779
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*
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Robert G. Stevens (8)
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19,474
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*
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Named executive officers and directors as a group (7 persons)
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2,039,916
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17.3
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%
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*
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Represents less than 1% of the outstanding shares of common stock.
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(1)
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Calculated in accordance with Rule 13d-3 under the Securities Exchange Act of 1934.
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(2)
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Includes 53,500 shares of common stock underlying options that are exercisable as of June 15,
2009 or within 60 days after such date. Mr. Bershad owns 972,491 shares of common stock
directly, 8,116 shares through the Axsys Technologies, Inc. 401(k) Retirement Plan and 686,146
shares of common stock indirectly through SWB Holding Corporation, of which he is the sole
shareholder and president.
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(3)
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Represents 48,000 shares of common stock underlying options that are exercisable as of June
15, 2009 or within 60 days after such date and 73,320 shares of common stock owned directly.
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(4)
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Represents 22,200 shares of common stock underlying options that are exercisable as of June
15, 2009 or within 60 days after such date and 75,489 shares of common stock owned directly.
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(5)
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Represents 9,220 shares of common stock underlying options that are exercisable as of June
15, 2009 or within 60 days after such date and 24,644 shares of common stock owned directly.
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(6)
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Represents 9,024 shares of common stock underlying options that are exercisable as of June
15, 2009 or within 60 days after such date and 23,513 shares of common stock owned directly.
|
|
(7)
|
|
Represents 8,779 shares of common stock underlying options that are exercisable as of June
15, 2009 or within 60 days after such date and 6,000 shares of common stock owned directly.
|
62
|
|
|
(8)
|
|
Represents 13,474 shares of common stock underlying options that are exercisable as of June
15, 2009 or within 60 days after such date and 6,000 shares of common stock owned directly.
|
Security Ownership of Certain Owners
Axsys knows of no person who beneficially owned, within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, more than five percent of the common stock outstanding, except for
Mr. Bershad and except as set forth below. As of June 2,
2009, 11,622,629 shares of Axsys common stock
were outstanding.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
|
Name and Address of Owner
|
|
Number of Shares
|
|
of Class
|
|
|
|
|
|
|
|
|
|
Friess Associates, LLC (1)
|
|
|
654,200
|
|
|
|
5.63
|
%
|
115 E. Snow King
|
|
|
|
|
|
|
|
|
Jackson, WY 83001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Barclays Global Investors, NA. (2)
|
|
|
602,052
|
|
|
|
5.18
|
%
|
400 Howard Street
|
|
|
|
|
|
|
|
|
San Francisco, CA 94105
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
According to a Schedule 13G filed on February 17, 2009 by Friess
Associates, LLC, Friess Associates, LLC has sole voting and dispositive
power with respect to these shares.
|
|
(2)
|
|
According to a Schedule 13G filed on February 6, 2009 by Barclays
Global Investors, N.A., Barclays Global Investors, N.A. and its
affiliates have sole voting power with respect to 477,383 of theses
shares and sole dispositive power with respect to 602,052 of these
shares.
|
63
ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the
SEC. You may read and copy this information at the SECs Public Reference Room at 100 F Street
N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at (800) SEC-0330. You also may obtain copies of this information by
mail from the Public Reference Room at the address set forth above, at prescribed rates. In
addition, the SEC maintains a website that contains reports, proxy statements and other
information about issuers like Axsys who file electronically with the SEC. The address of that
site is http://www.sec.gov. Axsys SEC filings are also available, free of charge, on our website,
at http://www.axsys.com.
You should rely only on the information contained in this proxy statement. We have not
authorized anyone to provide you with information that is different from what is contained in this
proxy statement. This proxy statement is dated June
[___]
, 2009. You should not assume that the
information contained in this proxy statement is accurate as of any date other than that date.
Neither the mailing of this proxy statement to Axsys stockholders nor the payment of cash in the
merger shall create any implication to the contrary.
We incorporate by reference into this proxy statement the documents listed below and any future filings
we make with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, including any filings after the date of this document until the
date of the special meeting. The information incorporated by reference is an important part of this
proxy statement. Any statement in a document incorporated by reference into this document will be deemed to
be modified or superseded for purposes of this document to the extent a statement contained in this
or any other subsequently filed document that is incorporated by reference into this document
modifies or supersedes such statement. Any statement so modified or superseded will be not deemed,
except as so modified or superseded, to constitute a part of this document.
Securities and Exchange Commission Filings
|
|
|
Commission file number 1-05111
|
|
Period
|
Annual Report on Form 10-K
|
|
Year ended December 31, 2008 (filed on
February 17, 2009)
|
|
|
|
Definitive Proxy Statement
|
|
For annual meeting on May 7, 2009 (filed on
March 20, 2009)
|
|
|
|
Quarterly Report on Form 10-Q
|
|
Quarter ended March 31, 2009 (filed on
April 22, 2009)
|
|
|
|
Current Reports on Form 8-K
|
|
Filed on March 13, 2009, May 11, 2009 and
June 4, 2009
|
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF THE COMPANYS ANNUAL
REPORT ON FORM 10-K, ITS SCHEDULES AND LIST OF ITS EXHIBITS. REQUESTS SHOULD BE SENT TO AXSYS
TECHNOLOGIES, INC., 175 CAPITAL BOULEVARD, SUITE 103, ROCKY HILL, CONNECTICUT 06067, ATTENTION:
CORPORATE SECRETARY.
64
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
Axsys does not currently expect to hold an annual meeting of stockholders in 2010 because
Axsys will not be a separate public company after the merger is consummated. If the merger is not
consummated and such a meeting is held, stockholders who intend to present proposals at the next
annual meeting of stockholders, and who wish to have such proposals included in the proxy statement
and form of proxy for such meeting, pursuant to the mechanism provided by SEC rules, must submit
such proposals in writing to the Corporate Secretary of Axsys Technologies, Inc., 175 Capital Boulevard,
Suite 103, Rocky Hill, Connecticut 06067, and such notice must be received no later than November
21, 2009.
Stockholders who cannot or do not wish to use the mechanism provided by SEC rules for
proposing a matter for action at the next annual meeting to be provided in a proxy statement must
notify Axsys in writing of the proposal and the information required by the provisions of Axsys
By-Laws dealing with stockholder proposals. The notice must be submitted in writing to Axsys
generally not less than 60 days nor more than 90 days in advance of an annual meeting. If the
merger is not consummated and such meeting is to be held, it is presently anticipated that next
years annual meeting will be held on May 6, 2010 and, accordingly, any stockholder proposal for
next years annual meeting submitted to Axsys on or between February 5, 2010 and March 7, 2010 will be
considered submitted on a timely basis. Axsys reserves the right to reject, rule out of order, or
take other appropriate action with respect to any proposal that does not comply with these and
other applicable requirements. A copy of Axsys By-Laws that describes the advance-notice
procedures can be obtained from the Corporate Secretary of Axsys.
June [___], 2009
65
ANNEX A
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 4, 2009
BY AND AMONG
GENERAL DYNAMICS ADVANCED INFORMATION SYSTEMS, INC.,
VISION MERGER SUB, INC.
AND
AXSYS TECHNOLOGIES, INC.
A-1
TABLE OF CONTENTS
|
|
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PAGE
|
|
ARTICLE I DEFINITIONS; INTERPRETATION
|
|
|
A-4
|
|
|
1.01 Definitions
|
|
|
A-4
|
|
|
1.02 Interpretation
|
|
|
A-13
|
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ARTICLE II THE MERGER
|
|
|
A-14
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|
2.01 The Merger
|
|
|
A-14
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2.02 Closing
|
|
|
A-14
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2.03 Effective Time
|
|
|
A-14
|
|
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2.04 Effects of the Merger
|
|
|
A-14
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|
|
2.05 Certificate of Incorporation and Bylaws
|
|
|
A-15
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2.06 Directors and Officers
|
|
|
A-15
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|
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2.07 Conversion or Cancellation of Shares
|
|
|
A-15
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|
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2.08 Exchange of Certificates; Payment of the Merger Consideration
|
|
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A-15
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2.09 Stock Incentives
|
|
|
A-18
|
|
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2.10 Appraisal Rights
|
|
|
A-19
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2.11 Withholdings
|
|
|
A-20
|
|
|
2.12 Section 16 Matters
|
|
|
A-20
|
|
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2.13 Further Action
|
|
|
A-20
|
|
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ARTICLE III REPRESENTATIONS AND WARRANTIES
|
|
|
A-21
|
|
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3.01 Representations and Warranties about the Company
|
|
|
A-21
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3.02 Representations and Warranties about Parent and Merger Sub
|
|
|
A-40
|
|
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ARTICLE IV COVENANTS AND AGREEMENTS TO BE PERFORMED PRIOR TO THE CLOSING
|
|
|
A-43
|
|
|
4.01 Conduct of Business of the Company
|
|
|
A-43
|
|
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4.02 [Reserved]
|
|
|
A-46
|
|
|
4.03 Additional Reports
|
|
|
A-46
|
|
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4.04 Reasonable Best Efforts; Antitrust Filings; Cooperation
|
|
|
A-47
|
|
|
4.05 Stockholder Approvals
|
|
|
A-48
|
|
|
4.06 Proxy Statement
|
|
|
A-49
|
|
|
4.07 Press Releases
|
|
|
A-50
|
|
|
4.08 Access; Information
|
|
|
A-50
|
|
|
4.09 No Solicitation
|
|
|
A-51
|
|
|
4.10 Takeover Laws and Provisions
|
|
|
A-55
|
|
|
4.11 Control of Operations
|
|
|
A-55
|
|
|
4.12 Stockholder Litigation
|
|
|
A-55
|
|
|
A-2
|
|
|
|
|
|
|
PAGE
|
|
4.13 Notification of Certain Matters
|
|
|
A-55
|
|
|
4.14 Voting Agreement
|
|
|
A-56
|
|
|
4.15 Release of Confidentiality and Standstill Obligations
|
|
|
A-56
|
|
|
ARTICLE V COVENANTS AND AGREEMENTS TO BE PERFORMED FOLLOWING THE CLOSING
|
|
|
A-56
|
|
|
5.01 Indemnification
|
|
|
A-56
|
|
|
5.02 Employee Matters
|
|
|
A-58
|
|
|
ARTICLE VI CONDITIONS TO THE MERGER
|
|
|
A-59
|
|
|
6.01 Conditions to Each Partys Obligation to Effect the Merger
|
|
|
A-59
|
|
|
6.02 Conditions to the Obligation of the Company
|
|
|
A-59
|
|
|
6.03 Conditions to the Obligation of Parent and Merger Sub
|
|
|
A-60
|
|
|
ARTICLE VII TERMINATION
|
|
|
A-61
|
|
|
7.01 Termination
|
|
|
A-61
|
|
|
7.02 Effect of Termination
|
|
|
A-62
|
|
|
7.03 Termination Fee
|
|
|
A-63
|
|
|
ARTICLE VIII MISCELLANEOUS
|
|
|
A-64
|
|
|
8.01 Survival
|
|
|
A-64
|
|
|
8.02 Waiver; Amendment; Extension of Time
|
|
|
A-64
|
|
|
8.03 Counterparts; Electronic Transmission
|
|
|
A-65
|
|
|
8.04 Governing Law; Jurisdiction; Venue; Service of Process; Waiver of Jury Trial
|
|
|
A-65
|
|
|
8.05 Specific Performance
|
|
|
A-65
|
|
|
8.06 Disclosure Schedule
|
|
|
A-66
|
|
|
8.07 Notices
|
|
|
A-66
|
|
|
8.08 Entire Understanding; No Third Party Beneficiaries
|
|
|
A-67
|
|
|
8.09 Severability
|
|
|
A-67
|
|
|
8.10 Assignment; Successors
|
|
|
A-68
|
|
|
8.11 Expenses
|
|
|
A-68
|
|
|
8.12 Disclaimer
|
|
|
A-68
|
|
|
8.13 Guaranty
|
|
|
A-68
|
|
|
Exhibit A
Form of Voting Agreement
|
|
|
|
|
|
Exhibit B
Certificate of Incorporation of the Surviving Corporation
|
|
|
|
|
|
Schedule A
Company Disclosure Schedule
|
|
|
|
|
|
A-3
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this
Agreement
), dated as of June 4, 2009, is by and
among General Dynamics Advanced Information Systems, Inc., a Delaware corporation (
Parent
),
Vision Merger Sub, Inc., a Delaware corporation (
Merger Sub
), and Axsys Technologies, Inc., a
Delaware corporation (the
Company
).
RECITALS
WHEREAS, the Board of Directors of each of the Company, Parent and Merger Sub has approved
this Agreement and deemed it advisable and in the best interests of their respective companies and
stockholders to consummate the merger of Merger Sub with and into the Company (the
Merger
) upon
the terms and subject to the conditions set forth herein, and have unanimously adopted resolutions
adopting, approving and declaring the advisability of this Agreement, the Merger and the other
transactions contemplated hereby;
WHEREAS, as a condition and inducement to Parent and Merger Sub entering into this Agreement,
certain stockholders of the Company are entering into a Voting Agreement with Parent and Merger Sub
simultaneously with the execution and delivery of this Agreement in substantially the form attached
hereto as
Exhibit A
(the
Voting Agreement
), whereby, among other things, such
stockholders have agreed, upon the terms and subject to the conditions set forth therein, to vote
their shares of Company Common Stock in favor of adoption of this Agreement; and
WHEREAS, pursuant to the Merger, shares of the common stock, par value $.01 per share, of the
Company (
Company Common Stock
) (all such shares of Company Common Stock being hereinafter
referred to as the
Shares
), will be, except as otherwise provided herein, converted into the
right to receive the Merger Consideration (as defined herein) in the manner set forth herein, and
the Company will become an indirect, wholly-owned subsidiary of Guarantor.
NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and
agreements contained in this Agreement, and such other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, on the terms and subject to the conditions set
forth in this Agreement, and intending to be legally bound hereby, Parent, Merger Sub and the
Company hereby agree as follows:
ARTICLE I
Definitions; Interpretation
1.01
Definitions
. This Agreement uses the following definitions:
Acquisition Proposal
means, other than the Transactions, any inquiry, proposal, indication
of interest or offer (whether written or oral) with respect to any direct or indirect:
(a) purchase or sale of an equity interest (including by means of a tender or exchange offer)
representing more than fifteen percent (15%) of the voting power in the Company or any of its
A-4
Significant Subsidiaries; (b) merger, consolidation, other business combination,
reorganization, recapitalization, share exchange, dissolution, liquidation or similar transaction
involving the Company or any of its Significant Subsidiaries; or (c) purchase or sale of assets,
businesses, securities or ownership interests (including the securities of any Significant
Subsidiary of the Company) representing more than fifteen percent (15%) of the consolidated assets
of the Company and its Subsidiaries.
Agreement
has the meaning assigned in the Preamble.
Anti-Bribery Laws
has the meaning assigned in
Section 3.01(j)(5)
.
Antitrust Authorities
means the Antitrust Division, the FTC and any other Governmental
Authority of any other jurisdiction (whether United States, foreign or multinational) responsible
for implementing the Antitrust Laws.
Antitrust Division
has the meaning assigned in
Section 4.04(b)
.
Antitrust Filings
has the meaning assigned in
Section 4.04(b)
.
Antitrust Laws
means the HSR Act and any other applicable competition, merger control,
antitrust or similar Laws.
Benefit Arrangement
means, with respect to the Company, each of the following (a) under
which any of its employees, former employees or any of its directors has any right to benefits,
(b) that is sponsored, maintained or contributed to by it or its ERISA Affiliates or (c) under
which it or its ERISA Affiliates has any liability: each employee benefit plan (within the
meaning of Section 3(3) of ERISA) and each stock purchase, stock option, equity-based grants,
severance, employment, post-employment, change-in-control, fringe benefit, bonus, incentive,
retirement, deferred compensation, welfare, paid time off benefits and other employee benefit plan,
agreement, program, policy or other arrangement (with respect to any of the preceding, whether or
not subject to ERISA).
Business Combination Law
means Section 203 of the DGCL.
Business Day
means any day other than a day on which banks in the State of Delaware are
required or authorized to be closed.
Certificate
means a certificate issued by the Company to a Company Stockholder representing
Shares held by such Company Stockholder.
Certificate of Merger
has the meaning assigned in
Section 2.03
.
Closing
has the meaning assigned in
Section 2.02
.
Closing Date
has the meaning assigned in
Section 2.02
.
Code
means the Internal Revenue Code of 1986, as amended.
A-5
Company
has the meaning assigned in the Preamble.
Company Board
means the Board of Directors of the Company.
Company Board Change of Recommendation
has the meaning assigned in
Section 4.09(f)
.
Company Board Recommendation
has the meaning assigned in
Section 3.01(c)(2)
.
Company Common Stock
has the meaning assigned in the Recitals.
Company IP Assets
has the meaning assigned in
Section 3.01(p)(1)
.
Company Preferred Stock
means the preferred stock, par value $.01 per share, of the Company.
Company Regulatory Filings
has the meaning assigned in
Section 3.01(g)(1)
.
Company Restricted Share
has the meaning assigned in
Section 2.09(a)(2)
.
Company Restricted Share Consideration
has the meaning assigned in
Section 2.09(a)(2)
.
Company Stock Option
has the meaning assigned in
Section 2.09(a)(1)
.
Company Stock Option Consideration
has the meaning assigned in
Section 2.09(a)(1)
.
Company Stock Plan
means the Companys Amended and Restated Long-Term Stock Incentive Plan.
Company Stock-Based Award
means each right of any kind, whether vested or unvested,
contingent or accrued, to acquire or receive Company Common Stock (other than Company Stock Options
or Company Restricted Shares) or to receive benefits measured by the value of a number of Shares,
that may be held, awarded, outstanding, credited, payable or reserved for issuance under the
Company Stock Plan.
Company Stock-Based Award Consideration
has the meaning assigned in
Section 2.09(a)(3)
.
Company Stockholder Approval
has the meaning assigned in
Section 3.01(b)
.
Company Stockholders
has the meaning assigned in
Section 3.01(c)(2)
.
Confidentiality Agreement
means the letter agreement, dated April 13, 2009, by and between
Guarantor and the Financial Advisor (as agent-in-fact for the Company).
Constituent Documents
means the charter or articles or certificate of incorporation and
bylaws of a corporation, the certificate of partnership and partnership agreement of a general or
limited partnership, the certificate of formation and limited liability company agreement of a
A-6
limited liability company, the trust agreement of a trust and the comparable documents of
other legal entities.
Covered Employees
has the meaning assigned in
Section 5.02(a)
.
DGCL
means the General Corporation Law of the State of Delaware.
Disbursing Agent
has the meaning assigned in
Section 2.08(a)
.
Disclosure Schedule
has the meaning assigned in
Section 8.06
.
Dissenting Shares
has the meaning assigned in
Section 2.10(a)
.
Dissenting Stockholders
has the meaning assigned in
Section 2.10(a)
.
Effective Time
has the meaning assigned in
Section 2.03
.
Environmental Laws
means all applicable Laws regulating, relating to, or imposing liability
or standards of conduct concerning pollution, protection of the environment or worker safety.
ERISA
means the U.S. Employee Retirement Income Security Act of 1974, as amended.
ERISA Affiliate
has the meaning assigned in
Section 3.01(m)(3)
.
Exception Shares
means, collectively, shares of Company Common Stock owned or held by the
Company, Guarantor, Parent, Merger Sub and any of their respective Subsidiaries, including any such
shares held as treasury stock of the Company; provided, however, that Shares of Company Common
Stock owned beneficially or held of record by any plan, program or arrangement sponsored or
maintained for the benefit of any current or former employee of the Company, Parent, Merger Sub or
any of their respective Subsidiaries, will not be deemed to be Exception Shares, regardless of
whether the Company, Guarantor, Parent, Merger Sub or any such Subsidiary has the power, directly
or indirectly, to vote or control the disposition of such shares.
Exchange Act
means the U.S. Securities Exchange Act of 1934 and the rules and regulations
promulgated thereunder.
Expense Reimbursement
has the meaning assigned in
Section 7.03(a)
.
Financial Advisor
has the meaning assigned in
Section 3.01(t)
.
Financial Statements
has the meaning assigned in
Section 3.01(g)(1)
.
FTC
has the meaning assigned in
Section 4.04(b)
.
GAAP
means generally accepted accounting principles in the United States.
A-7
Government Contract
has the meaning assigned in
Section 3.01(k)(3)
.
Governmental Authority
means any court, administrative agency, bureau, board, department,
official, political subdivision, tribunal or commission or other governmental authority or
instrumentality, whether domestic or foreign.
Grant Date
has the meaning assigned in
Section 3.01(e)(4)
.
Guarantor
means General Dynamics Corporation, a Delaware corporation.
Hazardous Materials
means any hazardous or toxic substances, materials, wastes, pollutants
or contaminants, including those defined or regulated as such under any Environmental Law, and any
other substance the presence of which may give rise to liability under any Environmental Law.
HSR Act
means the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules
and regulations promulgated thereunder.
HSR Filing
has the meaning assigned in
Section 4.04(b)
.
Import and Export Control Laws
has the meaning assigned in
Section 3.01(j)(4)
.
Indemnified Party
has the meaning assigned in
Section 5.01(b)
.
Insurance Policy
has the meaning assigned in
Section 3.01(r)
.
Intellectual Property
means all of the following in any jurisdiction throughout the world:
(a) patents, patent applications, patent disclosures and inventions; (b) trademarks, service marks,
trade dress, trade names, corporate names and Internet domain names; (c) copyrights;
(d) registrations for and applications to register any of the foregoing; (e) computer software
(other than commercial off-the-shelf software); (f) trade secrets, confidential information and
know-how; and (g) any other intellectual property rights.
Intervening Event
has the meaning assigned in
Section 4.09(f)
.
IP Assets
has the meaning assigned in
Section 3.01(p)(1)
.
IP Licenses
has the meaning assigned in
Section 3.01(p)(4)
.
Knowledge
means or has reference to, respectively, the actual knowledge of the executive
officers of the Company or Parent, as the case may be, after reasonable inquiry and investigation
with respect to the matter(s) referenced.
Laws
means all federal, state, local and foreign laws, statutes, rules, regulations,
ordinances, codes, licenses, permits, Orders or requirements issued, enacted, adopted, promulgated
or otherwise implemented or put into effect by any Governmental Authority (including common law or
the interpretation thereof).
Leased Property
has the meaning assigned in
Section 3.01(q)(2)
.
A-8
Leases
has the meaning assigned in
Section 3.01(q)(2)
.
Lien
means any mortgage, pledge, security interest, lien or similar encumbrance.
Matching Agreement
has the meaning assigned in
Section 4.09(g)
.
Material Adverse Effect
means:
(a) with respect to the Company, any change, effect, event, occurrence, state of facts,
development or circumstance that, individually or in the aggregate, has had, or would reasonably be
expected to have, a material adverse effect on, (i) the condition (financial or otherwise), assets,
liabilities, results of operations or business of the Company and its Subsidiaries, taken as a
whole, or (ii) the ability of the Company to perform its obligations under this Agreement or to
consummate the Transactions by the Termination Date, excluding in each case solely for purposes of
clause (i) the impact of (1) changes after the date of this Agreement in GAAP or regulatory
accounting requirements applicable to U.S. publicly owned business organizations generally or
changes after the date of this Agreement in Laws, (2) changes or developments in general economic
or political conditions, including acts of war (whether or not declared), sabotage, insurrection,
terrorism and armed hostilities, (3) changes in any financial, banking, credit or securities
markets (including any disruption thereof), (4) changes in the stock price or trading volume of the
Shares (it being understood that the facts or circumstances giving rise to or contributing to such
change in stock price or trading volume, if not otherwise excluded under this clause (a), may be
taken into account in determining whether there has been, or would reasonably be expected to be, a
Material Adverse Effect with respect to the Company), (5) general changes in industries in which
the Company operates, (6) natural disasters, (7) any failure of the Company to meet revenue,
backlog or earnings projections or forecasts (whether internal or published by the Company or third
parties) or any decline in the Companys credit rating (it being understood that the facts or
circumstances giving rise to or contributing to such failure to meet revenue, backlog or earnings
projections or forecasts or decline in the Companys credit rating, if not otherwise excluded under
this clause (a), may be taken into account in determining whether there has been, or would
reasonably be expected to be, a Material Adverse Effect with respect to the Company), (8) changes
resulting from the announcement of this Agreement or the consummation of the Transactions or
(9) any effect arising out of any action taken or omitted to be taken by the Company with the prior
written consent of Parent or Merger Sub, except to the extent in the case of clauses (1), (2), (3),
(5) or (6) that such change, effect, event, occurrence, state of facts, development or circumstance
materially and disproportionately has had, or would reasonably be expected to have, a greater
adverse impact on the Company and its Subsidiaries, taken as a whole, as compared to the adverse
impact on the competitors of the Company and its Subsidiaries, but taking into account in
determining whether there has been, or would reasonably be expected to be, a Material Adverse
Effect with respect to the Company only such materially disproportionate greater adverse impact;
and
(b) with respect to Parent or Merger Sub, any change, effect, occurrence, state of facts,
development or circumstance that, individually or in the aggregate, has had, or would reasonably be
expected to have, a material and adverse effect on the ability of Parent or Merger Sub to perform
their respective obligations under this Agreement or to consummate the Transactions by the
Termination Date.
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Material Contract
has the meaning assigned in
Section 3.01(k)(1)
.
Material Customers
has the meaning assigned in
Section 3.01(v)
.
Material Suppliers
has the meaning assigned in
Section 3.01(v)
.
Merger
has the meaning assigned in the Recitals.
Merger Consideration
has the meaning assigned in
Section 2.07(a)
.
Merger Sub
has the meaning assigned in the Preamble.
Merger Sub Common Stock
means the common stock, par value $.01 per share, of Merger Sub.
Modified Superior Proposal
has the meaning assigned in
Section 4.09(g)
.
Nasdaq
means The Nasdaq Stock Market, Inc.
Notice of Superior Proposal
has the meaning assigned in
Section 4.09(g)
.
Order
means, with respect to any Person, any order, writ, judgment, injunction, decree,
ruling, stipulation or award by, or subject to, any Governmental Authority or arbitrator that is
binding upon or applicable to such Person or its property.
Ordinary Course of Business
means an action taken or not taken with respect to the business
of the Company and its Subsidiaries that is consistent with the reasonably recent past practices of
the Company and its Subsidiaries (including with respect to quantity, nature, magnitude and
frequency) and is taken in the ordinary course of the normal and recurring operations of the
Company and its Subsidiaries.
Parent
has the meaning assigned in the Preamble.
Parent Approval
has the meaning assigned in
Section 3.02(b)
.
Party
means Parent, Merger Sub or the Company, as the context requires.
Permitted Lien
means any Lien (a) disclosed in the consolidated financial statements of the
Company and its Subsidiaries or the notes thereto set forth in the most recent Company Regulatory
Filing publicly available at least one Business Day prior to the date of this Agreement or securing
liabilities reflected on such financial statements, (b) incurred in the Ordinary Course of Business
since the date of such financial statements and which is not material in amount or nature, (c) for
Taxes not yet due and payable or that are being contested in good faith and reserved for on such
financial statements in accordance with GAAP, or (d) that is a carriers, warehousemens,
mechanics, materialmens, repairmens, landlords or other similar lien arising in the Ordinary
Course of Business and which is not material in amount or nature.
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Person
means any individual, corporation, limited liability company, partnership,
association, joint-stock company, business trust or unincorporated organization and is intended to
be interpreted broadly.
