prem14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the Registrant o |
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Check the appropriate box: |
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x 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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o Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
LaBarge, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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o No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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1) Title of each class of securities to which transaction applies: |
Common stock, par value $0.01 per
share.
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2) Aggregate number of securities to which transaction applies: |
15,706,589 shares of common stock,
411,565 options to purchase common stock with an exercise price below
$19.25 per share, and 119,338 restricted shares of common stock
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3) 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): |
Solely for the purpose of
calculating the filing fee, the underlying value of the transaction
was calculated as the sum of (A) 15,706,589 shares of common
stock, multiplied by $19.25 per share, (B) 411,565 options to
purchase common stock with an exercise price below $19.25 multiplied
by $13.70 per option (which is the difference between $19.25 and the
$5.55 weighted average exercise price of such options), and
(C) 119,338 restricted shares of common stock multiplied by
$19.25 per share. In accordance with Section 14(g) of the Securities
Exchange Act of 1934, as amended, the filing fee was determined by
multiplying the proposed maximum aggregate value of the transaction
by 0.00011610.
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4) Proposed maximum aggregate value of transaction: |
$310,287,535
$36,024.18
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o Fee paid previously with preliminary materials. |
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o 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) Amount Previously Paid: |
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2) Form, Schedule or Registration Statement No.: |
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SEC 1913 (02-02) |
Persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays a currently valid
OMB control number. |
PRELIMINARY
PROXY MATERIAL SUBJECT TO COMPLETION
LaBarge,
Inc.
9900 Clayton Road
St. Louis, Missouri 63124
PROXY
STATEMENT AND NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
TO BE HELD ON
[ ],
2011
Dear Stockholder:
The officers and directors of LaBarge, Inc. cordially invite you
to attend the special meeting of stockholders to be held at the
[ ], on [ ], 2011 at
[ ], local time, unless adjourned or postponed
to a later date. The special meeting will be held for the
following purposes:
1. To adopt the Agreement and Plan of Merger, dated as of
April 3, 2011 (the merger agreement), among
Ducommun Incorporated, DLBMS, Inc. and LaBarge, Inc. pursuant to
which DLBMS, Inc. will merge with and into LaBarge, Inc. in
accordance with Delaware law, whereupon the separate existence
of DLBMS, Inc. shall cease, and LaBarge, Inc. shall be the
surviving corporation and each share of LaBarge, Inc. common
stock shall be converted into the right to receive $19.25 in
cash (the merger). A copy of the merger agreement is
attached as Annex A to the accompanying proxy
statement.
2. To approve adjournments or postponements of the LaBarge,
Inc. special meeting, if necessary or appropriate, to permit
further solicitation of proxies if there are not sufficient
votes at the time of the LaBarge, Inc. special meeting to adopt
the merger agreement.
3. To transact such other business as may properly come
before the special meeting, or any adjournment or postponement
of the special meeting.
These items of business are described in the accompanying proxy
statement. Only stockholders of record at the close of business
on [ ], 2011, are entitled to notice of the
special meeting and to vote at the special meeting and any
adjournments or postponements of the special meeting. We expect
to mail this proxy statement to our stockholders on or about
[ ], 2011.
The LaBarge, Inc. board of directors has unanimously approved
and declared advisable the merger agreement and the transactions
contemplated thereby, including the merger, and has unanimously
determined that the merger agreement and the transactions
contemplated thereby, including the merger, are fair to, and in
the best interests of, LaBarge, Inc. and LaBarge, Inc.s
stockholders. The LaBarge, Inc. board of directors unanimously
recommends that you vote FOR the adoption of the
merger agreement and FOR any motion to adjourn or
postpone the LaBarge, Inc. special meeting to a later date or
dates if necessary or appropriate to solicit additional
proxies.
In deciding to approve the merger agreement and the transactions
contemplated by the merger agreement, including the merger, the
LaBarge, Inc. board of directors considered a number of factors,
including those listed under The Merger
LaBarges Reasons for the Merger and Recommendation of
LaBarges Board of Directors on page
[ ]. When you consider the
recommendation of the LaBarge, Inc. board of directors, you
should be aware that some of our directors and officers have
interests in the merger that may be different from, or in
addition to, the interests of LaBarge, Inc. stockholders
generally.
LaBarge, Inc. stockholders who do not vote in favor of the
proposal to adopt the merger agreement will have the right to
seek appraisal of the fair value of their shares of LaBarge,
Inc. common stock if they deliver a demand for appraisal before
the vote is taken on the merger agreement and comply with all
the requirements of Delaware law, which are summarized in the
accompanying proxy statement and reproduced in their entirety in
Annex C to the proxy statement.
Your vote is very important, regardless of the number of
shares of LaBarge, Inc. common stock you own. The merger
cannot be completed unless the merger agreement is adopted by
the affirmative vote of the holders of two-thirds of LaBarge,
Inc.s shares of common stock entitled to vote thereon.
Whether or not you plan to attend the special meeting in person,
please complete, sign and date the enclosed proxy card(s) as
soon
as possible and return it in the postage-prepaid envelope
provided, or vote your shares by telephone or over the internet
as described in the accompanying proxy statement. Submitting a
proxy or voting by telephone or internet now will not prevent
you from being able to vote at the special meeting by attending
in person and casting a vote. However, if you do not return
or submit your proxy or vote your shares by telephone or over
the internet or vote in person at the LaBarge, Inc. special
meeting, the effect will be the same as a vote
AGAINST the proposal to adopt the merger
agreement.
By order of the board of directors,
Donald H. Nonnenkamp
Vice President, Chief Financial Officer and Secretary
Please vote your shares promptly. You can find instructions
for voting on the enclosed proxy card.
Please do not send your LaBarge, Inc. common stock
certificate to us at this time. If the merger is completed, you
will be sent instructions regarding surrender of your
certificates.
If you have
questions, contact:
LaBarge,
Inc.
9900 Clayton Road
St. Louis, Missouri 63124
Attention: Corporate Secretary
(314) 997-0800
Phoenix
Advisory Partners
110 Wall Street, 27th Floor
New York, NY 10005
(877) 478-5038
St. Louis, Missouri, [ ], 2011
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE MERGER,
OR PASSED UPON THE FAIRNESS OR MERITS OF THE AGREEMENT AND PLAN
OF MERGER OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING
THE MERGER, OR THE ADEQUACY OR ACCURACY OF THE INFORMATION
CONTAINED IN THE ENCLOSED PROXY STATEMENT. ANY CONTRARY
REPRESENTATION IS A CRIMINAL OFFENSE.
YOUR VOTE IS VERY IMPORTANT.
Please complete, date, sign and return your proxy card(s) or
vote your shares by telephone or over the internet at your
earliest convenience so that your shares are represented at the
LaBarge, Inc. special meeting.
TABLE OF
CONTENTS
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ANNEXES
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A-1
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B-1
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C-1
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D-1
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E-1
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F-1
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SUMMARY
This summary highlights material information from this proxy
statement. It may not contain all of the information that is
important to you. You should read carefully this entire proxy
statement and the other documents to which this proxy statement
refers to understand fully the merger and the related
transactions. See Where You Can Find More
Information beginning on page [ ].
Most items in this summary include a page reference directing
you to a more complete description of those items.
Information
About LaBarge, Inc. (page [ ])
In this proxy statement, the terms LaBarge, the
Company, we, our, and
us refer to LaBarge, Inc. and its subsidiaries.
LaBarge provides custom high-performance electronic,
electromechanical and interconnect systems on a contract basis
for customers in diverse technology-driven markets. Its core
competencies are manufacturing, engineering and design of
interconnect systems, printed circuit board assemblies,
high-level assemblies and complete electronic systems for its
customers specialized applications.
LaBarge is headquartered in St. Louis, Missouri and was
incorporated in 1968. LaBarges principal offices are
located at 9900 Clayton Road, St. Louis, Missouri 63124 and
its telephone number is
(314) 997-0800.
LaBarges website is www.labarge.com. LaBarge common
stock is listed on the AMEX and trades under the symbol
LB. Additional information about LaBarge is included
in documents incorporated by reference into this proxy
statement. See the section entitled Where You Can Find
More Information beginning on
page [ ].
Information
About Ducommun (page [ ])
Ducommun Incorporated provides engineering and manufacturing
services to the aerospace and defense industry. Ducommun is a
supplier of critical components and assemblies for commercial
aircraft, military aircraft, and missile and space programs
through its three business units: Ducommun AeroStructures (DAS),
Ducommun Technologies (DTI), and Miltec.
Ducommun is headquartered in Carson, California and was founded
in 1849. Ducommuns website is www.ducommun.com.
Ducommuns common stock is listed on The New York Stock
Exchange and trades under the symbol DCO.
Information
About Merger Subsidiary
(page [ ])
DLBMS, Inc., a wholly-owned subsidiary of Ducommun, is a
Delaware corporation formed on March 29, 2011, for the
purpose of effecting the merger of merger subsidiary with and
into LaBarge. At the effective time of the merger, LaBarge will
be the surviving corporation and a wholly-owned subsidiary of
Ducommun.
The
Merger (page [ ])
Upon the terms and subject to the conditions of the merger
agreement, and in accordance with Delaware law, at the effective
time, the merger subsidiary will merge with and into LaBarge in
accordance with Delaware law, whereupon the separate existence
of the merger subsidiary shall cease, with LaBarge continuing as
the surviving corporation and a wholly-owned subsidiary of
Ducommun and each share of LaBarge common stock shall be
converted into the right to receive $19.25 in cash, without
interest.
We encourage you to read the merger agreement, which governs the
merger and is attached as Annex A to this proxy
statement, because it sets forth the terms of the merger.
Merger
Consideration (page [ ])
At the effective time, each share of LaBarge common stock
outstanding immediately prior to the effective time will be
converted into the right to receive $19.25 in cash, without
interest (we refer to this as the merger
consideration).
1
Effect
of the Merger on LaBarges Equity Awards
(page [ ])
Upon completion of the merger, each outstanding option to
purchase LaBarge common stock will be canceled in exchange for
the right to receive an amount of cash equal to $19.25, without
interest, less the exercise price of the option multiplied by
the number of shares of LaBarge common stock subject to the
option immediately prior to the completion of the merger.
Each LaBarge restricted share that is outstanding and unvested
immediately prior to the merger will fully vest and the holder
will be entitled to receive the merger consideration for each
such restricted share. Participants in the LaBarge Employee
Stock Purchase Plan, or ESPP, will be entitled to
receive the merger consideration for each share of LaBarge
common stock purchased through the ESPP prior to the effective
time. No new offering periods under the ESPP will commence after
the date of the merger agreement.
Performance units outstanding as of the effective time will be
converted into an unvested right to receive a cash payment at
the maximum level, $1.50 per unit, upon subsequent vesting of
such right, which is generally one year from the effective time,
although the chief executive officer, Craig E. LaBarge
(sometimes referred to herein as Chief Executive
Officer or CEO), and chief financial officer,
Donald H. Nonnenkamp (sometimes referred to herein as
Chief Financial Officer or CFO), will
receive this cash payment no later than March 15, 2012.
However, if the merger is not completed until after July 3,
2011, outstanding performance units with a performance period
ending on July 3, 2011 that are held by participants other
than Mr. LaBarge, Mr. Nonnenkamp, Randy L. Buschling
(sometimes referred to herein as Chief Operating
Officer or COO), Teresa K. Huber, William D.
Bitner and John R. Parmley (collectively, the Senior
Executive Officers), will be converted into the right to
receive $1.50 in cash per unit within ten days of the effective
time rather than an unvested cash right. In this scenario, all
outstanding performance units held by the Senior Executive
Officers will be converted into the unvested cash right
described above.
Financing
Relating to the Merger
(page [ ])
To provide financing for the merger, UBS Loan Finance LLC, UBS
Securities LLC, Credit Suisse Securities (USA) LLC and Credit
Suisse AG (hereinafter referred to as the Lenders)
have provided a commitment to Ducommun for a senior secured term
loan facility of $190,000,000 and a senior secured revolving
credit facility of up to $40,000,000, subject to the conditions
set forth in a debt commitment letter dated April 3, 2011
(such commitment letter and any schedules, exhibits, and annexes
thereto are collectively hereinafter referred to as the
Debt Commitment Letter). In the Debt Commitment
Letter, the Lenders also committed to provide a senior unsecured
bridge facility of $200,000,000, to be available to Ducommun if
it does not complete an anticipated offering of senior unsecured
notes on or before the date on which the merger is consummated.
The senior secured term loan facility of $190,000,000, the
senior secured revolving credit facility of up to $40,000,000
and the $200,000,000 of financing to be obtained through either
the anticipated offering of senior unsecured notes or the senior
unsecured bridge facility are hereinafter collectively referred
to as the Debt Financing. The financing commitments
are subject to certain conditions, as further described under
The Merger Financing Relating to Merger
beginning on page [ ]. Ducommuns
obligation to consummate the merger is not subject to receipt of
the proceeds from the Debt Financing. Funds needed to complete
the merger include funds to:
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pay LaBarge stockholders (and holders of LaBarges
equity-based interests and any payable cash awards) amounts due
to them under the merger agreement, which based upon the shares
(and LaBarges other equity-based interests) outstanding as
of April 13, 2011 would total approximately
$310 million; and
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pay fees and expenses related to the merger and the Debt
Financing,
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which will be funded through proceeds from the Debt Financing in
an expected aggregate principal amount of approximately
$390,000,000.
LaBarges
Reasons for the Merger
(page [ ])
In evaluating the merger, the LaBarge board of directors
consulted with LaBarges management, as well as
LaBarges legal and financial advisors and, in reaching its
decision to approve the merger agreement and
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the transactions contemplated thereby and to recommend that
LaBarge stockholders adopt the merger agreement, the LaBarge
board of directors considered a number of factors, including
those listed in The Merger LaBarges
Reasons for the Merger and Recommendation of LaBarge Inc.s
Board of Directors beginning on
page [ ].
Recommendations
of the Board of Directors to LaBarge Stockholders
(page [ ])
The LaBarge board of directors has unanimously determined that
the merger agreement and the transactions contemplated by the
merger agreement, including the merger, are advisable and fair
to, and in the best interests of, LaBarge and its stockholders
and has unanimously approved the merger agreement and the
transactions contemplated by the merger agreement, including the
merger. The LaBarge board of directors has resolved to recommend
that LaBarge stockholders vote FOR the
adoption of the merger agreement.
Opinion
of LaBarges Financial Advisor
(page [ ])
LaBarge retained Stifel, Nicolaus & Company,
Incorporated (Stifel) as its financial advisor in
connection with the merger. On April 3, 2011, at a meeting
of the LaBarge board of directors, Stifel delivered its opinion
to the board of directors of LaBarge that, based upon and
subject to the factors, considerations, qualifications,
limitations and assumptions set forth in the opinion, as of that
date, the per share merger consideration to be received by the
holders of shares of LaBarge common stock (other than shares
owned by LaBarge, Ducommun or their subsidiaries, or as to which
dissenters rights are perfected) in connection with the
merger pursuant to the merger agreement was fair to such holders
of shares of LaBarge common stock, from a financial point of
view.
The full text of Stifels written opinion, dated
April 3, 2011, which is attached to this proxy statement as
Annex B, sets forth assumptions made, procedures
followed, matters considered and limitations on the review
undertaken in connection with the opinion. LaBarge stockholders
should read the opinion in its entirety, as well as the section
of this proxy statement entitled The Merger
Opinion of LaBarges Financial Advisor beginning on
page [ ]. Stifel addressed its opinion to
the board of directors of LaBarge, and its opinion does not
constitute a recommendation to any LaBarge stockholder as to how
such stockholder should vote at the special meeting with respect
to the merger or as to any other action that a stockholder
should take with respect to the merger. See The
Merger Opinion of LaBarges Financial
Advisor beginning on page [ ].
Record
Date; Outstanding Shares; Shares Entitled to Vote
(page [ ])
The record date for the special meeting of LaBarge stockholders
is [ ], 2011. This means that you must be a
stockholder of record of LaBarge common stock at the close of
business on [ ], 2011 in order to vote at the
LaBarge special meeting. You are entitled to one vote for each
share of LaBarge common stock you own. As of the record date,
there were [ ] shares of LaBarge common
stock outstanding and entitled to vote at the LaBarge special
meeting. A majority of the shares of LaBarge common stock
outstanding at the close of business on the record date and
entitled to vote, present in person or represented by proxy, at
the special meeting constitutes a quorum for purposes of the
special meeting.
Voting
Agreement
In connection with the transactions contemplated by the merger
agreement, all of LaBarges executive officers and certain
directors, in their capacities as stockholders, together
beneficially owning in the aggregate approximately 19% of the
outstanding shares of LaBarge common stock as of April 3,
2011 (excluding any shares of LaBarge common stock deliverable
upon exercise or conversion of any options), have entered into a
voting agreement with Ducommun, dated April 3, 2011.
Pursuant to the terms of the voting agreement, each such
stockholder has agreed to vote its shares in favor of the merger
and the adoption of the merger agreement and against alternative
transaction proposals. The voting agreement will terminate
(i) if the merger agreement is terminated, (ii) if the
merger is not consummated by September 30, 2011 or
(iii) upon consummation of the merger. Due to the vote
required to approve the merger agreement, the voting agreement
does not assure
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approval by stockholders to adopt the merger agreement.
Therefore, your vote on the adoption of the merger agreement
is very important.
The foregoing description of the voting agreement is not
complete and is qualified in its entirety by reference to the
voting agreement, a copy of which is filed as
Annex D hereto and incorporated herein by reference.
Vote
Required (page [ ])
Approval of the proposal to adopt the merger agreement requires
the affirmative vote of at least two-thirds of the shares of
LaBarge common stock entitled to vote thereon at the special
meeting. Approval of the proposal to adjourn or postpone the
special meeting requires the affirmative vote of the majority of
stockholders present, in person or by proxy, and entitled to
vote at the special meeting, whether or not a quorum is present.
Stock
Ownership of Directors and Executive Officers
(page [ ])
At the close of business on April 13, 2011, the directors
and executive officers of LaBarge beneficially owned and were
entitled to vote 3,395,944 shares of LaBarge common stock,
collectively representing approximately 21.3% of the shares of
LaBarge common stock outstanding on that date.
Interests
of LaBarge Directors and Executive Officers in the Merger
(page [ ])
In considering the recommendation of the LaBarge board of
directors, you should be aware that LaBarge directors and
executive officers may have financial interests in the merger
that are in addition to or different from their interests as
stockholders and the interests of LaBarge stockholders generally
and may present actual or potential conflicts of interest.
LaBarges board of directors was aware of these interests
and considered them, among other matters, in unanimously
approving the merger agreement and the transactions contemplated
thereby. You should consider these and other interests of
LaBarge directors and executive officers that are described in
this proxy statement.
