EHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and between
NORTHROP GRUMMAN SPACE & MISSION SYSTEMS CORP.,
EAGLE TRANSACTION CORPORATION,
and
ESSEX CORPORATION
DATED AS OF NOVEMBER 8, 2006
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS...................................................2
Section 1.1
Certain
Definitions..........................................2
Section 1.2
Other
Defined Terms..........................................8
ARTICLE II THE
MERGER...................................................10
Section 2.1
The
Merger..................................................10
Section 2.2
Closing.....................................................10
Section 2.3
Effective
Time..............................................10
Section 2.4
Subsequent
Actions..........................................10
Section 2.5
Effects of
the Merger.......................................11
Section 2.6
Articles
of Incorporation; Bylaws...........................11
Section 2.7
Directors
and Officers......................................11
ARTICLE III EFFECT OF
THE MERGER ON CAPITAL STOCK........................11
Section 3.1
Effect on
Capital Stock.....................................11
Section 3.2
Surrender
of Certificates...................................12
Section 3.3
Adjustments to Prevent Dilution.............................14
Section 3.4
Treatment
of Stock Options..................................14
Section 3.5
Treatment
of ESPP...........................................14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY................15
Section 4.1
Organization; Power; Qualification..........................15
Section 4.2
Corporate
Authorization; Enforceability.....................16
Section 4.3
Capitalization; Options.....................................16
Section 4.4
Subsidiaries and Company Joint Ventures.....................18
Section 4.5
Governmental Concerns.......................................18
Section 4.6
Non-Contravention...........................................19
Section 4.7
Voting......................................................19
Section 4.8
Financial
Reports and SEC Documents.........................19
Section 4.9
No
Undisclosed Liabilities..................................21
Section 4.10
Absence of
Certain Changes or Events........................21
Section 4.11
Litigation..................................................22
Section 4.12
Contracts...................................................22
Section 4.13
Employee
Compensation and Benefit Plans; ERISA..............26
Section 4.14
Labor
Matters...............................................28
Section 4.15
Taxes.......................................................29
Section 4.16
Environmental
Liability.....................................30
Section 4.17
Title to Real
Properties....................................31
Section 4.18
Permits;
Compliance with Laws...............................31
Section 4.19
Takeover
Statutes...........................................32
Section 4.20
Interested Party
Transactions...............................32
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Section 4.21
Information
Supplied........................................32
Section 4.22
Opinion of Financial
Advisor................................33
Section 4.23
Brokers and
Finders.........................................33
Section 4.24
Intellectual
Property.......................................33
Section 4.25
Foreign Corrupt
Practices Act...............................35
Section 4.26
Export/Import
Compliance....................................35
Section 4.27
Security
Obligations........................................36
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGERCO........36
Section 5.1
Organization................................................36
Section 5.2
Corporate
Authorization.....................................36
Section 5.3
Enforceability..............................................36
Section 5.4
Governmental Authorizations.................................37
Section 5.5
Non-Contravention...........................................37
Section 5.6
Information Supplied........................................37
Section 5.7
Capital
Resources...........................................37
Section 5.8
Operations
of MergerCo......................................38
ARTICLE VI
COVENANTS....................................................38
Section 6.1
Conduct of
Business Prior to the Closing....................38
Section 6.2
Certain
Limitations.........................................41
Section 6.3
Access to
Information; Confidentiality......................41
Section 6.4
No
Solicitation.............................................42
Section 6.5
Notices of
Certain Events...................................44
Section 6.6
Proxy
Material; Shareholder Meeting.........................45
Section 6.7
Employees;
Benefit Plans....................................46
Section 6.8
Directors'
and Officers' Indemnification and Insurance......48
Section 6.9
All
Reasonable Efforts......................................49
Section 6.10
Public
Announcements........................................50
Section 6.11
Stock Exchange
Listing......................................51
Section 6.12
Fees and
Expenses...........................................51
Section 6.13
Takeover
Statutes...........................................51
Section 6.14
Resignations................................................51
Section 6.15
Shareholder
Litigation......................................51
Section 6.16
Rule
16b-3..................................................51
ARTICLE VII
CONDITIONS...................................................52
Section 7.1
Mutual
Conditions to Closing................................52
Section 7.2
Conditions
to Obligation of Parent and MergerCo.............52
Section 7.3
Conditions
to Obligation of the Company.....................53
ARTICLE VIII TERMINATION,
AMENDMENT AND WAIVER............................53
Section 8.1
Termination by Mutual Consent...............................53
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Section 8.2
Termination by Either Parent or the Company.................53
Section 8.3
Termination by Parent.......................................54
Section 8.4
Termination by the Company..................................55
Section 8.5
Effect of
Termination.......................................55
Section 8.6
Company
Termination Fee.....................................55
Section 8.7
Parent
Termination Fee......................................56
Section 8.8
Amendment...................................................57
Section 8.9
Extension;
Waiver...........................................57
ARTICLE IX
MISCELLANEOUS................................................57
Section 9.1
Interpretation..............................................57
Section 9.2
Survival....................................................58
Section 9.3
Governing
Law...............................................58
Section 9.4 Waiver of Jury
Trial........................................58
Section 9.5
Notices.....................................................58
Section 9.6
Entire
Agreement............................................59
Section 9.7
No
Third-Party Beneficiaries................................59
Section 9.8
Severability................................................59
Section 9.9
Rules of
Construction.......................................60
Section 9.10
Assignment..................................................60
Section 9.11
Remedies....................................................60
Section 9.12
Specific
Performance........................................60
Section 9.13
Counterparts;
Effectiveness.................................60
iii
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT
AND PLAN OF MERGER (this "AGREEMENT") is
entered into as of November 8, 2006, between Northrop Grumman Space & Mission
Systems Corp., an Ohio corporation ("PARENT"), Eagle Transaction Corporation
("MERGERCO"), a
Virginia corporation, and Essex Corporation, a Virginia
corporation (the "COMPANY").
RECITALS
WHEREAS, the parties
intend that MergerCo
be merged with and
into the Company,
with the Company
surviving that merger, on the terms and
subject to the conditions set forth herein, and in accordance with the
Virginia
Stock Corporation Act (the "VSCA");
WHEREAS, the Board of Directors of the Company has unanimously
(i) determined that
this Agreement and the
transactions
contemplated
hereby,
including the Merger,
are advisable,
fair to and in the
best interests of the
Company and its
shareholders, (ii)
approved and adopted this Agreement and the
transactions
contemplated hereby,
including the Merger,
and (iii) recommended
approval of this Agreement and the transactions contemplated hereby, including
the Merger, by the shareholders of the Company;
WHEREAS, the Boards of
Directors of Parent and MergerCo have
unanimously approved and adopted this Agreement;
WHEREAS, concurrently with the execution of this Agreement, as
a condition and inducement to Parent's and MergerCo's willingness to enter into
this Agreement, the
Company, Parent, and
MergerCo and certain
shareholders of
the Company are entering into voting agreements, of even date herewith (the
"VOTING AGREEMENTS") pursuant to which such shareholders have
agreed, subject to
the terms thereof, to vote all shares of common stock of the Company (the
"COMMON STOCK") held by them in favor of the Merger and this
Agreement;
WHEREAS, concurrently
with the execution and delivery of this
Agreement, certain
executives
of the Company have executed and delivered
employment/retention
agreements with the
Company, to be effective upon the
consummation of the Merger; and
WHEREAS, the
Company, Parent and MergerCo desire to make
certain representations, warranties, covenants and agreements in
connection with
the Merger and the
transactions
contemplated
by this Agreement and also to
prescribe certain conditions to the Merger;
NOW, THEREFORE,
in consideration of
the foregoing and of the
representations,
warranties,
covenants and
agreements
contained in this
Agreement, the parties, intending to be legally bound, agree as
follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1
CERTAIN DEFINITIONS.
For purposes of this Agreement, the
following terms will
have the following
meanings when used herein with initial
capital letters:
"ACCEPTABLE CONFIDENTIALITY
AGREEMENT" means
a
confidentiality and
standstill
agreement that contains confidentiality and
standstill provisions that are no less favorable in the aggregate
to the Company
than those contained in the Confidentiality Agreement; provided, however, that
an Acceptable
Confidentiality
Agreement may include
provisions that are
less
favorable to the Company than those contained in the Confidentiality Agreement
so long as the Company offers to amend the Confidentiality Agreement,
concurrently with
execution of such Acceptable Confidentiality Agreement, to
include substantially similar provisions.
"AFFILIATE" means,
with respect to any
Person, any
other Person that directly or indirectly controls, is controlled by or is under
common control with,
such first Person.
For the purposes of
this definition,
"control" (including,
with correlative meanings, the terms "controlling,"
"controlled by" and
"under common
control with"), as applied to any Person,
means the possession,
directly or
indirectly, of the
power to direct or cause
the direction of the management and policies of that Person,
whether through the
ownership of voting securities, by Contract or otherwise.