Previously Disclosed
means (a) information set forth by the Company in the applicable
paragraph of the Disclosure Schedule, or any other paragraph of the Disclosure Schedule (so long as
it is reasonably clear from the context that the disclosure in such other paragraph of the
Disclosure Schedule is also applicable to the Section of this Agreement in question) or (b) except
with respect to
Sections 3.01(a)
through
3.01(f)
and
Section
3.01(s)
, information set forth in those Company Regulatory Filings (including any schedules and
exhibits thereto) filed with the SEC and publicly available during the period beginning on December
31, 2007 and ending on the Business Day prior to the date of this Agreement, so long as it is
reasonably clear from the context that the disclosure in those Company Regulatory Filings is
applicable to the Section of this Agreement in question (but not including any disclosures set
forth in any section of any such Company Regulatory Filing entitled Risk Factors, Cautionary
Factors That May Affect Future Results, Forward-Looking Statements or Qualitative and
Quantitative Disclosures About Market Risk or any other disclosures included in any such Company
Regulatory Filing that are general cautionary, predictive or forward-looking in nature), without
giving effect to any amendment to any such Company Regulatory Filing filed on or after the date of
this Agreement.
Proxy Statement
means the proxy statement, including the form of proxy, the letter to
stockholders and the notice of meeting, as the case may be, to be provided to the Company
Stockholders for the purpose of obtaining the Company Stockholder Approval in connection with the
Merger (including any amendments or supplements thereto) and any schedules required to be filed
with the SEC in connection therewith.
Representatives
means, with respect to any Person, such Persons directors, officers,
employees, legal or financial advisors, accountants, representatives and agents.
Rights
means subscriptions, options, warrants, calls, convertible securities, rights of
first refusal, preemptive rights, or other similar rights, agreements or commitments relating to
the issuance of capital stock obligating the Company or any of its Subsidiaries to (a) issue,
transfer or sell any shares of capital stock or other equity interests of the Company or any of its
Subsidiaries or securities convertible into or exchangeable for such shares or equity interests,
(b) grant, extend or enter into any such subscription, option, warrant, call, convertible
securities or other similar right, agreement, arrangement or commitment to repurchase, (c) redeem
or otherwise acquire any such shares of capital stock or other equity interests or (d) provide an
amount of funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, the Company or any of its Subsidiaries.
Sarbanes-Oxley Act
means the Sarbanes-Oxley Act of 2002 and the rules and regulations
promulgated thereunder.
SEC
means the U.S. Securities and Exchange Commission.
Securities Act
means the U.S. Securities Act of 1933 and the rules and regulations
promulgated thereunder.
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Shares
has the meaning assigned in the Recitals.
Stockholders Meeting
has the meaning assigned in
Section 4.05(a)
.
Subsidiary
and
Significant Subsidiary
have the respective meanings ascribed to those terms
in Rule 1-02 of Regulation S-X promulgated by the SEC.
Superior Proposal
means a bona fide written Acquisition Proposal (with all references to
fifteen percent (15%) in the definition thereof deemed to be a majority for the purposes of
this definition) made by any Person that (a) is not received in violation of
Section 4.09
,
(b) is fully financed, (c) is on terms that the Company Board determines in good faith, after
consultation with the Companys financial and legal advisors, and in light of all relevant
circumstances as the Company Board in good faith considers to be appropriate (including the
conditionality, regulatory aspects, time likely to be required to consummate such Acquisition
Proposal and the likelihood of success of such Acquisition Proposal), are more favorable to the
Company and its stockholders from a financial point of view than the Transactions, and (d) is
reasonably likely to be consummated according to its terms.
Surviving Corporation
has the meaning assigned in
Section 2.01
.
Takeover Laws
has the meaning assigned in
Section 3.01(s)
.
Takeover Provisions
has the meaning assigned in
Section 3.01(s)
.
Tax
and
Taxes
means all federal, state, local or foreign taxes, levies or other
assessments, however denominated, including all net income, gross income, gains, gross receipts,
sales, use, ad valorem, goods and services, capital, production, transfer, franchise, windfall
profits, license, withholding, payroll, employment, disability, excise, estimated, severance,
stamp, occupation, property, unemployment or other taxes, custom duties, fees, assessments or
similar charges, together with any interest, penalties and additions to tax imposed by any
Governmental Authority, including any transferee, successor or secondary liability for any such tax
and any liability assumed by contract or arising as a result of being or ceasing to be a member of
any affiliated group, or similar group under state, provincial, local or foreign Law, or being
included or required to be included in any income Tax Return relating thereto.
Tax Returns
means a report, return or other information required to be filed with a taxing
authority with respect to Taxes (including any amendments and schedules thereto).
Termination Date
has the meaning assigned in
Section 7.01(f)
.
Termination Fee
has the meaning assigned in
Section 7.03(a)
.
Transactions
has the meaning assigned in
Section 3.01(c)(2)
.
Voting Agreement
has the meaning assigned in the Recitals.
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1.02
Interpretation
.
(a) In this Agreement, except as the context may otherwise require, references:
(1) to the Preamble, Recitals, Sections, Exhibits or Schedules are to the
Preamble to, a Recital or Section of, or Exhibit or Schedule to, this Agreement, as
applicable;
(2) to this Agreement are to this Agreement and the Exhibits and Schedules to
it taken as a whole;
(3) to any agreement (including this Agreement), contract or Law are to the
agreement, contract or Law as amended, modified, supplemented, restated or replaced
from time to time (in the case of an agreement or contract, to the extent permitted
by the terms thereof);
(4) to any section of any Law include any successor to that section;
(5) to any Governmental Authority include any successor to that Governmental
Authority;
(6) to the date of this Agreement are to the date set forth in the Preamble;
and
(7) to $ are to United States Dollars.
(b) The table of contents and Article and Section headings contained in this Agreement
are for reference purposes only and do not limit or otherwise affect any of the substance
of this Agreement.
(c) The words include, includes or including and any other variations thereof as
used in this Agreement are to be deemed followed by the words without limitation.
(d) The words herein, hereof, hereunder and similar terms as used in this
Agreement are to be deemed to refer to this Agreement as a whole and not to any specific
Section.
(e) This Agreement is the product of negotiation by the Parties, which have had the
assistance of counsel and other advisors. The Parties intend that this Agreement not be
construed more strictly with regard to one Party than with regard to any other Party.
(f) No provision of this Agreement is to be construed to require, directly or
indirectly, any Person to take any action, or omit to take any action, to the extent such
action or omission would violate applicable Law.
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(g) Whenever the context requires, terms defined in this Agreement in the singular
will be deemed to include the plural and vice versa.
(h) The word extent in the phrase to the extent as used in this Agreement means
the degree to which a subject or other thing extends and such phrase does not simply mean
if.
(i) With respect to this Agreement and the Voting Agreement, when calculating the
period of time before which, within which or following which any act is to be done or step
taken, the date that is the reference date in beginning the calculation of such period will
be excluded (for example, if an action is to be taken within two (2) days of a triggering
event and such event occurs on a Tuesday, then the action must be taken by the end of the
day on Thursday). If the last day of such period is not a Business Day, the period in
question will end on the next succeeding Business Day.
ARTICLE II
The Merger
2.01
The Merger
. At the Effective Time, the Company and Merger Sub shall consummate the
Merger, pursuant to which (a) the separate corporate existence of Merger Sub will terminate, (b)
the Company will be the surviving corporation (the
Surviving Corporation
) and will continue its
corporate existence under the Laws of the State of Delaware and will become an indirect,
wholly-owned Subsidiary of Guarantor and (c) the separate corporate existence of the Company with
all its rights, privileges, immunities, powers and franchises will continue unaffected by the
Merger.
2.02
Closing
. The closing of the Merger (the
Closing
) will take place at the offices of
Jones Day, 901 Lakeside Avenue, Cleveland, Ohio, at 10:00 a.m. prevailing Eastern time, on the
second Business Day (unless the Parties agree to another time or date) after satisfaction or waiver
of the conditions set forth in
Article VI
, other than those conditions that by their nature
are to be satisfied at the Closing but subject to the fulfillment or waiver of those conditions
(the
Closing Date
).
2.03
Effective Time
. On the Closing Date, the Parties shall cause the Merger to be
consummated by executing and delivering a certificate of merger (the
Certificate of Merger
) to
the Secretary of State of the State of Delaware for filing in accordance with Section 103 of the
DGCL. The Parties will make any and all other filings or recordings required under the DGCL, and
the Merger will become effective when the Certificate of Merger is filed in the office of the
Secretary of State of the State of Delaware, or at such later date or time as Parent and the
Company mutually agree and specify in the Certificate of Merger in accordance with the DGCL (the
time the Merger becomes effective being referred to herein as the
Effective Time
).
2.04
Effects of the Merger
. At the Effective Time, the Merger will have the effects set forth
in this Agreement and prescribed by the DGCL and any other applicable Law. Without limiting the
generality of the foregoing, as of the Effective Time, the Surviving Corporation will succeed to
all of the properties, rights, privileges, powers, franchises and assets of the Company
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and Merger Sub, and all debts, liabilities and duties of the Company and Merger Sub will
become debts, liabilities and duties of the Surviving Corporation.
2.05
Certificate of Incorporation and Bylaws
.
(a) At the Effective Time, the certificate of incorporation of the Company as in
effect immediately prior to the Effective Time shall be amended in the Merger to read in
its entirety as set forth on
Exhibit B
, and as so amended, will be the certificate
of incorporation of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable Law (subject to the requirements of
Section 5.01
).
(b) At the Effective Time, the bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, will be the bylaws of the Surviving Corporation until thereafter
amended as provided therein, by the certificate of incorporation of the Surviving
Corporation or by applicable Law (subject to the requirements of
Section 5.01
).
2.06
Directors and Officers
. The directors and officers of Merger Sub immediately prior to
the Effective Time will be the directors and officers of the Surviving Corporation as of the
Effective Time.
2.07
Conversion or Cancellation of Shares
. At the Effective Time, by virtue of the Merger and
without any action on the part of the Company, Parent, Merger Sub or the holders of any of the
following securities:
(a) Each Share issued and outstanding immediately prior to the Effective Time, other
than Exception Shares (which will be canceled and cease to exist with no payment or
distribution being made with respect thereto), Company Restricted Shares (which will be
treated in accordance with
Section 2.09(a)(2)
) and Dissenting Shares (which will be
treated in accordance with
Section 2.10
), will be converted into and constitute the
right to receive cash in an amount equal to $54.00, without interest (the
Merger
Consideration
), payable to the holder thereof in the manner provided in
Section
2.08
. At the Effective Time, all Shares that have been converted into the right to
receive the Merger Consideration as provided in this
Section 2.07(a)
will no longer
be outstanding and will be canceled and will cease to exist, and each holder of a
Certificate that immediately prior to the Effective Time represented such Shares will cease
to have any rights with respect thereto, except the right to receive the Merger
Consideration in exchange therefor in accordance with
Section 2.08
.
(b) Each issued and outstanding share of Merger Sub Common Stock will be converted
into one fully paid and nonassessable share of common stock, par value $.01 per share, of
the Surviving Corporation, and will constitute the only outstanding shares of capital stock
of the Surviving Corporation.
2.08
Exchange of Certificates; Payment of the Merger Consideration
.
(a)
Appointment of Disbursing Agent
. Prior to the Effective Time, Parent shall
deposit, or cause to be deposited, with a disbursing agent agreed upon by Parent
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and the Company (the
Disbursing Agent
) cash in an amount sufficient to allow the
Disbursing Agent to pay the aggregate Merger Consideration payable pursuant to
Section
2.07(a)
in exchange for outstanding Shares. Any income from investment of such funds,
which investment will be in accordance with the instructions of Parent, will be payable
solely to Parent (or its designee). Parent shall be obligated to, from time to time,
deposit any additional funds necessary to make all payments that may be required pursuant
to
Section 2.07(a)
. Any such cash remaining in the possession of the Disbursing
Agent six (6) months after the Effective Time (together with any earnings in respect
thereof) will be delivered by the Disbursing Agent to Parent (or its designee), and any
holder of Certificates immediately prior to the Effective Time who has not theretofore
exchanged such Certificates pursuant to this
Article II
will thereafter be entitled
to look exclusively to Parent and/or the Surviving Corporation, and only as a general
creditor thereof, for the consideration to which such holder may be entitled upon exchange
of such Certificates pursuant to
Section 2.07(a)
. Notwithstanding the foregoing,
neither the Disbursing Agent nor any Party will be liable to any holder of Certificates for
any amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar Laws. After any remaining cash has been delivered by the
Disbursing Agent to Parent pursuant to this
Section 2.08(a)
, in the event any
Certificate has not been surrendered for the consideration to which such holder may be
entitled prior to the date that such Certificate, or the consideration payable upon the
surrender thereof, would otherwise escheat to or become the property of any Governmental
Authority, then the consideration otherwise payable upon the surrender of such Certificate
will, to the extent permitted by applicable Law, become the property of Parent, free and
clear of all Liens, rights, interests and adverse claims of any Person. The consideration
paid in accordance with the terms of this
Article II
in respect of Certificates
that have been surrendered in accordance with the terms of this Agreement will be deemed to
have been paid in full satisfaction of all rights pertaining to the Shares formerly
represented thereby. Notwithstanding anything herein to the contrary, the exchange
procedures described in this
Section 2.08
will not apply to Company Restricted
Shares and the Company Restricted Share Consideration, and the Disbursing Agent will not
act as disbursing agent for the Company Restricted Shares.
(b)
Exchange Procedures
. As contemplated by
Section 2.08(a)
above, promptly
after the Effective Time, but in no event more than two (2) Business Days thereafter,
Parent shall cause the Disbursing Agent to mail or deliver to each Person who was,
immediately prior to the Effective Time, a holder of record of Company Common Stock, a form
of letter of transmittal (which will specify that delivery will be effected, and risk of
loss and title to Certificates will pass, only upon proper delivery of such Certificates to
the Disbursing Agent and will be in such form and have such other customary provisions as
Parent reasonably specifies) containing instructions for use in effecting the surrender of
Certificates in exchange for the consideration to which such Person is entitled pursuant to
Section 2.07(a)
. Upon surrender to the Disbursing Agent of a Certificate for
cancellation together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, and all other documents required by the
Disbursing Agent, the holder of such Certificate will promptly be provided in exchange
therefor cash in the amount to which such holder is entitled pursuant to
Section
2.07(a)
, and the Certificate so surrendered will forthwith be
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canceled. No interest will accrue or be paid with respect to any consideration to be
delivered upon surrender of Certificates.
(c)
Transfer to Holder other than Existing Holder
. If any cash payment is to be made
pursuant to
Section 2.07(a)
in a name other than that in which the Certificate
surrendered in exchange therefor is registered, it will be a condition of such payment that
(1) the Person requesting such payment shall pay any transfer or other similar Taxes
required by reason of the making of such payment in a name other than that of the
registered holder of the Certificate surrendered, or required for any other reason relating
to such holder or requesting Person, or shall establish to the reasonable satisfaction of
the Disbursing Agent that any such Tax has been paid or is inapplicable, and (2) the
Certificate so surrendered will be properly endorsed or will be otherwise in proper form
for transfer.
(d)
Transfers
. At the Effective Time, the stock transfer books of the Company will be
closed, and there will be no further registration of transfers of Company Common Stock or
Certificates that were outstanding immediately prior to the Effective Time on the stock
transfer books of the Company. If after the Effective Time Certificates are presented to
the Surviving Corporation for any reason, they will be canceled and exchanged as provided
in this
Article II
, subject to applicable Laws in the case of Dissenting Shares.
(e)
Lost, Stolen or Destroyed Certificates
. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit (in form and substance reasonably
acceptable to Parent) of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent or the Disbursing Agent, the posting by such
Person of a bond in such reasonable amount as Parent or the Disbursing Agent may direct as
indemnity against any claim that may be made against it with respect to such Certificate,
Parent or the Disbursing Agent shall, in exchange for such lost, stolen or destroyed
Certificate, pay or cause to be paid the consideration deliverable in respect of Company
Common Stock formerly represented by such Certificate pursuant to
Section 2.07(a)
.
(f)
Return of Merger Consideration for Dissenting Shares
. Any portion of the Merger
Consideration deposited by Parent with the Disbursing Agent pursuant to
Section
2.08(a)
in respect of any Dissenting Shares will be returned to Parent (or its
designee) upon demand.
(g)
Cessation of Rights.
From and after the Effective Time, the holders of
Certificates will cease to have any rights as stockholders of the Surviving Corporation,
except as otherwise expressly provided in this Agreement or by applicable Law, and Parent
will be entitled to treat each Certificate that has not yet been surrendered for exchange
solely as evidence of the right to receive the consideration into which the Company Common
Stock formerly evidenced by such Certificate has been converted pursuant to the Merger.
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2.09
Stock Incentives
.
(a)
Company Stock Options; Company Restricted Shares; Company Stock-Based Awards
.
(1) Each option to purchase Company Common Stock granted under the Company
Stock Plan (each, a
Company Stock Option
) outstanding and unexercised immediately
prior to the Effective Time (whether vested or unvested), by virtue of the Merger
and without any action on the part of any holder of any Company Stock Option, will
become fully vested and exercisable immediately prior to, and then will be canceled
automatically at, the Effective Time and will thereafter represent, and will be
converted into, only the right to receive an amount of cash, if any (and without
interest), equal to the product of (A) the excess, if any, of (i) the Merger
Consideration over (ii) the exercise price per share of the Company Common Stock
subject to such Company Stock Option and (B) the number of shares of Company Common
Stock subject to such Company Stock Option immediately prior to its cancellation,
regardless of the vested status of such Company Stock Option (the
Company Stock
Option Consideration
). Parent will, or will cause the Surviving Corporation to,
pay to holders of Company Stock Options the Company Stock Option Consideration, if
any, as soon as practicable after the Effective Time and in any case within five (5)
Business Days thereafter. For the avoidance of doubt, no Company Stock Option
Consideration will be payable in respect of Company Stock Options with an exercise
price per share in excess of the Merger Consideration as of immediately prior to the
Effective Time, and all such Company Stock Options will be canceled automatically at
the Effective Time without any payment therefor.
(2) Each restricted share of Company Common Stock granted under the Company
Stock Plan (each a
Company Restricted Share
) outstanding and subject to
restrictions immediately prior to the Effective Time (whether vested or unvested),
by virtue of the Merger and without any action on the part of the holder of any
Company Restricted Share, will become fully vested and no longer subject to any
restrictions immediately prior to, and then will be canceled automatically at the
Effective Time and will thereafter represent, and will be converted into, only the
right to receive an amount of cash, without interest, equal to the Merger
Consideration (the
Company Restricted Share Consideration
). Parent will, or will
cause the Surviving Corporation to, pay to holders of Company Restricted Shares the
Company Restricted Share Consideration as soon as practicable after the Effective
Time and in any case within five (5) Business Days thereafter.
(3) Each Company Stock-Based Award outstanding immediately prior to the
Effective Time will, by virtue of the Merger and without any action on the part of
the holder thereof, become fully vested and no longer subject to any restrictions
immediately prior to, and then will be cancelled automatically at the Effective Time
and will thereafter represent, and will be converted into, only the right to receive
an amount of cash, without interest, equal to the product of (1) the Merger
Consideration (or, if the Company Stock-Based Award provides for
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payments to the extent the value of the Shares exceeds a specified reference
price, the amount, if any, by which the Merger Consideration exceeds such reference
price) and (2) the number of Shares subject to such Company Stock-Based Award
(the
Company Stock-Based Award Consideration
). Parent will, or will cause the
Surviving Corporation to, pay to holders of Company Stock-Based Awards the Company
Stock-Based Award Consideration as soon as practicable after the Effective Time and
in any case within five (5) Business Days thereafter.
(b) As of the Effective Time, the Company Stock Plan will terminate and all rights
under any provision of any other plan, program or arrangement providing for the issuance or
grant of any other interest in respect of the capital stock of the Company will be
canceled. At and after the Effective Time, no Person will have any right under the Company
Stock Options, the Company Restricted Shares, the Company Stock-Based Awards, the Company
Stock Plan or any other plan, program or arrangement with respect to equity securities of
the Surviving Corporation or any Subsidiary thereof, except the right to receive the
amounts payable under this
Section 2.09
, if any.
(c) As soon as practicable following the date of this Agreement, the Company Board or
any committee administering the Company Stock Plan will adopt such resolutions or take such
other actions as may be required or appropriate to effect the provisions of this
Section 2.09
. The Company will provide notice (in a form reasonably satisfactory
to Parent) to each holder of an outstanding Company Stock Option, a Company Restricted
Share or a Company Stock-Based Award describing the treatment of such Company Stock Option,
Company Restricted Share or Company Stock-Based Award, as applicable, in accordance with
this
Section 2.09
.
(d) Except to the extent permitted by
Section 4.01(b)
, unless this Agreement
is terminated in accordance with its terms, no additional Company Stock Options, Company
Restricted Shares, Company Stock-Based Awards or any other equity-based awards or other
Rights will be granted pursuant to the Company Stock Plan or otherwise by the Company or
its Subsidiaries after the date of this Agreement.
2.10
Appraisal Rights
.
(a) Notwithstanding any provision of this Agreement to the contrary, Shares that are
outstanding immediately prior to the Effective Time (other than the Exception Shares) and
that are held by Company Stockholders who shall have neither voted in favor of the Merger
nor consented thereto in writing and who shall have demanded properly in writing appraisal
for such Shares in accordance with Section 262 of the DGCL (the
Dissenting Stockholders
)
shall not be converted into, or represent the right to receive, the Merger Consideration
(collectively, the
Dissenting Shares
). Dissenting Stockholders shall be entitled to
receive payment of the fair value of the Dissenting Shares as determined in accordance with
the provisions of Section 262 of the DGCL, except that all Dissenting Shares held by
Company Stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to appraisal of such Shares under Section 262 of the DGCL
will thereupon be deemed to have been converted into, and to have become exchangeable for,
as of the Effective Time, the right
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to receive the Merger Consideration in accordance with
Section 2.07
, without
any interest thereon, upon surrender, in the manner provided in
Section 2.08
, of
the Certificate or Certificates that formerly evidenced such Shares.
(b) The Company shall give Parent notice as promptly as reasonably practicable upon
receipt by the Company of any demand for appraisal pursuant to Section 262 of the DGCL and
of withdrawals of any such demand, and any other communications delivered to the Company
pursuant to or in connection with Section 262 of the DGCL with respect to the Transactions,
and the Company will give Parent the opportunity to participate in all negotiations and
proceedings with respect to any such demands (including any settlement offers). Except
with the prior written consent of Parent, the Company will not voluntarily make any payment
with respect to any demand for appraisal and will not settle or offer to settle any such
demand.
2.11
Withholdings
. All amounts payable pursuant to this Agreement will be subject to any
required withholding of Taxes and will be paid at or as soon as practicable following the Effective
Time, but in any event within five (5) Business Days following the Effective Time, without
interest. To the extent that amounts are so withheld and paid over to the appropriate Governmental
Authority by Parent, Merger Sub, the Surviving Corporation or the Disbursing Agent, such withheld
amounts will be treated for all purposes of this Agreement as having been paid to the holder of
Certificates, Company Restricted Shares, Company Stock Options or Company Stock-Based Awards as the
case may be, in respect of which such deduction and withholding was made by Parent, Merger Sub, the
Surviving Corporation or the Disbursing Agent.
2.12
Section 16 Matters
. Prior to the Effective Time, the Company Board or an appropriate
committee of non-employee directors will adopt a resolution and take all other necessary action
consistent with the interpretative guidance of the SEC so that the disposition of Shares, Company
Stock Options, Company Restricted Shares or Company Stock-Based Awards pursuant to this Agreement
and the Merger by any officer or director of the Company who is a covered person of the Company for
purposes of Section 16 of the Exchange Act will be an exempt transaction for purposes of Section 16
of the Exchange Act.
2.13
Further Action
. If at any time after the Effective Time the Surviving Corporation shall
determine, in its sole discretion, that any actions are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties or assets of either of the Company or Merger Sub vested in the
Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out
this Agreement, then the officers and directors of the Surviving Corporation will be authorized to
take all such actions as may be necessary or desirable to vest all right, title or interest in, to
and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out
this Agreement.
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ARTICLE III
Representations and Warranties
3.01
Representations and Warranties about the Company
. Except as Previously Disclosed, the
Company hereby represents and warrants to Parent and Merger Sub as follows:
(a)
Organization and Standing
. The Company is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware. The Company is duly
qualified and licensed to do business and is in good standing in all jurisdictions where
its ownership, leasing or operation of property or assets or its conduct of business
requires it to be so qualified or licensed, except where the failure to be in good standing
or be so qualified or licensed has not had, and would not reasonably be expected to have, a
Material Adverse Effect with respect to the Company. The Company has made available to
Parent or its counsel, true, correct and complete copies of the Constituent Documents of
the Company and each of its Subsidiaries, in each case as amended and in effect. Neither
the Company nor any of its Subsidiaries is in material violation of any of the provisions
of its Constituent Documents. The Company has made available to Parent or its counsel
true, correct and complete copies of the minute books containing records of all consents,
actions and meetings of (1) the Company Board, committees of the Company Board and
stockholders of the Company, and (2) the boards of directors, managers or equivalent
governing bodies of each of the Companys Subsidiaries and all stockholders and equity
holders thereof, in each case, since January 1, 2007.
(b)
Power
. The Company has the corporate power and authority to execute, deliver and
perform its obligations under this Agreement and to consummate the Transactions, subject to
the receipt of the affirmative vote of the holders of a majority of the outstanding Shares
entitled to vote thereon to adopt this Agreement (the
Company Stockholder Approval
). The
Company and each of its Subsidiaries has the corporate (or comparable) power and authority
to carry on its business as it is now being conducted and to own, lease and operate all its
properties and assets, except where the failure to have such power and authority has not
had, and would not reasonably be expected to have, a Material Adverse Effect with respect
to the Company.
(c)
Authority
.
(1) The Company has duly authorized, executed and delivered this Agreement.
Subject to receipt of the Company Stockholder Approval, this Agreement (and the
execution, delivery and performance hereof by the Company) and the Transactions have
been duly authorized by all necessary corporate action of the Company and no other
corporate proceedings on the part of the Company are necessary to authorize the
execution, delivery and performance of this Agreement or to consummate the
Transactions, other than obtaining the Company Stockholder Approval. The Company
Stockholder Approval is the only vote of the holders of any class or series of the
Companys capital stock necessary to adopt this Agreement and authorize and approve
the Transactions. This
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Agreement is the Companys valid and legally binding obligation, enforceable
against the Company in accordance with its terms (except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar Laws of general applicability relating to or affecting
creditors rights or by general equity principles).
(2) The Company Board, by resolutions duly adopted prior to the execution of
this Agreement, has unanimously (A) determined that the Merger is in the best
interests of the Company and the stockholders of the Company (the
Company
Stockholders
) and declared advisable this Agreement and the transactions
contemplated by this Agreement, including the Merger (collectively, the
Transactions
), (B) approved and adopted this Agreement and the Transactions in all
respects in accordance with the DGCL (including such approval for purposes of
rendering the restrictions on business combinations set forth in the Business
Combination Law inapplicable to Guarantor, Parent, Merger Sub, the Transactions,
this Agreement and the Voting Agreement), and (C) subject to
Section 4.09
,
resolved to (i) submit this Agreement for adoption by a vote of the Company
Stockholders at the Stockholders Meeting and (ii) recommend that the Company
Stockholders adopt and approve this Agreement and the Transactions (the
Company
Board Recommendation
). A copy of such resolutions of the Company Board has been
made available to Parent and, other than as permitted by and in accordance with
Section 4.09(f)
, such resolutions have not been modified, supplemented or
rescinded and remain in full force and effect.
(d)
Consents and Regulatory Approvals; No Defaults
.
(1) No consents, authorizations or approvals of, or filings or registrations
with, or notifications to, any Governmental Authority or with any third party are
required to be made or obtained by the Company or any of its Subsidiaries in
connection with the execution, delivery or performance by the Company of this
Agreement or for the Company to consummate the Transactions, except for (A) filings
of applications and notices with, receipt of approvals or non-objections from, and
expiration of related waiting periods required by, the FTC and the Antitrust
Division under the HSR Act, (B) filings as may be required by the Securities Act or
the Exchange Act or any applicable national securities exchange or Nasdaq, (C) the
approvals and filings required by the DGCL, including receipt of the Company
Stockholder Approval, and (D) such consents, authorizations, approvals, filings,
registrations or notifications the failure of which to make or obtain has not had,
and would not reasonably be expected to have, a Material Adverse Effect with respect
to the Company.