Such interests of LaBarge directors and executive officers
include:
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the accelerated cash payment for restricted shares held by
LaBarge executive officers;
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the cash payment for stock options held by LaBarge executive
officers;
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the entry of certain executive officers into employment
agreements in connection with the merger attached hereto as
Annex E;
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the payment of severance benefits pursuant to agreements with
LaBarge executive officers in connection with certain qualifying
terminations of employment that may occur following the merger;
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the conversion of performance units outstanding as of the
effective time into an unvested right to receive a cash payment
at the maximum level upon subsequent vesting; and
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the right to continued indemnification and insurance coverage by
the surviving corporation for acts or omissions occurring prior
to the merger.
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De-listing
of LaBarge Common Stock
(page [ ])
Shares of LaBarge common stock are currently traded on the AMEX
under the symbol LB. If the merger is completed,
LaBarge common stock will no longer be listed on the AMEX and
will be deregistered under the Securities Exchange Act of 1934,
as amended, which we refer to as the Exchange Act,
and LaBarge will no longer file periodic reports with the SEC.
4
Appraisal
Rights (page [ ])
LaBarge stockholders have the right under Delaware law to
dissent from the approval and adoption of the merger agreement,
to exercise appraisal rights and to receive payment in cash of
the judicially determined fair value for their shares, plus
interest, if any, on the amount determined to be the fair value,
in accordance with Delaware law. The fair value of shares of
LaBarge common stock, as determined in accordance with Delaware
law, may be more or less than, or equal to, the merger
consideration to be paid to non-dissenting stockholders in the
merger. To preserve their rights, LaBarge stockholders who wish
to exercise appraisal rights must not vote in favor of the
proposal to adopt the merger agreement and must follow the
specific procedures provided under Delaware law for perfecting
appraisal rights. Dissenting stockholders must precisely follow
these specific procedures to exercise appraisal rights or their
appraisal rights may be lost. These procedures are described in
this proxy statement, and a copy of Section 262 of the DGCL
(which we refer to as Section 262), which
grants appraisal rights and governs such procedures, is attached
as Annex C to this proxy statement. See The
Merger LaBarge Stockholders Rights of
Appraisal beginning on page [ ].
Non-solicitation
Provisions (page [ ])
LaBarge is subject to a no shop restriction on its
ability to solicit third party proposals or provide information
and engage in discussions with third parties relating to
alternative business combination transactions. The no
shop provision is subject to a fiduciary-out
provision that allows LaBarge, prior to obtaining stockholder
approval of the merger, (i) to engage in negotiations or
discussions (including making any counterproposal or counter
offer to) with any third party that has made after the date of
the merger agreement a superior proposal or a bona
fide unsolicited written acquisition proposal that the board of
directors of LaBarge believes in good faith (after consultation
with a financial advisor of nationally recognized reputation and
outside legal counsel) is reasonably likely to lead to a
superior proposal, (ii) furnish to any third
party that has made after the date of the merger agreement a
superior proposal nonpublic information,
(iii) terminate or amend any provision of any
confidentiality or standstill agreement to which it is a party
with respect to a superior proposal and
(iv) make an adverse recommendation change, but
in each case only if the board determines in good faith, after
consultation with outside legal counsel, that failure to take
such action would likely result in a breach of its fiduciary
duties under applicable law, taking into account all adjustments
to the terms of the merger agreement that may be offered by
Ducommun in response to any such proposed action by LaBarge. See
The Merger No Solicitation beginning on
page [ ]
Conditions
to Completion of the Merger
(page [ ])
The obligations of LaBarge, Ducommun and merger subsidiary to
complete the merger are subject to the satisfaction (or, to the
extent permissible, waiver) on or prior to the closing date of
the merger of certain conditions, including:
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the adoption of the merger agreement by holders of two-thirds of
the shares of LaBarge common stock entitled to vote thereon at
the LaBarge special meeting;
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the absence of any pending or threatened action by any
governmental authority, having a reasonable likelihood of
success, that seeks to (i) challenge or make illegal or
otherwise prohibit or materially delay the consummation of the
merger or any of the other transactions contemplated by the
merger agreement, or to make materially more costly the merger,
or to obtain from LaBarge, Ducommun or merger subsidiary any
damages that are material in relation to LaBarge and its
subsidiaries taken as a whole, (ii) prohibit or limit the
ownership, operation or control by LaBarge, Ducommun or any of
their respective subsidiaries of any material portion of their
respective business or assets or to compel LaBarge, Ducommun or
any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of
LaBarge, Ducommun or any of their respective subsidiaries or
(iii) impose limitations on the ability of Ducommun to
acquire or hold, or exercise full rights of ownership of, any
shares of common stock of LaBarge;
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no applicable law shall have been enacted, entered, promulgated,
enforced or deemed applicable by any governmental entity that,
in any case, prohibits the consummation of the merger;
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the expiration or early termination of the waiting periods
applicable to the consummation of the merger under the HSR Act
(as defined below); and
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the accuracy of the representations and warranties of the
parties and compliance by the parties with their respective
obligations under the merger agreement.
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In addition, the obligations of Ducommun and merger subsidiary
to complete the merger are subject to the satisfaction (or, to
the extent permissible, waiver) on or prior to the closing date
of the merger of certain conditions, including:
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LaBarge shall not have suffered a Material Adverse Effect (as
defined in the merger agreement); and
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The staff of the Securities and Exchange Commission shall not
have rejected or expressly disapproved any material terms or
conditions of the Offer of Settlement executed by LaBarge on
March 18, 2011.
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Regulatory
Approvals Required for the Merger
(page [ ])
The completion of the merger is subject to compliance with the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (which we refer
to as the HSR Act). The notifications required under
the HSR Act to the U.S. Federal Trade Commission (which we
refer to as the FTC) and the Antitrust Division of
the U.S. Department of Justice (which we refer to as the
Antitrust Division) were filed on April 14,
2011.
Termination
of the Merger Agreement
(page [ ])
The merger agreement may be terminated at any time before the
effective time, whether or not the LaBarge stockholders have
adopted the merger agreement:
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by mutual written agreement of Ducommun and LaBarge;
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by either Ducommun or LaBarge if:
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the merger has not been consummated on or before
September 30, 2011 (which we refer to as the end
date), unless the breach of the merger agreement by the
party seeking to terminate resulted in the failure to consummate
the merger by the end date;
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any applicable law, judgment or decree makes consummation of the
merger illegal or otherwise prohibited or permanently enjoins
the consummation of the merger and such enjoinment has become
final and non-appealable, provided the party seeking to
terminate the merger agreement shall have used all reasonable
best efforts to prevent, oppose and remove such applicable
law; or
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the adoption of the merger agreement by the LaBarge stockholders
was not obtained at the LaBarge special meeting (or adjournment
or postponement of the meeting).
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LaBarge breaches its representations or warranties or fails to
perform any covenants set forth in the merger agreement, which
breach or failure would cause the conditions to the closing
relating to the accuracy of the representations and warranties
of LaBarge or compliance by LaBarge with its obligations under
the merger agreement not to be satisfied and such breach, is not
cured by the earlier of the end date or 30 days after the
receipt of written notice thereof, provided that, at the time of
the delivery of written notice of breach, Ducommun is not in
material breach of its obligations under the merger agreement;
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the LaBarge board of directors has effected an adverse
recommendation change (as defined in merger agreement and on
page [ ]);
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LaBarge or the LaBarge board of directors shall approve or
recommend an alternative acquisition agreement;
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LaBarge materially breaches its non-solicitation obligations set
forth in the merger agreement; or
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the LaBarge board of directors fails to publicly reaffirm its
recommendation of the merger within 10 business days of a
request by Ducommun that it do so, or at least two business days
prior to the special meeting of LaBarges stockholders
following a request to do so by Ducommun or merger subsidiary.
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the LaBarge board of directors authorizes LaBarge, subject to
complying with the terms of the merger agreement, to enter into
a written definitive agreement concerning a superior proposal
(as defined on page [ ]) provided that
LaBarge has paid any applicable fees and expenses owed to
Ducommun; or
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Ducommun breaches its representations or warranties or fails to
perform any covenants set forth in the merger agreement, which
breach or failure would cause the conditions to the closing
relating to the accuracy of the representations and warranties
of Ducommun or compliance by Ducommun with its obligations under
the merger agreement not to be satisfied and such breach, is not
cured by the earlier of the end date or 30 days after the
receipt of written notice thereof, provided that, at the time of
the delivery of written notice of breach, LaBarge is not in
material breach of its obligations under the merger agreement.
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Termination
Fees and Expenses (page [ ])
If the merger agreement is terminated in certain circumstances
described under The Merger Agreement
Termination of the Merger Agreement beginning on page
[ ], LaBarge may be obligated to pay to
Ducommun a termination fee of $12,410,000 or reimburse Ducommun
for its or merger subsidiarys reasonable transaction
expenses up to $5,000,000.
In general, each of Ducommun and LaBarge will bear its own
expenses in connection with the merger agreement and the related
transactions, except Ducommun and LaBarge will equally bear the
filing fees of the filings made under applicable antitrust laws.
Litigation
Related to the Merger (page [ ])
LaBarge is aware of five purported class actions against
LaBarge, LaBarges directors and Ducommun filed by
purported stockholders of LaBarge and relating to the merger.
The complaints allege, among other things, that LaBarges
directors breached their fiduciary duties to the LaBarge
stockholders, and that LaBarge and Ducommun aided and abetted
LaBarges directors in such alleged breaches of their
fiduciary duties. Each plaintiff purports to bring his claims on
behalf of himself and a class of LaBarge stockholders. The
actions seek judicial declarations that the merger agreement was
entered into in breach of the directors fiduciary duties,
rescission of the transactions contemplated by the merger
agreement, and the award of attorneys fees and expenses
for the plaintiffs. Three lawsuits challenging the proposed
transaction have been filed in Missouri state court, all in the
Circuit Court of St. Louis County by the same plaintiffs
attorneys. All seek declaratory, rescissory and other,
unspecified, equitable relief against the directors and officers
on a theory of breach of fiduciary duty to the stockholders and
against LaBarge and Ducommun on a theory of aiding and
abetting the individual defendants. No money damages are
sought, except for attorneys fees and costs, and no
injunctive relief is expressly sought. All three Missouri suits
are identical in content, and two were filed on successive days
on behalf of the same named plaintiff.
The three Missouri cases are:
1. John M. Foley, Jr. v. LaBarge, Inc. et al., St.
Louis County Circuit Court Cause No. 11SL-CC01383, filed
April 5, 2011.
7
2. John M. Foley, Jr. v. LaBarge, Inc., et al., St.
Louis County Circuit Court Cause No.
11SL-CC01391,
filed April 6, 2011.
3. William W. Wheeler v. LaBarge, Inc., et al., St.
Louis County Circuit Court Cause No.
11SL-CC01392,
filed April 6, 2011.
Two other nearly identical lawsuits have been filed in the
Chancery Court of the State of Delaware by different attorneys
than the
above-described
matters. Barry P. Borodkin v. Craig E. LaBarge, et al.,
transaction ID 36985939, Case No. 6368- (filed on April 12,
2011) and Insulators and Asbestos Workers Local No. 14
v. Craig LaBarge, et al. (filed on April 15, 2011)
are putative class actions that mirror the claims raised in the
Missouri cases, but also seek injunctive relief to prevent the
proposed transaction with Ducommun in addition to an accounting
and attorneys fees and costs.
LaBarge and Ducommun and the other defendants believe that the
lawsuits are without merit and intend to defend them vigorously.
Material
United States Federal Income Tax Consequences
(page [ ])
The merger will be a taxable transaction to U.S. holders of
LaBarge common stock for U.S. federal income tax purposes.
You should read Material United States Federal Income Tax
Consequences of the Merger beginning on
page [ ] for a more complete discussion of
the U.S. federal income tax consequences of the
transaction. Tax matters can be complicated, and the tax
consequences of the transaction to LaBarge stockholders will
depend on their particular tax situations. LaBarge stockholders
should consult their tax advisors to determine the tax
consequences of the transaction to them.
Risk
Factors (page [ ])
In evaluating the merger and the merger agreement, you should
read carefully this proxy statement and especially consider the
factors discussed in the section titled Risk Factors
beginning on page [ ].
8
QUESTIONS
AND ANSWERS ABOUT THE LABARGE SPECIAL MEETING, MERGER
AGREEMENT AND THE MERGER
The following questions and answers briefly address some
commonly asked questions about the special meeting, the merger
agreement and the merger. These questions and answers may not
include all the information that is important to you. LaBarge
urges you to read carefully this entire proxy statement,
including the annexes and the other documents to which we have
referred you. We have included page references in certain parts
of this section to direct you to a more detailed description of
each topic presented elsewhere in this proxy statement.
The
Merger
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Why am I receiving this proxy statement? |
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The board of directors of LaBarge has unanimously agreed to the
merger of merger subsidiary, a wholly-owned subsidiary of
Ducommun, with and into LaBarge, with LaBarge continuing as the
surviving corporation and a wholly-owned subsidiary of Ducommun.
A copy of the merger agreement is attached to this proxy
statement as Annex A. See The Merger
Agreement The Merger; Closing beginning on
page [ ]. |
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In order to complete the transactions contemplated by the merger
and merger agreement, holders of two-thirds of the shares of
LaBarge common stock entitled to vote thereon must adopt the
merger agreement and all other conditions to the merger set
forth in the merger agreement must be satisfied (or waived, to
the extent permitted). LaBarge stockholders will vote on the
adoption of the merger agreement at the LaBarge special meeting.
See LaBarge Special Meeting beginning on page
[ ]. |
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This proxy statement contains important information about the
merger agreement, the transactions contemplated by the merger
agreement, including the merger, and the special meeting of
LaBarge, which you should read carefully and in its entirety.
The enclosed proxy materials allow you to grant a proxy or vote
your shares by telephone or internet without attending the
special meeting in person. |
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Your vote is very important. We encourage you to complete,
date, sign and return your proxy card(s) or vote your shares by
telephone or internet as soon as possible. |
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What is the proposed transaction for which I am being asked
to vote? |
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LaBarge stockholders are being asked to adopt the merger
agreement at its special meeting. A copy of the merger agreement
is attached to this proxy statement as Annex A. The
approval of the proposal to adopt the merger agreement by the
holders of two-thirds of the shares of LaBarge common stock
entitled to vote thereon is a condition to the obligation of the
parties to the merger agreement to complete the merger. See
The Merger Agreement Conditions to Completion
of the Merger beginning on page [ ]
and Summary Conditions to Completion of
the Merger beginning on page [ ]. |
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What will happen in the merger? |
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In the merger, the merger subsidiary will merge with and into
LaBarge in accordance with Delaware law, whereupon the separate
existence of the merger subsidiary shall cease, with LaBarge
continuing as the surviving corporation and a wholly-owned
subsidiary of Ducommun. You will thereafter cease to be a
stockholder of LaBarge. |
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What will LaBarge stockholders receive in the merger? |
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Each share of LaBarge common stock, other than shares owned by
Ducommun or LaBarge or their respective wholly-owned
subsidiaries, or shares owned by stockholders who have properly
exercised and perfected appraisal rights under Delaware law,
will be converted into the right to receive $19.25 in cash,
without interest. |
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How does the per share merger consideration to be received by
LaBarge stockholders compare to the market price of LaBarge
common stock prior to the announcement of the merger? |
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The per share merger consideration represents a premium of 10.4%
over the closing price of $17.43 per share of LaBarge common
stock on the New York Stock Exchange Amex LLC, which we refer to
as AMEX, on April 1, 2011, the last trading day
prior to the public announcement of the merger agreement, |
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a 17.2% premium over LaBarges average daily closing price
of $16.43 during the 30 trading days ending April 1, 2011,
and a 23.0% premium over LaBarges average daily closing
price of $15.65 during the 90 trading days ending April 1,
2011. |
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Why is LaBarge proposing the merger? |
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The board of directors of LaBarge has concluded that the merger
will maximize stockholder value as compared to any other
strategic alternative of LaBarge, including the continued
operation of LaBarge as an independent public company. To review
the reasons for the merger in greater detail, see The
Merger LaBarges Reasons for the Merger and
Recommendation of LaBarges Board of Directors
beginning on page [ ]. |
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What is the position of the LaBarge board of directors
regarding the merger and the proposals relating to the adoption
of the merger agreement? |
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The board of directors has unanimously approved and declared
advisable the merger agreement and the transaction contemplated
thereby, including the merger, and has unanimously determined
that the merger agreement and the transactions contemplated
thereby, including the merger, are fair to, and in the best
interests of its stockholders. The LaBarge board of directors
unanimously recommends that LaBarge stockholders vote
FOR the proposal to adopt the merger
agreement at the LaBarge special meeting. See The
Merger LaBarges Reasons for the Merger and
Recommendation of LaBarges Board of Directors
beginning on page [ ], and
Summary The Merger beginning on page
[ ]. |
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What vote is needed by LaBarge stockholders to adopt the
merger agreement? |
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LaBarges adoption of the merger agreement requires the
affirmative vote of two-thirds of the shares of LaBarge common
stock entitled to vote thereon. If you are a LaBarge stockholder
and you fail to vote or abstain from voting, that will have the
same effect as a vote AGAINST the adoption of
the merger agreement. See The LaBarge Special
Meeting Quorum and Vote Required beginning on
page [ ]. |
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Do LaBarge stockholders have appraisal rights? |
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Yes. Under the Delaware General Corporation Law, which we refer
to as the DGCL, holders of LaBarge common stock who
do not vote for the adoption of the merger agreement have the
right to seek appraisal of the fair value of their shares as
determined by the Delaware Court of Chancery, which we refer to
as the Court of Chancery, if the merger is
completed, but only if they comply with all requirements of
Delaware law, which are summarized in this proxy statement. See
The Merger LaBarge Stockholders Rights
of Appraisal beginning on page [ ]
and Summary Appraisal Rights
beginning on page [ ]. Please see
Annex C for the text of the applicable provisions of
the DGCL as in effect with respect to this transaction. |
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What happens if I sell or transfer my shares of LaBarge
common stock after the record date but before the special
meeting? |
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The record date for LaBarge stockholders entitled to vote at the
LaBarge special meeting is earlier than both the date of the
LaBarge special meeting and the consummation of the merger. If
you sell or transfer your shares of LaBarge common stock after
the record date but before the special meeting, you will, unless
other arrangements are made (such as provision of a proxy),
retain your right to vote at the special meeting but will
transfer the right to receive the merger consideration to the
person to whom you sell or transfer your shares. |
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What are the federal income tax consequences of the merger to
LaBarge stockholders? |
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In general, the exchange of shares of LaBarge common stock for
cash pursuant to the merger will be a taxable transaction for
U.S. federal income tax purposes. See Material United
States Federal Income Tax Consequences beginning on page
[ ] for more information. LaBarge
stockholders should consult a tax advisor about the tax
consequences of the exchange of the shares of LaBarge common
stock for cash pursuant to the merger in light of the particular
circumstances of each LaBarge stockholder. |
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When do you expect to complete the merger? |
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If the merger agreement is adopted at the LaBarge special
meeting, we expect to complete the merger as soon as possible
after the satisfaction of the other conditions to the merger.