"BUSINESS DAY" means
any day, other than
Saturday,
Sunday or a day on
which banking institutions in the City of New York are
generally closed.
"CODE" means the
Internal Revenue
Code of 1986, as
amended, and any rules and regulations promulgated thereunder.
"COMPANY BENEFIT PLAN" means each "employee benefit
plan" within the meaning of Section 3(3) of ERISA, including
multiemployer plans
within the meaning of Section 3(37) of ERISA, and each other stock purchase,
stock option, restricted stock, severance, retention, employment, consulting,
change-of-control, collective
bargaining,
bonus,
incentive,
deferred
compensation, employee
loan, fringe benefit and other benefit plan, agreement,
program, policy,
commitment
or other arrangement, whether or not subject to
ERISA (including any related funding mechanism now in effect or
required in the
future), whether
formal or informal,
oral or written, in each case under which
any past or present director, officer, or employee of the
Company or any of its
Subsidiaries has any present or future right to benefits.
"COMPANY CERTIFICATE"
means the Articles of
Incorporation of the
Company, as
amended.
"COMPANY INTELLECTUAL
PROPERTY RIGHTS" means all
Intellectual Property Rights owned by the Company and any of its
Subsidiaries.
"COMPANY JOINT
VENTURE" means, with
respect to the
Company, any Person in which the Company, directly or indirectly,
owns an equity
interest that
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does not have voting power under ordinary circumstances to elect a majority of
the board of directors or other Person performing similar functions
but in which
the Company
has substantial rights with respect to the management of such
Person.
"COMPANY MATERIAL
ADVERSE EFFECT" means any event,
state of facts,
circumstance,
development, change or
effect (including
those
affecting or relating to any Company Joint Venture) that,
individually or in the
aggregate with all other events, states of fact, circumstances, developments,
changes and
effects, (i) is materially adverse to the business, assets,
liabilities, financial condition or results of operations of the
Company and its
Subsidiaries, taken as
a whole or (ii) would
prevent or materially
impair or
materially delay the
ability of the Company to perform its obligations under
this Agreement or to consummate the transactions contemplated hereby; PROVIDED,
HOWEVER, that none of
the following shall
give rise to or constitute a Company
Material Adverse
Effect for any purpose
under this Agreement:
(A) changes in
general economic,
capital market or
industry conditions
except to the
extent
such changes have a disproportionate impact on the Company and its
Subsidiaries,
taken as a whole,
relative to other
participants in the
industry in which the
Company conducts
its businesses; (B) any failure, in and of itself, by the
Company to meet any internal or published projections, forecasts or revenue or
earnings predictions
or projections (it being understood that any change in the
Company underlying or
contributing to such failure may be taken into account in
determining whether there exists a Company Material Adverse
Effect); (C) effects
of the announcement
of this Agreement or
the pendency or
consummation of
the
transactions
contemplated hereby;
(D) any Law or Order
enacted,
promulgated,
issued, entered,
amended or enforced by
any Governmental Entity (or the threat
thereof) after the date of this Agreement enjoining, restraining, preventing,
delaying or prohibiting consummation of the transactions contemplated by this
Agreement or making the consummation of the transactions contemplated by this
Agreement illegal
pursuant to
applicable
Law; or (E) as set
forth on Section
1.1(b) of the Company Disclosure Letter.
"COMPANY ORGANIZATIONAL DOCUMENTS" means the articles
of incorporation and bylaws (or the equivalent organizational documents) of
the
Company and each of its Subsidiaries, in each case as in effect on the
date of
this Agreement.
"CONFIDENTIALITY
AGREEMENT" means
that certain
confidentiality agreement by and between the Company and Parent,
dated September
1, 2006.
"CONTRACTS" means any contracts, agreements,licenses,
notes, bonds, mortgages, indentures, commitments, leases or other
instruments or
obligations, whether
written or oral (including, without limitation, any
employment, severance,
change in control, or other similar agreement with
employees and/or directors of the Company).
"CREDIT FACILITY"
means that
certain Amended and
Restated Revolving Line of Credit Loan and Security Agreement,
dated as of June
30, 2005, as amended, between the Company and its Subsidiaries and Bank of
America, N.A.
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"ENVIRONMENTAL CLAIMS"
means, in respect of any
Person, any and all
administrative,
regulatory
or judicial
actions, suits,
orders, decrees,
demands, directives, claims, liens, proceedings or written
notices of noncompliance or violation by any Governmental
Entity, alleging (i)
liability with respect to the potential presence or Release of, or
exposure to,
any Hazardous Materials at any location, whether or not owned, operated,
leased
or managed by such Person, (ii) indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of, or
exposure to, any
Hazardous Materials,
or (iii) any other
liability arising under Environmental
Laws.
"ENVIRONMENTAL LAWS"
means all applicable
federal,
state, local and foreign laws (including international conventions, protocols
and treaties), common
law, rules,
regulations,
orders, decrees, judgments,
binding agreements or Environmental Permits issued, promulgated or
entered into,
by or with any Governmental Entity, relating to pollution,
Hazardous
Materials,
natural resources
or the protection, investigation or restoration of the
environment as in effect on or prior to the date of this
Agreement.
"ENVIRONMENTAL PERMITS" means all permits, licenses,
registrations and other governmental authorizations required under applicable
Environmental Laws.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any rules and regulations promulgated
thereunder.
"EXPORT AND
IMPORT CONTROL LAWS" means any United
States Law or any
Order involving
or regulating the import or export of the
Company or its Subsidiaries products or services, including but not limited to
the Tariff Act of 1930 as amended, the Export Administration Act of 1979 as
amended, the Export
Administration
Regulations,
the International
Emergency
Economic Powers Act as amended, the Arms Export Control Act, the
International
Traffic in Arms Regulations, the Uniting and Strengthening
America by Providing
Appropriate Tools
Required to Intercept
and Obstruct
Terrorism Act of 2001,
Executive Orders of
the President
regarding embargoes and restrictions on
transactions with
designated
entities
(including
countries,
terrorists,
organizations and individuals), and the embargoes and restrictions
administered
by the United States Office of Foreign Assets Control and the Money Laundering
Control Act ss. 120.16.
"FIXED
PRICE CONTRACT" means any firm-fixed-price
Contract, fixed-price
Contract with
prospective price adjustment, fixed-price
incentive
Contract or
fixed-price
Contract
with
prospective
price
redetermination, but
does not include time and materials fixed-labor-rate
Contracts.
"FOREIGN PERSON" means
any natural person who is not
a lawful permanent
resident as defined by 8 U.S.C. 1101(a)(20) or who is not a
protected individual
as defined by 8 U.S.C. 1324b(a)(3). It also means any
foreign corporation,
business association,
partnership, trust,
society or any
other entity or group
that is not
incorporated or
organized to do business in
the United States, as well as international
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<PAGE>
organizations, foreign
governments
and any agency or
subdivision
of foreign
governments (e.g., diplomatic missions).
"HAZARDOUS MATERIALS" means (i) any substance that is
listed, classified or regulated under any Environmental Laws; (ii)
any petroleum
product or by-product,
asbestos-containing
material,
lead-containing paint or
plumbing,
polychlorinated
biphenyls, radioactive
material, toxic molds, or
radon; or (iii) any other substance that is the subject of
regulatory action, or
that could give rise to liability, under any Environmental
Laws.
"INTELLECTUAL
PROPERTY RIGHTS"
means all of the
following: (i)
patents, patent rights, patent applications and patent
disclosures, (ii) trademarks, trademark rights, trade names,
trade name rights,
service marks, service mark rights, logos, corporate names and Internet
domain
names, together with
all goodwill associated with each of the foregoing, (iii)
copyrights and copyrightable works, (iv) computer software (including source
code, object code, data, databases and documentations),
(v) inventions,
trade
secrets, mask
work, confidential information, know-how (whether or not
patentable and whether
or not reduced to practice) and (vi) other proprietary
information and intellectual property.
"JOINT VENTURE AGREEMENTS" means such Contracts with
respect to Company
Joint Ventures as the
Company has made
available to Parent
prior to the date of this Agreement.
"KNOWLEDGE" means,
when used with respect to the
Company, the actual
knowledge of the Persons set forth in Section 1.1(a) of the
Company Disclosure Letter.
"LAWS" means any domestic or foreign laws, statutes,
ordinances, rules (including rules of common law), regulations,
codes, executive
orders or legally enforceable requirements enacted, issued,
adopted, promulgated
or applied by any Governmental Entity.
"LIENS" means any
mortgages, deeds of
trust, liens
(statutory or
other), pledges, security interests, collateral security
arrangements,
conditional and
installment
agreements,
claims,
covenants,
conditions,
restrictions,
reservations, options,
rights of first offer or
refusal, charges, easements, rights-of-way, encroachments, third
party rights or
other encumbrances or title imperfections or defects of any kind or
nature.