(2) Subject to receipt of the consents, authorizations and approvals referred
to in
Section 3.01(d)(1)
, the expiration of related waiting periods, and the
making of required filings with applicable Governmental Authorities, the execution,
delivery and performance of this Agreement and the consummation of the Transactions
do not and will not (A) result in, conflict with, or constitute or
A-22
create (with or
without due notice or lapse of time or both) a breach or violation
of, or a default under, or give rise to any Lien (other than Permitted Liens)
on any property or asset of the Company or its Subsidiaries or any acceleration of
remedies or right of termination or cancellation under any Law or under any of the
terms, conditions or provisions of any Material Contract or IP License, except for
any such conflict, breach, violation, default, Lien, acceleration of remedies, right
of termination or cancellation that has not had, and would not reasonably be
expected to have, a Material Adverse Effect with respect to the Company, or (B)
constitute a breach or violation of, or a default under, or conflict with, the
Constituent Documents of the Company or any of its Subsidiaries.
(e)
Company Stock
.
(1) The authorized capital stock of the Company consists of 4,000,000 shares of
Company Preferred Stock and 30,000,000 shares of Company Common Stock. As of the
close of business on June 2, 2009, (A) 11,622,629 shares of Company Common Stock
(including 254,641 Company Restricted Shares) were issued and outstanding and (B)
294,322 shares of Company Common Stock were issuable upon exercise of Company Stock
Options under the Company Stock Plan. There are (i) no shares of Company Preferred
Stock issued or outstanding, (ii) no shares of Company Common Stock issuable upon
exercise of any Rights under the Company Stock Plan (except as described in clause
(B) above), and (iii) no Company Stock-Based Awards outstanding.
(2) The outstanding Shares are, and all Shares which may be issued pursuant to
the Company Stock Plan or the exercise of Company Stock Options or Company
Stock-Based Awards will be, when issued in accordance with the respective terms
thereof, (A) duly authorized and validly issued and outstanding, fully paid and
nonassessable, and not subject to or issued in violation of any preemptive rights,
any purchase option, call option, right of first refusal, subscription right or any
similar right under any provision of the DGCL, the Companys Constituent Documents
or any contract or commitment to which the Company is a party or otherwise bound and
(B) issued in material compliance with all applicable Laws, including federal and
state securities laws, and all requirements set forth in applicable contracts
governing the issuance of such Company Stock Options or Company Stock-Based Awards.
Except as set forth in
Section 3.01(e)(1)
, there are no shares of Company
Common Stock or Company Preferred Stock reserved for issuance, the Company does not
have any Rights outstanding with respect to Company Common Stock or Company
Preferred Stock and the Company does not have any commitment to authorize, issue,
sell or otherwise cause to become outstanding any Company Common Stock, Company
Preferred Stock or Rights, except pursuant to Company Stock Options and Company
Restricted Shares outstanding as of the date of this Agreement and set forth on
Section 3.01(e)(4)
of the Disclosure Schedule. There are no outstanding
stock appreciation, phantom stock, profit participation or similar rights with
respect to the Company or any of its Subsidiaries or other equity interests in the
Company or any of its Subsidiaries or securities convertible into or exchangeable
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for such shares or equity interests. There are no stockholder agreements, voting
trusts or other arrangements or understandings to which the Company is a party,
or of which the Company has Knowledge, with respect to the voting of stock or other
equity interests of the Company or any of its Subsidiaries. The Company does not
have, and there is not in effect, a stockholder rights, poison pill or similar
plan with respect to the Company.
(3) No bonds, debentures, notes or other indebtedness of the Company or any of
its Subsidiaries having the right to vote are issued or outstanding, and there are
no outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the Company
or any of its Subsidiaries.
(4)
Section 3.01(e)(4)
of the Disclosure Schedule sets forth a complete
and accurate list, as of June 2, 2009, of (A) all outstanding Company Stock Options
under the Company Stock Plan (or otherwise), the number of Shares subject thereto,
the exercise or grant prices (if applicable) and the names of the holders thereof
and (B) all Company Restricted Shares under the Company Stock Plan (or otherwise)
and the names of the holders thereof. All (i) Company Stock Options and (ii)
Company Restricted Shares are evidenced by stock option agreements, restricted stock
purchase agreements or other award agreements, in each case in the forms set forth
in
Section 3.01(e)(4)
of the Disclosure Schedule or filed as an exhibit to a
Company Regulatory Filing prior to the date of this Agreement, and no stock option
agreement, restricted stock purchase agreement or other award agreement contains any
terms that are materially inconsistent with or in addition to such forms. Each
grant of a Company Stock Option was duly authorized no later than the date on which
the grant of such Company Stock Option was by its terms to be effective (the
Grant
Date
) by all necessary corporate action, including, as applicable, approval by the
Company Board (or a duly constituted and authorized committee thereof), and the
award agreement governing such grant (if any) was duly executed and delivered by
each party thereto, each such grant was made in accordance with the terms of the
Company Stock Plan, the Exchange Act and all other applicable Laws, the per share
exercise price of each Company Stock Option was equal to or greater than the fair
market value of a share of Company Common Stock on the applicable Grant Date and
each such grant was properly accounted for in accordance with GAAP in the Financial
Statements and disclosed in the Company Regulatory Filings in accordance with the
Exchange Act and all other applicable Laws. To the Companys Knowledge, the Company
has not granted, and there is no and has been no Company policy or practice to
grant, Company Stock Options prior to, or otherwise coordinate the grant of Company
Stock Options with, the release or other public announcement of material information
regarding the Company or its Subsidiaries or their financial results or prospects.
Each Company Stock Option, each Company Restricted Share and each Company
Stock-Based Award may, by its terms, be treated at the Effective Time as set forth
in
Section 2.09
.
A-24
(5) The Company Board has not declared any dividend or distribution with
respect to the Company Common Stock, the record or payment date for which is on or
after the date of this Agreement.
(f)
Company Subsidiaries
.
(1) (A) The Company owns, directly or indirectly, all the outstanding capital
stock and equity of each of its Subsidiaries free and clear of any Liens (other than
Permitted Liens); (B) no capital stock or equity of any of the Companys
Subsidiaries are or may become required to be issued (other than to the Company or
its wholly owned Subsidiaries) by reason of any Right or otherwise; (C) there are no
contracts, commitments, understandings or arrangements by which any of the Companys
Subsidiaries is bound to sell or otherwise transfer any capital stock or equity of
any such Subsidiaries (other than to the Company or its wholly owned Subsidiaries);
(D) there are no contracts, commitments, understandings or arrangements relating to
the Companys rights to vote or to dispose of the capital stock or equity of any of
its Subsidiaries; and (E) all the capital stock and equity interests of each
Subsidiary held by the Company or its Subsidiaries (i) have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable and not subject to
or issued in violation of any preemptive right, purchase option, call option, right
of first refusal, subscription right or any similar right under any provision of the
DGCL, such Subsidiarys Constituent Documents or any contract or commitment to which
such Subsidiary is a party or otherwise bound, and (ii) were issued in material
compliance with all applicable Laws, including federal and state securities laws.
(2) Each of the Companys Subsidiaries has been duly organized and is validly
existing and in good standing under the Laws of the jurisdiction of its organization
and is duly qualified and licensed to do business and is in good standing in all
jurisdictions where its ownership, leasing or operation of property or assets or its
conduct of business requires it to be so qualified or licensed, except where the
failure to be in good standing or to be so qualified or licensed has not had, and
would not reasonably be expected to have, a Material Adverse Effect with respect to
the Company.
(3) Other than with respect to the Subsidiaries listed on
Section
3.01(f)(3)
of the Disclosure Schedule, the Company does not directly or
indirectly own any securities or beneficial ownership interests in any other Person
(including through joint ventures or partnership arrangements) or have any
investment in any other Person.
(g)
Company Regulatory Filings; Ordinary Course.
(1) Since January 1, 2006, the Company has filed on a timely basis with the SEC
all forms, statements, reports, certifications, schedules and other documents
(including all exhibits and amendments thereto) required to be filed or
A-25
furnished by
it under the Exchange Act or the Securities Act (collectively,
together with the information incorporated by reference therein, the
Company
Regulatory Filings
). Each of the Company Regulatory Filings, including each of the
Company Regulatory Filings filed or furnished after the date hereof, as of the date
filed or furnished (or if amended prior to the date of this Agreement, then as of
the date of the last such amendment) (A) complied in all material respects as to
form with the applicable requirements under the Securities Act or the Exchange Act,
as the case may be, and (B) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they were
made, not misleading; and each of the consolidated financial statements contained in
or incorporated by reference into any such Company Regulatory Filing (including the
related notes and schedules) (collectively, the
Financial Statements
) (i) complied
in all material respects as to form with the published rules and regulations of the
SEC with respect thereto, (ii) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved, and (iii) fairly presented in all
material respects the financial position of the Company and its Subsidiaries on a
consolidated basis as of the date of such statement and the consolidated results of
the Companys and its Subsidiaries operations and cash flows for the periods
indicated in such statement, except in each case subject to normal year-end audit
adjustments and as permitted by SEC Form 10-Q promulgated under the Exchange Act in
the case of unaudited statements. The Company has not had any material dispute with
any of its auditors regarding accounting matters or policies during any of its past
three (3) full fiscal years or during the current fiscal year that is currently
outstanding or that resulted in an adjustment to, or any restatement of, the
Financial Statements.
(2) Without limiting the generality of the foregoing, Ernst & Young LLP has not
resigned nor been dismissed as independent public accountant of the Company as a
result of or in connection with any disagreement with the Company on a matter of
accounting practices which impacts or would require the restatement of any
previously issued financial statements, covering one or more years or interim
periods for which the Company is required to provide financial statements, such that
they should no longer be relied on.
(3) Since January 1, 2007, the Company has not conducted any material internal
investigations regarding accounting or revenue recognition discussed with, reviewed
by or initiated at the direction of the chief executive officer, chief financial
officer, the Company Board or any committee thereof.
(4) Except for liabilities and obligations (A) incurred in the Ordinary Course
of Business since December 31, 2008, (B) that have been discharged or paid in full
in the Ordinary Course of Business since December 31, 2008, (C) reflected in or
reserved against on the most recent balance sheet of the Company prepared in
accordance with GAAP and included in the Company Regulatory Filings filed with the
SEC at least one Business Day prior to the date of this Agreement, (D) that arise
under this Agreement or (E) that have not had,
A-26
and would not reasonably be expected
to have, a Material Adverse Effect with respect
to the Company, the Company has not incurred any liabilities or obligations of
any nature, whether or not accrued, contingent, absolute or otherwise that would be
required to be reflected in or reserved against on a balance sheet prepared in
accordance with GAAP.
(5) Since December 31, 2008 through the date of this Agreement, (A) the Company
and its Subsidiaries have conducted their respective businesses in the Ordinary
Course of Business (excluding conduct in connection with and the incurrence of
expenses related to this Agreement and the Transactions and the general process of
soliciting and evaluating proposals to acquire the Company), (B) there has not been
a Material Adverse Effect with respect to the Company, and (C) neither the Company
nor any of its Subsidiaries has taken or authorized the taking of any action that if
taken after the date of this Agreement would constitute a breach of
Section
4.01
.
(6) The Company is in compliance in all material respects with the applicable
provisions of the applicable listing and governance rules and regulations of Nasdaq.
(7) The Company has made available to Parent complete and correct copies of all
comment letters from the SEC staff since January 1, 2006 with respect to any of the
Company Regulatory Filings. There are no outstanding or unresolved comments in
comment letters received from the SEC staff with respect to any of the Company
Regulatory Filings.
(h)
Sarbanes-Oxley Act
. (1) The management of the Company has designed, implemented
and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Exchange Act) to reasonably ensure that all material information relating to the Company,
including its consolidated Subsidiaries, required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the SEC, and that all
such information is accumulated and made known to the chief executive officer and the chief
financial officer of the Company by other employees within the Company as appropriate to
allow timely decisions regarding required disclosure; (2) the Company maintains a system of
internal control over financial reporting (as defined in Rules 13a-15(f) of the Exchange
Act) that is reasonably designed to provide reasonable assurance (A) that the Company
maintains records that in reasonable detail accurately and fairly reflect its transactions
and dispositions of assets, (B) that transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP, (C) that receipts and
expenditures are being made only in accordance with authorizations of management and the
Company Board and (D) of the prevention or timely detection of the unauthorized
acquisition, use or disposition of the Companys assets that could have a material effect
on the Companys consolidated financial statements; (3) the Company has evaluated the
effectiveness of the Companys internal control over financial reporting and, to the extent
required by applicable Law, presented in any applicable Company Regulatory
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Filing that is a
report on Form 10-K or Form 10-Q (or any amendment thereto) its
conclusions about the effectiveness of the internal control over financial reporting
as of the end of the period covered by such report (or amendment) based on such
evaluations; (4) the Companys chief executive officer and chief financial officer have
disclosed, based on their most recent evaluation of internal control over financial
reporting, to the Companys auditors and the audit committee of the Company Board (or
persons performing the equivalent functions), (A) all significant deficiencies and material
weaknesses within their knowledge in the design or operation of internal control over
financial reporting that are reasonably likely to adversely affect the Companys ability to
record, process, summarize and report financial information and (B) any fraud that involves
management or other employees who have a significant role in the Companys internal control
over financial reporting; (5) the certifications provided pursuant to Sections 302 and 906
of the Sarbanes-Oxley Act with each Company Regulatory Filing, as applicable, at the time
of filing or submission of such certification, were true and correct; and (6) as of the
date of this Agreement, the Company has not identified any material weaknesses in the
design or operation of its internal control over financial reporting except as disclosed in
the Company Regulatory Filings filed with the SEC prior to the date of this Agreement.
(i)
Litigation
. There is no suit, claim, action, charge or proceeding (including
arbitration proceeding or dispute resolution proceeding) pending or, to the Companys
Knowledge, threatened against or affecting it or any of its Subsidiaries, businesses,
assets or properties, or its officers or directors in their capacities as such, that has
had, or would reasonably be expected to have, a Material Adverse Effect with respect to the
Company, and to the Companys Knowledge, there is no valid basis for any such suit, claim,
action, charge or proceeding. No Order is outstanding against the Company or any of its
Subsidiaries, businesses, assets or properties, or its officers or directors in their
capacities as such, that has had, or would reasonably be expected to have, a Material
Adverse Effect with respect to the Company. To the Companys Knowledge, there is no
investigation, indictment or audit pending or threatened by or against the Company or any
of its Subsidiaries, businesses, assets or properties, or its officers or directors in
their capacities as such, that has had, or would reasonably be expected to have, a Material
Adverse Effect with respect to the Company.
(j)
Compliance with Laws
. Since January 1, 2007, the Company and each of its
Subsidiaries:
(1) have been and are in compliance with all Laws applicable to their
respective businesses or to the employees conducting such businesses, except for
instances of noncompliance that have not had, and would not reasonably be expected
to have, a Material Adverse Effect with respect to the Company;
(2) have obtained and hold all permits, licenses, authorizations, Orders and
approvals of, and have made all filings, applications and registrations with, all
Governmental Authorities that are required in order to permit them to own or lease
their properties and assets and to conduct their businesses as presently conducted,
except for those the failure of which to obtain or to be in compliance
A-28
with have not
had, and would not reasonably be expected to have, a Material
Adverse Effect with respect to the Company; all such permits, licenses,
authorizations, Orders and approvals are in full force and effect; and, to the
Companys Knowledge, no suspension or cancellation of any of them has been
threatened as of the date of this Agreement, except for those suspensions or
cancellations that have not had, and would not reasonably be expected to have, a
Material Adverse Effect with respect to the Company;
(3) have not received written notification from any Governmental Authority (A)
asserting that the Company or any of its Subsidiaries is not in material compliance
with any of the Laws that such Governmental Authority enforces or (B) threatening to
revoke any material license, franchise, permit, approval or governmental
authorization;
(4) (A) have been and are in material compliance with all statutory and
regulatory requirements under the Arms Export Control Act (22 U.S.C. 2778), the
International Traffic in Arms Regulations (22 C.F.R. § 120 et seq.), the Export
Administration Regulations (15 C.F.R. § 730 et seq.) and associated executive
orders, the Laws implemented by the Office of Foreign Assets Control, United States
Department of the Treasury, antidumping and countervailing duty orders issued by the
United States International Trade Commission and/or the International Trade
Administration, United States Department of Commerce, and the Laws implemented by
the United States Customs and Border Protection, United States Department of
Homeland Security (collectively, the
Import and Export Controls Laws
); and (B)
have not received any written communication that alleges that the Company or any of
its Subsidiaries is not, or may not be, in material compliance with, or has, or may
have, any material liability under, the Import and Export Control Laws; and
(5) (A) (i) have been and are in material compliance with all legal
requirements under the Foreign Corrupt Practices Act (15 U.S.C. §§ 78dd-1, et seq.)
and the Organization for Economic Cooperation and Development Convention Against
Bribery of Foreign Public Officials in International Business Transactions and
legislation implementing such Convention and (ii) have been and are in compliance
with all international anti-bribery conventions (other than the convention described
in clause (i)) and local anti-corruption and bribery Laws, in each case, in
jurisdictions in which the Company and its Subsidiaries are operating (collectively,
the
Anti-Bribery Laws
), except with respect to clause (ii) only any failure to be
in compliance that has not had, and would not reasonably be expected to have, a
Material Adverse Effect with respect to the Company; and (B) have not received any
written communication that alleges that the Company, its Subsidiaries or any agent
thereof is, or may be, in material violation of, or has, or may have, any material
liability under, the Anti-Bribery Laws, except any written communication received
more than twenty-four (24) months prior to the date of this Agreement that did not
result in an inquiry or investigation that to the Companys Knowledge is currently
pending.
A-29
(k)
Material Contracts; Defaults
.
(1) Neither the Company nor any of its Subsidiaries is a party to, bound by or
subject to any currently effective agreement, contract, arrangement, commitment or
understanding (A) that is a material contract within the meaning of Item
601(b)(10) of the SECs Regulation S-K; (B) that is a credit agreement, note, bond,
guarantee, mortgage, indenture, lease, or other instrument or obligation pursuant to
which any indebtedness (as defined below) of the Company or any of its
Subsidiaries is outstanding or may be incurred; (C) that is a collective bargaining
agreement; (D) that is an employment or consulting agreement, contract or binding
commitment providing for annual compensation or annual payments in excess of
$250,000 in the current or any future year; (E) that is an agreement, contract or
commitment of indemnification or guaranty not entered into in the Ordinary Course of
Business providing for indemnification which would reasonably be expected to exceed
$250,000, as well as any agreement, contract or commitment of indemnification or
guaranty between the Company or any of its Subsidiaries and any of their respective
officers or directors, irrespective of the amount; (F) that is an agreement,
contract or binding commitment containing any covenant directly or indirectly
limiting the freedom of the Company or any of its Subsidiaries to engage in any line
of business, compete with any Person, or sell any product or service (including any
most favored nation clauses), or which, following the consummation of the Merger,
could so limit Parent or any of its affiliates (including the Surviving
Corporation), including any contract clause, mitigation plan, or other limitation
with respect to Organizational Conflicts of Interest, as that term is used in
Federal Acquisition Regulation Subpart 9.5; (G) that is a material partnership,
joint venture, teaming or similar agreement or arrangement; (H) that is a contract
or agreement involving a standstill or similar obligation of the Company or any of
its Subsidiaries to a third party; (I) the termination or cancellation of which by
any other party thereto, or under which the acceleration of any obligation or the
loss of any benefit, has had, or would reasonably be expected to have, a Material
Adverse Effect with respect to the Company; or (J) that contemplates or provides for
actual or potential payments to or from the Company and/or any of its Subsidiaries
in excess of $2,500,000 in the aggregate during the term thereof (each, other than
to the extent it would include a Benefit Arrangement, a
Material Contract
).
Section 3.01(k)
of the Disclosure Schedule lists each of the Material
Contracts that as of the date of this Agreement is in effect or otherwise binding on
the Company or any of its Subsidiaries or their respective properties or assets,
other than those contracts or agreements that have been filed as exhibits to the
Company Regulatory Filings prior to the date of this Agreement. For purposes of
this
Section 3.01(k)
, indebtedness will mean, with respect to any Person,
without duplication, (i) all obligations of such Person for borrowed money, (ii) all
obligations of others secured by any Lien on property or assets owned or acquired by
such Person, whether or not the obligations secured thereby have been assumed, (iii)
all letters of credit issued for the account of such Person (excluding letters of
credit issued for the benefit of suppliers to support accounts payable to suppliers
incurred in the Ordinary Course of Business) and (iv) all obligations, the
A-30
principal component of which are obligations under leases that are, or should
be pursuant to GAAP, classified as capital leases. A complete copy of each Material
Contract has previously been made available to Parent.
(2) Neither the Company nor any of its Subsidiaries is in default under any
Material Contract or IP License, and, to the Companys Knowledge, (A) no other party
thereto is in default, and (B) there has not occurred any event that, with the lapse
of time or the giving of notice or both, would constitute such a default, in each
case, except those defaults that have not had, and would not reasonably be expected
to have, a Material Adverse Effect with respect to the Company. Each Material
Contract and each Government Contract (as defined below) is valid, binding and
enforceable upon the Company or the Subsidiary that is a party thereto, and to the
Companys Knowledge each other party thereto, and is, and immediately following
consummation of the Transactions will remain, in full force and effect (except as
such enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors rights or by general equity
principles), except where any failure to be valid, binding and enforceable and in
full force and effect has not had, and would not reasonably be expected to have, a
Material Adverse Effect with respect to the Company.
(3) To the Companys Knowledge, with respect to each contract, agreement,
purchase order, modification, bid, quotation or proposal between the Company or any
of its Subsidiaries and any (A) Governmental Authority or (B) third party relating
to a contract, agreement, purchase order, modification, bid, quotation or proposal
where the ultimate contracting party is any domestic or foreign government or
Governmental Authority (each a
Government Contract
), (i) the Company and each of
its Subsidiaries have complied in all material respects with all terms and
conditions of such Government Contract; (ii) such Government Contract was legally
awarded and the Company and each of its Subsidiaries have complied in all material
respects with all applicable requirements of all applicable Laws pertaining to such
Government Contract, including where applicable the Cost Accounting Standards;
(iii) all representations and certifications executed, acknowledged or set forth in
or pertaining to such Government Contract were complete and accurate in all material
respects as of their respective effective dates and the Company and its Subsidiaries
have complied in all material respects with all such representations and
certifications; (iv) all cost or pricing data required to be provided in
connection with a Government Contract was provided and was current, accurate and
complete in all material respects as of the date of agreement on price; (v) neither
the United States government nor any prime contractor, subcontractor or other Person
has notified the Company or any of its Subsidiaries, in writing or, to the Companys
Knowledge, orally, that the Company or any of its Subsidiaries has breached or
violated any Laws, certification, representation, clause, provision or requirement
pertaining to such Government Contract; (vi) neither the Company nor any of its
Subsidiaries has received any notice of termination for convenience, notice of
termination for default, cure notice or show cause notice pertaining to
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such Government Contract; (vii) other than in the Ordinary Course of Business,
no cost incurred by the Company or any of its Subsidiaries pertaining to such
Government Contract has been disallowed by any Governmental Authority, or to the
Companys Knowledge, is the subject of any audit or investigation by any
Governmental Authority; and (viii) other than in the Ordinary Course of Business, no
payments due to the Company or any of its Subsidiaries pertaining to such Government
Contract have been withheld or set off, nor has any claim been made to withhold or
set off money, and the Company and its Subsidiaries are entitled to all progress or
other payments received with respect thereto.
(4) To the Companys Knowledge, there exist no material disputes or claims
between the Company or any of its Subsidiaries and the United States government
under the Contract Disputes Act, as amended, or any other applicable federal Law, or
between the Company or any of its Subsidiaries and any prime contractor,
subcontractor or vendor arising under or relating to any Government Contract that,
if adversely determined against the Company has had, or would reasonably be expected
to have, a Material Adverse Effect with respect to the Company.
(5) To the Companys Knowledge, since January 1, 2006, neither the Company nor
any of its Subsidiaries has been debarred or suspended from participation in the
award of contracts with the United States government or any other Governmental
Authority (excluding for this purpose ineligibility to bid on certain contracts due
to generally applicable bidding requirements). To the Companys Knowledge, there
exist no facts or circumstances that would warrant mandatory disclosure to a
Governmental Authority, the institution of suspension or debarment proceedings or
the finding of nonresponsibility or ineligibility on the part of the Company, any of
its Subsidiaries or any of their respective directors, officers or employees.
(l)
Taxes
. (1) All material Tax Returns that are required to be filed (taking into
account any extensions of time within which to file) by or with respect to the Company and
its Subsidiaries have been duly and timely filed and all such Tax Returns are true, correct
and accurate in all material respects; (2) all material Taxes have been paid in full or are
adequately reserved in the Companys deferred Tax accounts; (3) all material Taxes that the
Company or any of its Subsidiaries is obligated to withhold from amounts owing to any
employee, creditor or third party have been withheld, properly reported and paid over to
the proper Governmental Authority, to the extent due and payable; (4) no extensions or
waivers of statutes of limitation have been granted or requested with respect to any of the
Companys U.S. federal income taxes or those of its Subsidiaries; (5) neither the Company
nor any of its Subsidiaries has received notice of any dispute or claim concerning any Tax
and no such dispute or claim is pending or, to the Companys Knowledge, threatened in
writing; and (6) there have been no claims in writing by any jurisdiction where the Company
or its Subsidiaries do not file Tax Returns that the Company or any of its Subsidiaries is
or may be subject to taxation by such jurisdiction. Except for Permitted Liens, to the
Companys Knowledge, no Liens
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for material Taxes exist with respect to any of its assets or properties or those of
its Subsidiaries.
(m)
Benefit Arrangements
.
(1) True and complete copies of all material Benefit Arrangements, including
any summary plan description, determination letter, trust instruments, insurance
contracts and other funding agreements, each forming a part of any Benefit
Arrangements, and the most recent governmental filings, most recent actual reports,
most recent audited financial statements and all amendments thereto, have been made
available to Parent.
(2) All of the Benefit Arrangements have been administered in a manner
consistent in all respects with their written terms and are in substantial
compliance in form and operation with ERISA and the Code and other applicable Laws,
except for failures of administration or compliance that have not had, and would not
reasonably be expected to have, a Material Adverse Effect with respect to the
Company. Each of the Benefit Arrangements that is an employee pension benefit
plan within the meaning of Section 3(2) of ERISA, and that is intended to be
qualified under Section 401(a) of the Code, has received a favorable determination
letter or is subject to an opinion letter from the U.S. Internal Revenue Service,
and no event has occurred which would reasonably be expected to cause the loss,
revocation or denial of any such favorable determination letter or opinion letter.
(3) Neither the Company nor any entity that is considered one employer with the
Company under Section 4001 of ERISA or Section 414 of the Code (an
ERISA
Affiliate
) has contributed to a multiemployer plan within the meaning of Section
3(37) of ERISA, a multiple employer plan within the meaning of Section 210(a) of
ERISA, or a pension plan subject to Title IV of ERISA or Section 412 of the Code, in
each case, at any time within the last six (6) years.
(4) Except as provided in
Section 2.09
, neither the Companys execution
and delivery of this Agreement, the consummation of the Transactions nor the Company
Stockholder Approval will, either alone or in conjunction with another event (such
as termination of employment), (A) entitle any of its employees or any employees of
its Subsidiaries to the payment of any severance, termination, golden parachute,
or other similar payments, (B) accelerate the time of payment or vesting or trigger
any payment or funding of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the Benefit
Arrangements or (C) result in payments under any of the Benefit Arrangements which
would not be fully deductible under Section 280G of the Code. No Person is entitled
to any additional payment from the Company or any of its Subsidiaries by reason of
the excise tax required by Section 4999(a) of the Code being imposed on such Person
by reason of the Transactions.