The closing of the merger, which we refer to as the
closing, will occur no later than the second
business day following the date on which all of the conditions
to the merger, other than conditions that, by their nature are
to be satisfied at the closing have been satisfied or, to the
extent permissible, waived, that is the earlier of (a) any
business day during the marketing period provided for with
respect to the financing to be obtained by Ducommun as may be
specified by Ducommun on no later than three business days prior
notice to LaBarge and (b) the final day of the marketing
period provided for with respect to the financing to be obtained
by Ducommun, or at such place, at such other time or on such
date as Ducommun and LaBarge mutually agree. LaBarge expects
that the transaction will be completed in June 2011. However, we
cannot assure you that such timing will occur or that the merger
will be completed as expected. See The Merger
Agreement The Merger; Closing beginning on
page [ ]. |
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What happens if the merger is not consummated? |
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If the merger agreement is not adopted by the holders of
two-thirds of LaBarges shares of common stock entitled to
vote thereon or if the merger is not consummated for any other
reason, LaBarge stockholders will not receive any payment for
their shares in connection with the merger. Instead, LaBarge
will remain an independent public company and LaBarge common
stock will continue to be listed and traded on the AMEX. Under
specified circumstances, LaBarge may be required to pay to
Ducommun a fee with respect to the termination of the merger
agreement, as described under The Merger
Agreement Termination Fees and Expenses
beginning on page [ ]. |
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Should I send in my stock certificates now? |
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NO, PLEASE DO NOT SEND YOUR STOCK CERTIFICATE(S) WITH YOUR
PROXY CARD(S). If the merger is completed, LaBarge
stockholders will be sent written instructions for sending in
their stock certificates or, in the case of book-entry shares,
for surrendering their book-entry shares. See The LaBarge
Special Meeting Proxy Solicitations and
Expenses beginning on page [ ]. |
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Who can answer my questions about the merger? |
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If you have any questions about the merger or the LaBarge
special meeting, need assistance in voting your shares, or need
additional copies of this proxy statement or the enclosed proxy
card(s), you should contact: |
LaBarge,
Inc.
9900 Clayton Road
St. Louis, Missouri 63124
Attn: Corporate Secretary
(314) 997-0800
Phoenix
Advisory Partners
110 Wall Street, 27th Floor
New York, NY 10005
(877) 478-5038
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When and where will the special meeting be held? |
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The LaBarge special meeting will be held on
[ ], at [ ], local time, or at
any adjournments or postponements of the special meeting, for
the purposes set forth in the proxy statement and in the
accompanying notice of special meeting. |
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Who is eligible to vote at the LaBarge special meeting? |
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Owners of LaBarge common stock are eligible to vote at the
LaBarge special meeting if they were stockholders of record at
the close of business on [ ], 2011. See
The LaBarge Special Meeting Record Date;
Outstanding Shares; Shares Entitled to Vote beginning
on page [ ]. |
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What is a proxy? |
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A proxy is a stockholders legal designation of another
person, referred to as a proxy, to vote shares of
such stockholders common stock at a stockholders
meeting. The document used to designate a proxy to vote your
shares of LaBarge common stock is called a proxy
card. |
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What should I do now? |
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You should read this proxy statement carefully, including the
annexes, and return your completed, signed and dated proxy
card(s) by mail in the enclosed postage-paid envelope or submit
your voting instructions by telephone or over the internet as
soon as possible so that your shares will be represented and
voted at the special meeting. A number of banks and brokerage
firms participate in a program that also permits stockholders
whose shares are held in street name to direct their
vote by telephone or over the internet. This option, if
available, will be reflected in the voting instructions from the
bank or brokerage firm that accompany this proxy statement. If
your shares are held in an account at a bank or brokerage firm
that participates in such a program, you may direct the vote of
these shares by telephone or over the internet by following the
voting instructions enclosed with the proxy form from the bank
or brokerage firm. See The LaBarge Special
Meeting How to Vote beginning on
page [ ]. |
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May I attend the LaBarge special meeting? |
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All LaBarge stockholders of record as of the close of business
on [ ], 2011, the record date for the
LaBarge special meeting, may attend the LaBarge special meeting.
If your shares are held in street name by your
broker, bank or other nominee, and you plan to attend the
LaBarge special meeting, you must present proof of your
ownership of LaBarge common stock, such as a bank or brokerage
account statement, to be admitted to the meeting. You also must
present at the meeting a proxy issued to you by the holder of
record of your shares. |
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If I am going to attend the LaBarge special meeting, should I
return my proxy card(s)? |
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Yes. Returning your completed, signed and dated proxy card(s) or
voting by telephone or over the internet ensures that your
shares will be represented and voted at the LaBarge special
meeting. See The LaBarge Special Meeting How
to Vote beginning on page [ ]. |
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How will my proxy be voted? |
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If you complete, sign and date your proxy card(s) or vote by
telephone or over the internet, your shares will be voted in
accordance with your instructions. If you sign and date your
proxy card(s) but do not indicate how you want to vote at the
LaBarge special meeting your shares will be voted
FOR the adoption of the merger agreement and
FOR the proposal to approve adjournments or
postponements of the LaBarge special meeting, if necessary or
appropriate, to permit further solicitation of proxies if there
are not sufficient votes at the time of the LaBarge special
meeting to adopt the merger agreement. |
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What if my broker holds my shares in street
name? |
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If a broker holds your shares for your benefit but not in your
own name, your shares are in street name. A number
of banks and brokerage firms participate in a program that also
permits stockholders whose shares are held in street
name to direct their vote by telephone or over the
internet. If your shares are held in an account at a bank or
brokerage firm that participates in such a program, you may
direct the vote of these shares by telephone or over the
internet by following the voting instructions enclosed with the
proxy form from the bank or brokerage firm. The internet and
telephone proxy procedures are designed to authenticate
stockholders identities, to allow stockholders to give
their proxy voting instructions and to confirm that those
instructions have been properly recorded. Votes directed by
telephone or over the internet through such a program must be
received by 11:59 p.m., Eastern Daylight Time, on
[ ], 2011. Directing the voting of your shares
will not affect your right to vote in person if you decide to
attend the LaBarge special meeting. If your shares are held in
street name by your broker, bank or other nominee,
and you plan to attend the LaBarge special meeting, you must
present proof of your ownership of LaBarge common stock, as
applicable, such as a bank or brokerage account statement, to be
admitted to the |
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meeting. In addition, you must first obtain a signed and
properly executed legal proxy from your bank, broker or other
nominee to vote your shares held in street name at
the LaBarge special meeting. Requesting a legal proxy prior to
the deadline described above will automatically cancel any
voting directions you have previously given by telephone or over
the internet with respect to your shares. |
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Q. |
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Can I change my vote after I mail my proxy card(s) or vote by
telephone or over the internet? |
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A: |
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Yes. If you are a stockholder of record (that is, you hold your
shares in your own name), you can change your vote by: |
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sending a written notice to the corporate secretary
of LaBarge, bearing a date later than the date of the proxy,
that is received prior to the LaBarge special meeting and states
that you revoke your proxy;
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voting again by telephone or over the internet by
11:59 p.m., Eastern Daylight Time, on
[ ], 2011;
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signing, dating and delivering a new valid proxy
card(s) bearing a later date that is received prior to the
LaBarge special meeting; or
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attending the LaBarge special meeting and voting in
person, although your attendance alone will not revoke your
proxy.
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If your shares of LaBarge common stock are held in street
name by your broker, you will need to follow the
instructions you receive from your broker to revoke or change
your proxy. |
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Q: |
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What if I dont provide my broker with instructions on
how to vote? |
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A: |
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If you wish to vote on the proposal to adopt the merger
agreement, you must provide instructions to your broker because
this proposal is not routine. If you do not provide your broker
with instructions, your broker will not be authorized to vote
with respect to the adoption of the merger agreement, and a
broker non-vote will occur. This will have the same effect as a
vote AGAINST the adoption of the merger
agreement. A broker non-vote will have no effect on the
adjournment or postponement proposal. Broker non-votes will be
counted for purposes of determining whether a quorum is present
at the LaBarge special meeting. |
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Q: |
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What if I abstain from voting? |
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A: |
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Abstentions will be counted in determining whether a quorum is
present at the LaBarge special meeting. If you abstain from
voting with respect to the proposal to adopt the merger
agreement, it will have the same effect as a vote
AGAINST the proposal to adopt the merger
agreement. With respect to the proposal to adjourn or postpone
the LaBarge special meeting, if necessary or appropriate, to
solicit further proxies in connection with the merger agreement
adoption proposal, abstentions will have the same effect as a
vote AGAINST the proposal to adjourn or
postpone the LaBarge special meeting. |
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Q: |
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What does it mean if I receive multiple proxy cards? |
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A: Your shares may be registered in more than one account, such
as brokerage accounts and 401(k) accounts. It is important that
you complete, sign, date and return each proxy card or voting
instruction form you receive or vote using the telephone or over
the internet as described in the instructions included with your
proxy card(s) or voting instruction form(s). |
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Q: |
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Where can I find more information about LaBarge? |
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A: |
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You can find more information about LaBarge from various sources
described under Where You Can Find More Information
beginning on page [ ]. |
THE
LABARGE SPECIAL MEETING
Overview
This proxy statement is being provided to LaBarge stockholders
as part of a solicitation of proxies by the LaBarge board of
directors for use at the special meeting of LaBarge stockholders
and at any adjournments or
13
postponements thereof. This proxy statement is first being
furnished to stockholders of LaBarge on or about
[ ], 2011. This proxy statement provides
LaBarge stockholders with information they need to know to be
able to vote or instruct their vote to be cast at the special
meeting of LaBarge stockholders.
Date,
Time and Place of the LaBarge Special Meeting
The special meeting of LaBarge stockholders will be held at
[ ] on [ ], 2011, at
[ ], local time.
Purposes
of the LaBarge Special Meeting
At the LaBarge special meeting, LaBarge stockholders will be
asked:
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to adopt the merger agreement;
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to approve a proposal to approve adjournments or postponements
of the LaBarge special meeting, if necessary or appropriate, to
permit further solicitation of proxies if there are not
sufficient votes at the time of the LaBarge special meeting to
adopt the merger agreement; and
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to transact such other business as may properly come before the
special meeting.
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LaBarge stockholders must approve the proposal to adopt the
merger agreement in order for the merger to occur. If LaBarge
stockholders fail to approve the proposal to adopt the merger
agreement, the merger will not occur. A copy of the merger
agreement is attached as Annex A to this proxy
statement, which we encourage you to read carefully in its
entirety.
LaBarge
Board of Directors Recommendation
The LaBarge board of directors has unanimously determined that
the merger agreement and the merger are advisable, fair to and
in the best interests of LaBarge and LaBarges unaffiliated
stockholders and has unanimously approved the merger, the merger
agreement and the transactions contemplated thereby. The LaBarge
board of directors unanimously recommends that you vote
FOR the adoption of the merger agreement and
FOR the approval of adjournment or
postponement of the special meeting to a later date, if
necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement.
Record
Date; Outstanding Shares; Shares Entitled to Vote
The record date for the special meeting of LaBarge stockholders
is [ ], 2011. This means that you must be a
stockholder of record of LaBarge common stock at the close of
business on [ ], 2011, in order to vote at the
LaBarge special meeting. You are entitled to receive notice of,
and to vote at, the special meeting if you owned shares of
LaBarge common stock at the close of business on the record
date. At the close of business on the record date, there were
[ ] shares of LaBarge common stock
outstanding and entitled to vote, held by approximately
[ ] holders of record. Each share of LaBarge
common stock entitles its holder to one vote on all matters
properly presented at the special meeting.
Quorum
and Vote Required
A quorum of stockholders is necessary to hold a valid special
meeting of LaBarge The required quorum for the transaction of
business at the LaBarge special meeting is comprised of the
holders of a majority of the outstanding shares of LaBarge
common stock. Votes will be counted by the inspector appointed
for the special meeting, who will separately count
FOR and AGAINST votes and
abstentions. Shares of LaBarge common stock represented at the
special meeting but not voted, including shares of common stock
for which a stockholder directs an abstention from
voting, as well as broker non-votes, will be counted for
purposes of establishing a quorum. Once a share of LaBarge
common stock is represented at the special meeting, it will be
counted for the purpose of determining a quorum at the special
meeting and at any adjourned or postponed special meeting.
However, if a new record date is set for the adjourned or
postponed special meeting, then a
14
new quorum will have to be established. In the event that a
quorum is not present at the special meeting, it is expected
that the special meeting will be adjourned or postponed.
Adoption of the merger agreement requires the affirmative vote
of two-thirds of the holders of the outstanding shares of
LaBarge common stock entitled to vote. The required vote of
LaBarge stockholders on the merger agreement is based upon the
number of outstanding shares of LaBarge common stock as of the
record date, and not the number of shares that are actually
voted. Abstentions will not be counted as votes cast in favor of
the proposal to adopt the merger agreement, but will count for
the purposes of determining whether a quorum is present. If
you fail to submit a proxy or to vote in person at the special
meeting, or abstain, it will have the same effect as a vote
AGAINST the proposal to adopt the merger
agreement.
Banks, brokerage firms or other nominees who hold shares in
street name for customers have the authority to vote on
routine proposals when they have not received
instructions from beneficial owners. However, banks, brokerage
firms or other nominees are precluded from exercising their
voting discretion with respect to approving non-routine matters,
such as the proposal to adopt the merger agreement, and, as a
result, absent specific instructions from the beneficial owner
of such shares of LaBarge common stock, banks, brokerage firms
or other nominees are not empowered to vote those shares on
non-routine matters. These broker non-votes will be counted
for purposes of determining a quorum, but will have the same
effect as a vote AGAINST the proposal to adopt the
merger agreement.
Approval of the adjournment or postponement of the special
meeting to a later date, if necessary or appropriate, for the
purpose of soliciting additional proxies if there are
insufficient votes at the time of the special meeting to approve
the proposal to adopt the merger agreement requires the
affirmative vote of the holders of a majority of the shares of
LaBarge common stock present, in person or by proxy, and
entitled to vote at the special meeting on that matter, even if
less than a quorum.
For purposes of the adjournment or postponement proposal, if
your shares of LaBarge common stock are present at the special
meeting, but are not voted on this proposal, or if you have
given a proxy and abstained on the proposal, this will have the
same effect as if you voted AGAINST the
proposal. If you fail to submit a proxy or vote in person at the
special meeting, or there are broker non-votes on the issue, as
applicable, the shares of LaBarge common stock not voted, will
not be counted in respect of, and will not have an effect on,
the proposal to adjourn or postpone the special meeting.
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ITEM 1
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PROPOSAL TO
ADOPT THE MERGER AGREEMENT
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As discussed elsewhere in this proxy statement, LaBarge
stockholders are considering and voting on a proposal to adopt
the merger agreement. You should carefully read this proxy
statement in its entirety for more detailed information
concerning the transactions contemplated by the merger
agreement, including the merger. In particular, you are directed
to the merger agreement, which is attached as
Annex A to this proxy statement.
The LaBarge board of directors unanimously recommends that
LaBarge stockholders vote FOR the adoption of the
merger agreement, and your properly completed, signed and dated
proxy will be so voted unless you specify otherwise.
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ITEM 2
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PROPOSAL TO
APPROVE ADJOURNMENT OR POSTPONEMENT OF THE LABARGE SPECIAL
MEETING, IF NECESSARY OR APPROPRIATE, TO PERMIT FURTHER
SOLICITATION OF PROXIES IF THERE ARE NOT SUFFICIENT VOTES AT THE
TIME OF THE LABARGE SPECIAL MEETING TO ADOPT THE MERGER
AGREEMENT
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LaBarge stockholders may be asked to vote on a proposal to
adjourn or postpone the LaBarge special meeting, if necessary or
appropriate, to permit further solicitation of proxies if there
are not sufficient votes at the time of the LaBarge special
meeting to approve the proposal to adopt the merger agreement.
The LaBarge board of directors unanimously recommends that
LaBarge stockholders vote FOR the proposal to
adjourn or postpone the LaBarge special meeting under certain
circumstances, and your properly completed, signed and dated
proxy will be so voted unless you specify otherwise.
15
Stock
Ownership and Voting by LaBarges Directors and Executive
Officers
At the close of business on April 13, 2011, LaBarges
directors and executive officers had the right to vote
3,395,944 shares of the then-outstanding LaBarge voting
stock (excluding any shares of LaBarge common stock deliverable
upon exercise or conversion of any options) at the LaBarge
special meeting. At the close of business on April 13,
2011, these shares represented approximately 21.3% of the
LaBarge common stock outstanding and entitled to vote at the
special meeting. It is expected that LaBarges executive
officers will vote their shares FOR the
proposal to adopt the merger agreement and
FOR the proposal to adjourn or postpone the
special meeting to a later date, if necessary or appropriate,
for the purpose of soliciting additional proxies if there are
insufficient votes at the time of the special meeting to approve
the proposal to adopt the merger agreement, and executive
officers and certain directors collectively holding
approximately 19% of the stock entitled to vote have entered
into voting agreements to so vote.
Voting
Securities and Ownership Thereof by Management and Certain
Beneficial Owners
Set forth below is information, as of April 13, 2011,
concerning all persons known to LaBarge to be beneficial owners
of more than 5% of the common stock outstanding on the record
date, and beneficial ownership of common stock by each director,
each named executive officer of LaBarge and all executive
officers and directors as a group (unless otherwise indicated,
such ownership represents sole voting and sole investment power).
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Amount and Nature of
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Percent of
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Name and Address of Beneficial Owner(1)
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Beneficial Ownership
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Class(2)
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Directors and Named Executive Officers:
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William D. Bitner
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17,431 - (3)(5)
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*
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Randy L. Buschling
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212,453 - (3)(4)(5)
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1.3
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%
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Robert G. Clark
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8,385
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*
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Thomas A. Corcoran
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1,500
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*
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John G. Helmkamp, Jr.
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365,196 - (6)
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2.3
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%
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Teresa K. Huber
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53,427 - (3)(4)(5)
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*
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Craig E. LaBarge
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1,789,834 - (3)(4)(5)(7)
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11.2
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%
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Lawrence J. LeGrand
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1,218,485 - (8)(9)
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7.6
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%
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Donald H. Nonnenkamp
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213,111 - (3)(4)(5)
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1.3
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%
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John R. Parmley
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73,745 - (3)(4)(5)
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*
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Jack E. Thomas, Jr.
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3,685
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*
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All executive officers and directors as a group (11 persons)
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3,957,252 - (4)
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24.8
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%
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5% Stockholders
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Joanne V. Lockard
c/o Plancorp,
Inc.