"LOSS CONTRACT"
means any Contract or subcontract
that (i) has generated
revenues for the Company during the Company's current
fiscal year and for which the cost of performing such Contract or subcontract
since the start of the Company's current fiscal year through
September 30, 2006
has exceeded the monies paid to the Company under such Contract or subcontract
since the start of the Company's current fiscal year through
September 30, 2006
or (ii) to the
Knowledge of the
Company, has an
estimate at completion
that
exceeds the Contract or subcontract value. For purposes of this definition,
"costs" means all
costs to the Company
of performing
under
5
<PAGE>
such Contract or subcontract consistent with the Company's past
practices, and
including all
allocations
of general and administrative expenses to such
Contract or subcontract.
"ORDERS" means any
orders, judgments,
injunctions,
decrees or writs
handed down,adopted
or imposed
by, including any consent
decree, settlement agreement or similar written agreement with, any
Governmental
Entity.
"PARENT MATERIAL
ADVERSE EFFECT" means any event,
state of facts, circumstance, development, change or effect that,
individually
or in the aggregate
with all other events, states of fact, circumstances,
developments, changes
and effects, would prevent or materially impair or
materially delay the ability of Parent or MergerCo to perform their
obligations
under this Agreement or to consummate the transactions contemplated
hereby.
"PERMITTED LIENS"
means (i) liens for
Taxes not yet
due and payable or
that are being
contested in good
faith and by
appropriate
proceedings; (ii) mechanics', materialmen's or other liens or
security interests
that secure a
liquidated amount that
are being contested in
good faith and by
appropriate
proceedings; or
(iii) any other liens, security interests,
easements,
rights-of-way,
encroachments,
restrictions,
conditions and
other
encumbrances that do not secure a liquidated amount, that have been incurred or
suffered in the ordinary course of business and that would not,
individually or
in the aggregate,
have a material
effect on the assets
or properties to which
they relate.
"PERSON" means any individual, corporation, limited
or general
partnership,
limited
liability
company, limited liability
partnership, trust,
association, joint
venture, Governmental
Entity and other
entity and group
(which term will
include a "group" as such term is defined in
Section 13(d)(3) of the Exchange Act).
"RELEASE" means any
actual or threatened release,
spill, emission,
leaking, dumping, injection, pouring, deposit, disposal,
discharge, dispersal, leaching or migration into the
environment.
"REPRESENTATIVES"
means, when used with
respect to
Parent or the Company, the directors, officers, employees, consultants,
accountants, legal counsel, investment bankers, agents and other
representatives
of Parent or the Company, as applicable, and its Subsidiaries.
"REQUISITE COMPANY
VOTE" means the
approval of this
Agreement, the Merger
and the other
transactions
contemplated
hereby by the
holders of more than
two-thirds of the
voting power of the Shares entitled to
vote thereon, voting together as a single class.
"SCC" means the State
Corporation Commission
of the
Commonwealth of Virginia.
"SUBSIDIARY" means, when used with respect to Parent,
MergerCo or the Company, any other Person (whether or not incorporated) that
Parent, MergerCo or
the Company, as applicable, directly or indirectly owns or
has the power to vote or
6
<PAGE>
control 50% or more of
any class or series of
capital stock or other equity
interests of such Person.
"SUPERIOR PROPOSAL"
means any bona fide written
Takeover Proposal
that the Company Board determines in good faith (after
consultation with its
financial advisor) to be reasonably capable of being
consummated and to be more favorable (taking into account (i) all
financial and
strategic
considerations,
including relevant legal, financial, regulatory and
other aspects
of such Takeover Proposal and the Merger and the other
transactions
contemplated by this
Agreement deemed relevant by the Board of
Directors, and
(ii) the anticipated timing, conditions and prospects for
completion of such
Takeover Proposal, including the prospects for obtaining
regulatory approvals and financing, and any third party shareholder
approvals)
to the Company's
shareholders
than the Merger and the other transactions
contemplated by this
Agreement (taking into account all of the terms of
any
proposal by
Parent to amend or
modify the terms of
the Merger
and the other
transactions contemplated by this Agreement), except that the
reference to "15%"
in the definition of
"Takeover Proposal"
shall be deemed to be
a reference to
"50%".
"TAKEOVER PROPOSAL"
means any inquiry,
proposal or
offer from any Person or group of Persons other than Parent or
MergerCo or their
Affiliates relating
to any direct or
indirect acquisition or purchase of a
business or
division (or more than one of them) that in the aggregate
constitutes 15% or more of the net revenues, net income or assets
of the Company
and its Subsidiaries, taken as a whole, or 15% or more of the
equity interest in
the Company
(by vote or value),
any tender
offer or exchange offer that if
consummated would result in any Person or group of Persons
beneficially
owning
15% or more of the equity interest (by vote or value) in the
Company, or any
merger,
reorganization,
consolidation, share
exchange, business
combination,
recapitalization,
liquidation, dissolution or similar transaction involving the
Company (or any
Subsidiary
or Subsidiaries of the Company whose business
constitutes 15% or more of the net revenues, net income or assets
of the Company
and its Subsidiaries, taken as a whole).
"TAX RETURNS"
means any and all
reports, returns,
declarations, claims for refund, elections, disclosures,
estimates,
information
reports or returns or statements required to be supplied to a
taxing authority
in connection
with Taxes,
including any schedule or attachment thereto or
amendment thereof.
"TAX(ES)" means
(i) any and all federal, state,
provincial, local,
foreign and other taxes, levies, fees, imposts, duties, and
similar governmental
charges (including any interest, fines, assessments,
penalties or additions
to tax imposed in
connection therewith
or with respect
thereto) including
(x) taxes imposed on, or measured by,
income, franchise,
profits or gross
receipts, and (y) ad
valorem, value
added, capital gains,
sales, goods and
services, use, real or personal property, capital stock,
license, branch, payroll, estimated, withholding, employment, social security
(or similar),
unemployment,
compensation,
utility, severance, production,
excise, stamp, occupation, premium, windfall profits,
transfer and gains taxes,
and customs duties,
(ii) any liability for payment of amounts
described in
clause (i)
whether as a result of
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transferee liability,
joint and several liability for being a member of an
affiliated,
consolidated,
combined, unitary or
other group for any period, or
otherwise by
operation of law, and (iii) any liability for the payment of
amounts described
in clause (i) or (ii) as a result of any tax
sharing, tax
indemnity or tax allocation agreement or any other express or
implied agreement
to pay or indemnify any other Person.
"TREASURY REGULATIONS" means the Treasury regulations
promulgated under the Code.
Section
1.2
OTHER DEFINED TERMS.