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(5) The Company is not a party to any agreement, contract, arrangement or plan
(A) that constitutes a nonqualified deferred compensation plan within the meaning
of Code Section 409A(d)(1) but that fails to meet the requirements of Code Sections
409A(a)(2), (3) or (4), or (B) that has resulted or would result in any amount that
would not be fully deductible as a result of Code Section 162(m).
(6) With respect to each Benefit Arrangement, as applicable, there have been no
non-exempt prohibited transactions (as defined in Section 406 of ERISA and Code
Section 4975) with respect to such Benefit Arrangement, no fiduciary has any
liability for breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of such Benefit
Arrangement (including the actions contemplated by this Agreement), and no action,
suit, proceeding, hearing or, to the Companys Knowledge, investigation with respect
to the administration or the investment of the assets of such plan (other than
routine claims for benefits) is pending or, to the Companys Knowledge, threatened,
but excluding from each of the foregoing, events or circumstances that have not had,
and would not reasonably be expected to have, a Material Adverse Effect with respect
to the Company.
(7) Other than as required under Section 601 et seq. of ERISA or any similar
Law, no Benefit Arrangement provides health and welfare benefits or coverage
following retirement or other termination of employment.
(8) All contributions, premiums or other payments (including all employer
contributions and employee salary reduction contributions) that are required to be
made under the terms of any Benefit Arrangement have been timely made and properly
provided for in the Financial Statements, as applicable, except for failures that
have not had, and would not reasonably be expected to have, a Material Adverse
Effect with respect to the Company.
(9) All Benefit Arrangements are by their terms able to be amended or
terminated by the Company without material penalty, consent or incremental cost.
(10) The Company has never been a party to or otherwise bound by an advance
agreement pursuant to 48 C.F.R. sec. 31.109 with the U.S. government relating to the
allowability, allocation or reimbursement of benefit costs or other matters in
connection with any Benefit Arrangement.
(11) All required reports and descriptions (including Form 5500 Annual Reports,
Summary Annual Reports, PBGC-1s and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each Benefit Arrangement, except for
failures of filing or distribution that have not had, and would not reasonably be
expected to have, a Material Adverse Effect with respect to the Company.
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(12) The requirements of Part 6 of Subtitle B of Title I of ERISA and Section
4980B of the Code have been met with respect to each Benefit Arrangement, as
applicable, except for failures that have not had, and would not reasonably be
expected to have, a Material Adverse Effect with respect to the Company.
(n)
Labor Matters
. Neither the Company nor any of its Subsidiaries is a party to, or
is bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. As of the date of this Agreement,
neither the Company nor any of its Subsidiaries is the subject of a proceeding before any
Governmental Authority asserting that the Company or any such Subsidiary has committed an
unfair labor practice (within the meaning of the National Labor Relations Act) or seeking
to compel the Company or such Subsidiary to bargain with any labor organization as to wages
and conditions of employment. To the Companys Knowledge, no executive officer of the
Company or any of their respective direct reports has any plan to terminate employment with
the Company or its Subsidiaries. As of the date of this Agreement, (1) there is no strike
or other material labor dispute involving the Company or any of its Subsidiaries pending
or, to the Companys Knowledge, threatened, and (2) to the Companys Knowledge, none of the
Companys or any of its Subsidiaries employees is seeking to certify a collective
bargaining unit or engaging in any other similar labor organization activity. To the
Companys Knowledge, there are no material liabilities or obligations relating to any
individuals current or former employment with the Company or any of its Subsidiaries or
related entities arising in connection with any violation of any Laws.
(o)
Environmental Matters
. There are no material proceedings, claims, actions or
investigations pending or, to the Companys Knowledge, threatened before any Governmental
Authority arising under any Environmental Law against the Company or any of its
Subsidiaries. The Company and its Subsidiaries currently hold all material permits
required under all applicable Environmental Laws for the operations of their businesses,
and such permits are in full force and effect. Except with respect to matters that have
not had, and would not reasonably be expected to have, a Material Adverse Effect with
respect to the Company: (1) since January 1, 2006, the Company and its Subsidiaries have
conducted their operations in compliance with all permits required under applicable
Environmental Laws and the limitations, restrictions, conditions, standards, prohibitions,
requirements and obligations of all applicable Environmental Laws, and (2) there have been
no releases of Hazardous Materials at any property that the Company or its Subsidiaries
owns or operates, or has owned or operated, and that currently requires remediation by the
Company or its Subsidiaries under Environmental Laws.
(p)
Intellectual Property Assets
.
(1)
Section 3.01(p)(1)
of the Disclosure Schedule lists each patent,
registered trademark, registered service mark, trade name or Internet domain name
and registered copyright or mask work, and applications for registration of any of
the foregoing, owned by the Company or any of its Subsidiaries as of the
A-35
date of this Agreement (collectively, and together with any of the foregoing
obtained by the Company or any of its Subsidiaries after the date of this Agreement,
the
Company IP Assets
). The term
IP Assets
means all of the following in any
jurisdiction throughout the world: (A) the Intellectual Property listed on
Section 3.01(p)(1)
of the Disclosure Schedule and (B) all other Intellectual
Property used in the operation of the business of the Company and its Subsidiaries,
as presently conducted, including Intellectual Property incorporated or used in
products sold by the Company or its Subsidiaries.
(2) Each of the Company IP Assets is owned exclusively by either the Company or
one of its Subsidiaries, free and clear of all Liens, and free and clear of any
restrictions or limitations regarding ownership, use, license or disclosure
(including any rights in data claims of any Governmental Authority), in each case,
except for Liens or any such restrictions or limitations that have not had, and
would not reasonably be expected to have, a Material Adverse Effect with respect to
the Company. The Company and its Subsidiaries own or have a valid and enforceable
license or other right to use all IP Assets that are material to their businesses or
operations as presently conducted.
(3) With respect to all patent applications, trademark applications and
copyright applications included in the Company IP Assets pending with any
Governmental Authority, the Company and its Subsidiaries have conducted the
prosecution of all such pending applications in a manner consistent with their
reasonable ongoing business goals and objectives. With respect to all patents,
trademarks and copyrights included in the Company IP Assets issued or registered by
any Governmental Authority, to the extent consistent with the reasonable ongoing
business goals and objectives of the Company and its Subsidiaries, all registration
fees, maintenance fees, renewal fees and annuity fees necessary to maintain such
Company IP Assets as active and due prior to the Closing have been paid or will be
paid through the Closing, and all necessary documents and certificates in connection
with such Company IP Assets have been filed or will be filed with the relevant
patent, trademark and copyright offices, registrars or other authorities in the
United States or foreign jurisdictions, as the case may be, for the purposes of
maintaining the registration of such Company IP Assets through the Closing Date.
With regard to all applications for domain name registration and all registered
domain names included in the Company IP Assets, all necessary registration and
renewal fees due in connection with such Company IP Assets have been paid or will be
paid through the Closing.
(4)
Section 3.01(p)(4)
of the Disclosure Schedule contains a true and
complete list of all material agreements, contracts, arrangements, commitments or
understandings regarding the development, ownership or use of IP Assets (including
material licenses to or from other Persons) to which either the Company or one of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of the IP Assets is bound (collectively, the
IP Licenses
) (true and complete
copies of which, or, if none exist, written descriptions of which, together with all
amendments and supplements thereto and all waivers of
A-36
any terms thereof, have been made available to Parent), except licenses and
license agreements entered into in the Ordinary Course of Business for
commercially-available off-the-shelf software (as that term is commonly understood)
and those that arise as a matter of Law by implication as a result of sales of
products and services in the Ordinary Course of Business by the Company or any of
its Subsidiaries or any of their respective sales representatives, distributors or
resellers.
(5) To the Companys Knowledge, none of the IP Assets owned by the Company or
any of its Subsidiaries is being infringed by any other Person.
(6) To the Companys Knowledge, none of the Company IP Assets infringes any
Intellectual Property of any other Person. Neither the Company nor any of its
Subsidiaries is infringing any Persons Intellectual Property, and no claims
regarding the foregoing are pending or, to the Companys Knowledge, threatened.
(7) No Governmental Authority is currently, nor since January 1, 2006 has been,
entitled to claim any rights (including license rights) in: (A) any Technical
Data (as defined below) included in or related to any Company IP Assets, other than
Limited Rights (as defined below); (B) any Computer Software (as defined below)
included in the Company IP Assets, other than Restricted Rights (as defined
below); (C) any patents or patentable invention included in the Company IP Assets;
or (D) any copyright included in the Company IP Assets. The terms Technical Data
and Limited Rights have the meanings set forth at 48 C.F.R. 252.227-7013, and the
terms Restricted Rights and Computer Software have the meanings set forth at 48
C.F.R. 252.227-7014.
(q)
Real and Personal Property
.
(1) The Company does not own any real property.
(2)
Section 3.01(q)(2)
of the Disclosure Schedule contains a true and
complete list of all material real property leases, subleases and other occupancy
agreements to which the Company or any of its Subsidiaries is a party (together with
all amendments, modifications, supplements, renewals and extensions related thereto,
the
Leases
, and the space and real property subject to the Leases, the
Leased
Property
), and the Company has made available to Parent a true and complete copy of
each such Lease. The Company or one of its Subsidiaries has good and valid title to
the leasehold estate in all Leased Property, free and clear of all Liens (except for
Permitted Liens). Each Lease is valid, binding and enforceable upon the Company or
the Subsidiary that is a party thereto, and, to the Companys Knowledge, each other
party thereto, and is in full force and effect (except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar Laws of general applicability relating to or affecting
creditors rights or by general equity principles), except where any failure to be
valid, binding and
A-37
enforceable and in full force and effect has not had, and would not reasonably
be expected to have, a Material Adverse Effect with respect to the Company. There
is neither any existing default or violation by the Company or any of its
Subsidiaries under any Lease nor, to the Companys Knowledge, any existing default
or violation by any counterparty to any Lease, except those defaults or violations
that have not had, and would not reasonably be expected to have, a Material Adverse
Effect with respect to the Company. As of the date of this Agreement, neither the
Company nor any of its Subsidiaries has received any written notice of any default
or event that with notice or lapse of time, or both, would constitute a default by
the Company or any of its Subsidiaries under any Lease, except those defaults that
have not had, and would not reasonably be expected to have, a Material Adverse
Effect with respect to the Company. Neither the Company nor any of its Subsidiaries
has assigned, sublet, transferred or otherwise conveyed any interest in any Lease.
(3) Other than scheduled maintenance, repairs and replacements conducted or
required in the Ordinary Course of Business, the Leased Property and all material
improvements located thereon are in good operating condition and repair and do not
require material repair or material replacement in order to serve their intended
purposes in the Ordinary Course of Business.
(4) The Company or one of its Subsidiaries has good and valid title to, or a
valid leasehold estate in, all personal property and assets reflected in the
December 31, 2008 balance sheet contained in the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2008, except (A) for properties or
assets subsequently sold, and leases subsequently terminated, in the Ordinary Course
of Business or otherwise as expressly permitted by this Agreement or (B) as has not
had, and would not reasonably be expected to have, a Material Adverse Effect with
respect to the Company.
(r)
Insurance
. (1) The Company and its Subsidiaries maintain, or are entitled to the
benefits of, insurance covering their material properties, operations, personnel and
businesses (each, an
Insurance Policy
); (2)
Section 3.01(r)
of the Disclosure
Schedule contains a true and complete list of all of the Insurance Policies as of the date
of this Agreement; (3) except as has not had, and would not reasonably be expected to have,
a Material Adverse Effect with respect to the Company, all premiums payable under any
Insurance Policy have been paid when due, the Company and each of its Subsidiaries are in
compliance with the terms of each Insurance Policy and each Insurance Policy is in full
force and effect; and (4) there are no self-insurance arrangements in effect with respect
to the Company or any of its Subsidiaries.
(s)
Takeover Laws and Provisions Applicable to the Company
. The Company has taken all
action required to be taken by it in order to: (1) exempt this Agreement, the Voting
Agreement and the Transactions from the requirements of any moratorium, control share,
fair price, affiliate transaction, business combination or other anti-takeover Laws
of any State, including the Business Combination Law (collectively,
Takeover Laws
); and
(2) make this Agreement, the
A-38
Voting Agreement and the Transactions comply with the requirements of any provisions
of its Constituent Documents concerning business combination, fair price, voting
requirement, constituency requirement or other related provisions (collectively,
Takeover Provisions
).
(t)
Financial Advisors
. Neither the Company nor any of its Subsidiaries has engaged
any broker or finder or incurred any liability for any brokerage fees, commissions or
finders fees in connection with the Transactions, except that, in connection with the
Transactions, the Company has retained Jefferies & Company, Inc., as its financial advisor
(the
Financial Advisor
), pursuant to the letter agreement dated January 26, 2009, a
complete copy of which has been made available to Parent prior to the date of this
Agreement.
(u)
Opinion of Financial Advisor
. Prior to the execution and delivery of this
Agreement, the Company has received a written opinion of the Financial Advisor to the
effect that as of the date of this Agreement and based upon and subject to the matters set
forth therein, the Merger Consideration to be received by the Company Stockholders pursuant
to the Merger is fair from a financial point of view to such Company Stockholders, and such
opinion has not been withdrawn or revoked or otherwise modified in any material respect.
The Company has been authorized by the Financial Advisor to permit the inclusion of such
written opinion in its entirety and a description of the Financial Advisors analysis in
preparing such opinion in the Proxy Statement so long as the Financial Advisor approves in
advance such description and any accompanying disclosure.
(v)
Material Suppliers and Customers
.
Section 3.01(v)
of the Disclosure
Schedule sets forth a true, correct and complete list of the ten (10) largest suppliers to
(the
Material Suppliers
) and customers of (the
Material Customers
) the Company for the
fiscal year ended December 31, 2008 (determined on the basis of the total dollar amount of
purchases or sales, as the case may be) showing the total dollar number of purchases from
or sales to, as the case may be, each such Material Supplier or Material Customer, as the
case may be, during such period. Since January 1, 2009, there has been no termination,
cancellation or material curtailment of the business relationship of the Company with any
Material Customer or Material Supplier nor, to the Companys Knowledge, has any Material
Customer or Material Supplier notified the Company in writing that it intends to terminate,
cancel or materially curtail its business relationship with the Company.
(w)
No Additional Representations
. Except for the representations and warranties of
the Company expressly set forth in this
Section 3.01
(as modified by the Disclosure
Schedule), neither the Company nor any other Person makes any other express or implied
representation or warranty on behalf of the Company with respect to the Company, any of its
Subsidiaries, any of their respective businesses or the Transactions.
A-39
3.02
Representations and Warranties about Parent and Merger Sub
. Parent and Merger Sub hereby
jointly and severally represent and warrant to the Company as follows:
(a)
Organization and Standing
. Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the Laws of the State of Delaware.
Each of Parent and Merger Sub is duly qualified and licensed to do business and is in good
standing in all jurisdictions where its ownership, leasing or operation of property or
assets or its conduct of business requires it to be so qualified or licensed, except where
the failure to be in good standing or to be so qualified or licensed has not had, and would
not reasonably be expected to have, a Material Adverse Effect with respect to Parent and
Merger Sub.
(b)
Power
. Each of Parent and Merger Sub has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement and to consummate the
Transactions, subject to the adoption of this Agreement by General Dynamics Government
Systems Corporation, a Delaware corporation as the sole stockholder of Merger Sub (which
will occur promptly after the execution and delivery of this Agreement) (the
Parent
Approval
). Each of Parent and Merger Sub has the corporate power and authority to carry
on its business as it is now being conducted and to own, lease and operate all its
properties and assets, except where the failure to have such power and authority has not
had, and would not reasonably be expected to have, a Material Adverse Effect with respect
to Parent and Merger Sub.
(c)
Authority
. Each of Parent and Merger Sub has duly authorized, executed and
delivered this Agreement and the Voting Agreement. This Agreement, the Voting Agreement
(and the execution, delivery and performance thereof by Parent and Merger Sub) and the
Transactions have been duly authorized by all necessary corporate action of each of Parent
and Merger Sub and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize the execution, delivery and performance of this Agreement, the
Voting Agreement or to consummate the Transactions, subject to obtaining the Parent
Approval. The Parent Approval is the only vote of the holders of any class or series of
Merger Subs capital stock necessary to adopt this Agreement and authorize and approve the
Transactions. This Agreement and the Voting Agreement are each Parents and Merger Subs
valid and legally binding obligation, enforceable against each of them in accordance with
its terms (except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar Laws of general applicability
relating to or affecting creditors rights or by general equity principles).
(d)
Consents and Regulatory Approvals; No Defaults
.
(1) No consents, authorizations or approvals of, or filings or registrations
with, or notifications to, any Governmental Authority or with any third party are
required to be made or obtained by Parent or Merger Sub in connection with the
execution, delivery or performance by it of this Agreement or the Voting Agreement
or to consummate the Transactions, except for (A) filings of applications and
notices with, receipt of approvals or non-objections from, and
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expiration of related waiting periods required by, the FTC and the Antitrust
Division under the HSR Act, (B) filings as may be required by the Securities Act or
the Exchange Act or any applicable national securities exchange or Nasdaq, (C) the
approvals and filings required by the DGCL, including receipt of the Parent
Approval, and (D) such consents, authorizations, approvals, filings, registrations
or notifications the failure of which to make or obtain has not had, and would not
reasonably be expected to have, a Material Adverse Effect with respect to Parent and
Merger Sub.
(2) Subject to receipt of the consents and approvals referred to in
Section
3.02(d)(1)
, the expiration of related waiting periods, and the making of
required filings with applicable Governmental Authorities, the execution, delivery
and performance of this Agreement, the Voting Agreement and the consummation of the
Transactions do not and will not (A) result in, conflict with, or constitute or
create (with or without due notice or lapse of time or both) a breach or violation
of, or a default under, or give rise to any Lien (other than Permitted Liens) on any
property or asset of Parent or Merger Sub or any acceleration of remedies or right
of termination or cancellation under any Law or any indenture or instrument of
Parent or Merger Sub or to which Parent or Merger Sub or any of their properties is
subject or bound, except for any such conflict, breach, violation, default, Lien,
acceleration of remedies, right of termination or cancellation that, has not had,
and would not reasonably be expected to have, a Material Adverse Effect with respect
to Parent and Merger Sub, or (B) constitute a breach or violation of, or a default
under, or conflict with, the Constituent Documents of Parent or Merger Sub.
(e)
Merger Sub Stock
. The authorized capital stock of Merger Sub consists of 1,000
shares of Merger Sub Common Stock. All of the issued and outstanding capital stock of
Merger Sub is owned by General Dynamics Government Systems Corporation, a Delaware
corporation, as Merger Subs sole stockholder. The outstanding shares of Merger Sub Common
Stock are duly authorized and validly issued and outstanding, fully paid and nonassessable,
and not subject to or issued in violation of any preemptive rights, any purchase option,
call option, right of first refusal, subscription right or any similar right under any
provision of the DGCL, Merger Subs Constituent Documents or any contract or commitment to
which Merger Sub is a party or otherwise bound.
(f)
No Prior Activities
. Merger Sub was formed solely for the purpose of engaging in
the Transactions, has engaged in no other business activities and has conducted and will
conduct its operations prior to the Effective Time only as contemplated by this Agreement.
(g)
Ownership of Company Common Stock
. As of the date of this Agreement, neither
Parent nor any of its Subsidiaries (including Merger Sub) is, and at no time during the
last three (3) years has Parent or any of its Subsidiaries (including Merger Sub) been, an
interested stockholder of the Company as defined in the Business Combination Law. As of
the date of this Agreement, neither Parent nor any of
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its Subsidiaries (including Merger Sub) owns (beneficially or of record), or is a
party to any agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, any shares of capital stock of the Company (other than as
contemplated by this Agreement and the Voting Agreement) in excess of five percent (5%) of
the outstanding Shares.
(h)
Proxy Statement
.
(1) The information regarding Guarantor, Parent and Merger Sub furnished in
writing by Parent or Merger Sub expressly for inclusion in the Proxy Statement will
not at the time (A) the Proxy Statement (or any amendment or supplement thereto) is
filed with the SEC, (B) the Proxy Statement is first disseminated to the Company
Stockholders, or (C) of the Stockholders 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.
(2) Notwithstanding the foregoing, Parent and Merger Sub make no representation
or warranty with respect to any other information contained or incorporated by
reference in the Proxy Statement.
(i)
Funds
. As of the date of this Agreement, Merger Sub has access to, and will at
the Effective Time have, sufficient funds available to satisfy the obligation to pay the
Merger Consideration in the Merger.
(j)
Full Access
. Parent acknowledges that it and its Representatives have received
access to such books and records, facilities, equipment, contracts and other assets of the
Company and its Subsidiaries that it and its Representatives have desired or requested to
review, and that it and its Representatives have had full opportunity to meet with the
management of the Company to discuss the businesses and assets of the Company and its
Subsidiaries. Parent acknowledges that neither the Company nor any other Person has made
any representation or warranty, expressed or implied, as to the accuracy or completeness of
any information regarding the Company furnished or made available to Parent and its
Representatives in connection with the Transactions and that neither the Company, its
Subsidiaries nor any of their respective Representatives has made any representation or
warranty regarding the Company, its Subsidiaries or their respective businesses, except as
and to the extent expressly set forth in
Section 3.01
(as modified by the
Disclosure Schedule).
(k)
No Additional Representations
. Except for the representations and warranties of
Parent and Merger Sub expressly set forth in this
Section 3.02
, neither Parent,
Merger Sub nor any other Person makes any other express or implied representation or
warranty on behalf of Parent or Merger Sub with respect to Parent, Merger Sub or any of
their respective Subsidiaries or the Transactions.
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ARTICLE IV
Covenants and Agreements to be Performed Prior to the Closing
4.01
Conduct of Business of the Company
. From the date of this Agreement until the Effective
Time or the earlier termination of this Agreement in accordance with its terms, except as otherwise
expressly required by this Agreement or as specifically permitted pursuant to (a) through (v)
below, the Company shall conduct its business and cause to be conducted the businesses of its
Subsidiaries in the Ordinary Course of Business and shall use reasonable best efforts to preserve
intact their respective business organizations, keep available the services of their respective
current officers and employees, preserve the goodwill of those having material business
relationships with the Company and its Subsidiaries, preserve their respective material
relationships with customers, creditors and suppliers, maintain their respective books, accounts
and records and comply in all material respects with applicable Laws. Without limiting the
generality of the foregoing, except as expressly required by this Agreement, as set forth on
Section 4.01
of the Disclosure Schedule or as required by applicable Law, without the prior
written consent of Parent, from the date of this Agreement until the Effective Time or the earlier
termination of this Agreement in accordance with its terms, the Company shall not, and shall cause
each of its Subsidiaries not to:
(a)
Operations
. Enter into any new material line of business or change its material
operating policies.
(b)
Capital Stock and Other Securities
. Other than with respect to Company Stock
Options or Company Restricted Shares set forth on
Section 3.01(e)(4)
of the
Disclosure Schedule, (1) issue, sell, grant or otherwise permit to become outstanding or
dispose of or encumber or pledge, or authorize or propose the creation of, any additional
shares of its capital stock or any other securities (including long-term debt) or any
Rights with respect to shares of its capital stock or any other securities, or (2) permit
any additional shares of its capital stock to become subject to new grants under the
Company Stock Plan or otherwise.
(c)
Dividends, Distributions, Repurchases
. (1) Make, declare, pay or set aside for
payment any dividend on or in respect of, or declare or make any actual, constructive or
deemed distribution on, any shares of its capital stock, other than dividends from its
wholly owned Subsidiaries to it or another of its wholly owned Subsidiaries or (2)
authorize or effect, directly or indirectly, any adjustment, split, combination, redemption
or reclassification, or purchase of or otherwise acquire, any shares of its capital stock
or any other securities exercisable or exchangeable for or convertible into shares of its
capital stock, or amend any terms of any outstanding security of the Company.
(d)
Dispositions
. Sell, transfer, mortgage, encumber, lease, license or otherwise
dispose of any of its assets, businesses or properties, including any shares of capital
stock of its Subsidiaries, except for sales, transfers, mortgages, encumbrances, leases,
licenses or other dispositions in the Ordinary Course of Business pursuant to a
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transaction that, together with any other such transactions, is not material to it and
its Subsidiaries, taken as a whole.
(e)
Acquisitions
. Other than in the Ordinary Course of Business, acquire (whether by
purchase of assets, purchase of stock, merger or otherwise) (1) all or any portion of the
assets, business, properties or shares of stock or other securities of any other Person or
(2) any equity interest of any Person or any business or division of any business, or enter
into any joint venture, partnership agreement, joint development agreement, strategic
alliance agreement or other similar agreement.
(f)
Constituent Documents
. Amend or propose to amend its Constituent Documents.
(g)
Accounting Methods
. Implement or adopt any change in its financial accounting
principles, practices or methods, other than as may be required as a result of changes
after the date of this Agreement in GAAP or regulatory accounting requirements applicable
to U.S. publicly owned business organizations generally.
(h)
Compensation; Employment Agreements; Etc
. Except as expressly required by the
terms of a Benefit Arrangement set forth on
Section 4.01(h)
of the Disclosure
Schedule: (1) enter into, amend, modify or renew any employment, consulting, change in
control or similar contract, agreement or arrangement with any director, officer or
employee; (2) increase the compensation payable or to become payable to any director,
officer or employee (excluding increases in cash compensation in the Ordinary Course of
Business); (3) increase any bonus, insurance, pension or other benefit plan, payment or
arrangement made to, for or with any such directors, officers or employees; (4) grant any
severance or termination pay to any executive officer or director, or to any other employee
(excluding payments made in connection with the termination of employees who are not
executive officers in amounts consistent with its policies and past practice or pursuant to
written agreements set forth on
Section 3.01(m)(4)
of the Disclosure Schedule); or
(5) issue or grant any Company Stock-Based Awards.
(i)
Benefit Arrangements
. Enter into, establish, adopt, amend, modify or renew any
pension, retirement, stock option, stock purchase, savings, profit sharing, deferred
compensation, bonus, group insurance or other employee benefit, incentive or welfare
contract, plan or arrangement or any trust agreement in respect of any director, officer or
employee or take any action to accelerate the vesting or exercisability of stock options
(including Company Stock Options), restricted stock units (including Company Restricted
Shares) or other compensation or benefits payable thereunder, except (1) as may be required
by applicable Law or by the terms of a Benefit Arrangement set forth on
Section
4.01(h)
of the Disclosure Schedule or (2) amendments that do not increase benefits or
result in increased administrative costs.
(j)
Indebtedness.
(1) Create, incur, endorse, assume or otherwise become liable for
or suffer to exist any indebtedness for borrowed money or guarantee any such indebtedness
other than borrowings in the Ordinary Course of Business pursuant to the
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Companys and its Subsidiaries revolving credit arrangements or under capital leases,
in each case, in effect on the date of this Agreement, (2) issue, sell or amend any debt
securities or other rights to acquire any debt securities of the Company or any of its
Subsidiaries, (3) guarantee any debt securities of others, (4) enter into any keep well
or other covenants to maintain any financial condition or enter into any arrangement having
the economic effect of the foregoing, (5) other than to wholly-owned Subsidiaries of the
Company, make any loans, advances or capital contributions to, or material investment in,
any Person, (6) pledge or otherwise encumber shares of capital stock of the Company or any
of its Subsidiaries (other than Permitted Liens), or (7) mortgage, pledge or otherwise
encumber any of its material assets (other than Permitted Liens).
(k)
Taxes.
Make or change any material Tax election, settle or compromise any
material Tax liability, change in any material respect any accounting method in respect of
Taxes, file any amendment to a material Tax Return, enter into any closing agreement,
settle any material claim or material assessment of Taxes, enter into any agreement or
waiver extending the period for assessment or collection of any material Taxes of the
Company or any of its Subsidiaries, or fail to pay or withhold, or otherwise properly
reserve for, any material Taxes of the Company or any of its Subsidiaries.
(l)
Material Contracts.