540 Maryville Centre Drive, Suite 105
St. Louis, MO 63141
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1,217,035 - (9)(10)
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7.6
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%
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Leo V. Garvin, Jr.
c/o Plancorp,
Inc.
540 Maryville Centre Drive, Suite 105
St. Louis, MO 63141
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1,208,485 - (9)
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7.6
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%
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Wentworth, Hauser & Violich, Inc.
301 Battery Street, Suite 400
San Francisco, CA 94111
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765,800 - (11)
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4.8
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%
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* |
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Less than 1%. |
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(1) |
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The address of each named executive officer and director is
c/o LaBarge,
Inc., 9900 Clayton Road, St. Louis, Missouri 63124. |
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(2) |
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Percent of class is calculated on the basis of 15,958,839 common
shares outstanding on April 13, 2011. |
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(3) |
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Includes the following number of shares awarded under the 2004
Long Term Incentive Plan that are restricted until July 1,
2012: Mr. Bitner, 9,484; Mr. Buschling, 28,100;
Ms. Huber, 9,484; Mr. LaBarge, 43,906;
Mr. Nonnenkamp, 18,880; and Mr. Parmley, 9,484. |
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(4) |
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Includes options exercisable within 60 days for the
following number of shares under the 1995 Incentive Stock Option
Plan and the 1999 Non-Qualified Stock Option Plan:
Mr. Bitner, -0-; Mr. Buschling, 20,000;
Ms. Huber, 15,000; Mr. LaBarge, 220,452;
Mr. Nonnenkamp, 68,600; Mr. Parmley, 24,500. All
executive officers and Directors as a group
348,552 shares. |
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Includes the following number of shares held in employee
contribution accounts, LaBarge unrestricted match accounts and
LaBarge restricted match accounts, respectively, of
LaBarges 401(k) Benefit Plan: Mr. Bitner: -0-, 829
and -0-; Mr. Buschling: -0-, 6,956 and -0-; Ms. Huber:
-0-, 1,873 and -0-; Mr. LaBarge: 105,019, 126,835 and -0-;
Mr. Nonnenkamp: -0-, 6,074 and -0-; and Mr. Parmley:
-0-, 6,968 and -0-. The named persons have sole voting power
with respect to all shares held in their accounts, and have sole
dispositive power with respect to the shares held in their
LaBarge unrestricted match accounts. Except as noted below, the
named persons have no dispositive power with respect to shares
held in their LaBarge restricted match accounts. In addition,
Messrs. LaBarge and Nonnenkamp as administrators of the
Company 401(k) Benefit Plan have shared dispositive power and no
voting power (except for shares in their own accounts) as to
1,760 shares held in the LaBarge restricted match accounts.
Messrs. LaBarge and Nonnenkamp disclaim beneficial
ownership of all shares held in the LaBarge restricted match
accounts of employees other than themselves. |
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(6) |
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Includes 2,600 shares held by Mr. Helmkamps
spouse in her name, 3,911 shares in her IRA and
22,000 shares held in a trust, of which she acts as
trustee. Also includes 45,300 shares held in three trusts
for the benefit of Mr. Helmkamps children and
43,500 shares held in a charitable remainder trust.
Mr. Helmkamp is trustee of the aforesaid trusts.
Mr. Helmkamp disclaims beneficial ownership of all these
shares. |
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(7) |
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Includes 75,298 shares held by Mr. LaBarges
spouse in her name, 34,000 shares held in her IRA and
14,702 shares as custodian for their two children.
Mr. LaBarge disclaims beneficial ownership of these shares.
Also includes 18,172 shares held by a trust for two
children of Mr. LaBarge. Mr. LaBarge is a co-trustee
of the trusts and disclaims beneficial ownership. Also includes
918,694 shares owned in Mr. LaBarges individual
capacity and 20,000 shares held in his IRA. Also includes
212,756 shares held in a generation skipping trust for the
benefit of Mr. LaBarges two children, of which
Mr. LaBarge disclaims beneficial ownership. |
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(8) |
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Includes 5,000 shares held in Mr. LeGrands
individual capacity and 5,000 shares held by
Mr. LeGrands spouse. |
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(9) |
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Includes 1,208,485 shares of common stock held by various
trusts, the beneficiaries of which are generation skipping
trusts for the benefit of the children of the late Pierre L.
LaBarge, Jr. Ms. Lockard and Messrs. Garvin and
LeGrand, as personal representatives of Pierre L. LaBarge,
Jr.s estate, each has shared voting and shared dispositive
power of the these trusts. |
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(10) |
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Includes 1,106 shares owned jointly with
Ms. Lockards spouse of which she has shared voting
and dispositive power and 7,444 shares held in her IRA as
to which she has sole voting power. |
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(11) |
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Based on information submitted on Form 13G/A filed on
February 14, 2011. |
How to
Vote
You may vote in person at the LaBarge special meeting or by
proxy. LaBarge recommends you submit your proxy even if you plan
to attend the special meeting. If you vote by proxy, you may
change your vote if you attend and vote at the special meeting.
If you own LaBarge common stock in your own name, you are an
owner of record. This means that you may use the
enclosed proxy card(s) to tell the persons named as proxies how
to vote your shares. If you properly complete, sign and date
your proxy card(s) or submit your voting instructions by
telephone or over the internet, your shares will be voted in
accordance with your instructions. The named proxies will vote
all
17
shares at the meeting for which proxies have been properly
submitted (whether by mail, telephone or over the internet) and
not revoked. If you sign and return your proxy card(s) but do
not mark your card(s) to tell the proxies how to vote your
shares on each proposal, your shares will be voted as
recommended by the LaBarge board of directors. If you receive
more than one proxy card, it means that you have multiple
accounts at the transfer agent
and/or with
brokers, banks or other nominees. Please complete, sign and
return all the proxy cards you have received to ensure that all
your shares are voted.
If you are an owner of record, you have three voting
options:
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Internet: You can vote over the
internet at the web address shown on your proxy card(s). You
will be prompted to enter your Control Number from your proxy
card. This number will identify you as a stockholder of record.
Follow the simple instructions that will be given to you to
record your vote. If you vote over the internet, do not return
your proxy card(s).
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Telephone: You can vote by telephone by
calling the toll-free number on your proxy card(s). You will be
prompted to enter your Control Number from your proxy card. This
number will identify you as a stockholder of record. Follow the
simple instructions that will be given to you to record your
vote. If you vote by telephone, do not return your proxy card(s).
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Mail: You can vote by mail by simply
signing, dating and mailing your proxy card(s) in the
postage-paid envelope included with this proxy statement.
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Please refer to the instructions on your proxy or voting
instruction card to determine the deadlines for voting over the
internet or by telephone. If you choose to vote by mailing a
proxy card, your proxy card must be filed with LaBarges
Corporate Secretary by the time the special meeting begins.
Please do not send your stock certificates with your proxy
card. When the merger is completed, a separate letter of
transmittal will be mailed to you that will enable you to
receive the per share merger consideration in exchange for your
stock certificates.
If you have any questions or need assistance voting your shares,
please call Phoenix Advisory Partners at
(877) 478-5038.
If you hold shares of LaBarge common stock in a stock brokerage
account or through a bank, broker or other nominee, or, in other
words, in street name, please follow the voting
instructions provided by that entity. With respect to the
proposal to adopt the merger agreement, if you do not instruct
your bank, broker or other nominee how to vote your shares, your
bank, broker or other nominee will not be authorized to vote
with respect to this proposal and a broker non-vote will occur,
which will have the same effect as a vote
AGAINST the adoption of the merger agreement.
In addition, if you do not instruct your bank, broker or other
nominee how to vote your shares with respect to the proposal to
adjourn or postpone the meeting to solicit further proxies to
approve the proposal to adopt the merger agreement, a broker
non-vote will occur.
A number of banks and brokerage firms participate in a program
that also permits stockholders whose shares are held in
street name to direct their vote by telephone or
over the internet. If your shares are held in an account at a
bank or brokerage firm that participates in such a program, you
may direct the vote of these shares by telephone or over the
internet by following the voting instructions enclosed with the
proxy form from the bank or brokerage firm. The internet and
telephone proxy procedures are designed to authenticate
stockholders identities, to allow stockholders to give
their proxy voting instructions and to confirm that those
instructions have been properly recorded. Votes directed by
telephone or over the internet through such a program must be
received by 11:59 p.m., Eastern Daylight Time, on
[ ], 2011. Directing the voting of your shares
will not affect your right to vote in person if you decide to
attend the LaBarge special meeting; however, you must first
obtain a signed and properly executed legal proxy from your
bank, broker or other nominee to vote your shares held in
street name at the LaBarge special meeting.
Requesting a legal proxy prior to the deadline described above
will automatically cancel any voting directions you have
previously given by telephone or over the internet with respect
to your shares.
It is important that you vote your shares of LaBarge common
stock promptly. Whether or not you plan to attend the special
meeting, please complete, date, sign and return, as promptly as
possible, the
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enclosed proxy card in the accompanying prepaid reply
envelope, or submit your proxy by telephone or over the
internet. LaBarge stockholders who attend the special meeting
may revoke their proxies by voting in person.
Voting of
Proxies
Shares of LaBarge common stock represented by duly executed and
unrevoked proxies in the form of the enclosed proxy card
received by the Corporate Secretary of LaBarge will be voted at
the special meeting in accordance with specifications made
therein by the LaBarge stockholders, unless authority to do so
is withheld. If no specification is made, shares represented by
duly executed and unrevoked proxies in the form of the enclosed
proxy card will be voted FOR the proposal to
adopt the merger agreement and FOR the
proposal to adjourn or postpone the special meeting to a later
date, if necessary or appropriate, for the purpose of soliciting
additional proxies if there are insufficient votes at the time
of the special meeting to approve the proposal to adopt the
merger agreement.
If your shares of LaBarge common stock are held in street
name by your bank, brokerage form or other nominee, you
should instruct your bank, brokerage firm or other nominee on
how to vote your shares of LaBarge common stock using the
instructions provided by your bank, brokerage firm or other
nominee. If you fail to submit a proxy or vote in person at the
special meeting, or abstain, or do not provide your bank,
brokerage firm or other nominee with voting instructions, as
applicable, your shares will not be voted on the proposal to
adopt the merger agreement, which will have the same effect as a
vote AGAINST the proposal to adopt the merger
agreement.
Revoking
Your Proxy
If you are the owner of record of your shares, you can revoke
your proxy at any time before its exercise at the special
meeting by:
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sending a written notice to LaBarge, Inc., 9900 Clayton Road,
St. Louis, Missouri 63124, Attention: Donald H. Nonnenkamp,
Corporate Secretary, bearing a date later than the date of the
proxy, that is received prior to the LaBarge special meeting and
states that you revoke your proxy;
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submitting your proxy again by telephone or over the internet so
long as you do so before the deadline of [ ];
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signing another proxy card(s) bearing a later date and mailing
it so that it is received prior to the special meeting; or
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attending the special meeting and voting in person, although
attendance at the special meeting will not, by itself, revoke a
proxy.
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If your shares of LaBarge common stock are held in street
name by your broker, you will need to follow the
instructions you receive from your broker to revoke or change
your proxy.
Other
Voting Matters
Voting
in Person
If you plan to attend the LaBarge special meeting and wish to
vote in person, we will give you a ballot at the special
meeting. However, if your shares are held in street
name, you must first obtain from your broker, bank or
other nominee a legal proxy authorizing you to vote the shares
in person, which you must bring with you to the special meeting.
If your shares are held in street name by your
broker, bank or other nominee, and you plan to attend the
LaBarge special meeting, you must present proof of your
ownership of LaBarge common stock such as a bank or brokerage
account statement, to be admitted to the meeting.
Electronic
Access to Proxy Materials
This proxy statement is available on LaBarges website at
www.labarge.com.
19
People
with Disabilities
LaBarge can provide reasonable assistance to help you to
participate in the special meeting if you tell LaBarge about
your disability and how you plan to attend. Please write to
LaBarge at 9900 Clayton Road, St. Louis,
Missouri 63124, Attention: Donald H. Nonnenkamp, Corporate
Secretary, or call at
(314) 997-0800.
Proxy
Solicitations and Expenses
LaBarge has engaged Phoenix Advisory Partners to assist in the
solicitation of proxies for the special meeting. LaBarge
estimates that it will pay Phoenix Advisory Partners a fee of
approximately $15,125, and will reimburse Phoenix Advisory
Partners for reasonable
out-of-pocket
expenses. LaBarge may also reimburse brokers, banks and other
custodians, nominees and fiduciaries representing owners of
shares held in street name for their expenses in
forwarding soliciting materials to such owners of shares of
LaBarge common stock and in obtaining voting instructions from
those owners. LaBarges directors, officers and employees
may also solicit proxies by telephone, by facsimile, by mail,
over the internet or in person, but they will not be paid any
additional amounts for soliciting proxies.
Adjournment
or Postponement of the LaBarge Special Meeting
Although it is not currently expected, the LaBarge special
meeting may be adjourned or postponed, including for the purpose
of soliciting additional proxies, if there are insufficient
votes at the time of the LaBarge special meeting to approve the
proposal to adopt the merger agreement or if a quorum is not
present at the LaBarge special meeting. Other than an
announcement to be made at the LaBarge special meeting of the
time, date and place of an adjourned or postponed meeting, an
adjournment or postponement generally may be made without
notice. Any adjournment or postponement of the LaBarge special
meeting for the purpose of soliciting additional proxies will
allow LaBarge stockholders who have already sent in their
proxies to revoke them at any time prior to their use at the
special meeting as adjourned or postponed.
Stock
Certificates
Stockholders should not submit any stock certificates with
their proxy cards. If the merger is completed,
LaBarge stockholders will be sent written instructions for
sending their stock certificates or, in the case of book-entry
shares, for surrendering their book-entry shares.
Other
Business
The LaBarge board of directors is not aware of any other
business to be acted upon at the LaBarge special meeting. If,
however, other matters are properly brought before the LaBarge
special meeting, your proxies will have discretion to vote or
act on those matters according to their best judgment and they
intend to vote the shares as the LaBarge board of directors may
recommend.
Assistance
If you need assistance in completing your proxy card or have
questions regarding the LaBarge special meeting, or if you need
additional copies of this proxy statement or the enclosed proxy
card or voting instructions, please contact Phoenix Advisory
Partners at
(877) 478-5038.
20
MARKET
PRICE DATA AND DIVIDENDS
LaBarge common stock is traded on the AMEX under the symbol
LB. The following table shows the high and low daily
closing sales prices per share during the period indicated for
LaBarge common stock on the AMEX. For current price information,
you are urged to consult publicly available sources.
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LaBarge
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Price Range of
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Common Stock
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Dividends
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Fiscal Year Ended
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High
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Low
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Paid
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June 28, 2009:
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First Quarter
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$
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15.75
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$
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12.49
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Second Quarter
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15.32
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9.12
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Third Quarter
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14.35
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4.45
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Fourth Quarter
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9.44
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6.94
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June 27, 2010:
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First Quarter
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$
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11.33
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$
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8.31
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Second Quarter
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12.01
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10.75
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Third Quarter
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13.12
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10.56
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Fourth Quarter
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13.74
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11.03
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July 3, 2011:
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First Quarter
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$
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13.07
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$
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9.72
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Second Quarter
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16.24
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12.02
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Third Quarter (through April 1, 2011)
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$
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17.70
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$
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13.76
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The LaBarge board of directors has the power to determine the
amount and frequency of the payment of dividends. Decisions
regarding whether to pay dividends and the amount of any
dividends are based upon compliance with the DGCL, compliance
with agreements governing LaBarges indebtedness, earnings,
cash requirements, results of operations, cash flows, financial
condition and other factors that the board of directors
considers important. LaBarge has not paid dividends in respect
of its common stock in the past. If the merger were not
consummated LaBarge does not anticipate that it would commence
paying dividends. Under the merger agreement, until the
effective time, LaBarge is prohibited without Ducommuns
consent from declaring, setting aside or paying any dividends
on, or making any other distributions in respect of, any of its
capital stock.
21
RISK
FACTORS
In deciding whether to vote for the adoption of the merger
agreement, we urge you to consider carefully all of the
information included or incorporated by reference in this proxy
statement. See Where You Can Find More Information
beginning on page [ ]. You should also
read and consider the risks associated with the business of
LaBarge The risks associated with the business of LaBarge can be
found in the LaBarge Annual Report on
Form 10-K
for the year ended June 27, 2010, which is incorporated by
reference in this proxy statement.
Managements
focus on the merger may divert their attention from ongoing
business concerns.
Consummation of the merger, and satisfaction of various
conditions to closing the merger, will require a significant
investment of resources by LaBarge, including the time and
attention of our management. We cannot predict or estimate the
impact that our managements attention to these matters
will have on the operation of our business.
The
announcement of the merger agreement may cause disruptions that
will harm LaBarges operating results and business
generally, customer relationships, and relationships with our
employees and suppliers.
The inclination of LaBarge customers and suppliers to continue
their business relationships with LaBarge may be negatively
impacted by the announcement of the merger. In addition, certain
of our employees may elect to pursue other employment
opportunities as a result of the merger and the transactions
contemplated under the merger agreement. Any significant
disruption to our customer, supplier or employee relationships
could have an adverse effect on our financial condition and
results of operations.
LaBarge
must obtain governmental and regulatory approvals to consummate
the merger, which, if delayed, not granted or granted with
unacceptable conditions, may jeopardize or delay the
consummation of the merger, result in additional expenditure of
time and resources and reduce the anticipated benefits of the
acquisition.
The merger is conditioned on the receipt of clearance under the
HSR Act. If LaBarge does not receive such approvals, or does not
receive such approvals on terms that satisfy the conditions set
forth in the merger agreement, then LaBarge will not be
obligated to consummate the merger.
The governmental authorities from which LaBarge must seek these
regulatory approvals have broad discretion in their review of
the transaction. As a condition to their approval of the merger,
the governmental authorities may impose requirements,
limitations or costs on the combined company, require
divestitures of the combined company or place restrictions on
the conduct of the business of the combined company. These
requirements, limitations, costs, divestitures or restrictions
could jeopardize or delay the consummation of the merger and
could reduce its anticipated benefits to LaBarge LaBarge cannot
make any assurances that it will obtain all of the required
regulatory approvals or that Ducommun will obtain them on any
particular terms. The merger agreement also contains a condition
that the staff of the SEC has not rejected or expressly
disapproved any of the material terms or conditions of that
certain Offer of Settlement of LaBarge executed by LaBarge on
March 18, 2011. See The Merger Regulatory
Approvals Required for the Merger beginning on
page [ ].
LaBarge
must obtain approval of the holders of two-thirds of its shares
of common stock entitled to vote in order to consummate the
merger, which, if delayed or not obtained, may jeopardize or
prevent the consummation of the merger.