The following terms
have the
meanings defined for such terms in the Sections set forth
below:
--------------------------------------------------
-------------------------
2005 SEC Documents
Article IV
--------------------------------------------------
-------------------------
Affiliate Transaction
Section 4.20
--------------------------------------------------
-------------------------
Agreement
Preamble
--------------------------------------------------
-------------------------
Antitrust Division
Section 6.9(a)
--------------------------------------------------
-------------------------
Articles of Merger
Section 2.3
--------------------------------------------------
-------------------------
Bid
Section 4.12(c)
--------------------------------------------------
-------------------------
Certificate
Section 3.1(c)
--------------------------------------------------
-------------------------
Closing
Section 2.2
--------------------------------------------------
-------------------------
Closing Date
Section 2.2
--------------------------------------------------
-------------------------
COBRA
Section 4.13(f)
--------------------------------------------------
-------------------------
Common Stock
Recitals
--------------------------------------------------
-------------------------
Company
Preamble
--------------------------------------------------
-------------------------
Company Adverse Recommendation Change
Section 6.4(d)(iv)
--------------------------------------------------
-------------------------
Company Assets
Section 4.6
--------------------------------------------------
-------------------------
Company Board
Section 4.2(a)
--------------------------------------------------
-------------------------
Company Board Recommendation
Section 4.2(a)
--------------------------------------------------
-------------------------
Company Disclosure Letter
Article IV
--------------------------------------------------
-------------------------
Company Financial Advisor
Section 4.22
--------------------------------------------------
-------------------------
Company Government Contract
Section 4.12(c)
--------------------------------------------------
-------------------------
Company Government Subcontract
Section 4.12(c)
--------------------------------------------------
-------------------------
Company Permits
Section 4.18(a)
--------------------------------------------------
-------------------------
Company Proxy Statement
Section 4.5
--------------------------------------------------
-------------------------
Company Rights Agreement
Section 4.19(b)
--------------------------------------------------
-------------------------
Company SEC Documents
Section 4.8(a)
--------------------------------------------------
-------------------------
Company Termination Fee
Section 8.6(a)
--------------------------------------------------
-------------------------
Company Stock Award Plan(s)
Section 4.3(e)
--------------------------------------------------
-------------------------
Continuation Period
Section 6.7(a)
--------------------------------------------------
-------------------------
Contract
Section 4.12(a)
--------------------------------------------------
-------------------------
Dissenting Shares
Section 3.2(g)
--------------------------------------------------
-------------------------
Dissenting Shareholder
Section 3.2(g)
--------------------------------------------------
-------------------------
EC Merger Regulation
Section 4.5
--------------------------------------------------
-------------------------
Effective Time
Section 2.3
--------------------------------------------------
-------------------------
Employees
Section 6.7(a)
--------------------------------------------------
-------------------------
8
<PAGE>
--------------------------------------------------
-------------------------
ESPP
Section 3.5
--------------------------------------------------
-------------------------
Exchange Act
Section 4.5
--------------------------------------------------
-------------------------
Excluded Share(s)
Section 3.1(b)
--------------------------------------------------
-------------------------
Expenses
Section 6.12
--------------------------------------------------
-------------------------
FTC
Section 6.9(a)
--------------------------------------------------
-------------------------
GAAP
Section 4.8(b)
--------------------------------------------------
-------------------------
Governmental Entity
Section 4.5
--------------------------------------------------
-------------------------
HSR Act
Section 4.5
--------------------------------------------------
-------------------------
Indemnified Parties
Section 6.8(a)
--------------------------------------------------
-------------------------
IRS
Section 4.13(b)
--------------------------------------------------
-------------------------
Legal Action
Section
4.11
--------------------------------------------------
-------------------------
Material Contract
Section 4.12(a)
--------------------------------------------------
-------------------------
Maximum Premium
Section 6.8(b)
--------------------------------------------------
-------------------------
Measurement Date
Section 4.3(a)
--------------------------------------------------
-------------------------
Merger
Section 2.1
--------------------------------------------------
-------------------------
MergerCo
Preamble
--------------------------------------------------
-------------------------
Merger Consideration
Section 3.1(b)
--------------------------------------------------
-------------------------
Multiemployer Plan
Section 4.13(d)
--------------------------------------------------
-------------------------
Multiple Employer Plan
Section 4.13(a)
--------------------------------------------------
-------------------------
National Security Regulations
Section 4.26
--------------------------------------------------
-------------------------
New Plans
Section 6.7(c)
--------------------------------------------------
-------------------------
Old Plans
Section 6.7(c)
--------------------------------------------------
-------------------------
Other Filings
Section 4.21
--------------------------------------------------
-------------------------
Parent
Preamble
--------------------------------------------------
-------------------------
Parent Expenses
Section 8.6(b)
--------------------------------------------------
-------------------------
Paying Agent
Section 3.2(a)
--------------------------------------------------
-------------------------
Payment Fund
Section 3.2(a)
--------------------------------------------------
-------------------------
PBGC
Section 4.13(d)
--------------------------------------------------
-------------------------
Permits
Section 4.18(a)
--------------------------------------------------
-------------------------
SEC
Section 4.5
--------------------------------------------------
-------------------------
Securities Act
Section 4.8(a)
--------------------------------------------------
-------------------------
Share(s) Section 3.1(b)
--------------------------------------------------
-------------------------
SOX
Section 4.8(a)
--------------------------------------------------
-------------------------
Stock Options
Section 3.4(a)
--------------------------------------------------
-------------------------
Surviving Corporation
Section 2.1
--------------------------------------------------
-------------------------
Termination Date
Section 8.2(a)
--------------------------------------------------
-------------------------
Termination Fee
Section 8.6(a)
--------------------------------------------------
-------------------------
Vetoing Counsel
Section 6.2
--------------------------------------------------
-------------------------
Voting Agreement
Recitals
--------------------------------------------------
-------------------------
VSCA
Recitals
--------------------------------------------------
-------------------------
WARN Act
Section 4.14(b)
--------------------------------------------------
-------------------------
Withdrawal Liability
Section 4.13(d)
--------------------------------------------------
-------------------------
9
<PAGE>
ARTICLE II
THE MERGER
Section 2.1.......THE
MERGER. Upon the terms
and subject to the conditions set
forth in this Agreement, and in accordance with the VSCA, at the
Effective Time,
MergerCo shall be
merged with and into the Company (the "Merger") and the
separate corporate
existence of MergerCo
shall thereupon
cease. The Company
shall be the surviving corporation in the Merger (sometimes
hereinafter referred
to as the "SURVIVING CORPORATION"), and the separate corporate
existence of the
Company with all its rights, privileges, immunities, powers and
franchises shall
continue unaffected
by the Merger
except as otherwise
provided herein. The
Merger shall have the effects specified in Article II hereof and
the VSCA.
Section 2.2.......CLOSING. The closing of the Merger (the
"CLOSING") shall take
place (a) at the offices of Fried, Frank, Harris, Shriver & Jacobson LLP,
One
New York Plaza, New York, New York 10004, at 9:00 A.M. on the first
Business Day
after the day on which the last to be fulfilled or waived of the
conditions set
forth in Article VII hereof (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)
shall be satisfied or waived in accordance with this
Agreement, or (b) at
such other place and time and/or on such other date as the
Company and Parent may agree in writing (the date such Closing
actually occurs,
the "CLOSING DATE").
Section 2.3.......EFFECTIVE TIME. On the Closing Date, the Company,
MergerCo and
Parent will cause the Merger to be consummated by filing articles
of merger, in
customary form (the
"ARTICLES OF MERGER")
with the SCC and by making all other
filings or recordings
required under the VSCA in connection with the Merger, in
such form as is
required by, and
executed in accordance with the relevant
provisions of, the VSCA. The Merger shall become effective upon the issuance of
a certificate of
merger by the SCC or at such later time as may be agreed to by
Parent and the Company in writing and specified in the Articles of Merger (the
effective time of the Merger being referred to herein as the
"EFFECTIVE TIME").
Section
2.4.......SUBSEQUENT
ACTIONS. If at any
time after the Effective Time
the Surviving
Corporation will consider or be advised that any deeds,
bills of
sale, assignments,
assurance or any other
actions or things 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 MergerCo
acquired or to be
acquired by the Surviving Corporation as a result of, or in
connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving
Corporation shall be
authorized to execute
and deliver, in
the
name and on behalf of either the Company or MergerCo, all such deeds, bills of
sale, instruments of conveyance, assignments and assurances and to
take and do,
in the name and on behalf of each of such corporations or otherwise, all such
other actions and
things as may be necessary or desirable to vest, perfect or
confirm any and all
right, title and
10
<PAGE>
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
Section
2.5.......EFFECTS OF
THE MERGER. The Merger
will generally
have the
effects set forth in this Agreement and the applicable provisions
of the VSCA.
Section 2.6.......ARTICLES OF INCORPORATION; BYLAWS. At the Effective Time,
(a)
the Articles
of Incorporation of the Surviving Corporation, as in effect
immediately prior to
the Effective Time,
shall be amended as of
the Effective
Time so as to read in its entirety in the form of EXHIBIT A hereto
and (b) the
bylaws of the
Surviving Corporation
shall be amended so as to read in their
entirety in the form of EXHIBIT B hereto.
Section
2.7.......DIRECTORS
AND OFFICERS . The
directors of MergerCo
and the
officers of the Company, in each case, as of the Effective
Time shall, from and
after the Effective
Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors have been duly elected
or appointed
and qualified or until their earlier death, resignation or removal
in accordance
with the Articles of Incorporation or bylaws of the Surviving
Corporation.
ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK
Section 3.1.......EFFECT ON CAPITAL STOCK. At the Effective Time,
as a result of
the Merger and without any action on the part of Parent, MergerCo
or the Company
or the holder of any capital stock of Parent, MergerCo or the
Company:
(a) CANCELLATION
OF CERTAIN
COMMON STOCK.
Each share of Common
Stock that is
owned by Parent,
MergerCo, the Company
(as treasury stock or otherwise) or any
of their respective
direct or indirect
wholly owned
Subsidiaries (other
than
Shares held on behalf of third parties) will automatically be
cancelled and will
cease to exist, and no consideration will be delivered in exchange
therefor.
(b) CONVERSION OF COMMON STOCK. Each share of Common Stock (each,
a "SHARE" and
collectively, the
"SHARES") issued and
outstanding
immediately
prior to the
Effective Time (other than (i) Shares to be cancelled in accordance
with Section
3.1(a) and (ii)
Dissenting
Shares, if any (each, an "EXCLUDED SHARE" and
collectively, the
"EXCLUDED SHARES")) will be converted into the right to
receive $24 in cash, without interest (the "MERGER
CONSIDERATION").