Enter into any contract, agreement or commitment (excluding
Government Contracts) of a character that would constitute a Material Contract or be
required to be disclosed in
Section 3.01(k)
of the Disclosure Schedule if such
contract, agreement or commitment had been entered into prior to the date of this
Agreement, or terminate, renew or amend in any material respect any Material Contract, in
each case, other than in the Ordinary Course of Business (it being understood that if any
such entry into, or termination, renewal or amendment of, any such contract, agreement or
commitment is permitted pursuant to this
Section 4.01(l)
as a result of the
Ordinary Course of Business exception set forth above, but such action would otherwise be
prohibited by any other provision of this
Section 4.01
, then this
Section
4.01(l)
shall not be interpreted to permit such action without the prior written
consent of Parent as contemplated hereby).
(m)
Non-Competes
. Enter into any agreement, contract or binding commitment containing
any covenant directly or indirectly limiting the freedom of the Company or any of its
Subsidiaries to engage in any line of business, compete with any Person, or sell any
product or service (including any most favored nation clauses), or which, following the
consummation of the Merger, could so limit Guarantor, Parent or any of their affiliates
(including the Surviving Corporation), including any contract clause, mitigation plan, or
other limitation with respect to Organizational Conflicts of Interest, as that term is
used in Federal Acquisition Regulation Subpart 9.5.
(n)
Government Contracts
. Enter into any Government Contract or submit any bid for a
Government Contract that (1) would reasonably be expected to result in a financial loss of
greater than $100,000, (2) involves unusual risk in performance or compliance with schedule
requirements or contains non-customary terms and conditions or (3) would, under the federal
rules covering Organizational Conflicts of Interest, as
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that term is used in Federal Acquisition Regulation Subpart 9.5, limit Parent, the
Surviving Corporation or any of their respective Subsidiaries from engaging in any line of
business, competing with any Person or selling any product or service.
(o)
Adverse Actions
. Take, or omit to take, any action that would reasonably be
expected to result in any of the conditions to the Merger set forth in
Article VI
not being satisfied in a timely manner.
(p)
Waivers; Etc
. Waive, release or assign any material rights, claims or benefits of
the Company or any of its Subsidiaries under any Material Contract, other than in the
Ordinary Course of Business.
(q)
Capital Expenditures; Demonstration Equipment.
Make any capital expenditures,
capital additions or capital improvements in amounts exceeding $5,000,000 in the aggregate,
or manufacture any demonstration equipment with a cost exceeding $2,000,000 in the
aggregate.
(r)
Reportable Transactions
. Engage in any reportable transaction, including any
listed transaction, within the meaning of Code Section 6011 or any other applicable
federal Law including any Internal Revenue Service ruling, procedure, notice or other
pronouncement.
(s)
Satisfaction of Liabilities
. Other than in the Ordinary Course of Business, pay,
discharge or satisfy any material claim, liability or obligation, or settle or compromise
any material pending or threatened suit, action or proceeding requiring payments by the
Company in excess of $250,000 in the aggregate.
(t)
Insurance
. Materially change the amount or nature of any insurance coverage,
other than in the Ordinary Course of Business.
(u)
Related-Party Transactions
. Enter into, amend, modify, terminate or engage in any
contract, agreement, commitment or transaction with any executive officer or director of
the Company, or any Person owning five percent (5%) or more of the Company Common Stock, or
any relative of any such Person directly or indirectly controlled by such Person.
(v)
Commitments
. Enter into any contract or binding commitment with respect to any of
the foregoing, or otherwise resolve or commit to do any of the foregoing.
4.02
[Reserved]
.
4.03
Additional Reports
. From the date of this Agreement to the Effective Time, the Company
will timely file with, or furnish to, the SEC all forms, statements, reports, certifications,
schedules and other documents (including all exhibits and amendments thereto) required to be filed
or furnished by it under the Exchange Act and/or the Securities Act. The Company will furnish to
Parent drafts of all such forms, statements, reports, certifications, schedules and other documents
a reasonable time prior to filing with, or furnishing to, the SEC,
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and copies of any such forms, statements, reports, certifications, schedules and other
documents that it files with, or furnishes to, the SEC on or after the date of this Agreement.
4.04
Reasonable Best Efforts; Antitrust Filings; Cooperation
.
(a)
Reasonable Best Efforts
. Subject to
Section 4.04(b)
, from the date of
this Agreement until the Effective Time or the earlier termination of this Agreement in
accordance with its terms, each of the Parties shall use its reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other Parties in doing, all things, necessary, proper or advisable to
consummate and make effective, as promptly as practicable prior to the Termination Date,
the Transactions in accordance with the terms of this Agreement and the Voting Agreement,
including: (1) the taking of all acts necessary to cause the conditions to the Merger to
each be satisfied as promptly as practicable; and (2) the obtaining of all actions or
nonactions, waivers, consents and approvals from Governmental Authorities and the making of
all registrations, notices and filings (including filings with Governmental Authorities),
in each case, that are required in connection with this Agreement and the Merger and the
taking of all steps as may be necessary to obtain an approval or waiver from, or to avoid
an action or proceeding by, any Governmental Authority.
(b)
Antitrust Filings
. In connection with and without limiting the foregoing
clause (a), the Company shall, and Parent shall cause Guarantor to, file (1) duly file with
the United States Federal Trade Commission (the
FTC
) and the Antitrust Division of the
United States Department of Justice (the
Antitrust Division
) the notification and report
form (the
HSR Filing
) required under the HSR Act and (2) duly make all notifications and
other filings required under any other applicable Antitrust Law (together with the HSR
Filing, the
Antitrust Filings
) that the Company and Parent deem advisable or appropriate
or that may be required by the applicable Antitrust Authority, in each case with respect to
the Transactions and as promptly as practicable, but in the case of the HSR Filing, no
later than five (5) Business Days following the execution and delivery of this Agreement
unless the Parties otherwise agree. The Antitrust Filings shall be prepared and made in
substantial compliance with the requirements of the HSR Act or other Antitrust Laws, as
applicable. Each Party will use its respective reasonable best efforts to obtain early
termination of the applicable waiting period, if any, under all Antitrust Laws.
Notwithstanding anything to the contrary contained in this Agreement (whether in clause (a)
or elsewhere), nothing contained in this Agreement will be deemed to require Parent or
Guarantor to enter into any agreement, consent decree or other commitment requiring Parent,
Guarantor or any of their Subsidiaries to (A) divest, hold separate or otherwise limit the
use of any assets of the Company or its Subsidiaries, or Parent, Guarantor or their
Subsidiaries, (B) litigate, pursue or defend any action or proceeding challenging any of
the Transactions as violative of any Antitrust Laws, (C) other than filing fees required by
the HSR Act, make any out of pocket expenditures of more than a de minimis amount or incur
any obligations or liabilities, in each case, in order to comply with the provisions of
this
Section 4.04
or (D) take any other action that would, or would reasonably be
expected
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to, materially and adversely affect Parent, Guarantor or any of their Subsidiaries
(including after the Effective Time, the Surviving Corporation).
(c)
Cooperation
. From the date of this Agreement until the Closing or the earlier
termination of this Agreement in accordance with its terms, each Party shall, subject to
applicable Law and except as prohibited by any applicable representative of any applicable
Governmental Authority: (1) furnish to the other Parties upon reasonable request all
information concerning itself, its Subsidiaries, directors, officers and stockholders and
such other matters as may be reasonably necessary or advisable in connection with any
filing, notice or application made by or on behalf of such other Party or any of its
Subsidiaries with or to any third party or Governmental Authority in connection with the
Transactions; (2) promptly notify the other Parties of any written communication to the
first Party from any Antitrust Authority, any State Attorney General or any other
Governmental Authority relating to this Agreement or the Transactions, and permit the other
Parties a reasonable opportunity to review in advance any proposed written communication to
any of the foregoing with respect to the Transactions; (3) not participate or agree to
participate in any substantive meeting or discussion with any Governmental Authority in
respect of any filings, investigation or inquiry concerning this Agreement or the
Transactions unless it consults with the other Parties in advance and, to the extent
permitted by such Governmental Authority, gives the other Parties the opportunity to attend
and participate thereat; and (4) furnish the other Parties with copies of all
correspondence, filings and written communications (and memoranda setting forth the
substance thereof) between such Party and its Subsidiaries and their respective
Representatives, on the one hand, and any Governmental Authority or members or their
respective staffs, on the other hand, with respect to this Agreement and the Transactions.
Each Party shall (A) respond as promptly as reasonably practicable under the circumstances
to any inquiries received from any Antitrust Authority for additional information or
documentation and to all inquiries and requests received from any State Attorney General or
other Governmental Authority in connection with antitrust matters relating to this
Agreement or the Transactions, including the Antitrust Filings, and (B) not extend any
waiting period under the HSR Act or enter into any agreement with any Antitrust Authority
not to consummate the Transactions without the prior written consent of the other Parties.
(d) Parent shall cause Merger Sub to comply with all of Merger Subs obligations under
or related to this Agreement and the Transactions.
4.05
Stockholder Approvals
.
(a) As soon as possible after the date of this Agreement, the Company, acting through
the Company Board, shall, in accordance with applicable Law (including the DGCL) and the
Companys Certificate of Incorporation and Bylaws, establish a record date for, duly call,
give notice of, convene and hold a special meeting of its stockholders for the purpose of
considering and taking action on this Agreement and the Merger, and the Company shall
submit this Agreement for adoption by the Company Stockholders at such meeting
(the
Stockholders Meeting
). At the Stockholders Meeting, Parent and Merger Sub shall
cause all Shares then owned by them and their
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respective Subsidiaries to be voted in favor of the approval and adoption of this
Agreement.
(b) Subject to
Section 4.09
, the Company shall use its reasonable best efforts
to solicit from the Company Stockholders proxies in favor of the adoption of this Agreement
and take all actions reasonably necessary or advisable to secure the Company Stockholder
Approval.
(c) The Companys obligations pursuant to this
Section 4.05
will not be
affected by the commencement, public proposal, public disclosure or communication to the
Company of any Acquisition Proposal or Superior Proposal or any withdrawal of the Company
Board Recommendation. Subject to the Company withholding, withdrawing, qualifying or
modifying its recommendation pursuant to and in accordance with
Section 4.09
, the
Company, acting through the Company Board, will make the Company Board Recommendation at
the Stockholders Meeting.
4.06
Proxy Statement
.
(a) As soon as possible after the date of this Agreement, the Company shall prepare
and file, in no event later than three (3) Business Days after the date of this Agreement,
a preliminary Proxy Statement with the SEC under the Exchange Act and shall use its
reasonable best efforts to have such preliminary Proxy Statement cleared by the SEC
promptly. The Company agrees to use its reasonable best efforts, after consultation with
Parent, to respond promptly to all comments of and requests by the SEC with respect to such
preliminary Proxy Statement and to cause a definitive Proxy Statement and all required
amendments and supplements thereto to be disseminated to the Company Stockholders entitled
to vote at the Stockholders Meeting at the earliest practicable time. The Company will
notify Parent promptly of the receipt of and will respond promptly to any (1) comments from
the SEC or its staff and (2) request by the SEC or its staff for amendments or supplements
to the Proxy Statement or for additional information and will supply Parent with copies of
all correspondence between the Company 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.
Parent and its counsel will be given a reasonable opportunity to be involved in the
drafting of and review and comment upon the Proxy Statement and any amendment or supplement
thereto and any such correspondence prior to its filing with the SEC or dissemination to
the Company Stockholders.
(b) No amendment or supplement to the Proxy Statement will be made by the Company
without the prior approval of Parent, which approval will not be unreasonably withheld,
conditioned or delayed. If at any time prior to the Stockholders Meeting, any information
relating to the Company, Parent, Merger Sub or any of their respective affiliates,
directors or officers or the Transactions should be discovered by the Company or Parent,
which such Party believes should be set forth in an amendment or supplement to the Proxy
Statement so that the Proxy Statement shall not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the
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circumstances under which they were made, not misleading, the Party that discovers
such information (or the Party whose Subsidiary discovers such information) shall promptly
notify the other Party, and an appropriate amendment, supplement or other filing, if any,
incorporated by reference into the Proxy Statement describing such information shall be
filed by the Company with the SEC upon mutual agreement of Parent and the Company and, to
the extent required by applicable Law, (1) disseminated to the Company Stockholders, and
(2) proxies in connection therewith will be resolicited, in each case, as promptly as
reasonably practicable.
(c) The Company shall cause (1) the Proxy Statement to include all information
required under applicable Law to be furnished to the Company Stockholders in connection
with the Merger and the Transactions and, subject to
Section 4.09
, to include the
Company Board Recommendation and (2) all documents filed by the Company with the SEC in
connection with the Merger to comply as to form and substance with all applicable
requirements of the Exchange Act. The information included or incorporated by reference in
the Proxy Statement will not at the time (A) the Proxy Statement (or any amendment or
supplement thereto) is filed with the SEC, (B) the Proxy Statement is disseminated to the
Company Stockholders, or (C) of the Stockholders 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 made therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to statements made in the Proxy Statement regarding
Guarantor, Parent or Merger Sub and furnished in writing by Guarantor, Parent or Merger Sub
expressly for inclusion in the Proxy Statement. It is understood and agreed that all other
information in the Proxy Statement will be deemed to have been furnished by the Company.
Parent and Merger Sub shall supply all information regarding Guarantor, Parent and Merger
Sub reasonably requested by the Company in connection with the preparation of the Proxy
Statement as promptly as practicable.
4.07
Press Releases
. The initial press releases issued by each Party announcing the Merger
and the Transactions will be in a form that is mutually acceptable to Parent and the Company.
Thereafter, Parent and Merger Sub, on the one hand, and the Company, on the other hand, will
consult with each other before issuing any press release with respect to the Transactions or this
Agreement and will not issue any such press release without the prior written consent of the other
Party, which will not be unreasonably withheld, conditioned or delayed; provided, however, that a
Party may, without the prior consent of the other Party (but after prior consultation, to the
extent practicable in the circumstances), issue any such press release as may be required by
applicable Law, securities exchange or Nasdaq rules. Parent and Merger Sub, on the one hand, and
the Company, on the other hand, will cooperate to develop all public communications and make
appropriate members of management available at presentations related to the Transactions as
reasonably requested by the other Party.
4.08
Access; Information
.
(a) From the date of this Agreement until the Effective Time or the earlier
termination of this Agreement in accordance with its terms, upon reasonable notice, the
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Company will (and will cause its Subsidiaries to) afford Parent and Parents
Representatives such access during normal business hours to the officers, employees,
agents, books, records (including Tax Returns and work papers of independent auditors) and
properties of the Company and its Subsidiaries as Parent may reasonably request; provided,
however, that such access shall not unreasonably disrupt the operations of the Company or
any of its Subsidiaries. All requests for such access shall be made to such agents of the
Company as the Company may designate, who will be solely responsible for coordinating all
such requests and all access permitted hereunder. Notwithstanding the foregoing, neither
the Company nor any of its Subsidiaries will be required to afford access to or disclose
information that would (1) jeopardize the attorney client privilege, provided that the
Company will nonetheless provide Parent and its Representatives with appropriate
information regarding the factual basis underlying any circumstances that resulted in the
preparation of such privileged analyses, (2) violate any of its contractual obligations
with respect to confidentiality if the Company will have used reasonable best efforts to
obtain the consent of such third party to such inspection or disclosure without requiring
the Company to pay any amount or waive any rights to obtain such consent or (3) violate any
Law. The Parties will make reasonable appropriate substitute arrangements in circumstances
where the previous sentence applies.
(b) Each Party will hold any information provided in connection with this Agreement or
the Transactions confidential and any such information provided by the Company, its
Subsidiaries or their respective Representatives to Parent, Merger Sub or any of their
respective Representatives, will be deemed to be Information under the Confidentiality
Agreement.
(c) The Company will provide to Parent a copy of the opinion referenced in
Section 3.01(u)
promptly after the date of this Agreement solely for information
purposes.
4.09
No Solicitation
.
(a) From the date of this Agreement until the Effective Time or the earlier
termination of this Agreement in accordance with its terms, the Company shall not, and
shall cause its Representatives and its Subsidiaries (and its Subsidiaries
Representatives) not to, directly or indirectly, (1) initiate, facilitate, solicit or
knowingly encourage inquiries or proposals that constitute, or might reasonably be expected
to lead to, any Acquisition Proposal, (2) initiate or engage with any third party in any
discussions or negotiations concerning, or furnish any information to any third party in
connection with, any Acquisition Proposal (except to notify such third party of the
existence of the provisions of this
Section 4.09
), or otherwise knowingly
facilitate other inquiries or the making of any proposal that constitutes, or that might
reasonably be expected to lead to, any Acquisition Proposal, or (3) except as permitted
pursuant to
Section 4.09(g)
below, enter into any letter of intent, agreement,
arrangement or undertaking (other than a confidentiality agreement permitted by
Section 4.09(b)
below) with respect to any Acquisition Proposal or approve or
resolve to approve any Acquisition Proposal, or enter into any agreement, arrangement or
understanding that would require the Company to abandon, terminate or fail to consummate
the Merger or
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any of the other Transactions. Without limiting the foregoing, it is agreed that any
violation of the foregoing restrictions by any Representative, whether or not such Person
is purporting to act on behalf of the Company or any of its Subsidiaries, or otherwise,
will be deemed to be a breach of this
Section 4.09
by the Company, and the Company
will cause its Representatives to comply with the terms of this
Section 4.09
.
(b) Notwithstanding the restrictions set forth in
Section 4.09(a)
, any time
prior to obtaining the Company Stockholder Approval, the Company may in response to an
unsolicited Acquisition Proposal received by the Company which did not result from a breach
of this
Section 4.09
, furnish information to, or enter into discussions or
negotiations with, any Person that has made such unsolicited Acquisition Proposal if, and
only to the extent that: (1) such Acquisition Proposal constitutes a Superior Proposal or
the Company Board, after consulting with the Companys outside legal counsel and financial
advisors, determines in good faith that such Acquisition Proposal, after furnishing such
information and entering into such discussions or negotiations, would reasonably be
expected to result in a Superior Proposal; (2) after consultation with its outside legal
counsel, the Company Board determines in good faith that the failure to take such action
would violate its fiduciary duties under applicable Law; (3) the Company and its
Subsidiaries are otherwise in compliance with this
Section 4.09
(including, at
least two (2) Business Days prior to furnishing such information to, or entering into
discussions or negotiations with, such Person, by giving Parent notice to the effect that
the Company is furnishing information to, or entering into discussions or negotiations
with, such Person); (4) prior to furnishing such information, the Company receives from
such Person an executed confidentiality agreement on customary terms similar to and no less
favorable to the Company than those contained in the Confidentiality Agreement (provided
such agreement shall allow the Company to comply with its obligations under this Agreement,
including
Section 4.09(c)
); and (5) the Company keeps Parent informed, on a
reasonably current basis, of the status of any discussions or negotiations as provided
herein.
(c) The Company shall as promptly as reasonably practicable (and in any event within
two (2) Business Days after receipt) notify Parent of the existence of any proposal,
discussion, negotiation or inquiry received by the Company that has led to, or might
reasonably be expected to lead to, any Acquisition Proposal, including a copy of (or if
oral, a written statement setting forth in reasonable detail the material terms and
conditions of) any such proposal, discussion, negotiation, inquiry or Acquisition Proposal,
and the identity of the third party from which it was received. The Company will (1) keep
Parent reasonably apprised of any material developments, discussions and negotiations with
respect to any such proposal, discussion, negotiation, inquiry or Acquisition Proposal, as
well as any material modification of or amendment thereto, (2) promptly upon receipt or
delivery thereof, provide Parent with copies of all drafts and versions of agreements
(including schedules and exhibits) relating thereto exchanged between the Company and such
third party or their respective Representatives, and (3) promptly make available to Parent
any non-public information concerning the Company or any of its Subsidiaries furnished to
any third party in connection therewith that has not previously been provided to Parent.
The Company will give Parent prompt
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notice after any determination by the Company Board that an Acquisition Proposal is,
or would reasonably be likely to result in, a Superior Proposal.
(d) The Company shall immediately cease and cause to be terminated any existing
discussions or negotiations with any Persons (other than the Transactions) conducted
heretofore with respect to any Acquisition Proposal and use its commercially reasonable
efforts to effect the prompt return or destruction of all confidential information
furnished to any Person in connection with a possible Acquisition Proposal during the
twelve (12) month period ending on the date of this Agreement.
(e) Nothing contained in this
Section 4.09
prohibits or will be construed as
prohibiting the Company or the Company Board from (1) taking and disclosing to the Company
Stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
(2) making any disclosure to the Company Stockholders if, in the good faith judgment of the
Company Board, after consultation with outside legal counsel, failure to make such
disclosure would be inconsistent with applicable Law; provided however, that a Company
Board Change of Recommendation (as defined below) shall be made only in accordance with
Section 4.09(f)
or
4.09(g)
.
(f) Except as otherwise permitted by this
Section 4.09(f)
and
Section 4.09(g)
, from the date of this Agreement until the Effective Time or the
earlier termination of this Agreement in accordance with its terms, neither the Company
Board nor any committee thereof shall (1) approve or recommend, or propose to approve or
recommend, any Acquisition Proposal, (2) cause or permit the Company to enter into any
letter of intent, agreement in principle, acquisition agreement or similar agreement with
respect to any Acquisition Proposal, or (3) withdraw, amend or modify in a manner adverse
to Parent or Merger Sub, or publicly propose to withdraw, amend or modify in a manner
adverse to Parent or Merger Sub, the Company Board Recommendation (a
Company Board Change
of Recommendation
). Notwithstanding the foregoing, at any time prior to obtaining the
Company Stockholder Approval, the Company Board may, in response to a material development
or change in circumstances occurring or arising after the date of this Agreement that was
neither known to the Company Board nor reasonably foreseeable as of or prior to the date
hereof (and not relating to any Acquisition Proposal) (such material development or change
in circumstances, an
Intervening Event
), make a Company Board Change of Recommendation if
the Company Board has concluded in good faith, after consultation with, and taking into
account the advice of, its outside legal counsel, that, in light of such Intervening Event,
the failure of the Company Board to effect such a Company Board Change of Recommendation
would result in a breach of its fiduciary duties under applicable Law; provided, however,
that the Company shall not be entitled to exercise its right to make a Company Board Change
of Recommendation pursuant to this sentence unless the Company has (A) given Parent at
least three (3) Business Days prior notice (unless the Intervening Event arises fewer than
three (3) Business Days prior to the Stockholders Meeting) advising Parent that the
Company Board intends to take such action and specifying the reasons therefor in reasonable
detail and (B) during such three (3) Business Day period, or such shorter period as may
remain prior to the Stockholders Meeting, if requested by Parent, engaged in good faith
negotiations with
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Parent to amend this Agreement in such a manner that obviates the need for a Company
Board Change of Recommendation as a result of the Intervening Event. No Company Board
Change of Recommendation will modify the previous approval of the Company Board which
caused all state takeover statutes or other state Laws, including the Takeover Laws, to be
inapplicable to the Transactions.
(g) Notwithstanding anything in this
Section 4.09
to the contrary, at any time
prior to obtaining the Company Stockholder Approval, the Company Board (or any duly
constituted committee of the Company Board) may, in response to a Superior Proposal, cause
the Company to terminate this Agreement pursuant to
Section 7.01(g)
and
concurrently with such termination enter into a definitive agreement providing for the
transactions contemplated by such Superior Proposal; provided, however, that the Company
shall not terminate this Agreement pursuant to
Section 7.01(g)
, and any purported
termination pursuant to
Section 7.01(g)
shall be void and of no force or effect,
unless, (1) the Company shall have complied with all the provisions of this
Section
4.09
, including the notification provisions in this
Section 4.09(g)
, and with
all applicable requirements of
Sections 7.01(g)
and
7.03
(including the
payment of the Termination Fee and Expense Reimbursement prior to or concurrently with such
termination) in connection with such Superior Proposal and (2) after consultation with its
outside legal counsel, the Company Board determines in good faith that the failure to take
such action would violate its fiduciary duties under applicable Law; and provided further,
however, that the Company shall not exercise its right to terminate this Agreement pursuant
to
Section 7.01(g)
: (A) until after the second Business Day following actual
receipt by Parent of notice from the Company advising Parent that the Company has received
a Superior Proposal, specifying the material terms and conditions of the Superior Proposal
and attaching the most current versions of the definitive agreement, all exhibits and other
attachments thereto and agreements (such as stockholder agreements) ancillary thereto to
effect such Superior Proposal, and identifying the Person making such Superior Proposal (a
Notice of Superior Proposal
) and stating that the Company Board intends to cause the
Company to exercise its right to terminate this Agreement pursuant to
Section
7.01(g)
(it being understood and agreed that, prior to any termination pursuant to
Section 7.01(g)
taking effect, any amendment to the price or any other material
term of a Superior Proposal (such amended Superior Proposal, a
Modified Superior
Proposal
) shall require a new Notice of Superior Proposal and a new two (2) Business Day
period with respect to such Modified Superior Proposal), during which two (2) Business Day
period the Company will and will cause its Representatives to negotiate in good faith with
Parent so that Parent may propose an adjustment to this Agreement for the purpose of
causing the Acquisition Proposal to no longer be a Superior Proposal, and (B) unless either
(i) on or before the expiration of the two (2) Business Day period following the actual
receipt by Parent of any Notice of Superior Proposal, Parent does not make such adjustments
in the terms and conditions of this Agreement so that such Acquisition Proposal ceases to
constitute a Superior Proposal (a
Matching Agreement
) in response to such Superior
Proposal or (ii) following receipt of a Matching Agreement within the two (2) Business Day
period, the Company Board (or any duly constituted committee thereof) concludes in good
faith, after consultation with the Companys outside legal counsel and after taking into
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consideration the Matching Agreement, that the Superior Proposal to which the Notice
of Superior Proposal relates continues to be a Superior Proposal.
4.10
Takeover Laws and Provisions
. Each of the Company and the Company Board will take all
actions to cause the Transactions (a) not to be subject to requirements imposed by any Takeover Law
and will take all necessary steps within its control to exempt (or ensure the continued exemption
of) the Transactions from, or if necessary challenge the validity or applicability of, any
applicable Takeover Law, as now or hereafter in effect and (b) to comply with any Takeover
Provisions and will take all necessary steps within its control to make the Transactions comply
with (or continue to comply with) any Takeover Provisions. If any Takeover Law or Takeover
Provision becomes applicable to the Transactions, each of the Company and the Company Board will,
upon the request of Parent or Merger Sub, use its best efforts to ensure that the Transactions may
be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise
to minimize the effect of such Takeover Law or Takeover Provision on the Transactions.
4.11
Control of Operations
. Notwithstanding anything to the contrary contained herein,
nothing contained in this Agreement will give to Guarantor, Parent or Merger Sub, directly or
indirectly, rights to control or direct the operations of the Company or any of its Subsidiaries
prior to the Effective Time. Prior to the Effective Time, the Company will exercise, consistent
with the terms and conditions of this Agreement, complete control and supervision of its and its
Subsidiaries operations.
4.12
Stockholder Litigation
. The Company will give Parent the opportunity to participate in
the defense or settlement of any stockholder litigation against the Company and/or its directors or
executive officers relating to the Transactions, whether commenced prior to or after the execution
and delivery of this Agreement. The Company agrees that it will not settle or offer to settle in
exchange for the payment of funds any litigation commenced prior to or after the date of this
Agreement against the Company or any of its directors or executive officers by any stockholder of
the Company relating to this Agreement, the Merger or any other Transaction (unless such payment of
funds will be made under the Companys applicable Insurance Policy), without the prior written
consent of Parent (which consent will not be unreasonably withheld, conditioned or delayed).