The merger is conditioned on the holders of two-thirds of
LaBarges shares of common stock entitled to vote thereon
adopting the merger agreement at the LaBarge special meeting. If
the LaBarge stockholders do not adopt the merger agreement, then
LaBarge cannot consummate the merger.
22
LaBarge
will incur significant transaction and merger-related
integration costs in connection with the merger.
LaBarge expects to incur a number of costs associated with
completing the merger. The substantial majority of these costs
will be non-recurring expenses and will primarily consist of
transaction costs related to the merger. It is possible that the
merger may be more expensive to complete than anticipated,
including as a result of unexpected factors or events.
An event, change or other circumstance could occur that could
give rise to the termination of the merger agreement, including
a termination under circumstances that could require us to pay a
termination fee or reimburse Ducommun for its expenses incurred
in connection with the proposed transaction up to $5,000,000.
The
market price of LaBarge common stock may decline as a result of
investor perceptions of the merger.
In response to the announcement of the merger, the market price
of LaBarge common stock may decline as a result of investor
perceptions about the terms or benefits of the transaction.
LaBarge
officers and directors may have financial interests in the
merger that are different from, or in addition to, the interests
of LaBarge stockholders.
When considering the recommendation of the LaBarge board of
directors with respect to the merger, LaBarge stockholders
should be aware that some directors and executive officers of
LaBarge have interests in the merger that might be different
from, or in addition to, their interests as stockholders and the
interests of stockholders of LaBarge generally. These interests
include, among others, potential payments under severance
agreements, cash payments in respect of restricted stock as a
result of the merger, cash payments upon subsequent vesting of
performance units, which units are valued at the maximum level
provided for thereunder, cash payments in respect of stock
options in connection with the merger, the potential to serve as
directors
and/or
officers of Ducommun, the potential to enter into new employment
agreements with Ducommun, and the right to continued
indemnification and insurance coverage by the surviving
corporation for acts or omissions occurring prior to the merger.
See The Merger Interests of LaBarge Directors
and Executive Officers in the Merger beginning on
page [ ].
As of the close of business on April 13, 2011, LaBarge
directors and executive officers were entitled to vote
approximately 24.7% of the then-outstanding shares of LaBarge
common stock. See The Merger Stock Ownership
of Directors and Executive Officers of LaBarge beginning
on page [ ].
The
condition of the financial markets, including volatility and
weakness in the credit markets, could affect the availability
and terms of debt sources to finance Ducommuns undertaking
in connection with the merger.
In connection with the merger, Ducommun obtained the Debt
Commitment Letter from the Lenders. The funds to be made
available pursuant to the terms and conditions of the Debt
Commitment Letter should be sufficient to finance the cash
consideration to LaBarge stockholders, to refinance certain
existing LaBarge and Ducommun debt and to pay fees and expenses
related to the merger and the Debt Financing. Subject to the
conditions set forth in the Debt Commitment Letter, Ducommun
expects to have in place approximately $390 million in debt
financing available on the date on which the merger is
consummated. The condition of the financial markets could affect
the availability and terms of debt financing sources to finance
Ducommuns undertaking in connection with the merger. See
The Merger Financing Relating to the
Merger beginning on page [ ].
Legal
proceedings in connection with the merger could delay or prevent
the completion of the merger.
Four lawsuits have been filed questioning the terms of the
merger and whether they are fair to the LaBarge stockholders.
Additional purported class action lawsuits may also be filed by
stockholders and/or third parties challenging the proposed
merger and seeking, among other things, to enjoin the
consummation of the merger. One of the conditions to the closing
of the merger is that no governmental authority has enjoined
23
the consummation of the merger. If a plaintiff is successful in
obtaining an injunction prohibiting consummation of the merger,
then the injunction may delay the merger or prevent the merger
from being completed. See The Merger
Litigation Related to the Merger beginning on
page [ ].
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This proxy statement includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933,
as amended (which we refer to as the Securities Act)
and Section 21E of the Exchange Act. All statements
regarding LaBarges expected future financial position,
results of operations, cash flows, financing plans, business
strategy, budgets, capital expenditures, competitive positions,
growth opportunities, plans and objectives of management and
statements containing words such as anticipate,
approximate, believe, plan,
estimate, expect, project,
could, should, will,
intend, may and other similar
expressions, are forward-looking statements. These
forward-looking statements are made based upon expectations and
beliefs concerning future events affecting LaBarge and are
subject to uncertainties and factors relating to its operations
and business environment, all of which are difficult to predict
and many of which are beyond its control, that could cause its
actual results to differ materially from those matters expressed
or implied by these forward-looking statements. Accordingly, you
should not place undue reliance on any of the forward-looking
statements in this proxy statement, which are likewise subject
to numerous uncertainties, and you should consider all of such
information in light of the various risks identified in this
proxy statement and in the reports filed by LaBarge with the
SEC, as well as the other information that LaBarge provides with
respect to the merger.
The following factors, among others, could cause actual results
to differ from those set forth in the forward-looking statements:
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the adoption of the merger agreement by LaBarges
stockholders or other conditions to the completion of the merger
may not be satisfied, or the regulatory approvals required for
the merger may not be obtained on the terms expected or on the
anticipated schedule, if at all;
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the effect of the announcement of the merger on LaBarges
business relationships, operating results and business generally;
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the retention of certain key employees by LaBarge;
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the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement;
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liability for litigation, administrative actions, and similar
disputes;
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the outcome of any legal proceedings that have been or may be
instituted against LaBarge related to the merger and the merger
agreement;
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changes in laws and regulations or interpretations or
applications thereof;
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the amount of the costs, fees, expenses and charges related to
the merger;
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the ability to recognize the benefits of the merger;
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the failure of Ducommun to obtain the necessary debt
financing; and
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LaBarges and Ducommuns ability to meet expectations
regarding the timing and completion of the merger.
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Additional factors that may affect future results are contained
in LaBarges filings with the SEC, which are available at
the SECs website at www.sec.gov. Many of these
factors are beyond the control of LaBarge
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof and are not guarantees of performance or results. There
can be no assurance that forward-looking statements will prove
to be accurate. Stockholders should also understand that it is
not possible to predict or identify all risk factors and that
neither this list nor the factors
24
identified in LaBarges SEC filings should be considered
a complete statement of all potential risks and uncertainties.
LaBarge undertakes no obligation to publicly update or release
any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof except as required
by law.
THE
MERGER
The following is a description of the material aspects of the
merger, which does not contain all of the information that is
important to you and is qualified in its entirety by reference
to the merger agreement attached to this proxy statement as
Annex A. We encourage you to read carefully this
entire proxy statement, including the merger agreement attached
to this proxy statement as Annex A, for a more
complete understanding of the merger.
Overview
The LaBarge board of directors has unanimously approved the
merger agreement and the transactions contemplated by the merger
agreement, including the merger. The merger subsidiary will
merge with and into LaBarge in accordance with Delaware law,
whereupon the separate existence of the merger subsidiary shall
cease, with LaBarge continuing as the surviving corporation and
a wholly-owned subsidiary of Ducommun and each share of LaBarge
common stock shall be converted into the right to receive $19.25
in cash, without interest.
As a result of the merger, LaBarge will cease to be a publicly
traded company.
Background
of the Merger
As part of its continuing evaluation of strategic alternatives,
the LaBarge board of directors and management regularly evaluate
LaBarges business strategy and prospects for growth as an
independent company and consider opportunities to improve
LaBarges operations and financial performance in order to
maximize value for LaBarge stockholders. As part of this
process, and in light of its relatively small market
capitalization, the LaBarge board of directors, in consultation
with LaBarges Chief Executive Officer, Chief Financial
Officer and Chief Operating Officer and outside legal and
financial advisors, evaluated and pursued a number of
opportunities to expand and to diversify LaBarges business.
On July 27, 2010, the LaBarge board met to review and to
consider various strategic alternatives for LaBarge. Among other
things, the LaBarge board assessed the electronics manufacturing
industry and business environment generally, reviewed
LaBarges recent stock price performance and considered
LaBarges business prospects, and its financial metrics
relative to other companies within LaBarges industry. Over
the course of the months leading up to this meeting, the LaBarge
board met with representatives of Stifel and Goldman
Sachs & Company, to solicit each of their views on
LaBarges position as an independent company, as well as
their views on LaBarge as a potential acquisition candidate. The
closing price of LaBarge common stock on July 27, 2010 was
$12.60 per share.
As a result of the LaBarge board of directors review, on
July 30, 2010, the LaBarge board determined that it was in
the best interests of LaBarges stockholders to engage an
outside financial advisor to assist the board and management in
exploring a potential sale transaction.
On August 16, 2010, LaBarge engaged Stifel to begin a
process to explore a potential sale of LaBarge.
From August 16, 2010 through November 1, 2010, Stifel
representatives conducted due diligence on LaBarge, including
tours of LaBarges manufacturing facilities. Stifel also
worked with LaBarges Chief Executive Officer, Chief
Financial Officer and Chief Operating Officer to prepare a
confidential information memorandum and management presentation
for prospective acquirors.
On November 2, 2010, Stifel reviewed with the LaBarge board
certain key considerations of a potential sale of LaBarge,
including a list of potential strategic and financial buyers,
and an illustrative timeline for a potential sale transaction.
The LaBarge board considered each of the potential strategic
buyers merits,
25
including each such partys financial capacity to
consummate a transaction with LaBarge as well as strategic
considerations related to each of those potential buyers and
LaBarge. At that meeting, the LaBarge board also discussed the
possibility of concurrently contacting potential financial
buyers, but decided to initiate the process with strategic
buyers before widening the process to include financial buyers
in order to protect the confidentiality of the process while
determining whether there was interest from strategic buyers. At
this meeting, the LaBarge board directed Stifel to contact 11
potential strategic buyers (including Ducommun) to ascertain
levels of interest in a potential transaction with LaBarge. The
closing price of LaBarge common stock on November 2, 2010
was $12.34 per share.
Following the November 2, 2010 meeting, at the direction of
the LaBarge board, Stifel contacted the 11 prospective strategic
buyers that LaBarges Chief Executive Officer, Chief
Financial Officer and Chief Operating Officer and Stifel had
identified as potential interested parties. Of these 11
prospective buyers, five indicated that they were not interested
in participating in the process. The remaining six prospective
buyers (including Ducommun) entered into nondisclosure
agreements, received a descriptive confidential information
memorandum containing certain non-public information regarding
LaBarge and confirmed their interest in continuing to pursue a
potential acquisition of LaBarge.
During the weeks of December 6, 2010 and December 13,
2010, LaBarge management and representatives from Stifel met
with representatives from the six prospective strategic buyers
to provide a detailed overview of LaBarges business.
Following the last meeting during the week of December 13,
2010, each of the six prospective buyers was invited to submit
an initial indication of interest by January 13, 2011. In
advance of January 13, 2011, Stifel received notification
from three of the six prospective buyers that they were formally
withdrawing from the process and would not submit initial
indications of interest.
On January 13, 2011, three parties, including Ducommun,
submitted initial indications of interest with values ranging
from $16.50 $19.25 per outstanding share of LaBarge
common stock. The closing price of LaBarge common stock on
January 13, 2011 was $15.10 per share.
On January 18, 2011, the LaBarge board held a meeting at
which representatives from Stifel reviewed with the LaBarge
board each of the three preliminary indications of interest and
provided an update on its financial analysis. Representatives
from Stifel reviewed with the LaBarge board an illustrative
timeline for continuing a potential sale process with the
prospective buyers, which included detailed due diligence,
solicitations of final offers and negotiation of definitive
agreements. The LaBarge board and Stifel representatives
considered the merits of soliciting interest of potential
financial buyers at this time in the sale process. At this
meeting, the LaBarge board instructed Stifel to invite the
potential buyers that submitted offers to continue with the
process and directed Stifel to contact a select group of
potential financial buyers to solicit their interest in pursuing
an acquisition of LaBarge. The LaBarge board selected a group of
five financial buyers based on their capacity to consummate an
acquisition of LaBarge and their demonstrated interest in making
acquisitions in LaBarges industry. Immediately following
this meeting, Stifel informed each of the potential strategic
buyers of the LaBarge boards decision and on
January 19, 2011, arranged for the three potential
strategic buyers to have access to LaBarges electronic
dataroom.
Beginning on January 19, 2011, Stifel contacted the five
prospective financial buyers and informed them that LaBarge had
initiated a process in December 2010 but would provide them with
the opportunity to meet with management and, upon receiving a
preliminary indication of interest that was acceptable to the
LaBarge board, would provide them adequate time to conduct a
complete due diligence review of LaBarge. Four of the five
prospective financial buyers signed nondisclosure agreements and
received a descriptive confidential information memorandum
containing non-public information regarding LaBarge. One
prospective financial buyer indicated that it was not interested
in pursuing an acquisition of LaBarge and therefore declined to
sign a nondisclosure agreement. Within approximately one week
after receiving the confidential information memorandum and
publicly available information on LaBarge, each of the
prospective financial buyers indicated that it was not
interested in further pursuing an acquisition of LaBarge.
26
On February 9, 2011, Stifel, on behalf of LaBarge, sent a
bid submission letter to each of the remaining prospective
strategic buyers requesting the submission of formal bid
proposals, including a marked merger agreement, by March 8,
2011.
On February 10, 2011, LaBarge received a Wells notice from
the staff of the SEC indicating that the staff intended to
recommend the filing of a civil enforcement action against
LaBarge. Later that day, at the request of the LaBarge board,
Stifel notified the potential buyers of the receipt of the Wells
notice and indicated that although the process could potentially
be delayed, LaBarge would continue to facilitate each of the
potential buyers due diligence reviews and that a revised
bid deadline would be set when LaBarge had more clarity with
respect to the outcome of the SECs investigation. The
closing price of LaBarge common stock on February 10, 2011
was $16.93 per share.
Over the next several weeks, all of the potential buyers
continued their business, financial and legal due diligence
review of LaBarge, and on separate days during the week of
February 21, 2010, each of the potential buyers met with
members of LaBarge management to conduct in-person due diligence
meetings. Additionally, each of the potential buyers visited
certain of LaBarges manufacturing facilities.
On February 25, 2011, Stifel, on behalf of LaBarge, sent a
revised bid submission letter to each of the potential strategic
buyers requesting the submission of a formal bid proposal,
including a marked merger agreement, by March 15, 2011.
On March 8, 2011, one of the potential buyers, Party
A, informed Stifel that it intended to submit a proposal
but would not do so until the evening of March 21, 2011 or
the morning of March 22, 2011.
On the evening of March 15, 2011, Ducommun submitted its
formal bid package, which included a proposed purchase price of
$18.75 per outstanding share of LaBarge common stock, a
mark-up of
the merger agreement and draft financing commitment letters from
the Lenders. In addition, in its cover letter, Ducommun
indicated that its proposal was contingent upon the amendment of
existing severance agreements with the senior management of
LaBarge. On that same evening, one of the prospective buyers,
Party B, indicated that it would not submit a formal
bid proposal and would not continue to pursue an acquisition of
LaBarge. The closing price of LaBarge common stock on
March 15, 2011 was $16.51 per share.
During the morning of March 18, 2011, before the LaBarge
board meeting scheduled for that afternoon, LaBarges CEO,
Craig LaBarge, received a call from the Chief Executive Officer
of Party A, who indicated that Party A intended to submit a
formal proposal on March 22, 2011, but that Party As
proposal would be at the low end of the range Party A had
provided in its preliminary indication of interest, or $16.50
per outstanding share of LaBarge common stock. On that same
morning, a representative from Party As financial advisor
called Stifel and reiterated that Party A intended to submit a
proposal of $16.50 per share.
In a telephonic meeting of the LaBarge board on March 18,
2011, Stifel reviewed with the LaBarge board the sale process to
date, as well as its financial analysis of the bids received by
Ducommun and Party A. Bryan Cave LLP, outside counsel to the
board, and Armstrong Teasdale LLP, outside counsel to LaBarge,
reviewed the merger agreement comments submitted by Ducommun.
Stifel, Bryan Cave, Armstrong Teasdale and LaBarges Chief
Executive Officer, Chief Financial Officer and Chief Operating
Officer discussed Ducommuns ability to finance an
acquisition of LaBarge. The LaBarge board directed Stifel to
inform Party A that it should submit its proposal in writing but
that it should reconsider its price as the LaBarge board was not
prepared to consider a bid at the low end of its range, or
$16.50 per outstanding share of LaBarge common stock. The
LaBarge board of directors also directed Stifel to communicate
to Ducommun that the LaBarge board would not proceed based upon
Ducommuns current proposed purchase price of $18.75 per
share and asked Ducommun to revise its price and clarify and
improve certain terms of the merger agreement by March 21,
2011.
On the morning of March 19, 2011, Stifel communicated to
Party A that it should submit its proposal in writing and that
it should reconsider its price as the LaBarge board was not
prepared to consider a bid at the low end of its range, or
$16.50 per outstanding share of LaBarge common stock. Later that
evening, a representative from Party As financial advisor
informed Stifel that Party A would proceed with a board
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meeting on March 21, 2011, but was not likely to improve
its per share purchase price. Party A did not ultimately submit
a written proposal, nor did it indicate a willingness to
increase its per share price.
On the evening of March 21, 2011, Ducommun submitted a
formal written response to the LaBarge boards request to
clarify and to improve certain aspects of Ducommuns
proposal, including price. Later that evening, representatives
from Stifel discussed Ducommuns written response with
Ducommuns financial advisor and were informed that
Ducommun might be willing to improve certain aspects of its
proposal but reiterated its proposed price of $18.75 per
outstanding share of LaBarge common stock.
In a telephonic meeting of the LaBarge board of directors on
March 22, 2011, Stifel reviewed its financial analysis with
the LaBarge board in light of Ducommuns $18.75 per share
price. After the meeting, at the direction of the LaBarge board,
Stifel informed Ducommuns financial advisor that LaBarge
would be willing to move forward at a price of $20.50 per share,
provided that Ducommun improved certain terms of the merger
agreement regarding the timing of Ducommuns required
financing, the amount of the termination fee, and the
restrictive nature of the non-solicitation provision. In
addition, at the direction of the LaBarge board, Stifel
requested additional clarification of the amendments to the
existing senior management severance agreements that Ducommun
required.
On March 23, 2011, Ducommuns financial advisor
informed representatives from Stifel that Ducommun was willing
to increase its proposed purchase price to $19.25 per
outstanding share of LaBarge common stock, but that this price
represented Ducommuns best and final offer. The closing
price of LaBarge common stock on March 23, 2011 was $16.67
per share. Ducommun also clarified and improved certain aspects
of its merger agreement, including the timing of Ducommuns
required financing, the size of the termination fee and the
language regarding the non-solicitation provision. Later that
evening, Mr. LaBarge contacted Ducommuns CEO, Tony
Reardon, to inform him that he was prepared to recommend to the
LaBarge board that LaBarge pursue a transaction with Ducommun if
Ducommun improved its proposed purchase price to $19.75 per
share and materially improved several remaining aspects of the
merger agreement.