(c) CANCELLATION OF SHARES. At the Effective Time, all Shares
will no longer be
outstanding and all
Shares will be
cancelled and will cease to exist, and,
subject to Section 3.3, each holder of a certificate formerly representing any
such Shares (each, a
"CERTIFICATE") will
cease to have any rights with respect
thereto, except the right to receive the Merger Consideration,
without interest,
in accordance with Section 3.2.
(d) CONVERSION OF MERGERCO CAPITAL STOCK. Each share of common stock, par
value
$0.01 per share, of
MergerCo issued and
outstanding
11
<PAGE>
immediately prior to
the Effective
Time will be
converted into one share of
common stock, par value $0.01 per share, of the Surviving
Corporation.
Section
3.2.......SURRENDER OF
CERTIFICATES.
(a) PAYING AGENT.
Prior to the
Effective Time,
for the benefit of the
holders of Shares
(other than Excluded
Shares) Parent
will designate, or cause to be designated, a bank or trust
company that is reasonably acceptable to the Company (the "PAYING
AGENT") to act
as agent for the payment of the Merger Consideration in respect of
Certificates
upon surrender of such
Certificates
(or effective
affidavits of loss in
lieu
thereof) in
accordance
with this Article III from time to time after the
Effective Time. Promptly after the Effective Time, Parent will
deposit, or cause
to be deposited,
with the Paying Agent cash in amounts and at the times
necessary for the payment of the Merger Consideration pursuant to
Section 3.1(b)
upon surrender of such
Certificates (such
cash being herein referred to as the
"PAYMENT FUND").
The Paying
Agent will invest the
Payment Fund as directed by
Parent.
(b) PAYMENT PROCEDURES. As promptly as practicable after the
Effective Time, the
Surviving Corporation
will instruct the
Paying Agent to mail to each holder of
record of Shares
(other than
Excluded Shares) a letter of transmittal in
customary form as reasonably agreed by the parties specifying that
delivery will
be effected, and risk
of loss and title to
Certificates will
pass, only upon
proper delivery
of Certificates (or effective affidavits of loss in lieu
thereof) to the Paying Agent and instructions for use in effecting
the surrender
of the Certificates
(or effective affidavits of loss in lieu thereof) in
exchange for
the Merger Consideration. Upon the proper surrender of a
Certificate (or
effective affidavit of loss in lieu thereof) to the Paying
Agent, together with a properly completed letter of transmittal,
duly executed,
and such other documents as may reasonably be requested by the
Paying Agent, the
holder of such Certificate will be entitled to receive in exchange
therefor cash
in the amount (after giving effect to any required tax withholdings) that such
holder has
the right to receive pursuant to this Article III, and the
Certificate so surrendered will forthwith be cancelled. No interest
will be paid
or accrued on any amount payable upon due surrender of the
Certificates. In
the
event of a transfer
of ownership of Shares that is not registered in the
transfer records
of the Company, cash to be paid upon due
surrender of the
Certificate may be
paid to such a transferee if the Certificate formerly
representing such
Shares is presented to the Paying Agent, accompanied by all
documents required to evidence and effect such transfer and to
evidence that any
applicable stock transfer Taxes have been paid or are not
applicable.
(c) WITHHOLDING
TAXES. Parent and the Paying Agent will
be entitled to deduct
and withhold from amounts otherwise payable pursuant to this Agreement to
any
holder of Shares or holder of Stock Options any amounts
required to be
deducted
and withheld
with respect to such payments under the Code and the rules
and
Treasury Regulations promulgated thereunder, or any provision of
state, local or
foreign Tax law. Any amounts so deducted and withheld will be treated for all
purposes of this
Agreement as having been paid to the holder
of the Shares or
holders of Stock Options, as the case may be, in respect of which
such deduction
and withholding was made.
12
<PAGE>
(d) NO FURTHER
TRANSFERS. After the
Effective Time, there will be no transfers
on the stock transfer
books of the
Company of Shares that were outstanding
immediately prior to the Effective Time other than to settle
transfers of Shares
that occurred
prior to the
Effective Time. If, after the Effective Time,
Certificates are
presented to the
Paying Agent,
they will be
cancelled and
exchanged for the Merger Consideration as provided in this Article
III.
(e) TERMINATION
OF PAYMENT FUND.
Any portion of the
Payment Fund that remains
undistributed to the
holders of the
Certificates 12 months after the Effective
Time will be delivered to Parent, on demand, and any holder of a
Certificate who
has not theretofore
complied with this Article III will thereafter look only to
Parent for
payment
of his or her claims for Merger Consideration.
Notwithstanding the
foregoing,
none of Parent,
MergerCo, the Company, the
Surviving Corporation,
the Paying
Agent or any other
Person will be liable to
any former
holder of Shares
for any amount delivered to a public official
pursuant to applicable abandoned property, escheat or similar
Laws.
(f) LOST, STOLEN OR
DESTROYED
CERTIFICATES. In the
event any Certificate
has
been lost, stolen or destroyed, upon the making of an affidavit of
that fact by
the Person claiming
such Certificate
to be lost,
stolen or destroyed
and, if
required by the Surviving Corporation, the posting by such Person of a
bond in
customary amount and
upon such terms as Parent may determine are necessary as
indemnity against
any claim that may be
made against it with
respect to such
Certificate, the
Paying Agent will issue in exchange for such lost, stolen or
destroyed Certificate the Merger Consideration pursuant to this
Agreement.
(g) DISSENTING SHARES.
Parent and Company do not believe that the provisions of
Article 15 of the VSCA will be applicable to the Merger.
However, in the event
such Article becomes
applicable,
then notwithstanding any provision of this
Agreement to the
contrary, any Shares outstanding immediately prior to the
Effective Time that are held by a shareholder (a "DISSENTING
SHAREHOLDER")
who
has neither voted in
favor of the adoption
of this Agreement nor consented
thereto in writing and who has demanded properly in writing appraisal for such
Shares and otherwise
properly perfected and not withdrawn or lost his or
her
rights (the "DISSENTING SHARES") in accordance with
Article 15 of the VSCA will
not be converted into, or represent the right to receive, the Merger
Consideration. Such
Dissenting Shareholders will be entitled to receive payment
of the appraised value of Dissenting Shares held by them in accordance
with the
provisions of Article 15 of the VSCA, except that all Dissenting Shares
held by
shareholders who have
failed to perfect or who effectively have withdrawn or
lost their rights to appraisal of such Dissenting Shares pursuant to Article 15
of the VSCA will thereupon be deemed to have been converted
into, and
represent
the right to receive, the Merger Consideration in the manner
provided in Article
III and will no longer
be Excluded
Shares. Notwithstanding anything to the
contrary contained
in this Section 3.2(g), if the Merger is rescinded or
abandoned, then the
right of any
shareholder to be paid the fair value of such
shareholder's
Dissenting Shares
pursuant to Article 15 of the VSCA will cease.
The Company
will give MergerCo prompt notice of any written demands for
appraisal, attempted
withdrawals
of such demands,
and any other
13
<PAGE>
instruments served
pursuant to applicable Law received by the Company relating
to shareholders'
rights of appraisal. The Company will give MergerCo the
opportunity to participate in and direct all negotiations and proceedings with
respect to demands for appraisal to the extent permitted by applicable Law.
The
Company will not,
except with the prior
written consent of
MergerCo or unless
and to the extent required to do so under applicable Law, make any payment
with
respect to any demands for appraisals of Dissenting Shares, offer to settle or
settle any such demands or approve any withdrawal or other
treatment of any such
demands.
Section
3.3.......ADJUSTMENTS TO PREVENT DILUTION. In the event that, after
the
date hereof and prior to the Effective Time, the Company changes the number of
Shares, or securities
convertible
or exchangeable into or exercisable for
Shares, issued and
outstanding
prior to the
Effective Time as a result of a
reclassification,
stock split (including a reverse stock split), stock dividend
or distribution,
recapitalization,
merger, subdivision,
issuer tender or
exchange offer, or other similar transaction, the Merger Consideration will
be
equitably adjusted to reflect such change; PROVIDED, that nothing herein shall
be construed
to permit the Company to take any action with respect to its
securities that is prohibited by the terms of this Agreement.
Section
3.4.......TREATMENT OF
STOCK OPTIONS.
(a) Each option to purchase
Shares, other than rights to acquire Shares pursuant to the ESPP,
(collectively,
the "STOCK
OPTIONS") outstanding immediately prior to the Effective Time
pursuant to
the Company Benefit Plans (whether or not then vested or
exercisable) will at
the Effective
Time be cancelled and the holder of such
Stock Option will, in
full settlement of
such Stock Option and in exchange for
the surrender to the Company of any certificate or other document evidencing
such Stock Option, receive from the Company an amount (subject to
any applicable
withholding tax) in
cash, without
interest, equal to the product of (x) the
excess, if any, of the Merger Consideration over the exercise price
per Share of
such Stock Option
multiplied by (y) the number of Shares subject to such Stock
Option (with the
aggregate amount of such payment rounded up to the nearest
whole cent). All Stock
Options shall terminate as of the Effective Time and the
holders of Stock
Options will have no
further rights in respect of any Stock
Options from and after the Effective Time.