4.13
Notification of Certain Matters
. Each of the Company, on the one hand, and Parent and
Merger Sub, on the other hand, will give prompt notice to each other of, and will use its
reasonable best efforts to prevent or promptly remedy, (a) the occurrence or failure to occur or
the impending or threatened occurrence or failure to occur, of any event which occurrence or
failure to occur would be likely to cause any of its representations or warranties in this
Agreement to be untrue or inaccurate in any material respect at any time from the date of this
Agreement to the Effective Time and (b) any material failure on its part to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it hereunder. The
delivery of any notice pursuant to this
Section 4.13
will not limit or otherwise affect the
remedies available hereunder to the Party receiving such notice nor be deemed to have amended any
of the disclosures set forth in the Disclosure Schedule, to have qualified the representations and
warranties contained herein or to have cured any misrepresentation or breach of a representation
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or warranty that otherwise might have existed hereunder by reason of such material
development.
4.14
Voting Agreement
. The Company will take actions as may be necessary or appropriate to
give effect to and implement the transfer restrictions and other provisions set forth in the Voting
Agreement.
4.15
Release of Confidentiality and Standstill Obligations
. The Company shall not release nor
permit the release of any Person from, or waive or permit the waiver of any provision of, and the
Company shall use its reasonable efforts to enforce or cause to be enforced, any confidentiality,
standstill or similar agreement to which the Company or any of its Subsidiaries is a party,
unless the Company Board determines in good faith (after consultation with outside legal counsel)
that the failure to take such action would be a breach of its fiduciary duties to the Company
Stockholders under applicable Law; provided, however, that the Company shall give Parent at least
two (2) Business Days prior notice of such upcoming release and/or waiver and specifying the
reasons therefor in reasonable detail, including the identities of the parties to such
confidentiality, standstill or similar agreements; provided further, however, that the Company
shall not release or permit the release from, or waive or permit the waiver of, any provision of
any standstill or similar agreement the effect of which would be to permit such Person to effect a
transaction without the approval of the Company Board.
ARTICLE V
Covenants and Agreements to be Performed Following the Closing
5.01
Indemnification
.
(a) The indemnification provisions of the Constituent Documents of the Surviving
Corporation as in effect at the Effective Time will not be amended, repealed or otherwise
modified for a period of six (6) years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who immediately prior to the
Effective Time were directors, officers or employees of the Company unless such
modification shall be required by Law.
(b) Without limiting
Section 5.01(a)
, following the Effective Time, Parent and
the Surviving Corporation will indemnify and hold harmless the present and former
directors, officers and employees of the Company and its Subsidiaries (each, an
Indemnified Party
) from and against any and all costs or expenses (including reasonable
attorneys fees and costs of investigation), judgments, fines, losses, claims, damages or
liabilities incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising out of
actions or omissions before, at or after the Effective Time (including as to, or arising
out of or pertaining to, the Transactions), to the fullest extent permitted by applicable
Law. At and as of the Effective Time, Parent shall cause the Constituent Documents of the
Surviving Corporation to be amended as necessary to provide for the rights and protections
contained in the indemnification and advancement of expense provisions set forth in the
Constituent Documents of the Company in effect on the date hereof and
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with Parents obligations under this
Section 5.01
. Parent shall cause the
Surviving Corporation to advance expenses in connection with any of the foregoing as
incurred by directors and officers to the fullest extent permitted under applicable Laws;
provided that any Person to whom expenses are advanced shall have provided an undertaking
to repay such advances if it is finally determined that it is not entitled to
indemnification by a court of competent jurisdiction.
(c) Effective as of the Effective Time, Parent will cause to be purchased a directors
and officers liability tail insurance policy that serves to reimburse the present and
former officers and directors (determined as of the Effective Time) of the Company and its
Subsidiaries (as opposed to reimbursing the Company or such Subsidiaries) with respect to
claims against such directors and officers arising from facts or events occurring before,
at or after the Effective Time (including as to, or arising out of or pertaining to, the
Transactions), which insurance will contain substantially equivalent scope and amount of
coverage as provided in the directors and officers liability insurance currently provided
as of the date of this Agreement by the Company and its Subsidiaries; provided, however,
that Parent will not be obligated to pay a premium for such insurance policy in excess of
two hundred percent (200%) of the aggregate premium paid by the Company for its directors
and officers insurance coverage in effect for the year that includes the date of this
Agreement, which aggregate premium is set forth on
Section 5.01(c)
of the
Disclosure Schedule. If the aggregate premium necessary to purchase such insurance
coverage exceeds two hundred percent (200%) of the aggregate premium set forth on
Section 5.01(c)
of the Disclosure Schedule, Parent will use its reasonable best
efforts to obtain the most advantageous tail policy of directors and officers liability
insurance and fiduciary liability insurance reasonably obtainable for an aggregate premium
not exceeding two hundred percent (200%) of the aggregate premium set forth on
Section
5.01(c)
of the Disclosure Schedule, provided that Indemnified Parties may be required
to make application and provide customary representations and warranties to the insurance
carrier for the purpose of obtaining such insurance.
(d) Any Indemnified Party wishing to claim indemnification under
Section 5.01(b)
, upon learning of any claim, action, suit, proceeding or
investigation described above, will promptly notify Parent; provided, however, that failure
to so notify Parent will not affect the obligations of Parent under
Section 5.01(b)
unless and to the extent that Parent is actually and materially prejudiced thereby.
(e) If Parent or any of its successors or assigns (1) consolidates with or merges into
any other entity and is not the continuing or surviving entity of such consolidation or
merger or (2) transfers all or substantially all of its assets to any other entity, then
and in each such case, Parent will use its reasonable best efforts to cause proper
provision to be made so that the successors and assigns of Parent will expressly assume the
obligations set forth in this
Section 5.01
.
(f) The provisions of this
Section 5.01
will survive the Effective Time and
are intended to be for the benefit of, and will be enforceable by, each Indemnified Party
and his or her heirs and legal representatives.
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(g) Parent shall pay all reasonable expenses, including reasonable attorneys fees and
costs of investigation, that may be incurred by any Indemnified Party in enforcing Parents
obligations set forth in this
Section 5.01
.
5.02
Employee Matters
.
(a) From the Effective Time until the date that is twelve (12) months following the
Effective Time, Parent shall provide, or cause to be provided, the employees and former
employees of the Company and its Subsidiaries as of the Effective Time (the
Covered
Employees
) with employee benefits and compensation plans (including with respect to salary
and bonus, but not equity awards), programs and arrangements no less favorable, in the
aggregate, than those provided by the Company or its Subsidiaries, as the case may be, to
the Covered Employees immediately prior to the Effective Time.
(b) From and after the Effective Time, Parent shall: (1) provide, or cause to be
provided, all Covered Employees with service credit for purposes of eligibility to
participate, vesting and benefit accruals (other than benefit accruals under a defined
benefit plan) under any employee benefit or compensation plan, program or arrangement
adopted, maintained or contributed to by Parent or any of its Subsidiaries in which Covered
Employees are eligible to participate, for all periods of employment with the Company or
any of its Subsidiaries (or their predecessor entities) prior to the Effective Time to the
extent credited by the Company for purposes of a comparable plan (provided that there will
be no duplication of benefits); and (2) with respect to any self-insured welfare benefit
plans of Parent or any of its Subsidiaries, cause, and with respect to all other welfare
benefit plans, use reasonable best efforts to cause, any pre-existing conditions
limitations, eligibility waiting periods or required physical examinations to be waived
with respect to the Covered Employees and their eligible dependents to the extent waived
under the corresponding plan (for a comparable level of coverage) in which the applicable
Covered Employee participated immediately prior to the Effective Time. If the Companys or
any of its Subsidiaries medical, vision and/or dental benefit plans for Covered Employees
are terminated prior to the end of a plan year, Covered Employees and their dependents who
are then participating in a deductible-based medical, vision and/or dental benefit plan
sponsored by the Company or any of its Subsidiaries will be given credit for deductibles,
co-payments and eligible out-of-pocket expenses incurred toward deductibles, co-payments
and out-of-pocket maximums during the portion of the plan year preceding the termination
date (or transfer date) in a comparable deductible-based medical, vision and/or dental
benefit plan of Parent or any of its Subsidiaries for the corresponding Parent benefit plan
year.
(c) Parent and the Surviving Corporation shall honor, or cause to be honored, in
accordance with their respective terms, all vested or accrued benefit obligations to, and
contractual rights of, Covered Employees, including any benefits or rights arising as a
result of the Transactions (either alone or in combination with any other event), in each
case, as set forth on
Section 5.02(c)
of the Disclosure Schedule.
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(d) No provision in this
Section 5.02
will (1) create or be deemed to create
any third-party beneficiary or other rights in any employee or former employee (including
any beneficiary or dependent thereof) of the Company, its Subsidiaries or any other Person
other than the Parties and their respective successors and permitted assigns,
(2) constitute or create or be deemed to constitute or create an employment agreement,
(3) constitute or be deemed to constitute an amendment to any employee benefit plan
sponsored or maintained by Guarantor, Parent, the Company or any of their respective
Subsidiaries, or (4) limit the Surviving Corporations discretion and authority to
interpret the respective employee benefit and compensation plans, agreements, arrangements,
and programs, in accordance with their terms and applicable Law.
(e) Provided that Parent complies with its obligations pursuant to
Sections 5.02(a)
and
5.02(b)
, no provision in this
Section 5.02
will (1) prohibit Parent from adding, deleting or changing providers of benefits, changing,
increasing or decreasing co-payments, deductibles or other requirements for coverage or
benefits (e.g., utilization review or pre-certification requirements), and/or making other
changes in the administration or in the design, coverage and benefits provided to such
Covered Employees, or (2) limit the right of the Surviving Corporation to amend or
terminate any plan.
ARTICLE VI
Conditions to the Merger
6.01
Conditions to Each Partys Obligation to Effect the Merger
. The respective obligation of
each Party to consummate the Merger and the other Transactions is subject to the fulfillment or
written waiver by the Parties (to the extent permitted by applicable Law) before the Effective Time
of each of the following conditions:
(a)
Stockholder Approval
. The Company will have obtained the Company Stockholder
Approval;
(b)
No Order
. No Governmental Authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Order (whether temporary, preliminary or
permanent) that is then in effect and has the effect of making consummation of the Merger
illegal or otherwise preventing or prohibiting consummation of the Merger and no Law shall
have been adopted that makes consummation of the Merger illegal or otherwise prevented or
prohibited; and
(c)
HSR Act
. Any applicable waiting period under the HSR Act shall have expired or
been terminated.
6.02
Conditions to the Obligation of the Company
. The obligation of the Company to consummate
the Merger and the other Transactions is subject to the fulfillment or written waiver by the
Company (to the extent permitted by applicable Law) before the Effective Time of each of the
following conditions:
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(a)
Representations and Warranties
. Each of the representations and warranties of
Parent and Merger Sub set forth in this Agreement (which for purposes of this subsection
will be read as though none of them contained any Material Adverse Effect or materiality
qualification) will be true and correct in all respects at and as of the Closing Date as
though made at and as of the Closing Date (except to the extent expressly made as of an
earlier date, in which case solely as of such date), in each instance, except as has not
had, and would not reasonably be expected to have, a Material Adverse Effect with respect
to Parent and Merger Sub;
(b)
Performance of Obligations
. Each of Parent and Merger Sub will have performed or
complied in all material respects with all of its agreements, obligations and covenants
under this Agreement; and
(c)
Closing Certificate
. Parent will have delivered to the Company a certificate,
dated as of the Closing Date and signed by an executive officer of Parent, certifying in
his or her capacity as an executive officer of Parent and not in his or her capacity as an
individual the satisfaction of the conditions set forth in
Sections 6.02(a)
and
6.02(b)
.
6.03
Conditions to the Obligation of Parent and Merger Sub
. The obligation of Parent and
Merger Sub to consummate the Merger and the other Transactions is subject to the fulfillment or
written waiver by Parent or Merger Sub (to the extent permitted by applicable Law) before the
Effective Time of each of the following conditions:
(a)
Representations and Warranties
. (1) Each of the representations and warranties of
the Company contained in
Section 3.01(e)(1)
through
(3)
and
(5)
shall be true and correct other than in de minimis respects as of the date of this
Agreement and as of the Closing Date, as if made as of such date (except to the extent
expressly made as of an earlier date, in which case solely as of such date), (2) each of
the representations and warranties of the Company contained in
Sections 3.01(a)
,
3.01(b)
,
3.01(c)
,
3.01(e)(4)
,
3.01(f)
,
3.01(g)(1)
,
3.01(g)(2)
and
3.01(s)
that is qualified as to materiality or Material
Adverse Effect shall be true and correct in all respects, or any such representation or
warranty that is not so qualified shall be true and correct in all material respects, in
each case as of the date of this Agreement and as of the Closing Date, as if made as of
such date (except to the extent expressly made as of an earlier date, in which case solely
as of such date) and (3) each of the other representations and warranties of the Company
set forth in this Agreement (without regard to materiality or Material Adverse Effect)
shall be true and correct in all respects, in each case, at and as of the date of this
Agreement and as of the Closing Date, as if made as of such date (except to the extent
expressly made as of an earlier date, in which case solely as of such date), except where
the failure to be so true and correct has not had, and would not reasonably be expected to
have, a Material Adverse Effect with respect to the Company;
(b)
Performance of Obligations
. The Company will have performed or complied with in
all material respects all of its agreements, obligations and covenants under this
Agreement;
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(c)
No Material Adverse Effect
. Since the date of this Agreement, there will not have
been any event, change, circumstance, condition, development or effect that has had, or
would reasonably be expected to have, a Material Adverse Effect with respect to the
Company;
(d)
Dissenting Shares
. Dissenting Shares will constitute no more than twelve percent
(12%) of the outstanding Shares; and
(e)
Closing Certificate
. The Company will have delivered to Parent a certificate,
dated as of the Closing Date and signed by an executive officer of the Company, certifying
in his or her capacity as an executive officer and not in his or her individual capacity
the satisfaction of the conditions set forth in
Sections 6.03(a)
and
6.03(b)
.
ARTICLE VII
Termination
7.01
Termination.
This Agreement may be terminated at any time prior to the Effective Time
and the Transactions may be abandoned (whether before or, subject to the terms hereof, after the
Company Stockholder Approval has been obtained) for any reason provided in paragraphs (a) through
(j) below.
(a) By mutual written consent of each of Parent and the Company.
(b) By either Parent or the Company if any Governmental Authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any Order
(whether temporary, preliminary or permanent) that has become final and nonappealable and
has the effect of making consummation of the Merger illegal or otherwise preventing or
prohibiting consummation of the Merger; provided, however, that the provisions of this
Section 7.01(b)
shall not be available to any Party if such Partys material breach
of this Agreement has been a principal cause of such Order.
(c) By either Parent or the Company if any Law shall have been adopted, enacted or
promulgated that makes consummation of the Merger illegal or otherwise prohibited.
(d) By Parent if there shall have been a breach of any of the covenants or agreements
set forth in this Agreement on the part of the Company (other than
Section 4.09
),
or any representation or warranty of the Company set forth in this Agreement shall have
become untrue or inaccurate, in each case, such that (1) the conditions set forth in
Section 6.03(a)
or
6.03(b)
would not be satisfied and (2) such breach,
untruth or inaccuracy shall not have been cured or is incapable of being cured within
fifteen (15) days after Parent shall have given the Company notice thereof.
(e) By either Parent or the Company if the adoption of this Agreement by the Company
Stockholders shall not have been obtained at the Stockholders Meeting or at any
adjournment or postponement of the Stockholders Meeting.
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(f) By Parent or the Company if the Merger shall not have been consummated on or
before November 30, 2009 (the
Termination Date
); provided, however, that the right to
terminate this Agreement under this
Section 7.01(f)
shall not be available to any
Party to the extent that such Partys failure to comply in all respects with any provision
of this Agreement has resulted in the failure of a condition to the consummation of the
Merger prior to the Termination Date.
(g) By the Company, at any time prior to obtaining the Company Stockholder Approval,
to enter into a definitive agreement with respect to a Superior Proposal in accordance with
Section 4.09
; provided that prior thereto and as a condition precedent thereof, the
Company pays the Termination Fee and Expense Reimbursement in accordance with
Section
7.03
.
(h) By Parent if: (1) a Company Board Change of Recommendation shall have occurred or
the Company shall have failed to include the Company Board Recommendation in the Proxy
Statement disseminated to the Company Stockholders; (2) the Company Board fails to
reconfirm the Company Board Recommendation within five (5) Business Days after receipt of a
request by Parent, provided that any such request may be made only after notice of any of
the following events (as any of the following events may occur from time to time): (A)
receipt by the Company of an Acquisition Proposal, (B) any material change to an
Acquisition Proposal and (C) a public announcement of any transaction to acquire a material
portion of the Company Common Stock by a Person other than Merger Sub, Parent or any of
their affiliates; (3) the Company Board shall have resolved to do either of the foregoing;
or (4) the Company violates or breaches in any material respect any of its obligations
under
Section 4.09
.
(i) By the Company if there shall have been a breach of any of the covenants or
agreements set forth in this Agreement on the part of Merger Sub or Parent, or any
representation or warranty of Parent or Merger Sub set forth in this Agreement shall have
become untrue or inaccurate, in each case, such that (1) the conditions set forth in
Section 6.02(a)
or
Section 6.02(b)
would not be satisfied and (2) such
breach, untruth or inaccuracy shall not have been cured or is incapable of being cured
within fifteen (15) days after the Company shall have given Parent notice thereof.
(j) By Parent, if for five (5) or more days, the Dissenting Shares constitute more
than twelve percent (12%) of the outstanding Shares.
7.02
Effect of Termination
. In the event of the termination of this Agreement pursuant to
Section 7.01
, this Agreement will forthwith become void and there will be no liability on
the part of any Party or any of its affiliates, directors, officers or stockholders except that
(a) the Company may have liability or obligations as set forth in
Section 7.03
, (b) nothing
herein relieves the Company, on the one hand, or Parent and Merger Sub, on the other hand, from
liability for fraud or any willful or intentional breach hereof or willful or intentional
misrepresentation herein, and (c) the provisions contained in
Article I
(Definitions;
Interpretation),
Section 4.07
(Press Releases), this
Section 7.02
(Effect of
Termination),
Section 7.03
(Termination Fee),
Article VIII
(Miscellaneous) (as
applicable) and the provisions
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of the Confidentiality Agreement will each survive any such termination. For purposes of this
Agreement, willful or intentional breach will include a breach that is a consequence of an act
undertaken by a breaching party with the knowledge that the taking of such act would, or would
reasonably be expected to, cause a breach of this Agreement.
7.03
Termination Fee
.
(a) If (1) the Company terminates this Agreement pursuant to
Section 7.01(g)
or (2) Parent terminates this Agreement pursuant to
Section 7.01(h)
, then the
Company shall (A) pay to Parent $23,600,000 in cash (the
Termination Fee
) and
(B) reimburse up to an aggregate of $2,000,000 for Parents and Guarantors documented
out-of-pocket expenses in connection with the Transactions (the
Expense Reimbursement
).
(b) If Parent terminates this Agreement pursuant to
Section 7.01(d)
, then (1)
the Company will pay to Parent the Expense Reimbursement and (2) if (A) prior to such
termination there exists an Acquisition Proposal (whether or not such offer or proposal has
been rejected or has been withdrawn prior to the time of such termination) and (B) within
twelve (12) months after such termination, the Company or any of its Subsidiaries accepts a
written offer for, or otherwise enters into an agreement to consummate or consummates, an
Acquisition Proposal, then upon the signing of a definitive agreement relating to such
Acquisition Proposal, or, if no such agreement is signed, then upon consummation of any
such Acquisition Proposal, the Company will pay to Parent the Termination Fee.
(c) If this Agreement is terminated pursuant to
Section 7.01(f)
or
Section 7.01(j)
, then if (1) prior to such termination there exists an Acquisition
Proposal (whether or not such offer or proposal has been rejected or has been withdrawn
prior to the time of such termination) and (2) within twelve (12) months after such
termination, the Company or any of its Subsidiaries accepts a written offer for, or
otherwise enters into an agreement to consummate or consummates, an Acquisition Proposal,
then upon the signing of a definitive agreement relating to such Acquisition Proposal, or,
if no such agreement is signed, then upon consummation of any such Acquisition Proposal,
the Company will pay to Parent the Expense Reimbursement and the Termination Fee.
(d) In the event that Parent terminates this Agreement pursuant to
Section 7.01(e)
, then the Company will pay to Parent the Expense Reimbursement.
(e) The Company will make any payments required by this
Section 7.03
by wire
transfer of immediately available funds to an account designated by Parent. Assuming
reasonable documentation has been provided therefor, all Expense Reimbursements payable
pursuant to
Sections 7.03(a)
,
(b)
or
(d)
will be paid concurrently
with the termination of this Agreement, and any Expense Reimbursement payable pursuant to
Section 7.03(c)
will be payable concurrently with the payment of any Termination
Fee payable pursuant to such
Section 7.03(c)
, as set forth in the next sentence.
All Termination Fees will be paid (1) no later than two (2) Business Days after the date of
such termination if terminated by Parent pursuant to
Section 7.01(h)
, (2)
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prior to or concurrently with such termination if terminated by the Company pursuant
to
Section 7.01(g)
, and (3) the earlier of the date of the Companys entry into an
agreement providing for, or consummating, an Acquisition Proposal if terminated pursuant to
Section 7.01(d)
,
Section 7.01(f)
or
Section 7.01(j)
.
(f) The Parties acknowledge that (1) the provisions of this
Section 7.03
are
an integral part of the Transactions, (2) the amount of, and basis for payment of, the
Termination Fee and Expense Reimbursement are reasonable and appropriate in all respects,
and (3) without those provisions, the Parties would not enter into this Agreement.
Accordingly, if the Company fails to pay in a timely manner the Termination Fee and/or the
Expense Reimbursement, and in order to obtain such payment, Parent or Merger Sub makes a
claim that results in a judgment for the amounts set forth in this
Section 7.03
,
the Company will pay to Parent and the Merger Sub their reasonable costs and expenses
(including reasonable attorneys fees and expenses) in connection with such suit, together
with interest on the amount set forth in this
Section 7.03
at the rate announced by
Bank of America, N.A. as its prime rate in effect on the date such payment was required to
be made hereunder. Payment of the amounts described in this
Section 7.03
will not
be in lieu of damages incurred in the event of breach of this Agreement.
ARTICLE VIII
Miscellaneous
8.01
Survival
. None of the representations or warranties contained in this Agreement will
survive the Effective Time. This
Section 8.01
will not limit any covenant or agreement of
the Parties which by its terms contemplates performance after the Effective Time and this
Article VIII
will survive the Effective Time.
8.02
Waiver; Amendment; Extension of Time
. At any time prior to the Effective Time, whether
before or after obtaining the Company Stockholder Approval, any provision of this Agreement may be
(a) waived by the Party benefited by the provision, but only in writing (provided that no such
waiver will be applicable except in the specific instance for which it is given), or (b) amended or
modified at any time, but only by a written agreement executed in the same manner as this
Agreement, except to the extent that any such amendment would violate applicable Law; provided that
after receipt of the Company Stockholder Approval, no amendment shall be made or given that
requires further approval of the Company Stockholders under the DGCL unless the required approval
is obtained. Except as set forth elsewhere in this Agreement, at any time prior to the Effective
Time, the Parties may extend the time for performance of any of the covenants, agreements or
conditions of the other Parties to this Agreement, but only in a written agreement executed and
delivered by or on behalf of the Party against which it is sought to be enforced. Neither the
failure nor any delay by any Party in exercising any right, power or privilege under this Agreement
will operate as a waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise of such right, power
or privilege or the exercise of any other right, power or privilege.
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8.03
Counterparts; Electronic Transmission.
This Agreement may be executed in one or more
counterparts (whether by facsimile, electronic transmission or otherwise), each of which will be
deemed to constitute an original, and transmission of a duly executed counterpart hereof by
electronic means will be deemed to constitute delivery of an executed original manual counterpart
hereof.
8.04
Governing Law; Jurisdiction; Venue; Service of Process; Waiver of Jury Trial
. This
Agreement and the agreements, instruments and documents contemplated hereby and all disputes
between the Parties under or relating to this Agreement or the facts and circumstances leading to
its execution and delivery, whether in contract, tort or otherwise, will be governed by and
construed in accordance with the Laws of the State of Delaware, without giving effect to conflicts
of laws principles that would result in the application of the Law of any other State. The
Delaware Court of Chancery sitting in Wilmington, Delaware (and if the Delaware Court of Chancery
shall be unavailable, any Delaware state court and the Federal court of the United States of
America sitting in the State of Delaware) will have exclusive jurisdiction over any and all
disputes among the Parties, whether at law or in equity, based upon, arising out of or relating to
this Agreement and the agreements, instruments and documents contemplated hereby or the facts and
circumstances leading to its execution and delivery, whether in contract, tort or otherwise. Each
of the Parties irrevocably consents to and agrees to submit to the exclusive jurisdiction of such
courts, agrees that process may be served upon them in any manner authorized by the Laws of the
State of Delaware, and hereby waives, and agrees not to assert in any such dispute, to the fullest
extent permitted by applicable Law, any claim that (a) such Party is not personally subject to the
jurisdiction of such courts, (b) such Party and such Partys property is immune from any legal
process issued by such courts or (c) any litigation commenced in such courts is brought in an
inconvenient forum. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUTSIDE THE TERRITORIAL JURISDICTION OF THE COURTS REFERRED TO IN THIS
SECTION 8.04
IN ANY
ACTION OR PROCEEDING UNDER OR RELATING TO THIS AGREEMENT OR THE FACTS AND CIRCUMSTANCES LEADING TO
ITS EXECUTION AND DELIVERY BY MAILING COPIES THEREOF BY REGISTERED UNITED STATES MAIL, POSTAGE
PREPAID, RETURN RECEIPT REQUESTED, TO ITS ADDRESS AS SPECIFIED IN OR PURSUANT TO
SECTION
8.07
. HOWEVER, THE FOREGOING SHALL NOT LIMIT THE RIGHT OF A PARTY TO EFFECT SERVICE OF PROCESS
ON ANY OTHER PARTY BY ANY OTHER LEGALLY AVAILABLE METHOD. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS (AS DEFINED HEREIN). For purposes of this
Section 8.04
only, the term Party shall include Guarantor.
8.05
Specific Performance
. The Parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. Each Party agrees that, in the event of any breach or threatened
breach by any other Party of any covenant or obligation contained in this Agreement, the
non-breaching Party shall be entitled (in addition to any other remedy that may be available to it
whether in law or equity, including monetary damages) to seek and obtain (a) a decree or order of
specific performance to enforce the observance and performance of such covenant or obligation and
(b) an injunction restraining such breach or threatened breach. Each Party further
A-65
agrees that no other Party or any other Person shall be required to obtain, furnish or post
any bond or similar instrument in connection with or as a condition to obtaining any remedy
referred to in this
Section 8.05
, and each Party irrevocably waives any right it may have
to require the obtaining, furnishing or posting of any such bond or similar instrument.
8.06
Disclosure Schedule
. Before entry into this Agreement, the Company delivered to Parent
and Merger Sub a schedule (the
Disclosure Schedule
) setting forth, among other things, items the
disclosure of which is necessary or appropriate either (a) in response to an express disclosure
requirement contained in a provision hereof or (b) as an exception to one or more representations
or warranties contained in
Section 3.01
or to one or more of the Companys covenants
contained in
Article IV
. The Disclosure Schedule constitutes an integral part of this
Agreement and is attached hereto as
Schedule A
and is hereby incorporated herein. There
may be included in the Disclosure Schedule and elsewhere in this Agreement items and information
that are not material, and such inclusion will not be deemed to be an acknowledgment or agreement
that any such item or information (or any non-disclosed item or information of comparable or
greater significance) is material and will not be used as a basis for interpreting the terms
material, materially, materiality or any word or phrase of similar import used herein.
Matters reflected in the Disclosure Schedule are not necessarily limited to matters required by
this Agreement to be disclosed in the Disclosure Schedule. No disclosure in the Disclosure
Schedule relating to a possible breach or violation of any contract or Law will be construed as an
admission or indication that such breach or violation exists or has occurred. Any disclosures in
the Disclosure Schedule that refer to a document are qualified in their entirety by reference to
the text of such document, including all amendments, exhibits, schedules and other attachments
thereto. Any capitalized term used in the Disclosure Schedule and not otherwise defined therein
has the meaning given to such term in this Agreement. Any headings set forth in the Disclosure
Schedule are for convenience of reference only and do not affect the meaning or interpretation of
any of the disclosures set forth in the Disclosure Schedule.