On March 24, 2011, Mr. Reardon informed
Mr. LaBarge that, while Ducommun was willing to negotiate
several aspects of the merger agreement, it was not able to
increase its proposed purchase price above $19.25 per share and
that such price reflected its best and final offer.
In a telephonic meeting of the LaBarge board on March 25,
2011, the LaBarge board authorized LaBarges Chief
Executive Officer, Chief Financial Officer and Chief Operating
Officer and its advisors to continue final negotiations on the
terms of the merger agreement with Ducommun. Following the
LaBarge board meeting, Mr. LaBarge informed
Mr. Reardon that LaBarge was prepared to accept
Ducommuns proposed purchase price of $19.25 per share and
that the LaBarge board authorized LaBarge management to proceed
with final negotiations on the terms of the merger agreement. On
March 25, 2011, Bryan Cave delivered to Ducommuns
outside legal counsel a revised draft of the merger agreement.
At a meeting of the LaBarge board on March 31, 2011,
representatives of Stifel updated the LaBarge board on the
process relating to the sale of LaBarge that had been undertaken
between November 2, 2010 and the current meeting, and
reviewed with the LaBarge board its financial analysis of the
per share merger consideration. Representatives of Armstrong
Teasdale and Bryan Cave reviewed with the LaBarge board the
boards fiduciary duties and the terms and conditions of
the merger agreement and the debt commitment letter to be
obtained by Ducommun.
From March 28 through April 3, 2011, LaBarges senior
management and legal and financial advisors continued to
negotiate with Ducommuns senior management and legal and
financial advisors to finalize the terms of the proposed
transaction, including exchanging several drafts of the merger
agreement.
At a board meeting on April 3, 2011, representatives of
Bryan Cave and Armstrong Teasdale reviewed the final draft of
the merger agreement with the LaBarge board. Also at this
meeting, Stifel reviewed with the LaBarge board its financial
analysis of the per share merger consideration and delivered to
the LaBarge board of directors an oral opinion, which was
confirmed by delivery of a written opinion dated April 3,
2011, to the effect that, as of the date of the opinion and
based upon and subject to the assumptions made, procedures
followed, matters considered and limitations of the review
undertaken in the written opinion, the per share
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merger consideration to be received in the merger by holders of
LaBarge common stock was fair to such holders, from a financial
point of view.
After additional discussion and deliberation, the LaBarge board
unanimously resolved that the merger agreement and the
transactions contemplated thereby are advisable and fair to, and
in the best interests of, LaBarge and its stockholders, approved
the merger agreement and the transactions contemplated thereby,
and recommended that LaBarges stockholders vote to approve
and adopt the merger agreement and the transaction contemplated
thereby.
The merger agreement was executed by LaBarge and Ducommun on
April 3, 2011. On the morning of April 4, 2011, prior
to the commencement of trading on the NYSE and AMEX, LaBarge and
Ducommun each issued a press release announcing the signing of
the merger agreement.
LaBarges
Reasons for the Merger and Recommendation of LaBarges
Board of Directors
At a meeting on April 3, 2011, after careful consideration,
including detailed presentations by LaBarges Chief
Executive Officer, Chief Financial Officer and Chief Operating
Officer and its legal and financial advisors, the LaBarge board
of directors unanimously determined that the merger is fair to,
and in the best interests of, LaBarge and its stockholders and
approved and declared advisable the merger agreement, the merger
and other transactions contemplated by the merger agreement. The
LaBarge board of directors resolved that the merger agreement be
submitted for consideration by the LaBarge stockholders at a
special meeting of its stockholders, and recommended that the
LaBarge stockholders vote FOR the adoption of
the merger agreement. The merger agreement was finalized and
executed on behalf of LaBarge on April 3, 2011.
In evaluating the merger agreement, the merger and the other
transactions contemplated by the merger agreement, the LaBarge
board of directors consulted with LaBarges Chief Executive
Officer, Chief Financial Officer and Chief Operating Officer and
its legal and financial advisor and reviewed a significant
amount of information and considered a number of factors,
including but not limited to the material factors discussed
below (not in any relative order of importance).
Financial
Considerations
The LaBarge board of directors considered the financial terms of
the merger based on, among other things, the following factors:
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the financial terms of the merger, including:
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the per share merger consideration represents a premium of 10.4%
over the closing price of $17.43 per share of LaBarge common
stock on the AMEX on April 1, 2011, the last
trading day prior to the public announcement of the merger
agreement, a 17.2% premium over LaBarges average daily
closing price of $16.43 during the 30 trading days ending on
April 1, 2011, and a 23.0% premium over LaBarges
average daily closing price of $15.65 during the 90 trading days
ending on April 1, 2011;
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the limited public trading volume and liquidity of LaBarge
common stock; and
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the various background data and analyses relating to the
combination of LaBarge and Ducommun, reviewed with the LaBarge
board of directors by LaBarges outside financial and legal
advisors and management, as well as the opinion of Stifel, dated
April 3, 2011, to the LaBarge board of directors as to the
fairness, from a financial point of view, as of the date of the
opinion and based upon and subject to the factors and
assumptions set forth in such opinion, of the per share merger
consideration of $19.25 to be received by the holders of LaBarge
common stock in connection with the merger pursuant to the
merger agreement, as more fully described below in the section
entitled Opinion of LaBarges Financial Advisor.
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Strategic
Considerations
The LaBarge board of directors considered a number of strategic
advantages of the merger in comparison to a stand-alone
strategy, including, but not limited to the following factors:
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the possibility of continuing to operate as an independent
public company, including the perceived risks and uncertainties
of remaining an independent public company. In considering the
alternative of pursuing growth as an independent company, the
board considered managements and the boards
understanding of the business, operations, financial condition,
competitive position, business strategy, succession planning,
earnings and prospects of LaBarge.
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LaBarges ability to compete with its current and potential
future competitors within its markets, including other larger
companies that may have significantly greater resources or
market presence; and
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the degree of risk and uncertainty associated with various
alternative or other proposals or of proposed or potential
transaction structures, specifically considering factors such as
regulatory approvals and financing commitments.
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Other
Considerations
The LaBarge board of directors also considered the following
factors, among others:
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the fact that the cash merger consideration will provide LaBarge
stockholders with immediate value in cash for their shares;
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the judgment of the LaBarge board of directors, after
consultation with management and advisors, that continuing
discussions with Ducommun or soliciting interest from additional
third parties would be unlikely to lead to a better offer and
could lead to the loss of Ducommuns proposed offer;
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the structure of the merger and the terms and conditions of the
merger agreement, including the following:
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the limited conditions to the parties obligations to
complete the merger and the probability that such conditions
would be satisfied, including the parties agreement to use
reasonable best efforts to satisfy such conditions, as more
fully described below in The Merger Agreement
Conditions to Completion of the Merger beginning on
page [ ];
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the provisions that allow LaBarge, under certain circumstances,
to engage in negotiations or discussions with, third parties,
prior to the adoption of the merger agreement by its
stockholders, in response to an unsolicited takeover proposal
that LaBarges board of directors determines in good faith,
after consultation with outside legal counsel and its financial
advisor, constitutes or is reasonably likely to lead to a
superior proposal (as defined on page [ ]);
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the provisions that allow LaBarge, under certain circumstances,
to terminate the merger agreement prior to adoption by its
stockholders, in order to enter into an alternative transaction
in response to an unsolicited takeover proposal that
LaBarges board of directors determines in good faith,
after consultation with outside legal counsel and financial
advisor, constitutes a superior proposal (as defined on
page [ ]);
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the fact that the termination date under the merger agreement
allows for time that is expected to be sufficient to complete
the merger;
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the fact that there is a date certain for terminating the
transaction if the merger has not been consummated;
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the likelihood that the merger would be completed based on,
among other things, the receipt of an executed debt commitment
letter, the terms of the debt commitment letter and the identity
of the Lenders, all of which, in the reasonable judgment of the
LaBarge board of directors, increase the likelihood of such
financing being completed;
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the willingness of the holders of approximately 19% of the
outstanding LaBarge common stock to support the proposed merger;
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the availability of appraisal rights under the DGCL to holders
of LaBarge common stock who comply with all of the required
procedures under the DGCL, which allows such holders to seek
appraisal of the fair value of their shares of LaBarge common
stock as determined by the Delaware Court of Chancery; and
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the belief by the LaBarge board of directors that the merger is
more favorable to LaBarge stockholders than the alternatives to
the merger, which belief was formed based on the review by the
LaBarge board of directors, with assistance of its financial
advisor, of the strategic alternatives available to LaBarge.
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Consideration
of Risks and Other Potentially Negative Factors
The LaBarge board of directors also considered a variety of
risks and other potentially negative factors, including, without
limitation, the following:
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the risks and contingencies relating to the announcement and
pendency of the merger and the risks and costs to LaBarge if the
merger does not close timely or does not close at all, including
the impact on LaBarges relationships with employees and
with third parties;
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the risk of diverting management focus, employee attention and
resources from other strategic opportunities and from
operational matters while working to complete the merger;
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the risk that the parties may incur significant costs and
unexpected delays resulting from seeking governmental consents
and approvals necessary for completion of the merger;
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the fact that, while LaBarge expects that the merger will be
consummated, there can be no assurance that all conditions to
the parties obligations to complete the merger agreement
(including the condition that the parties obtain all required
regulatory approvals) will be satisfied, and, as a result, the
merger may not be consummated;
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the fact that the merger is subject to a condition that the
staff of the SEC has not rejected or expressly disapproved any
of the material terms or conditions of that certain Offer of
Settlement of LaBarge executed by LaBarge on March 18, 2011;
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the fact that the merger consideration would be taxable to
LaBarge stockholders that are U.S. holders for
U.S. federal income tax purposes;
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the fact that LaBarges directors and executive officers
have interests in the merger that are different from, or in
addition to, the LaBarge stockholders, as described below in
Interests of LaBarge Directors and Executive Officers in
the Merger beginning on page [ ];
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the fact that the transaction will prevent current stockholders
from participating in future growth and earnings of LaBarge;
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the risk that Ducommun might not obtain the necessary Debt
Financing set forth in the commitment letter received in
connection with the merger, or alternative financing, or that
any such financing might not be sufficient to complete the
merger and the transactions contemplated thereby;
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the terms and conditions of the merger agreement, including:
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restrictions on the conduct of LaBarges business prior to
the completion of the merger, any of which may delay or prevent
LaBarge from pursuing business opportunities that may arise or
may delay or preclude LaBarge from taking actions that would be
advisable if it were to remain an independent company;
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the non-solicitation covenants and the requirement that LaBarge
must pay to Ducommun a termination fee of $12,410,000 or expense
reimbursement up to $5,000,000 if the merger agreement is
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terminated under circumstances specified in the merger
agreement, as described below in The Merger
Agreement Termination Fees and Expenses
beginning on page [ ]; and
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the risks described in the section entitled Risk
Factors beginning on page [ ].
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LaBarges board of directors concluded that the anticipated
benefits of the merger would outweigh the preceding
considerations.
The reasons set forth above are not intended to be exhaustive,
but include material facts considered by the LaBarge board of
directors in approving the merger agreement. In view of the wide
variety of factors considered in connection with its evaluation
of the merger and the complexity of these matters, the LaBarge
board of directors did not find it useful to and did not attempt
to quantify or assign any relative or specific weights to the
various factors that it considered in reaching its determination
to approve the merger and the merger agreement and to make its
recommendations to LaBarge stockholders. In addition, individual
members of the LaBarge board of directors may have given
differing weights to different factors. The LaBarge board of
directors carefully considered all of the factors described
above as a whole.
The LaBarge board of directors unanimously recommends that
you vote FOR the proposal to adopt the merger
agreement and FOR the proposal to adjourn or
postpone the special meeting, if necessary or appropriate, to
solicit additional proxies.
The LaBarge stockholders should be aware that LaBarges
directors and executive officers have interests in the merger
that are different from, or in addition to, the LaBarge
stockholders. The LaBarge board of directors was aware of and
considered these interests, among other matters, in evaluating
and negotiating the merger agreement and the merger, and in
recommending that the merger agreement be adopted by the LaBarge
stockholders, as described below in Interests of LaBarge
Directors and Executive Officers in the Merger beginning
on page [ ].
Opinion
of LaBarges Financial Advisor
On August 16, 2010, the LaBarge board of directors retained
Stifel to act as its financial advisor and to provide a fairness
opinion in connection with the merger contemplated by the merger
agreement. The LaBarge board of directors selected Stifel based
on Stifels qualifications, expertise and reputation.
Stifel, as part of its investment banking business, is
continuously engaged in the evaluation of businesses and their
debt and equity securities in connection with mergers and
acquisitions, underwritings, private placements and other
securities, valuations and general corporate advisory services.
On April 3, 2011, Stifel delivered its written opinion,
dated April 3, 2011, to the LaBarge board of directors
that, as of the date of the opinion and based upon and subject
to the assumptions made, procedures followed, matters considered
and limitations of the review undertaken in such opinion, the
per share merger consideration to be received by the holders of
LaBarge common stock in connection with the merger pursuant to
the merger agreement was fair to such holders of LaBarge common
stock, from a financial point of view. There are no other
material relationships that existed during the two years prior
to the date of Stifels opinion or that are mutually
understood to be contemplated in which any compensation was
received or is intended to be received as a result of the
relationship between Stifel and any party to the merger.
The full text of the written opinion of Stifel is attached as
Annex B to this proxy statement and is
incorporated into this document by reference. The summary of
Stifels opinion set forth in this proxy statement is
qualified in its entirety by reference to the full text of the
opinion. LaBarge stockholders are urged to read the opinion in
its entirety carefully for a discussion of the procedures
followed, assumptions made, other matters considered and limits
of the review undertaken by Stifel in connection with the
delivery of such opinion.
The opinion of Stifel is solely for the information of, and is
directed to, the LaBarge board of directors for its information
and assistance in connection with its evaluation of the
financial terms of the merger and is not to be relied upon by
any stockholder of LaBarge or Ducommun or any other person or
entity. Stifels opinion does not constitute a
recommendation to LaBarge or the LaBarge board of directors as
to how to vote on the merger or whether to enter into the merger
agreement, or effect the merger or any other transaction
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contemplated by the merger agreement, or to any LaBarge
stockholder as to how such stockholder should vote at any
stockholders meeting at which the merger is considered, or
whether or not any such stockholder should enter into a voting
or stockholders agreement with respect to the merger, or
exercise any dissenters or appraisal rights that may be
available to such stockholder. Further, Stifels opinion
does not compare the relative merits of the merger with any
other alternative transaction or business strategy which may
have been available to or considered by the LaBarge board of
directors or LaBarge, and does not address the underlying
business decision of the LaBarge board of directors or LaBarge
to proceed with or effect the merger, or any other aspect of the
merger. No limitations were imposed by LaBarges board of
directors upon Stifel with respect to the investigations made or
procedures followed by it in rendering its opinion.
Stifels opinion is limited to whether, as of the date of
the opinion, the per share merger consideration was fair to the
holders of LaBarge common stock, from a financial point of view.
Stifels opinion does not consider, address or include:
(i) any other strategic alternatives currently (or which
may have been or may be) contemplated by LaBarge or the LaBarge
board of directors; (ii) the legal, tax or accounting
consequences of the merger on LaBarge or the holders of LaBarge
common stock; (iii) the fairness of the merger to, or any
consideration received in connection therewith by, the holders
of any other class of securities, creditors or other
constituencies of LaBarge; nor does it address the fairness of
the amount or nature of any compensation to be paid or payable
to any of LaBarges officers, directors or employees, or
class of such persons, in connection with the merger, whether
relative to the per share consideration or otherwise; or
(iv) the treatment of, or effect of the merger on, any
LaBarge stock options or performance units. Furthermore, Stifel
did not express any opinion as to the prices, trading range or
volume at which LaBarges securities would trade following
public announcement of the merger.
In connection with its opinion, Stifel, among other things:
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reviewed and analyzed a draft copy of the merger agreement dated
April 3, 2011;
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reviewed certain publicly available financial and other data
with respect to LaBarge, including the consolidated financial
statements for recent years and interim periods up to
January 2, 2011, and certain other relevant financial and
operating data relating to LaBarge made available to Stifel from
published sources and from the internal records of LaBarge;
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made inquiries regarding and discussed the merger and a draft
copy of the merger agreement dated April 3, 2011, a draft
copy of the voting agreement described in the merger agreement
dated April 3, 2011, and other matters related thereto with
LaBarge counsel;
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reviewed certain publicly available information concerning the
trading of, and the trading market for, LaBarges common
stock;
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reviewed and analyzed certain publicly available financial and
stock market data and pricing metrics for selected publicly
traded companies in the electronics manufacturing and, to a
lesser extent, the aerospace and defense industries which Stifel
considered relevant to its analysis;
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reviewed the financial terms and valuation metrics, to the
extent publicly available, of selected recent business
combinations which Stifel considered relevant to its analysis;
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reviewed and discussed with representatives of the management of
LaBarge certain information of a business and financial nature
regarding LaBarge, furnished to Stifel by them, including
financial forecasts and related assumptions of LaBarge;
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reviewed and discussed with representatives of the management of
LaBarge their assessments as to existing and anticipated
commercial relationships with key accounts of LaBarge, including
the ability to retain existing accounts; and
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conducted such other financial studies, analyses and
investigations as Stifel deemed necessary or appropriate for
purposes of its opinion.
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In connection with its review, Stifel relied upon and assumed,
without independent verification, the accuracy and completeness
of all financial, production, reserve, cash flow and other
information that was made
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available, supplied, or otherwise communicated to Stifel by or
on behalf of LaBarge, Ducommun or their respective advisors, or
that was otherwise provided to, discussed with or reviewed by
Stifel, and Stifel did not assume any obligation to
independently verify, and has not independently verified, any of
such information.
With respect to the financial forecasts for LaBarge provided to
Stifel by the management of LaBarge, upon the advice of the
management of LaBarge and with LaBarges consent, Stifel
assumed for purposes of its opinion that the forecasts had been
reasonably prepared on bases reflecting the best available
estimates and judgments of the management of LaBarge at the time
of preparation as to the future operating and financial
performance of LaBarge and that they provided a reasonable basis
upon which Stifel could form its opinion. Such forecasts and
projections were not prepared with the expectation of public
disclosure. All such projected financial information is based on
numerous variables and assumptions that are inherently
uncertain, including, without limitation, factors related to
general economic, market and competitive conditions.
Accordingly, actual results could vary significantly from those
set forth in such projected financial information. Stifel relied
on this projected information without independent verification
or analysis and does not in any respect assume any
responsibility for the accuracy or completeness thereof. Stifel
further relied upon the assurances by LaBarge that it is unaware
of any facts that would make any information provided by or on
behalf of it incomplete or misleading. Stifel assumed, with the
consent of LaBarge, that any material liabilities (contingent or
otherwise, known or unknown), if any, relating to LaBarge have
been disclosed to Stifel.