(b) Prior to the Effective Time, the Company will adopt such
resolutions
and
will take such other
actions as shall be
required to
effectuate
the actions
contemplated by this Section 3.4, without paying any consideration or incurring
any debts or obligations on behalf of the Company or the Surviving
Corporation.
Parent and the Company
will cooperate with each other in establishing such
procedures as may be necessary to provide for the timely
payment of the
amounts
payable pursuant to
Section 3.4(a) and for the timely and accurate calculation
of, and payment to the applicable taxing authority of, all amounts required
to
be withheld in respect of such amounts.
Section
3.5.......TREATMENT OF
ESPP. Prior to the date hereof, the Company or
the administrator
of the Company's 2004 Employee Stock Purchase Plan (the
"ESPP") has taken all such action (and provided Parent evidence
thereof) as may
be necessary under the
ESPP (a) to provide that in connection with the Closing,
the then effective
Purchase Interval (as defined in the ESPP) will be shortened
so that it ends on,
and a New Purchase
14
<PAGE>
Date (as defined in the ESPP) is established as of, a date that is
no later than
5 Business Days prior to the Effective Time, (b) to provide that
participants in
the ESPP shall purchase Shares on such New Purchase Date,
unless prior to
such
date the participant
has withdrawn
from the Purchase
Interval (in
accordance
with the terms of the ESPP), (c) to terminate the ESPP as of the
Effective Time,
and (d) to prohibit
(i) any increase in
the rate of payroll
deductions being
made by participants to the ESPP, (ii) any further direct payments by
participants
thereunder that were
not authorized
as of the date hereof,
and
(iii) the acceptance of any new participants into the ESPP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby
represents
and warrants to Parent
and to
MergerCo as follows,
except as set forth (i) in the applicable sections (or by
internal
cross-reference) of
the letter
(the "COMPANY DISCLOSURE LETTER")
delivered by the
Company to Parent
concurrently
with the execution of this
Agreement (provided that the mere inclusion of an item in the
Company Disclosure
Letter as an exception to a representation or warranty shall not be deemed an
admission that such item represents a material exception or
material fact, event
or circumstance or that such item has or would have a Company
Material Adverse
Effect) or (ii) in the Company's Annual Report on Form 10-K for the
fiscal year
ended December 31,
2005 or any Quarterly
Report on Form 10-Q or Current Report
on Form 8-K filed by the Company with the SEC after January 1, 2006
and prior to
October 15, 2006
(collectively, the
"2005 SEC DOCUMENTS")
(other than (A) any
risk factor disclosure, including disclosures contained in
the "Forward Looking
Statements" and "Risk
Factors" sections of the 2005 SEC Documents
and (B) any
documents filed as
exhibits to such 2005 SEC Documents to the extent that the
information is only
set forth in such
exhibits);
provided however that the
foregoing exception in
clause (ii) shall not apply to the representations and
warranties contained in Sections 4.1, 4.2, 4.3, 4.5 and 4.6.
Section
4.1.......ORGANIZATION; POWER; QUALIFICATION. The Company and each of
its Subsidiaries
is a corporation,
limited liability company or other legal
entity duly organized,
validly existing and
in good standing under the Laws of
its jurisdiction of
organization. Each of
the Company and its Subsidiaries has
the requisite
corporate or
partnership power and
authority to own,
lease and
operate its assets and to carry on its business as now conducted. Each of the
Company and its
Subsidiaries is duly
qualified or licensed to do business as a
foreign corporation,
limited liability
company or other legal entity and is in
good standing
in each jurisdiction where the character of the assets and
properties owned,
leased or operated by
it or the nature of its business makes
such qualification
or license
necessary,
except where the failure to be so
qualified or licensed or in good standing does not have and would
not reasonably
be expected
to have, individually or in the aggregate, a Company Material
Adverse Effect.
Neither the Company
nor any Subsidiary
nor, to the
Company's
Knowledge, any Company
Joint Venture, is in
violation of its organizational or
governing documents,
except for such
violations that do not have and would not
reasonably be expected
to have, individually
or in the aggregate, a Company
Material Adverse Effect.
15
<PAGE>
Section 4.2.......CORPORATE AUTHORIZATION; ENFORCEABILITY. (a) The Company
has
all requisite
corporate power and authority to enter into and to
perform its
obligations under this
Agreement and, subject
to approval of this Agreement by
the Requisite Company Vote, to consummate the transactions
contemplated by
this
Agreement. The Board
of Directors
of the Company
(the "COMPANY BOARD") has
unanimously (i) determined that this Agreement and the transactions
contemplated
hereby, including the
Merger, are advisable,
fair to and in the best interests
of the Company and its
shareholders, (ii)
approved and adopted this Agreement
and the transactions
contemplated
hereby, including the Merger, and (iii)
resolved to
recommend approval of this Agreement and the transactions
contemplated hereby,
including the Merger,
by the shareholders of
the Company
((i), (ii), and (iii)
collectively, the
"COMPANY BOARD
RECOMMENDATION"),
and
directed that such matter be submitted for consideration of the shareholders
of
the Company at the Company Shareholders Meeting. The execution, delivery and
performance of this Agreement by the Company and the consummation
by the Company
of the transactions
contemplated
by this Agreement have
been duly and validly
authorized by all necessary corporate action on the part of the
Company, subject
to the Requisite Company Vote.
(b) This Agreement
has been duly
executed and delivered by the Company and,
assuming the due
authorization,
execution and
delivery of this
Agreement by
Parent and MergerCo,
constitutes a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
Section 4.3.......CAPITALIZATION; OPTIONS. (a) The Company's
authorized capital
stock consists solely of 50,000,000 shares of Common Stock and
1,000,000 shares
of Preferred Stock (the "PREFERRED STOCK"), of which 2,500 shares of
Preferred
Stock are designated as Class A Preferred Stock and 500,000 shares of
Preferred
Stock are designated as Series B Convertible Preferred Stock. As of
the close of
business on October
31, 2006 (the
"MEASUREMENT DATE"),
21,780,467
shares of
Common Stock were
issued and
outstanding.
No shares of
Preferred Stock are
issued or outstanding.
As of the Measurement Date, no Shares are held in
the
treasury of the
Company. Since the Measurement Date until the date of this
Agreement, other than
in connection with the issuance of Shares pursuant to the
exercise of Stock Options outstanding as of the Measurement Date,
there has been
no change in the number of outstanding shares of capital stock of
the Company or
the number of
outstanding Stock
Options. As of the
Measurement
Date, Stock
Options to purchase
2,653,390 shares of Common Stock were outstanding, with a
weighted average
exercise price of $9.26 per share. Section 4.3(a) of the
Company Disclosure
Letter sets forth a
complete and correct
list of all Stock
Options that are outstanding as of the Measurement Date, the exercise price of
each such Stock Option, and with respect to the Persons specified
thereon, the
number of Stock
Options held by each such Person and the exercise prices
thereof. Except as set forth in this Section 4.3, there are no
shares of capital
stock or securities or other rights convertible or exchangeable into or
exercisable for shares
of capital stock of
the Company or such
securities or
other rights (which
term, for purposes of this Agreement, will be deemed to
include "phantom" stock, stock appreciation rights, or other commitments
that
provide any right to receive value or benefits similar to such capital
stock,
securities or other rights). Since the Measurement Date through the
date of this
Agreement, there have
been
16
<PAGE>
no issuances of any
securities of the Company or any of its Subsidiaries that
would have
been in breach of Section 6.1 if made after the date of this
Agreement.
(b) All outstanding Shares are duly authorized, validly issued, fully paid and
non-assessable and are not subject to any pre-emptive rights.
(c) There are no
outstanding
contractual
obligations of the Company or any of
its Subsidiaries (i) to issue, sell, or otherwise transfer to any
Person, or to
repurchase, redeem or
otherwise acquire from any Person, any Shares, Preferred
Stock, capital stock
of any Subsidiary of
the Company, or
securities or other
rights convertible or
exchangeable
into or exercisable
for shares of
capital
stock of the Company
or any Subsidiary
of the Company or such
securities
or
other rights
or (ii) to
provide any funds to or make any
investment
in any
Subsidiary of the Company that is not wholly owned by the
Company.
(d) Other than the issuance of Shares upon exercise of Stock Options and other
than previously announced regular quarterly dividends, since
January 1, 2006 and
through the date of this Agreement, the Company has not declared or paid any
dividend or distribution in respect of any of the Company's
securities.