8.07
Notices
. All notices, requests and other communications given or made under this
Agreement must be in writing and will be deemed given when personally delivered, transmitted by
facsimile (with confirmation of successful transmission) or mailed by registered or certified mail
(return receipt requested) to the persons, addresses and/or facsimile numbers set forth below or
such other place as such Party may specify by notice given in accordance with this
Section 8.07
.
If to the Company, to:
Axsys Technologies, Inc.
175 Capital Boulevard, Suite 103
Rocky Hill, CT 06067
Attention: Scott Conner
Facsimile: (860) 257-0200
A-66
with a copy to:
Jones Day
901 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Christopher J. Hewitt
Facsimile: (216) 579-0212
If to Parent or Merger Sub, to:
General Dynamics Advanced Information Systems, Inc.
2941 Fairview Park Drive
Suite 100
Falls Church, VA 22042-4513
Attention: David A. Savner
Facsimile: (703) 876-3554
with a copy to:
Jenner & Block LLP
330 North Wabash Avenue
Chicago, IL 60611-7603
Attention: Thaddeus J. Malik
Facsimile: (312) 840-7313
8.08
Entire Understanding; No Third Party Beneficiaries
. This Agreement represents the entire
understanding of the Parties regarding the Transactions and supersedes any and all other oral or
written agreements and understandings previously made or purported to be made with respect thereto,
other than the Confidentiality Agreement and the Voting Agreement. Other than those set forth in
the Voting Agreement, no representation, warranty, inducement, promise, understanding or condition
not set forth in this Agreement has been made or relied on by any Party in entering into this
Agreement. Except for (i) the enforcement by the Indemnified Parties after the Effective Time of
Section 5.01
, and (ii) Guarantor to the extent it is required to perform its obligations as
set forth in
Section 8.13
, nothing expressed or implied in this Agreement is intended to
confer any rights, remedies, obligations or liabilities upon any Person other than the Parties.
8.09
Severability
. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity or enforceability of
the other provisions hereof. If any provision of this Agreement or the application thereof to any
Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid or unenforceable, will remain
in full force and effect and will in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the Transactions is not affected in any manner materially
adverse to any Party. Upon any such determination, the Parties will negotiate in good faith in an
A-67
effort to agree upon a suitable and equitable substitute provision to effect the original
intent of the Parties.
8.10
Assignment; Successors
. No Party nor Guarantor may assign either this Agreement or any
of its rights or interests, or delegate any of its duties, hereunder, in whole or in part, without
the prior written consent of the other Parties; provided that Merger Sub may assign any of its
rights, interests and obligations hereunder, in whole or from time to time in part, to any direct
or indirect Subsidiary of Guarantor without the consent of any other party, but no such assignment
shall relieve Parent of its obligations hereunder. Any attempt to make any assignment in violation
of this
Section 8.10
will be null and void. Subject to the preceding sentences of this
Section 8.10
, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the Parties and Guarantor and their respective successors and permitted assigns.
8.11
Expenses.
Except as otherwise specifically provided herein, all costs and expenses
incurred in connection with this Agreement and the Transactions will be paid by the Party incurring
such expenses, whether or not the Merger is consummated.
8.12
Disclaimer
. The representations and warranties in this Agreement are the product of
negotiations among the Parties and are for the sole benefit of the Parties. Any inaccuracies in
such representations and warranties are subject to waiver by the Parties in accordance with
Section 8.02
without notice or liability to any other Person. In some instances, the
representations and warranties in this Agreement may represent an allocation among the Parties of
risks associated with particular matters regardless of the knowledge of any of the Parties.
Consequently, Persons other than the Parties may not rely upon the representations and warranties
in this Agreement as characterizations of actual facts or circumstances as of the date of this
Agreement or as of any other date.
8.13
Guaranty.
Guarantor hereby irrevocably guarantees each and every obligation of Parent
and Merger Sub under this Agreement. This is a guarantee of payment and performance, and not of
collection, and Guarantor acknowledges and agrees that this guarantee is full and unconditional,
and no release or extinguishment of Parents or Merger Subs obligations (other than in accordance
with the terms hereof), whether by decree in any bankruptcy proceeding or otherwise, shall affect
the continuing validity or enforceability of this guarantee or any provision requiring or
contemplating performance by Guarantor. Guarantor hereby waives, for the benefit of the Company,
(i) any right to require the Company to, as a condition of payment or performance by Guarantor,
proceed against Parent or Merger Sub or pursue any other remedy whatsoever and (ii) to the fullest
extent permitted by Law, any defense or benefits that may be derived from or afforded by applicable
Law that limit the liability of or exonerate guarantors or sureties. Guarantor understands that
the Company is relying on this guarantee in entering into this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly
authorized officers as of the day and year first above written.
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GENERAL DYNAMICS ADVANCED INFORMATION SYSTEMS, INC.
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By:
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/s/ David A. Savner
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Name:
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David A. Savner
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Title:
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Vice President
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VISION MERGER SUB, INC.
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By:
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/s/ David A. Savner
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Name:
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David A. Savner
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Title:
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Vice President
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AXSYS TECHNOLOGIES, INC.
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By:
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/s/ Stephen W. Bershad
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Name:
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Stephen W. Bershad
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Title:
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Chief Executive
Officer
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AS GUARANTOR SOLELY FOR THE PURPOSES OF
SECTION 8.13
:
GENERAL DYNAMICS CORPORATION
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By:
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/s/ David A. Savner
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Name:
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David A. Savner
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Title:
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Senior Vice President
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A-69
ANNEX B
Execution
Version
VOTING AGREEMENT
by and among
STEPHEN W. BERSHAD,
SWB HOLDING CORPORATION,
GENERAL DYNAMICS ADVANCED INFORMATION SYSTEMS, INC.
and
VISION MERGER SUB, INC.
dated as of
June 4, 2009
B-1
TABLE OF CONTENTS
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Page
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ARTICLE 1
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1.01 Certain Definitions
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B-3
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1.02 Representations and Warranties of the Stockholders
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B-3
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1.03 Representations and Warranties of Parent and Merger Sub
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B-5
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ARTICLE 2
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2.01 Transfer of the Shares
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B-5
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2.02 Adjustments
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B-6
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ARTICLE 3
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3.01 Voting Agreement
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B-6
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3.02 Proxy
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B-7
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3.03 Dissenting Shares
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B-8
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3.04 Succession to Shares
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B-8
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3.05 No Solicitation
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B-8
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3.06 Disclosure
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B-8
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ARTICLE 4
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4.01 Termination
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B-9
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4.02 Expenses
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B-9
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4.03 Further Assurances
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B-9
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4.04 Press Releases
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B-9
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4.05 Specific Performance
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B-9
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4.06 Miscellaneous
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B-9
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B-2
VOTING AGREEMENT
This VOTING AGREEMENT, dated as of June 4, 2009 (this
Agreement
), is by and among General
Dynamics Advanced Information Systems, Inc., a Delaware corporation (
Parent
), Vision Merger Sub,
Inc., a Delaware corporation (
Merger Sub
), and the undersigned stockholders (each a
Stockholder
and collectively, the
Stockholders
) of Axsys Technologies, Inc., a Delaware corporation (the
"
Company
).
WHEREAS, Parent, Merger Sub and the Company have entered into an Agreement and Plan of Merger,
dated as of the date hereof (as amended from time to time, the
Merger Agreement
), which provides,
among other things, that, upon the terms and subject to the conditions therein, Merger Sub will
merge with and into the Company (the
Merger
), and as a result of the Merger, the Company will
become an indirect, wholly-owned subsidiary of Guarantor; and
WHEREAS, each Stockholder acknowledges that, as a condition to the willingness of Parent and
Merger Sub to enter into the Merger Agreement (and for Guarantor to perform its obligations
thereunder), Guarantor, Parent and Merger Sub have requested that each Stockholder agree, and in
order to induce Guarantor, Parent and Merger Sub to enter into the Merger Agreement, each
Stockholder has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the representations,
warranties, covenants and agreements set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and
conditions set forth herein, the parties hereto hereby agree as follows:
ARTICLE 1
1.01
Certain Definitions
. Capitalized terms used but not otherwise defined herein
have the meanings ascribed to such terms in the Merger Agreement.
1.02
Representations and Warranties of the Stockholders
. Each Stockholder represents
and warrants to Parent and Merger Sub as follows:
(a) The Stockholder (i) is the sole record or beneficial owner, except for the Shares held of
record by HoldCo (as defined below), which are also beneficially owned by Bershad (as defined
below) (the term beneficial owner shall be as defined in Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the
Exchange Act
), which meaning will apply to all uses of the term
beneficial owner (or any variation thereof) contained in this Agreement), of, and has good title
to, the shares of Company Common Stock identified as being held by such Stockholder on
Annex A
hereto (all such shares of Company Common Stock, including any restricted shares of
Company Common Stock owned by such Stockholder, being hereinafter referred to as the
Shares
of
such Stockholder), free and clear of any Liens or voting agreements and commitments of every kind
(including any restriction on the right to vote, sell or otherwise dispose of its Shares), except
as set forth in this Agreement and (ii) holds stock options identified as being held by such
Stockholder (the
Options
) to acquire the number of shares of Company Common Stock as set forth on
Annex A
hereto.
B-3
(b) Other than its Options (if applicable), its Shares constitute all of the securities (as
defined in Section 3(10) of the Exchange Act, which definition will apply to all uses of the term
securities contained in this Agreement) of the Company owned beneficially or otherwise, directly
or indirectly, by the Stockholder (excluding (i) any securities beneficially owned by any of its
affiliates or associates (as such terms are defined in Rule 12b-2 under the Exchange Act, which
definitions will apply to all uses of the terms affiliates and associates, respectively,
contained in this Agreement) as to which it does not have voting or investment power and (ii) the
Shares and Options (if applicable) owned by the other Stockholder).
(c) Except for its Shares, its Options (if applicable) and the Shares and Options (if
applicable) owned by the other Stockholder, the Stockholder does not, directly or indirectly,
beneficially own or have any option, warrant, or other Rights to acquire any securities of the
Company that are or may by their terms become entitled to vote or any securities that are
convertible or exchangeable into or exercisable for any securities of the Company that are or may
by their terms become entitled to vote, nor is the Stockholder subject to any contract, commitment,
arrangement, understanding or relationship (whether or not legally enforceable), other than this
Agreement, that obligates it to vote or acquire any securities of the Company. The Stockholder
holds sole and exclusive power to vote the Shares and has not granted any proxy to any other Person
to vote the Shares, subject to the limitations set forth in this Agreement.
(d) (i) Stephen W. Bershad (
Bershad
) owns, directly or indirectly, all the outstanding
capital stock and equity of SWB Holding Corporation, a Delaware corporation (
HoldCo
); (ii) no
capital stock or equity of HoldCo is or may become required to be issued (other than to Bershad) by
reason of any security or otherwise; (iii) there are no contracts, commitments, understandings or
arrangements by which HoldCo is bound to sell or otherwise transfer any capital stock or equity of
HoldCo (other than to Bershad); (iv) there are no contracts, commitments, understandings or
arrangements relating to Bershads right to vote or to dispose of the capital stock or equity of
HoldCo; (v) all the capital stock and equity interests of HoldCo (A) have been duly authorized and
are validly issued and outstanding, fully paid and nonassessable and not subject to or issued in
violation of any preemptive right, purchase option, call option, right of first refusal,
subscription right or any similar right under any provision of the DGCL, HoldCos Constituent
Documents or any contract or commitment to which HoldCo is a party or otherwise bound, and (B) were
issued in material compliance with all applicable Laws, including federal and state securities
laws; (vi) Bershad is the sole director and officer of HoldCo; and (vii) Bershad exclusively
controls HoldCo.
(e) The Stockholder has the legal capacity or power and authority, as the case may be, to
execute, deliver and perform its obligations under, and has duly executed and delivered, this
Agreement. This Agreement is the Stockholders valid and legally binding obligation, enforceable
against the Stockholder in accordance with its terms (except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar Laws
of general applicability relating to or affecting creditors rights or by general equity
principles). If the Stockholder is married and the Shares constitute community property, then this
Agreement (including the granting of the irrevocable proxy as provided for in
Section 3.02
)
has been duly authorized, executed and delivered by, and
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constitutes a valid and binding agreement of, such Stockholders spouse, enforceable against
such person in accordance with its terms.
(f) No consents, authorizations or approvals of, or filings or registrations with, or
notifications to, any Governmental Authority or with any third party are required to be made or
obtained by the Stockholder in connection with the execution, delivery or performance by the
Stockholder of this Agreement or the transactions contemplated hereby.
(g) The execution, delivery and performance of this Agreement by the Stockholder does not and
will not constitute (i) a violation of any Law to which the Stockholder or any of the Stockholders
properties (including the Shares) is subject or bound or (ii) a breach or violation of, or a
default under, or conflict with, (A) the Constituent Documents of the Company or any of its
Subsidiaries or (B) the Constituent Documents of such Stockholder, if applicable.
(h) There is no suit, claim, action, charge or proceeding (including any arbitration
proceeding or dispute resolution proceeding) pending or, to the knowledge of the Stockholder (after
reasonably inquiry), threatened that, individually or in the aggregate, has impaired, or would
reasonably be expected to impair, the ability of the Stockholder to perform its obligations under
this Agreement or consummate the transactions contemplated hereby.
1.03
Representations and Warranties of Parent and Merger Sub
. Parent and Merger Sub
represent and warrant to each Stockholder as follows:
(a) Each of Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Delaware.
(b) Each of Parent and Merger Sub has the corporate power and authority to execute, deliver
and perform its obligations under this Agreement. Each of Parent and Merger Sub has duly
authorized, executed and delivered this Agreement. This Agreement has been duly authorized by all
necessary corporate action of each of Parent and Merger Sub. This Agreement is each of Parents
and Merger Subs valid and legally binding obligation, enforceable against each of them in
accordance with its terms (except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer and similar Laws of general
applicability relating to or affecting creditors rights or by general equity principles).
ARTICLE 2
2.01
Transfer of the Shares
. During the term of this Agreement, except as otherwise
provided herein, each Stockholder will not, directly or indirectly, (a) tender into any tender or
exchange offer or otherwise sell, transfer (including transfer by merger, testamentary or intestate
succession, interspousal disposition pursuant to a domestic relations proceeding or otherwise by
operation of Law), pledge, hypothecate, assign, gift, constructively sell or otherwise dispose of,
or encumber with any Lien, or permit or suffer the encumbrance of any Lien on, any of its Shares
(or any economic, voting or other direct or indirect right, title or interest therein), including,
in each case, by operation of Law, (b) deposit its Shares into a voting trust, enter into any other
voting agreement or arrangement with respect to its Shares or grant any proxy, power of attorney
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or other authorization or consent in or with respect to its Shares (other than to the other
Stockholder), (c) enter into any contract, option or other arrangement or undertaking with respect
to the direct or indirect acquisition or sale, transfer, pledge, hypothecation, assignment, gift,
constructive sale, or other disposition of, or encumbrance with any Lien on, any interest in or the
voting of any shares of Company Common Stock or any other securities of the Company (or any
economic, voting or other direct or indirect right, title or interest therein), or any Rights with
respect thereto, (d) take any other action which would, or could reasonably be expected to, result
in a diminution of the voting power represented by its Shares or in any way restrict, limit or
interfere in any material respect with the performance of such Stockholders obligations hereunder
or (e) offer, commit or agree to take any of the foregoing actions. Any purported action by a
Stockholder in violation of this
Section 2.01
shall be null and void.
2.02
Adjustments
.
(a) In the event (i) of any stock dividend, stock split, recapitalization, reclassification,
combination or exchange of shares of capital stock or other securities of the Company on, of or
affecting the Shares or the like or any other action that would have the effect of changing a
Stockholders ownership of Company Common Stock or other securities of the Company or (ii) a
Stockholder becomes the beneficial owner of any additional shares of Company Common Stock or other
securities of the Company that entitle such Stockholder to vote on the matters contemplated herein
(including pursuant to any exercise or conversion of any Rights, including any Company Stock
Options or Company Stock-Based Awards), then the terms of this Agreement will apply to the shares
of capital stock held by such Stockholder immediately following the effectiveness of the events
described in clause (i) or such Stockholder becoming the beneficial owner thereof as described in
clause (ii), and shall be deemed to be Shares with respect to such Stockholder for all purposes
hereunder.
(b) Each Stockholder hereby agrees, while this Agreement is in effect, to promptly notify
Parent in writing of the number of any new shares of Company Common Stock or other securities of
the Company acquired by such Stockholder, if any, after the date hereof.
ARTICLE 3
3.01
Voting Agreement
. Unless otherwise directed in writing by Parent, at every
meeting of the Company Stockholders, however called, and at every postponement or adjournment
thereof, and on every action or approval of Company Stockholders (including by written consent),
each Stockholder irrevocably agrees to, or to cause the holder of record on the applicable record
date to, vote (or cause to be voted) (or consent or cause to be consented) its Shares (a) in favor
of (i) the Company Stockholder Approval, including the approval and adoption of the Merger
Agreement and the approval of the Merger and the other Transactions and (ii) any other matter that
is required by applicable Law or a Governmental Authority to be approved by the Company
Stockholders to facilitate the approval and consummation of the Merger and the other Transactions
and (b) against (i) any Acquisition Proposal, (ii) any action or agreement that would, or would
reasonably be expected to, result in a breach in any respect of any covenant, agreement,
representation or warranty of the Company under the Merger Agreement, and (iii) the following
actions (other than the Merger and the other Transactions): (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business
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combination involving the Company or any of its Subsidiaries; (B) any sale, lease or transfer
of a material amount of assets of the Company or any of its Subsidiaries, or a reorganization,
recapitalization, dissolution or liquidation of the Company or its Subsidiaries; (C) (1) any change
in the board of directors of the Company as of the date hereof; (2) any change in the present
capitalization of the Company or any amendment of the Companys certificate of incorporation or
bylaws, as amended prior to the date of this Agreement; (3) any other material change in the
Companys corporate structure or business; or (4) any other action that, in the case of each of the
matters referred to in clauses (C)(1), (2) and (3), would, or would reasonably be expected to,
prevent, impede, frustrate, interfere with, delay, postpone or adversely affect the Merger or the
other Transactions or that could facilitate an Acquisition Proposal or Superior Proposal. Each
Stockholder shall, or shall cause the holder of record on the applicable record date, to cast votes
(or cause votes to be cast), or give consents (or cause consents to be given), with respect to all
of its Shares in accordance with such procedures relating thereto so as to ensure that all of its
Shares are duly counted, including for purposes of determining that a quorum is present and for
purposes of recording the results of such vote (or consent). Unless and until this Agreement shall
be terminated pursuant to
Section 4.01
, the obligations of the Stockholders specified
herein will apply whether or not (I) the Company Board (or any committee thereof) shall make any
Company Board Change of Recommendation or (II) the Company breaches any of its representations,
warranties, agreements or covenants set forth in the Merger Agreement.
3.02
Proxy
. Each Stockholder, by this Agreement, does hereby constitute and appoint
Parent and Merger Sub, or any nominee thereof, with full power of substitution and re-substitution,
during and for the term of this Agreement, as its true and lawful attorney-in-fact and proxy for
and in its name, place and stead, to vote, express consent or dissent, or otherwise utilize such
voting power with respect to its Shares in the manner and to the extent contemplated by
Section
3.01
as such proxy or its substitute or re-substitute shall, in its sole discretion, deem
proper with respect to its Shares. The proxy and power of attorney granted by each Stockholder
pursuant to this
Section 3.02
is a proxy and power coupled with an interest (in accordance
with Section 212 of the DGCL), is irrevocable during and for the term of this Agreement, and is
granted in order to secure each Stockholders performance under this Agreement and also in
consideration of Parent and Merger Sub entering into this Agreement and the Merger Agreement. The
power of attorney granted hereunder is a durable power of attorney and shall survive the
bankruptcy, death or incapacity of a Stockholder, as applicable. Each Stockholder hereby ratifies
and confirms all that such irrevocable proxy may lawfully do or cause to be done by virtue hereof.
Each Stockholder shall execute and deliver to Parent any proxy cards that such Stockholder receives
to vote in favor of the approval and adoption of the Merger Agreement and the approval of the
Merger and the other Transactions. Each Stockholder represents and warrants that any proxies
heretofore made or granted in respect of its Shares are not irrevocable, and hereby revokes any and
all other proxies with respect to its Shares that it may have heretofore made or granted. If a
Stockholder fails for any reason to be counted as present, consent or vote its Shares in accordance
with the requirements of
Section 3.01
(or anticipatorily breaches
Section 3.01
),
then Parent shall have the right to cause to be present, consent or vote such Stockholders Shares
in accordance with
Section 3.01
. For Shares as to which a Stockholder is the beneficial
but not the record owner, such Stockholder shall cause the record owner of any such Shares to grant
to Parent and Merger Sub a proxy to the same effect as that contained herein. Notwithstanding
anything to the contrary contained herein, the irrevocable
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proxy granted hereby shall automatically terminate and be of no further force or effect upon
termination of this Agreement.
3.03
Dissenting Shares
. Each Stockholder hereby irrevocably and unconditionally
(a) waives, and agrees to prevent the exercise of, any rights of appraisal, any dissenters rights
and any similar rights relating to the Merger or the other Transactions that it may directly or
indirectly have by virtue of the ownership of its Shares, and (b) agrees not to commence or
participate in, and to take all actions necessary to opt out of any class in any class action with
respect to, any claim, derivative or otherwise, against Guarantor, Parent, Merger Sub, the Company
or any of their respective successors relating to the negotiation, execution or delivery of this
Agreement or the Merger Agreement or the consummation of the Merger, including any claim
(i) challenging the validity of, or seeking to enjoin the operation of, any provision of this
Agreement or (ii) alleging a breach of any fiduciary duty of the Company Board in connection with
the Merger Agreement, the Merger or the other Transactions. Notwithstanding the foregoing, nothing
in this
Section 3.03
shall constitute, or be deemed to constitute, a waiver or release by
either Stockholder of any claim or cause of action against Parent or Merger Sub to the extent
arising out of a breach of this Agreement by Parent or Merger Sub.
3.04
Succession to Shares
. Each Stockholder agrees that this Agreement and the
obligations hereunder shall attach to its Shares and shall be binding upon any Person to which
legal or beneficial ownership of its Shares shall pass, whether by operation of Law or otherwise,
including such Stockholders heirs, guardians, administrators or successors, as applicable. Prior
to, directly or indirectly, transferring any rights (including voting rights) or ownership in or to
any of its Shares, each Stockholder agrees to cause the potential transferee of such Shares to
enter into an agreement with Parent and Merger Sub on substantially the same terms as the terms
hereof. Each Stockholder agrees that it shall authorize and request the Company to notify its
transfer agent that there is a stop order with respect to all of the Shares and that this Agreement
places limits on the voting of its Shares.
3.05
No Solicitation
. Each Stockholder agrees that Section 4.09 of the Merger
Agreement shall apply to each Stockholder
mutatis mutandis.
Notwithstanding anything to the
contrary in this
Section 3.05
, any action which is permitted by the Merger Agreement to be
taken by a Stockholder in its individual capacity as an officer or director of the Company shall
not be prohibited by this
Section 3.05
.
3.06
Disclosure
. Each Stockholder (a) hereby authorizes Guarantor, Parent and the
Company to publish and disclose in any announcement or disclosure in connection with the Merger or
the other Transactions, including the Proxy Statement, such Stockholders identity and ownership of
its Shares and the nature of such Stockholders obligations under this Agreement and (b) agrees to
promptly furnish to Parent any information it may reasonably request for the preparation of any
such announcement or disclosure. Each Stockholder agrees to promptly notify Parent and the Company
of any required corrections with respect to any information supplied by it for use in any such
announcement or disclosure, if and to the extent that any such information shall have become false
or misleading in any material respect.
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ARTICLE 4
4.01
Termination
. This Agreement will terminate upon the earliest to occur of (a) the
Effective Time, (b) the date the Merger Agreement is terminated in accordance with its terms, and
(c) the mutual written agreement of the Stockholders and Parent (such date of termination, the
"
Termination Date
); provided, however, that (i) this
Section 4.01
and
Sections
1.01
,
4.02
,
4.04
,
4.05
and
4.06
(as applicable) shall survive
any such termination and (ii) such termination shall not relieve any party for any breach of this
Agreement occurring prior to such termination.
4.02
Expenses
. Except as may otherwise be specifically provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions contemplated hereby will
be paid by the party incurring such expenses, whether or not the Merger is consummated.
4.03
Further Assurances
. Each Stockholder agrees that prior to the Termination Date
in accordance with its terms, such Stockholder shall not take any action that would make any
representation or warranty of such Stockholder contained herein untrue or incorrect or have the
effect of preventing, impeding, interfering with or adversely affecting the performance by such
Stockholder of its obligations under this Agreement. Each party hereto will execute and deliver
all such further documents and instruments and take all such further action as any other party may
reasonably request in order to consummate the transactions contemplated hereby.
4.04
Press Releases
. Parent and Merger Sub, on the one hand, and the Stockholders, on
the other hand, will consult with each other before issuing any press release with respect to the
transactions contemplated by this Agreement, the Merger Agreement or the Transactions and will not
issue any such press release without the prior written consent of the other parties, which will not
be unreasonably withheld, conditioned or delayed; provided, however, that a party may, without the
prior consent of the other party (but after prior consultation, to the extent practicable in the
circumstances), issue any such press release as may be required by applicable Law or securities
exchange rules.
4.05
Specific Performance
. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in accordance with its
specific terms or were otherwise breached. Each party agrees that, in the event of any breach or
threatened breach by any other party of any covenant or obligation contained in this Agreement, the
non-breaching party shall be entitled (in addition to any other remedy that may be available to it
whether in law or equity, including monetary damages) to seek and obtain (a) a decree or order of
specific performance to enforce the observance and performance of such covenant or obligation and
(b) an injunction restraining such breach or threatened breach. Each party further agrees that no
other party or any other Person shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred to in this
Section 4.05
, and each party irrevocably waives any right it may have to require the
obtaining, furnishing or posting of any such bond or similar instrument.
4.06
Miscellaneous
.
(a) All representations and warranties contained herein are made as of the date hereof and
will not survive the consummation of the Merger or any termination of this
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Agreement. The covenants and agreements made herein will survive in accordance with their
respective terms.
(b) At any time prior to the Termination Date, any provision of this Agreement may be (i)
waived by the party benefited by the provision, but only in writing (provided that no such waiver
will be applicable except in the specific instance for which it is given), or (ii) amended or
modified, but only by a written agreement executed in the same manner as this Agreement, except to
the extent that any such amendment would violate applicable Law. Except as set forth elsewhere in
this Agreement, at any time prior to the Termination Date, the parties may extend the time for
performance of any of the covenants, agreements or conditions of the other parties to this
Agreement, but only in a written agreement executed and delivered by or on behalf of the party
against which it is sought to be enforced. Neither the failure nor any delay by any party in
exercising any right, power or privilege under this Agreement will operate as a waiver of such
right, power or privilege, and no single or partial exercise of any such right, power or privilege
will preclude any other or further exercise of such right, power or privilege or the exercise of
any other right, power or privilege.
(c) This Agreement represents the entire understanding of the parties regarding the
transactions contemplated hereby and supersedes any and all other oral or written agreements,
representations and understandings previously made or purported to be made with respect thereto.
Other than those set forth in the Merger Agreement, no representation, warranty, inducement,
promise, understanding or condition not set forth in this Agreement has been made or relied on by
any party in entering into this Agreement. Nothing expressed or implied in this Agreement is
intended to confer any rights, remedies, obligations or liabilities upon any Person other than the
parties hereto.