Stifel also assumed that there have been no material changes in
the assets, liabilities, financial condition, results of
operations, reserves, production levels, business or prospects
of LaBarge since the date of the financial statements contained
in LaBarges Quarterly Report on
Form 10-Q
for the period ended January 2, 2011. With the consent of
LaBarge, Stifel relied on advice of counsel and independent
accountants to LaBarge as to all legal, financial reporting,
tax, accounting and regulatory matters with respect to LaBarge,
the merger, and the merger agreement. Stifel has not been
requested to make, and has not made, an independent evaluation,
appraisal or physical inspection of any of the assets or
liabilities (including, without limitation, any contingent,
derivative or other off-balance sheet assets or liabilities) of
LaBarge, nor has Stifel been furnished with any such evaluations
or appraisals. Stifels opinion does not address the
consequences of, nor does Stifel express any opinion as to any
consideration that may be received in the merger by, holders of
LaBarge common stock perfecting and pursuing appraisal rights as
permitted by applicable law. Stifel assumed that the merger will
be consummated in a manner that complies in all respects with
the applicable provisions of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and
all other applicable statutes, rules and regulations, and that
all governmental, regulatory or other consents and approvals
necessary for the consummation of the merger will be obtained
without any adverse effect on the expected benefits of the
merger in any way meaningful to Stifels analysis or
opinion. Stifel further assumed with the consent of LaBarge that
the merger will be consummated on the terms and conditions
described in the draft merger agreement, without any waiver,
modification or amendment of any material term, condition,
obligation or agreement.
Stifels opinion is necessarily based upon financial,
economic, monetary, market and other conditions and
circumstances existing on, and the information made available to
Stifel as of, the date of such opinion. It is understood that
subsequent developments may affect the conclusions reached in
its opinion, and that Stifel does not have or assume any
obligation to update, revise or reaffirm its opinion. Further,
the credit, financial and stock markets have been experiencing
unusual volatility and Stifel expresses no opinion or view as to
any potential effects of such volatility on LaBarge, Ducommun,
their respective affiliates, or the merger.
The summary set forth below does not purport to be a complete
description of the analyses performed by Stifel, but describes,
in summary form, the material elements of the presentation that
Stifel made to the LaBarge board of directors on April 3,
2011, in connection with Stifels fairness opinion.
In accordance with customary investment banking practice, Stifel
employed generally accepted valuation methods and financial
analyses in reaching its opinion. The following is a summary of
the material financial analyses performed by Stifel in arriving
at its opinion. These summaries of financial analyses alone do
not constitute a complete description of the financial analyses
Stifel employed in reaching its conclusions. None of the
analyses performed by Stifel were assigned a greater
significance by Stifel than any other, nor does the
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order of analyses described represent relative importance or
weight given to those analyses by Stifel. Some of the summaries
of the financial analyses performed by Stifel include
information presented in tabular format. In order to understand
the financial analyses performed by Stifel more fully, you
should read the tables together with the text of each summary.
The tables alone do not constitute a complete description of
Stifels financial analyses, including the methodologies
and assumptions underlying the analyses, and if viewed in
isolation could create a misleading or incomplete view of the
financial analyses performed by Stifel. The summary data set
forth below do not represent and should not be viewed by anyone
as constituting conclusions reached by Stifel with respect to
any of the analyses performed by it in connection with its
opinion. Rather, Stifel made its determination as to the
fairness to the holders of LaBarge common stock of the per share
merger consideration, from a financial point of view, on the
basis of its experience and professional judgment after
considering the results of all of the analyses performed.
Accordingly, the data included in the summary tables and the
corresponding imputed ranges of value for LaBarge should be
considered as a whole and in the context of the full narrative
description of all of the financial analyses set forth in the
following pages, including the assumptions underlying these
analyses. Considering the data included in the summary table
without considering the full narrative description of all of the
financial analyses, including the assumptions underlying these
analyses, could create a misleading or incomplete view of the
financial analyses performed by Stifel.
Except as otherwise noted, the following quantitative
information, to the extent that it is based on market data, is
based on market data as it existed on or before April 3,
2011 and is not necessarily indicative of current market
conditions. The analyses described below do not purport to be
indicative of actual future results, or to reflect the prices at
which any securities may trade in the public markets, which may
vary depending upon various factors, including changes in
interest rates, dividend rates, market conditions, economic
conditions and other factors that influence the price of
securities.
No company or transaction used in any analysis as a comparison
is identical to LaBarge or the merger, and they all differ in
material ways. Stifel selected publicly traded companies and
publicly announced transactions on the basis of various factors,
including the size of the public companies and the similarity of
the lines of business to LaBarge. Accordingly, an analysis of
the results described below is not mathematical; rather it
involves complex considerations and judgments concerning
differences in financial and operating characteristics of the
companies and other factors that could affect the public trading
value of the selected companies or transactions to which they
are being compared. In addition, because the market conditions,
rationale and circumstances surrounding each of the transactions
analyzed were specific to each transaction and because of the
inherent differences between LaBarges businesses,
operations and prospects and those of the selected companies
analyzed, Stifel believed that it was inappropriate to, and
therefore did not, rely solely on the quantitative results of
the analyses. Accordingly, Stifel also made qualitative
judgments concerning the differences between the characteristics
of these transactions (including market conditions, rationale
and circumstances surrounding each of the transactions, and the
timing, type and size of each of the transactions) and the
merger that could affect LaBarges acquisition value.
In conducting its analysis, Stifel used four methodologies to
determine the approximate valuation of LaBarge. The
methodologies used to determine the value of LaBarge included:
selected publicly traded companies analysis, selected precedent
transactions analysis, discounted cash flow analysis, and
discounted equity analysis. These analyses were developed and
applied collectively. Consequently, each individual methodology
was not given a specific weight, nor can any methodology be
viewed individually. Stifel used these analyses to determine the
impact of various operating metrics on the implied equity value
of LaBarge. Each of these analyses yielded a range of implied
equity values, and therefore, such implied equity value ranges
developed from these analyses must be viewed collectively and
not individually. Unless noted otherwise, all analyses are based
on the LaBarge closing stock price as of April 1, 2011 of
$17.43 per share.
Selected
Publicly Traded Companies Analysis
Based on public and other available information, Stifel
calculated LaBarges implied enterprise value (which Stifel
defined as fully diluted market capitalization, plus total debt,
less cash, cash equivalents and marketable securities) and
LaBarges implied fully diluted equity value, in each case,
using multiples of last
35
twelve months (LTM) earnings before interest, taxes,
stock-based compensation, depreciation and amortization, or
EBITDA, and net income, and projected calendar year
(CY) 2011 and CY 2012 EBITDA and net income, which
multiples were implied by the estimated enterprise values and
equity values, and projected EBITDA and net income of the
selected companies listed below. LTM and projected CY 2011 and
CY 2012 information for LaBarge was provided by LaBarges
Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer. CY 2011 and CY 2012 information was based on
two sets of forecasts relating to LaBarge prepared by
LaBarges Chief Executive Officer, Chief Financial Officer
and Chief Operating Officer under scenarios reflecting varying
assumptions of LaBarges Chief Executive Officer, Chief
Financial Officer and Chief Operating Officer, which we refer to
as the Base Case and the SG Case. The SG Case takes into account
assumptions made by the management of LaBarge with respect to
the timing and impact of the SG program, a system developed by
one of LaBarges top customers that was being deployed in
limited quantities as of December 31, 2010. Projections for
the selected companies were based upon First Call Consensus
estimates, publicly available investment banking research and
public filings. Stifel believes that the seven companies listed
below in the electronics manufacturing services industry and, to
a lesser extent, the seven companies listed below in the
aerospace and defense industry, have operations similar to
certain operations of LaBarge, but noted that none of these
companies have identical management, composition, size
and/or
combination of businesses as LaBarge:
|
|
|
|
|
|
|
Electronics Manufacturing Services
|
|
Aerospace & Defense
|
|
|
|
Benchmark Electronics Inc.;
|
|
|
|
Ametek Inc.;
|
|
|
Celestica Inc.;
|
|
|
|
Astronics Corp.;
|
|
|
CTS Corporation;
|
|
|
|
Cubic Corporation;
|
|
|
Flextronics International Ltd.;
|
|
|
|
Esterline Technologies Corp.;
|
|
|
Jabil Circuit Inc.;
|
|
|
|
Mercury Computer Systems, Inc.;
|
|
|
Plexus Corp.; and
|
|
|
|
OSI Systems, Inc.; and
|
|
|
Sanmina-SCI Corporation
|
|
|
|
Teledyne Technologies Inc.
|
The following table sets forth the multiples indicated by this
analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
|
|
|
Third
|
Enterprise Value to:
|
|
Quartile
|
|
Median
|
|
Mean
|
|
Quartile
|
|
Electronics Manufacturing Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTM EBITDA
|
|
|
5.4
|
x
|
|
|
5.8
|
x
|
|
|
6.4
|
x
|
|
|
7.0
|
x
|
CY 2011 Projected (P) EBITDA
|
|
|
4.6
|
x
|
|
|
5.5
|
x
|
|
|
6.0
|
x
|
|
|
6.7
|
x
|
CY 2012P EBITDA
|
|
|
4.2
|
x
|
|
|
5.0
|
x
|
|
|
5.3
|
x
|
|
|
6.1
|
x
|
LTM net income
|
|
|
9.8
|
x
|
|
|
12.9
|
x
|
|
|
12.0
|
x
|
|
|
14.2
|
x
|
CY 2011P net income
|
|
|
7.8
|
x
|
|
|
11.4
|
x
|
|
|
10.6
|
x
|
|
|
13.1
|
x
|
CY 2012P net income
|
|
|
7.0
|
x
|
|
|
10.1
|
x
|
|
|
9.3
|
x
|
|
|
11.5
|
x
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LTM EBITDA
|
|
|
9.9
|
x
|
|
|
10.8
|
x
|
|
|
11.8
|
x
|
|
|
13.3
|
x
|
CY 2011P EBITDA
|
|
|
9.1
|
x
|
|
|
9.7
|
x
|
|
|
10.3
|
x
|
|
|
11.3
|
x
|
CY 2012P EBITDA
|
|
|
7.9
|
x
|
|
|
8.2
|
x
|
|
|
8.9
|
x
|
|
|
9.1
|
x
|
LTM net income
|
|
|
16.1
|
x
|
|
|
19.2
|
x
|
|
|
19.5
|
x
|
|
|
22.3
|
x
|
CY 2011P net income
|
|
|
16.8
|
x
|
|
|
18.8
|
x
|
|
|
19.5
|
x
|
|
|
20.5
|
x
|
CY 2012P net income
|
|
|
14.3
|
x
|
|
|
15.2
|
x
|
|
|
16.3
|
x
|
|
|
18.1x
|
|
The multiples derived from the implied estimated enterprise
values and equity values, and applicable EBITDA and net income
of the companies listed above, were calculated using data that
excluded all extraordinary items and non-recurring charges.
The implied LaBarge per share equity values below were each
calculated based on a range of multiples of first quartile to
third quartile. The quartiles were calculated using statistical
interpolation to divide the
36
probability distribution into four equal areas. In each case,
Stifel multiplied the ratios derived from its analysis by
LaBarges actual or estimated Base Case EBITDA (there was
not a material difference between LaBarges Base Case and
SG Case NTM EBITDA), as applicable, to calculate enterprise
value, and subtracted LaBarges net debt position to derive
equity value. Using the Treasury Stock Method, Stifel then
derived LaBarges implied per share equity value. Stifel
also multiplied the ratios derived from its analysis by
LaBarges actual or estimated net income, as applicable, to
calculate equity value. Using the Treasury Stock Method, Stifel
then derived LaBarges implied per share equity value.
|
|
|
|
|
|
|
|
|
Enterprise Value to:
|
|
Low
|
|
High
|
|
Electronics Manufacturing
|
|
|
|
|
|
|
|
|
LTM EBITDA
|
|
$
|
11.30
|
|
|
$
|
15.14
|
|
CY 2011P EBITDA
|
|
$
|
10.32
|
|
|
$
|
15.64
|
|
CY 2012P EBITDA (Base Case)
|
|
$
|
11.21
|
|
|
$
|
17.04
|
|
CY 2012P EBITDA (SG Case)
|
|
$
|
11.49
|
|
|
$
|
17.45
|
|
LTM Net Income
|
|
$
|
11.13
|
|
|
$
|
16.16
|
|
CY 2011P Net Income
|
|
$
|
9.98
|
|
|
$
|
16.71
|
|
CY 2012P Net Income (Base Case)
|
|
$
|
11.40
|
|
|
$
|
18.49
|
|
CY 2012P Net Income (SG Case)
|
|
$
|
11.70
|
|
|
$
|
18.98
|
|
Aerospace & Defense
|
|
|
|
|
|
|
|
|
LTM EBITDA
|
|
$
|
22.11
|
|
|
$
|
30.42
|
|
CY 2011P EBITDA
|
|
$
|
21.59
|
|
|
$
|
27.23
|
|
CY 2012P EBITDA (Base Case)
|
|
$
|
22.85
|
|
|
$
|
26.42
|
|
CY 2012P EBITDA (SG Case)
|
|
$
|
23.38
|
|
|
$
|
27.02
|
|
LTM Net Income
|
|
$
|
18.32
|
|
|
$
|
25.25
|
|
CY 2011P Net Income
|
|
$
|
21.40
|
|
|
$
|
25.96
|
|
CY 2012P Net Income (Base Case)
|
|
$
|
23.06
|
|
|
$
|
29.08
|
|
CY 2012P Net Income (SG Case)
|
|
$
|
23.67
|
|
|
$
|
29.85
|
|
Stifel noted that LaBarges business model as an outsourced
manufacturer of high-performance electronic, electromechanical
and interconnect systems on a contract basis, LaBarges
primary competitors, and LaBarges significant focus on and
exposure to industries other than the aerospace and defense
industry, are more similar to companies in the electronics
manufacturing services industry. As a result, Stifel viewed the
valuation multiples implied by the seven companies listed above
in the electronics manufacturing services industry as more
relevant.
Selected
Precedent Transactions Analysis
Based on public and other available information, Stifel
calculated LaBarges implied enterprise value and implied
equity value based on multiples of LTM and estimated next twelve
months (NTM) revenues and EBITDA, implied by 16
acquisitions of companies listed below in the electronics
manufacturing services and aerospace and defense industries that
had been announced since January 1, 2004. Estimated NTM
information
37
for LaBarge was based on projections provided by LaBarges
Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer. The acquisitions reviewed in this analysis
were the following:
|
|
|
|
|
Announcement Date
|
|
Acquirer
|
|
Target
|
|
February 7, 2011
|
|
Kratos Defense & Security Solutions, Inc.
|
|
Herley Industries Inc.
|
October 4, 2010
|
|
B/E Aerospace, Inc.
|
|
TSI Group, Inc.
|
August 6, 2010
|
|
TransDigm Group, Inc.
|
|
Semco Instruments Inc.
|
March 30, 2010
|
|
Microsemi Corp.
|
|
White Electronic Designs Corp.
|
March 22, 2010
|
|
Smiths Group plc
|
|
Interconnect Devices, Inc.
|
December 23, 2009
|
|
Crane Co.
|
|
Merrimac Industries, Inc.
|
November 17, 2009
|
|
Goodrich Corp.
|
|
Atlantic Inertial Systems
|
February 27, 2009
|
|
Woodward Governor Company
|
|
HR Textron, Inc.
|
August 19, 2008
|
|
Woodward Governor Company
|
|
MPC Products Corporation
|
June 10, 2008
|
|
LS Corp.
|
|
Superior Essex, Inc.
|
May 13, 2008
|
|
Cobham plc
|
|
M/A-COM Technology Solutions
|
June 4, 2007
|
|
Flextronics International Ltd.
|
|
Solectron Corporation
|
October 17, 2006
|
|
Benchmark Electronics, Inc.
|
|
Pemstar, Inc.
|
August 3, 2006
|
|
TTM Technologies Inc.
|
|
Tyco Electronics PCB Group
|
February 7, 2005
|
|
Jabil Circuit, Inc.
|
|
Varians EMS Division
|
November 17, 2004
|
|
CTS Corp.
|
|
SMTEK International
|
The following table sets forth the multiples indicated by this
analysis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
|
|
|
Third
|
Enterprise Value to:
|
|
Quartile
|
|
Median
|
|
Mean
|
|
Quartile
|
|
LTM EBITDA
|
|
|
7.5
|
x
|
|
|
9.3
|
x
|
|
|
9.7
|
x
|
|
|
10.1
|
x
|
NTM EBITDA
|
|
|
7.6
|
x
|
|
|
7.8
|
x
|
|
|
7.8
|
x
|
|
|
8.0
|
x
|
The implied LaBarge per share equity values below were each
calculated based on a range of multiples of first quartile to
third quartile. The quartiles were calculated using statistical
interpolation to divide the probability distribution into four
equal areas. In each case, Stifel multiplied the ratios derived
from its analysis by LaBarges actual or estimated Base
Case EBITDA (there was not a material difference between
LaBarges Base Case and SG Case NTM EBITDA), as applicable,
to calculate enterprise value, and subtracted LaBarges net
debt position to derive equity value. Using the Treasury Stock
Method, Stifel then derived LaBarges implied per share
equity value.
|
|
|
|
|
|
|
|
|
Enterprise Value to:
|
|
Low
|
|
High
|
|
LTM EBITDA
|
|
$
|
16.45
|
|
|
$
|
22.70
|
|
NTM EBITDA
|
|
$
|
17.75
|
|
|
$
|
18.96
|
|
No transaction used in the selected precedent transactions
analysis is identical to the merger. However, Stifel chose such
transactions based on, among other things, a review of
transactions involving companies in the electronics
manufacturing services and aerospace and defense industries
announced since January 1, 2004, Stifels knowledge
about LaBarge, the industries in which LaBarge operates, the
geographical and operational nature of LaBarges business
and the similarity of the applicable target companies in the
selected precedent transactions to LaBarge with respect to the
size, mix, margins and other characteristics of their
businesses. Accordingly, an analysis of the results of the
foregoing is not mathematical; rather it involves complex
considerations and judgments concerning differences in financial
and operating characteristics of the target companies and other
factors that could affect the public trading value of the
companies and the transactions to which LaBarge and the merger
are being compared.