(e) Each Company
Benefit Plan
providing for the grant of Shares or of
awards
denominated in, or otherwise measured by reference to, Shares
(each, a "COMPANY
STOCK AWARD PLAN") is set forth (and identified as a Company Stock Award Plan)
in Section 4.13(a) of the Company Disclosure Letter. The Company
has provided to
Parent correct and
complete copies of all Company Stock Award Plans and all
forms of options and
other stock-based
awards (including award agreements)
issued under such Company Stock Award Plans.
(f) As of the date of this Agreement, neither the Company nor any
Subsidiary has
entered into
any commitment, arrangement or agreement, or is otherwise
obligated, to
contribute capital, loan money or otherwise provide funds or
make
additional
investments in
any Person other than any such commitments,
arrangements, or
agreements in the ordinary course of business consistent with
past practice, and other than pursuant to Material Contracts.
(g) The maximum number of Shares authorized for issuance pursuant
to the ESPP is
1,000,000. Not more
than 10,000 Shares
will be issuable
pursuant to the
ESPP
with respect to the
current Purchase
Interval which is scheduled to end on
December 31, 2006.
With respect to any subsequent Purchase Interval and until
the Effective Time, (i) not more than 10,000 Shares will be
issuable pursuant to
the ESPP during such Purchase Interval and (ii) the total amount of all
contributions by
participants to their respective participant accounts during
any 30-day period
during such
Purchase Interval shall not exceed the dollar
amount that,
when applied to the purchase of Shares under the ESPP on the
Purchase Date (as defined in the ESPP) or New Purchase Date with
respect to such
Purchase Interval, would result in the purchase of a total of 3,333
Shares under
the ESPP.
17
<PAGE>
(h) As of the date of this Agreement, (i) the Company and its
Subsidiaries owe
$40 million pursuant to outstanding borrowings under the Credit
Facility, (ii)
the maximum amount of additional borrowings possible under the Credit
Facility
is $55 million and (iii) neither the Company nor any
Subsidiary
has any other
indebtedness for borrowed money or guarantees thereof.
Section
4.4.......SUBSIDIARIES
AND COMPANY JOINT VENTURES. Section 4.4 of the
Company Disclosure
Letter sets forth a
complete and correct list of all of the
Company's Subsidiaries
and all Company Joint Ventures. All equity interests of
the Company's Subsidiaries and the Company Joint Ventures held by
the Company or
any other Subsidiary are validly issued, fully paid and non-assessable and
were
not issued in violation of any preemptive or similar rights, purchase option,
call or right of first refusal or similar rights. All such equity interests are
free and clear of any Liens or any other limitations or restrictions on such
equity interests
(including any limitation or restriction on the right to vote,
pledge or sell or
otherwise dispose of
such equity interests)
other than any
restrictions contained
in the Joint Venture
Agreements related
thereto. The
Company has made available to Parent complete and correct copies of the
Company
Organizational
Documents and all organizational documents of the Company Joint
Ventures.
Section 4.5.......GOVERNMENTAL CONCERNS. The execution, delivery
and performance
of this Agreement
by the Company and the consummation by the Company of the
transactions
contemplated by this
Agreement do not and will not require any
consent, approval or
other authorization of, or filing with or notification to,
any international,
national, federal,
state, provincial or local governmental,
regulatory or
administrative
authority,
agency, commission, board, court,
tribunal, arbitral body, self-regulated entity or similar body,
whether domestic
or foreign (each, a
"GOVERNMENTAL
ENTITY"), other than:
(i) the filing of the
Articles of Merger
with the SCC as
required by the VSCA and the issuance of a
certificate of merger by the SCC; (ii) applicable requirements of
the Securities
Exchange Act of 1934,
as amended and the rules and regulations promulgated
thereunder (the
"EXCHANGE ACT"); (iii) the filing with the Securities and
Exchange Commission
(the "SEC") of a proxy statement (the "COMPANY PROXY
STATEMENT") relating
to the special meeting of the shareholders of the Company
to be held to consider the adoption of this Agreement (the "COMPANY
SHAREHOLDERS
MEETING"); (iv) any
filings required by, and any approvals required under, the
rules and regulations
of The Nasdaq Global
Select Market;
(v) the pre-merger
notifications required
under (A) the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as
amended (the "HSR ACT"), (B) any applicable requirements of
Council Regulation
(EC) No. 139/2004 of
the Council of the European Union (the
"EC MERGER
REGULATION"), and (C)
the competition or merger control Laws of any
other applicable jurisdiction; (vi) any consent, approval or other
authorization
of, or filing with or notification to, any Governmental Entity identified in
Section 4.5(vi) of the
Company Disclosure
Letter; (vii) notification to the
Defense Secretary in
accordance
with National Industrial Security Program
Operating Manual
section 1-302(g)(1);
(viii) notification to administrative
contracting
officer(s), if
required, in
accordance with
Federal
Acquisition
Regulation 52.215-9;
and (ix) in such other
circumstances where the failure to
obtain such consents,
approvals,
authorizations
or permits,
or to make such
filings or notifications, does not have and would not
reasonably
18
<PAGE>
be expected
to have, individually or in the aggregate, a Company Material
Adverse Effect.
Section 4.6.......NON-CONTRAVENTION. The execution, delivery and
performance of
this Agreement
by the Company and the consummation by the Company of the
transactions
contemplated by this Agreement, including the Merger, do not and
will not: (i)
contravene or conflict with, or result in any violation or
breach
of, any provision of (x) the Company Organizational Documents or (y) any of the
organizational or
governing documents of the Company Joint Ventures; (ii)
contravene or conflict
with, or result in any
violation or breach of, any Laws
or Orders applicable
to the Company or any of its Subsidiaries or by which any
assets of the Company or any of its Subsidiaries ("COMPANY ASSETS") are bound
(assuming that
all consents, approvals, authorizations, filings and
notifications
described in
Section 4.5 or Section 4.5(vi) of the Company
Disclosure Letter have
been obtained or made and any waiting periods under such
filings have been
terminated
or expired);
(iii) result in any violation or
breach of or loss of a benefit under, or constitute a default (with or
without
notice or lapse of time or both) under, any Material Contract;
(iv) require any
consent, approval or
other authorization of, or filing with or notification to,
any Person
under any Material Contract; (v) give rise to any termination,
cancellation,
amendment,
modification or
acceleration
of any rights or
obligations under
any Material Contract; or (vi) cause the creation or
imposition of any
Liens on any Company
Assets, except for Permitted Liens,
except, in the cases of clauses (i)(y) and (ii) - (vi), as do not
have and would
not reasonably be expected to have, individually or in the aggregate,
a Company
Material Adverse Effect.
Section 4.7.......VOTING. (a) The Requisite Company Vote is the
only vote of the
holders of any class or series of the capital stock of the Company
or any of its
Subsidiaries necessary
(under the Company Organizational Documents, the VSCA,
other applicable Laws
or otherwise) to approve this Agreement, the Merger and
the other transactions contemplated hereby.
(b) There are no voting trusts, proxies or similar agreements,
arrangements or
commitments to which
the Company or any of
its Subsidiaries
is a party or of
which the Company
has Knowledge with respect to the voting of any
shares of
capital stock of the Company or any of its Subsidiaries, other than the Voting
Agreements. There
are no bonds, debentures, notes or other instruments of
indebtedness of the
Company or any of its
Subsidiaries that have
the right to
vote, or that are convertible or exchangeable into or exercisable
for securities
or other rights having the right to vote, on any matters on which
shareholders
of the Company may vote.
Section 4.8.......FINANCIAL REPORTS AND SEC DOCUMENTS. (a) The
Company has filed
or furnished all forms, statements, reports and documents required to
be filed
or furnished
by it with the SEC
pursuant to applicable federal securities
statutes, regulations
and rules since
January 1, 2003 (the forms, statements,
reports and documents
filed or furnished with the SEC since January 1, 2003 and
those filed or furnished with the SEC subsequent to the date of
this Agreement,
if any, including any amendments thereto, the "COMPANY SEC
Documents"). Each
of
the Company SEC
Documents filed or
furnished on or prior to the date of
this
Agreement, at the time
of its filing or furnishing (except as
19
<PAGE>
and to the extent such Company SEC Document has been modified or superseded in
any subsequent Company
SEC Document filed or
furnished and publicly
available
prior to the date of this Agreement), complied, and each of the Company SEC
Documents filed or
furnished after the
date of this Agreement will comply, in
all material respects
with the applicable
requirements of each of the Exchange
Act and the Securities
Act of 1933, as amended, and the rules and regulations
promulgated thereunder
(the "SECURITIES Act")
and complied or will comply, as
applicable, in
all material respects with the then-applicable accounting
standards. As of their respective dates, except as and to the
extent modified or
superseded in any
subsequent
Company SEC Document filed or furnished and
publicly available
prior to the date of this Agreement, the Company SEC
Documents did not, and any Company SEC Documents filed or furnished
with the SEC
subsequent to the date of this Agreement will not, contain any untrue statement
of a material
fact or omit to state
a material
fact required to be stated
therein or
necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. The Company
SEC Documents
filed or furnished on or prior to the date of this Agreement included, and if
filed or furnished after the date of this Agreement, will include all
certificates required to be included therein pursuant to Sections
302 and 906 of
the Sarbanes-Oxley
Act of 2002,
as amended, and the rules and regulations
promulgated thereunder
("SOX"), and the internal control report and attestation
of the Company's outside auditors required by Section 404 of
SOX.