(d) This Agreement and the agreements, instruments and documents contemplated hereby and all
disputes between the parties under or relating to this Agreement or the facts and circumstances
leading to its execution and delivery, whether in contract, tort or otherwise, will be governed by
and construed in accordance with the Laws of the State of Delaware, without giving effect to
conflicts of laws principles that would result in the application of the Law of any other State.
The Delaware Court of Chancery sitting in Wilmington, Delaware (and if the Delaware Court of
Chancery shall be unavailable, any Delaware state court and the Federal court of the United States
of America sitting in the State of Delaware) will have exclusive jurisdiction over any and all
disputes among the parties, whether at law or in equity, based upon, arising out of or relating to
this Agreement and the agreements, instruments and documents contemplated hereby or the facts and
circumstances leading to its execution and delivery, whether in contract, tort or otherwise. Each
of the parties irrevocably consents to and agrees to submit to the exclusive jurisdiction of such
courts, agrees that process may be served upon them in any manner authorized by the Laws of the
State of Delaware, and hereby waives, and agrees not to assert in any such dispute, to the fullest
extent permitted by applicable Law, any claim that (i) such party is not personally subject to the
jurisdiction of such courts, (ii) such party and such partys property is immune from any legal
process issued by such courts or (iii) any litigation commenced in such courts is brought in an
inconvenient forum. EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS
OUTSIDE THE TERRITORIAL JURISDICTION OF THE COURTS REFERRED TO IN THIS
SECTION 4.06(d)
IN
ANY ACTION OR PROCEEDING UNDER OR RELATING TO THIS
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AGREEMENT OR THE FACTS AND CIRCUMSTANCES LEADING TO ITS EXECUTION AND DELIVERY BY MAILING
COPIES THEREOF BY REGISTERED UNITED STATES MAIL, POSTAGE PREPAID, RETURN RECEIPT REQUESTED, TO ITS
ADDRESS AS SPECIFIED IN OR PURSUANT TO
SECTION 4.06(f)
. HOWEVER, THE FOREGOING SHALL NOT
LIMIT THE RIGHT OF A PARTY TO EFFECT SERVICE OF PROCESS ON ANY OTHER PARTY BY ANY OTHER LEGALLY
AVAILABLE METHOD. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(e) The table of contents and Section headings contained in this Agreement are for reference
purposes only and do not limit or otherwise affect any of the substance of this Agreement.
(f) All notices, requests and other communications given or made under this Agreement must be
in writing and will be deemed given when personally delivered, transmitted by facsimile (with
confirmation of successful transmission) or mailed by registered or certified mail (return receipt
requested) to the persons, addresses and/or facsimile numbers set forth below or such other person,
address and/or facsimile number as such party may specify by notice given in accordance with this
Section 4.06(f)
.
If to either of the Stockholders:
Axsys Technologies, Inc.
175 Capital Boulevard, Suite 103
Rocky Hill, CT 06067
Attention: Stephen W. Bershad
Facsimile: (860) 257-0200
If to Parent or Merger Sub, to:
General Dynamics Advanced Information Systems, Inc.
2941 Fairview Park Drive
Suite 100
Falls Church, VA 22042-4513
Attention: David A. Savner
Facsimile: (703) 876-3554
With a copy to:
Jenner & Block LLP
330 North Wabash Avenue
Chicago, IL 60611-7603
Attention: Thaddeus J. Malik
Facsimile: (312) 840-7313
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(g) This Agreement may be executed in one or more counterparts (whether by facsimile,
electronic transmission or otherwise), each of which will be deemed to constitute an original, and
transmission of a duly executed counterpart hereof by electronic means will be deemed to constitute
delivery of an executed original manual counterpart hereof.
(h) No party may assign either this Agreement or any of its rights or interests, or delegate
any of its duties, hereunder, in whole or in part, without the prior written consent of the other
parties; provided that Merger Sub may assign any of its rights, interests and obligations
hereunder, in whole or from time to time in part, to any direct or indirect Subsidiary of Guarantor
without the consent of any other party, but no such assignment shall relieve Parent of its
obligations hereunder. Any attempt to make any assignment in violation of this
Section
4.06(h)
will be null and void. Subject to the preceding sentences of this
Section 4.06(h)
, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the parties and their respective successors and permitted assigns.
(i) The provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement or the application thereof to any Person or
circumstance is determined by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions, or the application of such provision to Persons or
circumstances other than those as to which it has been held invalid, void or unenforceable, will
remain in full force and effect and will in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon any such determination, the parties will
negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to
effect the original intent of the parties.
(j) All rights, powers and remedies provided under this Agreement or otherwise available in
respect hereof at law or in equity will be cumulative and not alternative, and the exercise of any
thereof by any party will not preclude the simultaneous or later exercise of any other such right,
power or remedy by such party. Without limiting the generality of the foregoing, the rights and
remedies of the parties under this Agreement, and the obligations and liabilities of the parties
under this Agreement, are in addition to their respective rights, remedies, obligations and
liabilities under all applicable Laws.
(k) This Agreement is the product of negotiation by the parties, which have had the assistance
of counsel and other advisors. The parties intend that this Agreement not be construed more
strictly with regard to one party than with regard to any other party.
(l) The words include, includes or including as used in this Agreement are to be deemed
followed by the words without limitation. The words herein, hereof, hereunder and similar
terms as used in this Agreement are to be deemed to refer to this Agreement as a whole and not to
any specific Section or Article. Whenever the context requires, terms defined in this Agreement in
the singular will be deemed to include the plural and vice versa. The word extent in the phrase
to the extent as used in this Agreement means the degree to which a subject or other thing
extends and such phrase does not simply mean if. No provision of this Agreement is to be
construed to require, directly or indirectly, any Person to take any action, or omit to take any
action, to the extent such action or omission would violate
B-12
applicable Law. In this Agreement, except as the context may otherwise require, references:
(i) to Sections or Articles are to the Sections or Articles of this Agreement; (ii) to any
agreement (including this Agreement), contract, statute or regulation are to the agreement,
contract, statute or regulation as amended, modified, supplemented, restated or replaced from time
to time (in the case of an agreement or contract, to the extent permitted by the terms thereof);
(iii) to any section of any statute or regulation include any successor to that section; and (iv)
to the date of this Agreement is to the date set forth in the Preamble.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first
above written.
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GENERAL DYNAMICS ADVANCED
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INFORMATION SYSTEMS, INC.
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By:
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/s/ David A. Savner
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Name:
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David A. Savner
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Title:
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Vice President
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VISION MERGER SUB, INC.
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By:
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/s/ David A. Savner
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Name:
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David A. Savner
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Title:
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Vice President
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STOCKHOLDERS:
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/s/ Stephen W. Bershad
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Stephen W. Bershad
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SWB HOLDING CORPORATION
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By:
Name:
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/s/ Stephen W. Bershad
Stephen W. Bershad
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Title:
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President
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B-14
ANNEX C
June 3, 2009
The Board of Directors
Axsys Technologies, Inc.
175 Capital Boulevard
Suite 103
Rocky Hill, CT 06067
Members of the Board:
We understand that Axsys Technologies, Inc. (the Company), General Dynamics Advanced
Information Systems, Inc. (Parent), and Vision Merger
Sub, Inc. (Merger Sub), an indirect wholly-owned subsidiary of
General Dynamics Corporation (Guarantor) propose to enter into an Agreement and Plan of Merger (the Merger
Agreement), pursuant to which Merger Sub will merge with and into the Company (the Merger) in a
transaction in which each outstanding share of common stock, par value $0.01 per share, of the
Company (the Common Stock), other than shares of Common Stock held by the Company, Parent, Merger
Sub, Guarantor or any of their respective subsidiaries, all of
which shares will be canceled, or as to which dissenters rights have been properly exercised, will
be converted into the right to receive $54.00 in cash (the Consideration). The terms and
conditions of the Merger are more fully set forth in the Merger Agreement.
You have asked for our opinion as to whether the Consideration to be received by the holders
of shares of Common Stock pursuant to the Merger Agreement is fair, from a financial point of view,
to such holders.
In arriving at our opinion, we have, among other things:
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(i)
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reviewed (a) a draft dated June 3, 2009 of the Merger Agreement and (b)
a draft dated June 3, 2009 of the Voting Agreement (as defined in the Merger
Agreement);
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(ii)
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reviewed certain publicly available financial and other information
about the Company;
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(iii)
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reviewed certain information furnished to us by the Companys
management, including financial forecasts and analyses, relating to the business,
operations and prospects of the Company;
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(iv)
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held discussions with members of senior management of the Company
concerning the matters described in clauses (ii) and (iii) above;
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(v)
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reviewed the share trading price history and valuation multiples for
the Common Stock and compared them with those of certain publicly traded companies
that we deemed relevant;
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(vi)
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compared the proposed financial terms of the Merger with the financial
terms of certain other transactions that we deemed relevant; and
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(vii)
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conducted such other financial studies, analyses and investigations as
we deemed appropriate.
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C-1
In our review and analysis and in rendering this opinion, we have assumed and relied upon, but
have not assumed any responsibility to independently investigate or verify, the accuracy and
completeness of all financial and other information that was supplied or otherwise made available
by the Company to us or that was publicly available (including, without limitation, the information
described above), or that was otherwise reviewed by us. We have relied on assurances of the
management of the Company that it is not aware of any facts or circumstances that would make such
information inaccurate or misleading. In our review, we did not obtain any independent evaluation
or appraisal of any of the assets or liabilities of, nor did we conduct a physical inspection of
any of the properties or facilities of, the Company, nor have we been furnished with any such
evaluations or appraisals of such physical inspections, nor do we assume any responsibility to
obtain any such evaluations or appraisals.
With respect to the financial forecasts provided to and examined by us, we note that
projecting future results of any company is inherently subject to uncertainty. The Company has
informed us, however, and we have assumed, that such financial forecasts were reasonably prepared
on bases reflecting the best currently available estimates and good faith judgments of the
management of the Company as to the future financial performance of the Company. We express no
opinion as to the Companys financial forecasts or the assumptions on which they are made.
Our opinion is based on economic, monetary, regulatory, market and other conditions existing
and which can be evaluated as of the date hereof. We expressly disclaim any undertaking or
obligation to advise any person of any change in any fact or matter affecting our opinion of which
we become aware after the date hereof.
We have made no independent investigation of any legal or accounting matters affecting the
Company, and we have assumed the correctness in all respects material to our analysis of all legal
and accounting advice given to the Company and its Board of Directors, including, without
limitation, advice as to the legal, accounting and tax consequences of the terms of, and
transactions contemplated by, the Merger Agreement to the Company and its stockholders. In
addition, in preparing this opinion, we have not taken into account any tax consequences of the
transaction to any holder of Common Stock. We have assumed that the final forms of the Merger
Agreement and the Voting Agreement will be substantially similar to the last drafts reviewed by us.
We have also assumed that in the course of obtaining the necessary regulatory or third party
approvals, consents and releases for the Merger, no delay, limitation, restriction or condition
will be imposed that would have an adverse effect on the Company or the contemplated benefits of
the Merger in any way meaningful to our analysis.
It is understood that our opinion is for the use and benefit of the Board of Directors of the
Company in its consideration of the Merger, and our opinion does not address the relative merits of
the transactions contemplated by the Merger Agreement as compared to any alternative transaction or
opportunity that might be available to the Company, nor does it address the underlying business
decision by the Company to engage in the Merger or the terms of the Merger Agreement or the
documents referred to therein. Our opinion does not constitute a recommendation as to how any
holder of shares of Common Stock should vote on the Merger or any matter related thereto. In
addition, you have not asked us to address, and this opinion does not address, the fairness to, or
any other consideration of, the holders of any class of securities, creditors or other
constituencies of the Company, other than the holders of shares of Common Stock. We express no
opinion as to the price at which shares of Common Stock will trade at any time. Furthermore, we do
not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature
of any compensation payable to or to be received by any of the Companys officers, directors or
employees, or any class of such persons, in connection with the Merger relative to the
Consideration to be received by holders of shares of Common Stock. Our opinion has been authorized
by the Fairness Committee of Jefferies & Company, Inc.
C-2
We have been engaged by the Company to act as financial advisor to the Company in connection
with the Merger and will receive a fee for our services, a portion of which is payable upon
delivery of this opinion and a significant portion of which is payable contingent upon consummation
of the Merger. We also will be reimbursed for expenses incurred. The Company has agreed to
indemnify us against liabilities arising out of or in connection with the services rendered and to
be rendered by us under such engagement. In the ordinary course of our business, we and our
affiliates may trade or hold securities of the Company or Parent and/or their respective affiliates
for our own account and for the accounts of our customers and, accordingly, may at any time hold
long or short positions in those securities. In addition, we may seek to, in the future, provide
financial advisory and financing services to the Company, Parent or entities that are affiliated
with the Company or Parent, for which we would expect to receive compensation. Except as otherwise
expressly provided in our engagement letter with the Company, our opinion may not be used or
referred to by the Company, or quoted or disclosed to any person in any matter, without our prior
written consent.
Based upon and subject to the foregoing, we are of the opinion that, as of the date hereof,
the Consideration to be received by the holders of shares of Common Stock pursuant to the Merger
Agreement is fair, from a financial point of view, to such holders.
Very truly yours,
JEFFERIES & COMPANY, INC.
C-3
ANNEX D
Section 262 of the General Corporation Law of the State of Delaware
Appraisal Rights
[EFFECTIVE UNTIL AUG. 1, 2009]
(a) Any stockholder of a corporation of this State who holds shares of stock on the date of
the making of a demand pursuant to subsection (d) of this section with respect to such shares, who
continuously holds such shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to § 228 of this title shall be
entitled to an appraisal by the Court of Chancery of the fair value of the stockholders shares of
stock under the circumstances described in subsections (b) and (c) of this section. As used in this
section, the word stockholder means a holder of record of stock in a stock corporation and also a
member of record of a nonstock corporation; the words stock and share mean and include what is
ordinarily meant by those words and also membership or membership interest of a member of a
nonstock corporation; and the words depository receipt mean a receipt or other instrument issued
by a depository representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or series of stock of a
constituent corporation in a merger or consolidation to be effected pursuant to § 251 (other than a
merger effected pursuant to § 251(g) of this title), § 252, § 254, § 257, § 258, § 263 or § 264 of
this title:
(1) Provided, however, that no appraisal rights under this section shall be available for
the shares of any class or series of stock, which stock, or depository receipts in respect
thereof, at the record date fixed to determine the stockholders entitled to receive notice of
and to vote at the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or (ii) held of record
by more than 2,000 holders; and further provided that no appraisal rights shall be available
for any shares of stock of the constituent corporation surviving a merger if the merger did
not require for its approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of § 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section
shall be available for the shares of any class or series of stock of a constituent corporation
if the holders thereof are required by the terms of an agreement of merger or consolidation
pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:
a. Shares of stock of the corporation surviving or resulting from such merger or
consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts in respect
thereof, which shares of stock (or depository receipts in respect thereof) or depository
receipts at the effective date of the merger or consolidation will be either listed on a
national securities exchange or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository receipts described in
the foregoing subparagraphs a. and b. of this paragraph; or
D-1
d. Any combination of the shares of stock, depository receipts and cash in lieu of
fractional shares or fractional depository receipts described in the foregoing
subparagraphs a., b. and c. of this paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger
effected under § 253 of this title is not owned by the parent corporation immediately prior to
the merger, appraisal rights shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation that appraisal rights
under this section shall be available for the shares of any class or series of its stock as a
result of an amendment to its certificate of incorporation, any merger or consolidation in which
the corporation is a constituent corporation or the sale of all or substantially all of the assets
of the corporation. If the certificate of incorporation contains such a provision, the procedures
of this section, including those set forth in subsections (d) and (e) of this section, shall apply
as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are provided under
this section is to be submitted for approval at a meeting of stockholders, the corporation,
not less than 20 days prior to the meeting, shall notify each of its stockholders who was such
on the record date for such meeting with respect to shares for which appraisal rights are
available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any
or all of the shares of the constituent corporations, and shall include in such notice a copy
of this section. Each stockholder electing to demand the appraisal of such stockholders
shares shall deliver to the corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of such stockholders shares. Such demand will
be sufficient if it reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such stockholders shares. A
proxy or vote against the merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or consolidation, the
surviving or resulting corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in favor of or consented
to the merger or consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title,
then either a constituent corporation before the effective date of the merger or consolidation
or the surviving or resulting corporation within 10 days thereafter shall notify each of the
holders of any class or series of stock of such constituent corporation who are entitled to
appraisal rights of the approval of the merger or consolidation and that appraisal rights are
available for any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section. Such notice may, and, if
given on or after the effective date of the merger or consolidation, shall, also notify such
stockholders of the effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such holders shares.
Such demand will be sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the appraisal of such holders
shares. If such notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a second notice before
the effective date of the merger or consolidation notifying each of the holders of any class
or series of stock of such constituent corporation that are entitled to appraisal rights of
the effective date of the
D-2
merger or consolidation or (ii) the surviving or resulting corporation shall send such a
second notice to all such holders on or within 10 days after such effective date; provided,
however, that if such second notice is sent more than 20 days following the sending of the
first notice, such second notice need only be sent to each stockholder who is entitled to
appraisal rights and who has demanded appraisal of such holders shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent
of the corporation that is required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For
purposes of determining the stockholders entitled to receive either notice, each constituent
corporation may fix, in advance, a record date that shall be not more than 10 days prior to
the date the notice is given, provided, that if the notice is given on or after the effective
date of the merger or consolidation, the record date shall be such effective date. If no
record date is fixed and the notice is given prior to the effective date, the record date
shall be the close of business on the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation, the surviving or
resulting corporation or any stockholder who has complied with subsections (a) and (d) of this
section hereof and who is otherwise entitled to appraisal rights, may commence an appraisal
proceeding by filing a petition in the Court of Chancery demanding a determination of the value of
the stock of all such stockholders. Notwithstanding the foregoing, at any time within 60 days after
the effective date of the merger or consolidation, any stockholder who has not commenced an
appraisal proceeding or joined that proceeding as a named party shall have the right to withdraw
such stockholders demand for appraisal and to accept the terms offered upon the merger or
consolidation. Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and (d) of this section
hereof, upon written request, shall be entitled to receive from the corporation surviving the
merger or resulting from the consolidation a statement setting forth the aggregate number of shares
not voted in favor of the merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after such stockholders written request for such a
statement is received by the surviving or resulting corporation or within 10 days after expiration
of the period for delivery of demands for appraisal under subsection (d) of this section hereof,
whichever is later. Notwithstanding subsection (a) of this section, a person who is the beneficial
owner of shares of such stock held either in a voting trust or by a nominee on behalf of such
person may, in such persons own name, file a petition or request from the corporation the
statement described in this subsection.
(f) Upon the filing of any such petition by a stockholder, service of a copy thereof shall be
made upon the surviving or resulting corporation, which shall within 20 days after such service
file in the office of the Register in Chancery in which the petition was filed a duly verified list
containing the names and addresses of all stockholders who have demanded payment for their shares
and with whom agreements as to the value of their shares have not been reached by the surviving or
resulting corporation. If the petition shall be filed by the surviving or resulting corporation,
the petition shall be accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the hearing of such
petition by registered or certified mail to the surviving or resulting corporation and to the
stockholders shown on the list at the addresses therein stated. Such notice shall also be given by
1 or more publications at least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as the Court deems
advisable. The forms of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders who have
complied with this section and who have become entitled to appraisal rights. The Court may require
the
D-3
stockholders who have demanded an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in Chancery for notation thereon
of the pendency of the appraisal proceedings; and if any stockholder fails to comply with such
direction, the Court may dismiss the proceedings as to such stockholder.
(h) After the Court determines the stockholders entitled to an appraisal, the appraisal
proceeding shall be conducted in accordance with the rules of the Court of Chancery, including any
rules specifically governing appraisal proceedings. Through such proceeding the Court shall
determine the fair value of the shares exclusive of any element of value arising from the
accomplishment or expectation of the merger or consolidation, together with interest, if any, to be
paid upon the amount determined to be the fair value. In determining such fair value, the Court
shall take into account all relevant factors. Unless the Court in its discretion determines
otherwise for good cause shown, interest from the effective date of the merger through the date of
payment of the judgment shall be compounded quarterly and shall accrue at 5% over the Federal
Reserve discount rate (including any surcharge) as established from time to time during the period
between the effective date of the merger and the date of payment of the judgment. Upon application
by the surviving or resulting corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, proceed to trial upon the appraisal prior
to the final determination of the stockholders entitled to an appraisal. Any stockholder whose name
appears on the list filed by the surviving or resulting corporation pursuant to subsection (f) of
this section and who has submitted such stockholders certificates of stock to the Register in
Chancery, if such is required, may participate fully in all proceedings until it is finally
determined that such stockholder is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares, together with
interest, if any, by the surviving or resulting corporation to the stockholders entitled thereto.
Payment shall be so made to each such stockholder, in the case of holders of uncertificated stock
forthwith, and the case of holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Courts decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving or resulting
corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon the parties as
the Court deems equitable in the circumstances. Upon application of a stockholder, the Court may
order all or a portion of the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys fees and the fees and expenses of
experts, to be charged pro rata against the value of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no stockholder who has
demanded appraisal rights as provided in subsection (d) of this section shall be entitled to vote
such stock for any purpose or to receive payment of dividends or other distributions on the stock
(except dividends or other distributions payable to stockholders of record at a date which is prior
to the effective date of the merger or consolidation); provided, however, that if no petition for
an appraisal shall be filed within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a written withdrawal of such
stockholders demand for an appraisal and an acceptance of the merger or consolidation, either
within 60 days after the effective date of the merger or consolidation as provided in subsection
(e) of this section or thereafter with the written approval of the corporation, then the right of
such stockholder to an appraisal shall cease. Notwithstanding the foregoing, no appraisal
proceeding in the Court of Chancery shall be dismissed as to any stockholder without the approval
of the Court, and such approval may be conditioned upon such terms as the Court deems just;
provided, however that this provision shall not affect the right of any stockholder who has not
commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such
D-4
stockholders demand for appraisal and to accept the terms offered upon the merger or
consolidation within 60 days after the effective date of the merger or consolidation, as set forth
in subsection (e) of this section.
(l) The shares of the surviving or resulting corporation to which the shares of such objecting
stockholders would have been converted had they assented to the merger or consolidation shall have
the status of authorized and unissued shares of the surviving or resulting corporation.
D-5
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR THE PROPOSALS. Please mark
x
your votes as indicated in this example 1. Adoption of the Agreement and Plan of Merger, dated as of June 4, 2009, among
Axsys Technologies, Inc., General Dynamics Advanced Information Systems, Inc. and Vision Merger Sub, Inc.
· FOR · AGAINST · ABSTAIN 2. Approval of adjournment or postponement of the Special Meeting, if deemed
necessary or appropriate by the proxy holders, including, if necessary, to permit further solicitation of proxies.
· FOR · AGAINST · ABSTAIN (continued and to be signed on the other side) Mark Here for Address Change or Comments
· SEE REVERSE Signature Signature Date Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If partnership,
please sign in partnership name by authorized person. ? FOLD AND DETACH HERE ? WE ENCOURAGE YOU TO TAKE ADVANTAGE OF
INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. Internet and telephone voting is available through
11:59 PM Eastern Time the day prior to annual meeting day. INTERNET http://www.proxyvoting.com/axsys-esop Axsys Technologies, Inc.
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. OR TELEPHONE 1-866-540-5760 Use any
touch-tone telephone to vote your proxy. Have your proxy card in hand when you call. If you vote your proxy by Internet or by telephone,
you do NOT need to mail back your proxy card. To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope..
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your
proxy card. You can review the Annual Report and Proxy Statement on the Internet at http://materials.proxyvote.com/054615
|
AXSYS TECHNOLOGIES, INC. SPECIAL MEETING OF STOCKHOLDERS July [___] , 2009 PROXY This Proxy is Solicited by the Board of Directors
The undersigned hereby appoints Stephen W. Bershad and David A. Almeida, and each of them, the attorneys and proxies of the undersigned
(each with power to act without the other and with power of substitution) to vote, in accordance with the terms of this proxy, all shares
of Common Stock of Axsys Technologies, Inc., which the undersigned may be entitled to vote at the Special Meeting of Stockholders to be held at the
Hartford Marriott Rocky Hill at Corporate Ridge, 100 Capital Boulevard, Rocky Hill, Connecticut, on the [___] day of July 2009, at 10:00 a.m., and any adjournment
or postponement thereof, upon all matters which may properly come before said meeting. This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR THE ADOPTION OF THE AGREEMENT PLAN OF MERGER
AND APPROVAL OF ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING. (Continued, and to be dated and signed, on reverse side) BNY MELLON SHAREOWNER
SERVICES Address Change/Comments P.O. BOX 3550 (Mark the corresponding box on the reverse side)
SOUTH HACKENSACK, NJ 07606-9250 ? FOLD AND DETACH HERE
? Choose MLink
SM
for fast, easy and secure 24/7 online access to your future proxy materials, investment plan statements, tax documents
and more. Simply log on to Investor ServiceDirect
®
at www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment.
|
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED FOR THE PROPOSALS.
Please mark
x
your votes as indicated in this example 3. Adoption of the Agreement and Plan of Merger,
dated as of June 4, 2009, among Axsys Technologies, Inc., General Dynamics Advanced Information Systems, Inc. and Vision Merger Sub, Inc.
· FOR · AGAINST · ABSTAIN 4. Approval of adjournment or postponement of the Special Meeting, if deemed necessary or appropriate by
the proxy holders, including, if necessary, to permit further solicitation of proxies. · FOR · AGAINST · ABSTAIN
(continued and to be signed on the other side) Mark Here for Address Change or Comments
· SEE REVERSE Signature Signature Date Please sign exactly as name appears above. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If partnership, please sign in partnership name by authorized person. ? FOLD AND DETACH HERE
? WE ENCOURAGE YOU TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING, BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK. Internet and telephone voting is
available through 11:59 PM Eastern Time the day prior to annual meeting day. INTERNET http://www.proxyvoting.com/axsys-esop Axsys Technologies, Inc.
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site. OR TELEPHONE 1-866-540-5760 Use any touch-tone telephone
to vote your proxy. Have your proxy card in hand when you call. If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.. Your Internet or telephone vote authorizes the named
proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. You can review the Annual Report and Proxy Statement
on the Internet at http://materials.proxyvote.com/054615
|
AXSYS TECHNOLOGIES, INC. SPECIAL MEETING OF STOCKHOLDERS July [___] , 2009 PROXY This Proxy is Solicited by the Board of Directors The undersigned hereby
authorizes and directs Fidelity Investments Institutional Services Company, Inc., as trustee (the Trustee), of Axsys Technologies, Inc. Employees Retirement
Savings Plan to vote for the undersigned, in person or by proxy, as herein stated at the Annual Meeting of Stockholders of Axsys Technologies, Inc. (the Company)
to be held at the Hartford Marriott Rocky Hill at Corporate Ridge, 100 Capital Boulevard, Rocky Hill, Connecticut, on the [___] day of July 2009, at 10:00 a.m., and
any adjournment thereof, all shares of Common Stock of the Company allocated to the account of the undersigned under such plan, on the proposals set forth on the
reverse side hereof and in accordance with the Trustees discretion on any other matters that may properly come before the meeting or any adjournments or postponement
thereof. The undersigned hereby acknowledges receipt of the Notice and Proxy Statement. This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be voted FOR THE ADOPTION OF THE AGREEMENT PLAN OF MERGER AND APPROVAL OF ADJOURNMENT OR
POSTPONEMENT OF THE SPECIAL MEETING. (Continued, and to be dated and signed, on reverse side) BNY MELLON SHAREOWNER SERVICES Address Change/Comments P.O. BOX 3550
(Mark the corresponding box on the reverse side)
SOUTH HACKENSACK, NJ 07606-9250
? FOLD AND DETACH HERE ?
Choose
MLink
SM
for fast, easy and secure 24/7 online access to your future proxy mat
erials, investment plan statements, tax documents and more. Simply log on to
Investor ServiceDirect
®
at www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you through enrollment.
|
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