(b) Each of the
consolidated balance
sheets included in or incorporated by
reference into the
Company SEC
Documents (including the related notes and
schedules) fairly presents or, in the case of the Company SEC
Documents filed or
furnished after the date of this Agreement, will fairly present in all
material
respects the consolidated financial position of the Company and its
Subsidiaries
as of its date, and each of the consolidated statements of income, changes in
shareholders' equity
and cash flows
included in or
incorporated by
reference
into the Company SEC
Documents (including
any related notes and schedules)
fairly presents or, in
the case of the Company SEC Documents filed or furnished
after the date of this Agreement, will fairly present in all
material respects
the results of operations and cash flows, as the case may be, of
the Company and
its Subsidiaries
for the periods set
forth therein
(subject, in the case of
unaudited statements,
to the absence of notes and normal year-end audit
adjustments), in each case in accordance with U.S. generally
accepted accounting
principles ("GAAP") consistently applied during the periods
involved, except
as
may be noted therein.
(c) The management of the Company has (x) implemented disclosure controls and
procedures (as
defined in Rule 13a-15(e) of the Exchange Act) that are
reasonably designed to ensure that material information relating to
the Company,
including its
consolidated
Subsidiaries, is made
known to the chief executive
officer and chief
financial officer of the Company by others within those
entities, and (y)
disclosed,
based on its most recent evaluation, to the
Company's outside
auditors and the audit committee of the Company Board (A) all
significant
deficiencies and material weaknesses in the design or
operation of
internal controls over financial reporting (as defined in Rule
13a-15(f) of the
Exchange Act) which are reasonably likely to adversely affect in any material
respect the Company's ability to record, process, summarize and
report financial
data and (B) any fraud, whether or not material,
that involves
20
<PAGE>
management or other
employees who have a significant role in the Company's
internal controls over financial reporting. Since January 1, 2003, any
material
change in internal control over financial reporting or failure or inadequacy
of
disclosure controls
required to be
disclosed in any Company SEC Document
has
been so disclosed.
(d) Since January 1, 2003, to the Company's Knowledge, (x) none of the Company
or any of its Subsidiaries, or any director, officer, employee or independent
auditor of the Company or any of its Subsidiaries, has received or
otherwise had
or obtained Knowledge of any material complaint, allegation,
assertion or claim,
whether written
or oral, regarding the accounting or auditing practices,
procedures,
methodologies or
methods of the Company or any of its Subsidiaries
or their respective
internal accounting controls relating to periods after
January 1, 2003,
including any material
complaint,
allegation,
assertion or
claim that the Company or any of its Subsidiaries has engaged in questionable
accounting or auditing practices (except for any of the foregoing
that have been
resolved without any material impact on the Company and its
Subsidiaries,
taken
as a whole, and except for any of the foregoing which have no
reasonable basis),
and (y) no attorney representing the Company or any of its
Subsidiaries, whether
or not employed by the Company or any of its Subsidiaries, has
reported evidence
of a material
violation of securities Laws, breach of fiduciary duty or
similar
violation, relating to
periods after January
1, 2003, by the Company or any of
its officers,
directors,
employees or agents to the Company Board or any
committee thereof
or, to the
Knowledge of the Company, to any director or
officer of the Company.
Section 4.9.......NO
UNDISCLOSED
LIABILITIES. Except
(i) as and to the extent
disclosed or reserved
against on the balance
sheet of the Company
dated as of
June 30, 2006
(including
the notes thereto) included in the Company SEC
Documents or (ii) as incurred since the date thereof in the
ordinary course of
business consistent
with past practice, neither the Company, any of its
Subsidiaries nor, to
the Knowledge of the Company, any Company Joint Venture,
has any liabilities
or obligations of any nature, whether known or unknown,
absolute, accrued,
contingent
or otherwise
and whether due or to
become due,
that have or would
reasonably
be expected to have, individually or in the
aggregate, a Company Material Adverse Effect.
Section
4.10......ABSENCE OF
CERTAIN CHANGES OR EVENTS. (a) Since December 31,
2005, there has not
been any Company
Material Adverse Effect or any change,
event or development
that, individually or
in the aggregate, has
had or would
reasonably be expected to have a Company Material Adverse
Effect.
(b) Since December 31, 2005 and through the date of this Agreement,
the Company
and each of its Subsidiaries have conducted their business only
in the ordinary
course consistent with
past practice, and
there has not been any (i) action or
event that, if taken
on or after the date of this Agreement without Parent's
consent, would violate
the provisions of any of Sections 6.1(a), (b), (c)(i) -
(ii), (c)(iv) - (v), (d)(i) - (iii), (d)(v), (e) (except with
respect to mergers
or consolidations
between entities that were wholly-owned by the Company at the
time of merger or
consolidation), (f),
(h), (j), (l), (m), (n) (except with
respect to the Company's Subsidiaries or former
Subsidiaries), (o),
(p) or (q)
or (ii) agreement or commitment to do any of the foregoing.
21
<PAGE>
Section
4.11......LITIGATION.
There are no
claims, actions, suits, demand
letters, judicial,
administrative
or regulatory proceedings, or hearings,
notices of violation, or, to the Knowledge of the Company,
investigations (each,
a "LEGAL ACTION")
pending or, to the
Knowledge of the Company, threatened,
against the
Company or any of its
Subsidiaries
or any executive officer or
director of Company or any of its Subsidiaries in connection with his or her
status as a
director or executive officer of the Company or any of its
Subsidiaries which (i)
involves an amount in
controversy in excess of $50,000,
or (ii) have or would
reasonably be expected
to have, individually
or in the
aggregate, a Company
Material Adverse Effect. There is no outstanding
Order
against the Company or any of its Subsidiaries or by which any
property, asset
or operation of the Company or any of its Subsidiaries is bound or
affected. To
the Knowledge of the
Company, as of the date of this
Agreement,
neither the
Company, any Subsidiary, nor any officer, director or employee of
the Company or
any such Subsidiary is under investigation by any Governmental
Entity related to
the conduct of the Company's or any such Subsidiary's business.
Section
4.12......CONTRACTS.
(a) Section 4.12(a)(i)
of the Company Disclosure
Letter lists all Contracts to which the Company or any of its
Subsidiaries is a
party and which are in effect as of the date hereof that fall within any of
the
following categories:
(A) any Contract
relating to
indebtedness for
borrowed
money or any financial guaranty involving amounts in excess of
$1,000,000; (B)
any Contract
that materially limits the ability of the Company
or any of its
Subsidiaries to
conduct any activity or compete in any business line or in any
geographic area;
(C) any Contract that is terminable by the other party or
parties upon a change in control of the Company or any of its
Subsidiaries that
involves anticipated
future expenditures or receipts by the
Company or any of
its Subsidiaries
of more than $250,000; (D) any Contract that involves
anticipated future
receipts by the
Company or any of its
Subsidiaries of more
than $500,000;
(E) any Contract that by its terms limits the payment of
dividends or other distributions by the Company or any of its
Subsidiaries; (F)
any Joint Venture
Agreement;
(G) any Contract
that grants any right
of first
refusal or right of first offer or similar right; (H) any Fixed Price Contract;
(I) any Loss Contract;
(J) any Contract for the lease or purchase of real
property involving
aggregate payments in excess of $250,000;
(K) any Company
Government Contract that involves anticipated future receipts by the
Company or
any of its
Subsidiaries of more
than $500,000; (L) any Company Government
Subcontract that
involves future receipts by the Company or any of its
Subsidiaries of more than $500,000, (M) any Contract with any
director, officer
or Affiliate
of the Company or any of its Subsidiaries; (N) any Contract
relating to the
acquisition,
development, license,
transfer or disclosure
of
Intellectual Property
Rights that is material to the business of the Company or
any of its
Subsidiaries; and (O)
any Contract pursuant to which the Company or
its Subsidiaries have paid any subcontractor or vendor more than
$500,000 during
the current fiscal year (collectively, "MATERIAL CONTRACTS").
True and correct
copies of all Material
Contracts have been made available to Parent (subject to
redaction if required pursuant to the terms thereof or if required
by applicable
Law).
(b) Each Material
Contract is a valid and legally binding arrange