38
Discounted
Cash Flow Analysis
Stifel performed a discounted cash flow analysis of LaBarge
based on the Base Case and the SG Case forecasts prepared by the
management of LaBarge through 2015. Stifel estimated the
terminal value of the projected cash flows by applying exit
multiples to LaBarges estimated 2015 EBITDA for each of
the Base Case and the SG Case, which multiples ranged from 7.0x
to 9.0x. Stifel then discounted the cash flows projected through
2015 and the terminal value for each of the Base Case and the SG
Case to present values using discount rates for each of the Base
Case and the SG Case ranging from 12.5% to 14.5%. This analysis
indicated a range of aggregate values, which were then decreased
by LaBarges estimated net debt, to calculate a range of
equity values. These equity values were then divided by fully
diluted shares outstanding to calculate implied equity values
per share ranging from $18.39 to $23.13 for the Base Case and
implied equity values per share ranging from $19.29 to $24.40
for the SG Case. Stifel noted that the value of the per share
merger consideration to be received by holders of LaBarge common
stock pursuant to the merger was $19.25. This analysis did not
purport to be indicative of actual future results and did not
purport to reflect the prices at which LaBarge common stock may
trade in the public markets. A discounted cash flow analysis was
included because it is a widely used valuation methodology, but
the results of such methodology are highly dependent upon the
numerous assumptions that must be made, including earnings
growth rates, asset growth rates, dividend payout rates,
terminal multiples and discount rates.
Discounted
Equity Analysis
Stifel used earnings per share projections prepared by
LaBarges Chief Executive Officer, Chief Financial Officer
and Chief Operating Officer for CY 2012 and CY 2013 for each of
the Base Case and the SG Case to calculate a range of present
equity values per share for LaBarge. In conducting this
analysis, Stifel applied a range of CY 2011
price-to-earnings
multiples to LaBarges projected CY 2012 and CY 2013
earnings per share and applied a discount rate of 13.5% to these
ranges. This analysis indicated implied equity values per share
ranging from $15.75 to $22.28 for the Base Case and implied
equity values per share ranging from $16.17 to $23.53 for the SG
Case. Stifel noted that the value of per share merger
consideration to be received by holders of LaBarge common stock
pursuant to the merger was $19.25.
Conclusion
Based upon the foregoing analyses and the assumptions and
limitations set forth in full in the text of Stifels
opinion letter, Stifel was of the opinion that, as of the date
of Stifels opinion, the per share merger consideration to
be received by the holders of LaBarge common stock in connection
with the merger pursuant to the merger agreement was fair to
such holders of LaBarge common stock, from a financial point of
view.
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to a partial analysis or summary
description. In arriving at its opinion, Stifel considered the
results of all of its analyses as a whole and did not attribute
any particular weight to any analysis or factor considered by
it. Stifel believes that the summary provided and the analyses
described above must be considered as a whole and that selecting
portions of these analyses, without considering all of them,
would create an incomplete view of the process underlying
Stifels analyses and opinion; therefore the range of
valuations resulting from any particular analysis described
above should not be taken to be Stifels view of the actual
value of LaBarge.
Miscellaneous
Stifel acted as financial advisor to LaBarge in connection with
the merger and will receive a fee of approximately $5,000,000
for its services, a significant portion of which is contingent
upon the consummation of the merger (the Advisory
Fee). Stifel also acted as financial advisor to the
LaBarge board of directors and received a fee of $750,000 upon
the delivery of its opinion that is not contingent upon
consummation of the merger (the Opinion Fee),
provided that such Opinion Fee is creditable against any
Advisory Fee. Other than the Advisory Fee, Stifel will not
receive any other payment or compensation contingent upon the
successful consummation of the merger. In addition, LaBarge has
agreed to indemnify Stifel for certain liabilities arising out
of its engagement. In the ordinary course of its business,
Stifel may actively trade the
39
equity securities of LaBarge and Ducommun for its own account
and for the accounts of its customers and, accordingly, may at
any time hold a long or short position in such securities. There
are no other material relationships that existed during the two
years prior to the date of Stifels opinion or that are
mutually understood to be contemplated in which any compensation
was received or is intended to be received as a result of the
relationship between Stifel and any party to the merger. Stifel
may seek to provide investment banking services to Ducommun or
its affiliates in the future, for which Stifel would seek
customary compensation. Stifels internal Fairness Opinion
Committee has approved the issuance of Stifels opinion.
Summary
of LaBarge Projections
In the course of the process resulting in the merger agreement,
LaBarges Chief Executive Officer, Chief Financial Officer
and Chief Operating Officer prepared and provided to Stifel,
Ducommun and the other parties that entered into confidentiality
agreements certain non-public, projected financial information,
which was based on LaBarges Chief Executive
Officers, Chief Financial Officers and Chief
Operating Officers estimate of LaBarges future
financial performance as of the date they were prepared (the
Base Case Projections). The projected financial
information covered the fiscal years 2011 through 2015. The
information for fiscal year 2011 was based on actual results for
the first two fiscal quarters and projected results for the
third and fourth fiscal quarters of that year.
In addition, LaBarges provided certain projected financial
information from fiscal 2012 through 2015 that included the
impact of a system developed by one of LaBarges top
customers that was being deployed in limited quantities as of
December 31, 2010 (the SG Projections). The
program is not expected to have a material impact on
LaBarges forecast until fiscal year 2012, and given its
recent implementation, its potential future results are
inherently more uncertain and speculative than the factors
underlying the Base Case Projections. The projected financial
information provided to Stifel and the potential buyers (the
Projections) were also provided by LaBarges
Chief Executive Officer, Chief Financial Officer and Chief
Operating Officer to the LaBarge board of directors.
The Projections were not prepared with a view to public
disclosure and are included in this proxy statement only because
Projections were provided to the LaBarge board of directors,
Stifel and the potential buyers. The Projections were not
prepared with a view to compliance with the published guidelines
of the SEC or the guidelines established by the American
Institute of Certified Public Accountants regarding projections.
LaBarges Independent Registered Public Accounting Firm has
not examined, compiled or performed any procedures with respect
to the Projections and accordingly does not provide any form of
assurance with respect to the Projections. Neither LaBarge nor
any of LaBarges representatives, including Stifel, has
made or makes any representations regarding the ultimate
performance of LaBarge compared to the information contained in
the Projections, and LaBarge does not intend to provide any
update or revision thereof, and undertakes no obligation to do
so except as required by law.
Furthermore, the Projections:
|
|
|
|
|
while presented with numerical specificity, necessarily make
numerous assumptions, many of which are beyond LaBarges
control, including with respect to industry performance, general
business, economic, regulatory, market and financial conditions,
as well as matters specific to LaBarges business, and may
not prove to have been, or may no longer be, accurate;
|
|
|
|
do not necessarily reflect revised prospects for LaBarges
business, changes in general business, economic, regulatory,
market and financial conditions, or any other transaction or
event that has occurred or that may occur and that was not
anticipated at the time the Projections were prepared;
|
|
|
|
are not necessarily indicative of actual current values or
future performance, which may be significantly more favorable or
less favorable than as set forth below;
|
|
|
|
do not reflect the impact of the merger; and
|
|
|
|
should not be regarded as a representation that the Projections
will be achieved and readers of this proxy statement are
cautioned not to place undue reliance on the projections.
|
LaBarge cannot assure you that the Projections will be realized
and actual results may vary materially from those shown.
Important factors that may affect actual results and result in
the Projections not being
40
|
|
|
|
|
achieved include, but are not limited to, the risks described in
LaBarges most recent annual and quarterly reports filed
with the SEC on Forms 10-K and 10-Q, respectively, and in
this proxy statement under the heading Cautionary
Statement Concerning Forward-Looking Statements. The
Projections also cover multiple years and by their nature become
subject to greater uncertainty with each successive year.
Furthermore, and for the same reasons, the Projections should
not be construed as commentary by LaBarges management as
to how management expects LaBarges actual results to
compare to research analysts estimates. The inclusion of
the Projections in this proxy statement should not be regarded
as an indication that LaBarge or any of its affiliates, advisors
or representatives considered or considers the Projections to be
necessarily predictive of actual future events, and the
Projections should not be relied on as such.
|
The Projections are summarized in the following tables showing
both the Base Case Projections and the SG Projections:
BASE CASE
PROJECTIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ending(1),
|
|
|
June 2011
|
|
June 2012
|
|
June 2013
|
|
June 2014
|
|
June 2015
|
|
|
(In millions, except per share amounts)
|
|
Revenue
|
|
$
|
333.8
|
|
|
$
|
386.2
|
|
|
$
|
437.8
|
|
|
$
|
481.5
|
|
|
$
|
539.1
|
|
Gross profit
|
|
$
|
66.4
|
|
|
$
|
77.1
|
|
|
$
|
88.2
|
|
|
$
|
96.9
|
|
|
$
|
108.3
|
|
EBIT
|
|
$
|
29.7
|
|
|
$
|
37.2
|
|
|
$
|
45.5
|
|
|
$
|
50.9
|
|
|
$
|
58.5
|
|
EBITDA
|
|
$
|
38.2
|
|
|
$
|
45.7
|
|
|
$
|
54.1
|
|
|
$
|
59.9
|
|
|
$
|
68.0
|
|
Net Income
|
|
$
|
18.2
|
|
|
$
|
23.2
|
|
|
$
|
28.8
|
|
|
$
|
32.4
|
|
|
$
|
37.3
|
|
Diluted EPS
|
|
$
|
1.14
|
|
|
$
|
1.45
|
|
|
$
|
1.80
|
|
|
$
|
2.03
|
|
|
$
|
2.33
|
|
|
|
|
(1) |
|
LaBarge operates on a 52-week reporting period. |
SG
PROJECTIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ending(1),
|
|
|
June 2011
|
|
June 2012
|
|
June 2013
|
|
June 2014
|
|
June 2015
|
|
|
(In millions, except per share amounts)
|
|
Revenue
|
|
$
|
333.8
|
|
|
$
|
391.7
|
|
|
$
|
465.3
|
|
|
$
|
525.5
|
|
|
$
|
605.1
|
|
Gross profit
|
|
$
|
66.4
|
|
|
$
|
77.8
|
|
|
$
|
91.5
|
|
|
$
|
102.2
|
|
|
$
|
116.3
|
|
EBIT
|
|
$
|
29.7
|
|
|
$
|
37.3
|
|
|
$
|
47.5
|
|
|
$
|
54.3
|
|
|
$
|
63.8
|
|
EBITDA
|
|
$
|
38.2
|
|
|
$
|
45.8
|
|
|
$
|
56.1
|
|
|
$
|
63.3
|
|
|
$
|
73.3
|
|
Net Income
|
|
$
|
18.2
|
|
|
$
|
23.3
|
|
|
$
|
30.1
|
|
|
$
|
34.6
|
|
|
$
|
40.7
|
|
Diluted EPS
|
|
$
|
1.14
|
|
|
$
|
1.46
|
|
|
$
|
1.88
|
|
|
$
|
2.16
|
|
|
$
|
2.54
|
|
|
|
|
(1) |
|
LaBarge operates on a 52-week reporting period. |
Voting
Agreement
In connection with the execution of the merger agreement, all of
LaBarges executive officers and certain directors (each, a
Voting Agreement Stockholder) entered into a voting
agreement with Ducommun attached as Annex D. Each
Voting Agreement Stockholder has agreed to vote all shares of
LaBarge common stock owned of record or beneficially
(representing approximately 19% of the outstanding shares of
LaBarge common stock as of the record date (excluding any shares
of LaBarge common stock deliverable upon exercise or conversion
of any option) (the Voting Shares)) at any meeting
of the stockholders of LaBarge however called (or any action by
written consent in lieu of a meeting) or any adjournment thereof
in favor of the adoption of the merger agreement, the merger and
each of transactions contemplated by the merger agreement.
41
Each Voting Agreement Stockholder also agreed to vote such
Voting Shares held by such stockholder against the following
actions (referred to herein as the frustrating
transactions), whether or not the LaBarge board of
directors recommends approval of such action, proposal or
transaction:
|
|
|
|
|
any merger agreement or merger involving LaBarge other than the
merger agreement and merger with Ducommun;
|
|
|
|
any acquisition proposal (as defined on page
[ ]) or any other proposal which could
reasonably be expected to prevent, impede, interfere or delay
consummation of the merger or the transactions contemplated by
the merger agreement;
|
|
|
|
any change in LaBarges capitalization or dividend policy
or any amendment or other change to LaBarges certificate
of incorporation or bylaws; and
|
|
|
|
any proposal for any recapitalization, reorganization,
liquidation, dissolution, merger or other business combination
between LaBarge and any other person.
|
Each Voting Agreement Stockholder also appointed Ducommun and
Anthony J. Reardon, Joseph P. Bellino and James S. Heiser as his
or her proxy and attorney-in-fact (with full power of
substitution) to vote all of such persons shares (at any
meeting of stockholders of the LaBarge however called or any
adjournment thereof), or to execute one or more written consents
in respect of such shares, (i) in favor of the adoption of
the merger agreement, and each of the transactions contemplated
thereby and approval of any proposal to adjourn or postpone such
meeting to a later date if there are not sufficient votes for
approval on the foregoing on the date on which such meeting is
held and (ii) against any frustrating transaction. The
proxy granted is irrevocable until termination of the voting
agreement, as described below.
Each Voting Agreement Stockholder further agreed not to,
directly or indirectly:
|
|
|
|
|
sell, transfer, gift, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other
arrangement with respect to the sale, transfer, gift, pledge,
encumbrance, assignment or other disposition of, any of such
Voting Stockholders shares (or any right, title or
interest thereto or therein) except as otherwise permitted in
the Voting Agreement;
|
|
|
|
enter into any other voting arrangement, whether by proxy,
voting agreement or otherwise in connection with any acquisition
proposal or frustrating transaction with respect to any of such
shares; or
|
|
|
|
knowingly take any action that would have the effect of
preventing or disabling such stockholder from performing its
obligations under the voting agreement.
|
Each Voting Agreement Stockholder also agreed to not solicit any
acquisition proposal or any inquiry or offer that is reasonably
likely to lead to any acquisition proposal, enter into, continue
or otherwise participate in any discussions with respect to an
acquisition proposal, execute any agreement relating to, or
approve or recommend, an acquisition proposal or make a
solicitation of proxies or seek to advise or influence any
person with respect to the voting of shares of capital stock of
LaBarge intending to facilitate any acquisition proposal.
The voting agreement and the proxy granted by each Voting
Agreement Stockholder shall terminate upon the earlier of
(a) the effective time of the merger,
(ii) September 30, 2011 and (iii) the termination
of the merger agreement in accordance with its terms.
Stock
Ownership of Directors and Executive Officers of
LaBarge
At the close of business on April 13, 2011, for the LaBarge
special meeting, the directors and executive officers of LaBarge
beneficially owned and were entitled to vote approximately
3,395,944 shares of LaBarge common stock, collectively
representing approximately 21.3% of the shares of LaBarge common
stock outstanding on that date. See Stock Ownership and
Voting by LaBarges Directors and Executive Officers
on page [ ] for further information about
the beneficial ownership of shares of LaBarge common stock of
LaBarge directors and executive officers.
42
Merger
Consideration
At the effective time, each share of LaBarge common stock
outstanding immediately prior to the effective time, other than
shares owned by Ducommun or LaBarge or their respective
wholly-owned subsidiaries, or shares owned by stockholders who
have properly exercised and perfected appraisal rights under
Delaware law, will be converted into the right to receive the
merger consideration.
Holders of LaBarge common stock will receive an amount in cash
of $19.25 per share, without interest.
Interests
of LaBarge Directors and Executive Officers in the
Merger
When considering the unanimous recommendation of the LaBarge
board of directors with respect to the approval of the merger
agreement and the transactions contemplated by the merger
agreement, including the merger, LaBarge stockholders should be
aware that some directors and executive officers of LaBarge have
interests in the transactions contemplated by the merger
agreement that may be different from, or in addition to, their
interests as stockholders and the interests of LaBarge
stockholders generally. Such interests relate to, or arise from,
among other things, the following:
|
|
|
|
|
the fact that restricted shares held by LaBarges executive
officers will fully vest and be treated as described below in
The Merger Agreement Effect of the Merger on
LaBarge Inc.s Equity Awards beginning on page
[ ];
|
|
|
|
the fact that stock options held by LaBarges executive
officers will be entitled to a cash payment in connection with
cancellation of such stock options;
|
|
|
|
the fact that LaBarges executive officers may receive
severance payments pursuant to agreements with such executive
officers in the event of a qualified termination of employment
following the merger;
|
|
|
|
the fact that performance units outstanding as of the effective
time will be converted into an unvested right (vested right for
Craig E. LaBarge and Donald H. Nonnenkamp) to receive a cash
payment at the maximum level upon subsequent vesting;
|
|
|
|
the fact that six of LaBarges executive officers have
entered into new employment agreements with LaBarge effective at
the effective time attached hereto as
Annex E; and
|
|
|
|
the fact that LaBarges directors and executive officers
will be entitled to continued indemnification and insurance
coverage by the surviving corporation for acts or omissions
occurring prior to the merger for a period of six years
following the effective time.
|
The LaBarge board of directors was aware of the interests of
LaBarges directors and executive officers during its
deliberations on the merits of the merger and in deciding to
recommend that LaBarge stockholders vote FOR
the adoption of the merger agreement at the LaBarge special
meeting. For purposes of all of the agreements and plans
described below, the completion of the transactions contemplated
by the merger agreement will constitute a change in control.
Stock
Options
Certain of LaBarges executive officers hold stock options,
issued pursuant to various LaBarge stock option plans to
purchase shares of LaBarge common stock. All such options are
fully vested. At the effective time, each LaBarge stock option
outstanding immediately prior to such time will be canceled in
exchange for the right to receive an amount of cash equal to the
product of (1) the number of shares of LaBarge common stock
subject to the option and (2) the excess, of $19.25 over
the exercise price per share less any applicable taxes. The
following chart sets forth, as of April 13, 2011, for each
of LaBarges executive officers:
|
|
|
|
|
the number of shares subject to outstanding options for LaBarge
common stock held by such person;
|
|
|
|
the weighted average exercise price for such options; and
|
|
|
|
the aggregate value of such options (without regard to
deductions or withholdings for applicable taxes), assuming the
closing of the merger as of July 3, 2011.
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
No. of Shares
|
|
|
|
Aggregate
|
|
|
Subject to
|
|
Weighted Average
|
|
Value of
|
|
|
Options
|
|
Exercise Price
|
|
Options
|
|
Name of Executive
|
|
|
|
|
|
|
|
|
|
|
|
|
Craig E. LaBarge
|
|
|
220,452
|
|
|
$
|
4.67
|
|
|
|
3,214,190
|
|
Randy L. Buschling
|
|
|
20,000
|
|
|
|
2.85
|
|
|
|
328,000
|
|
Donald H. Nonnenkamp
|
|
|
68,600
|
|
|
|
6.22
|
|
|
|
893,858
|
|
William D. Bitner
|
|
|
|
|
|
|
|
|
|
|
|
|
Teresa K. Huber
|
|
|
15,000
|
|
|
|
8.54
|
|
|
|
160,650
|
|
John R. Parmley
|
|
|
24,500
|
|
|
|
8.54
|
|
|
|
262,395
|
|
Restricted
Shares
Certain of LaBarges executive officers hold restricted
shares. All such restricted shares shall vest as of the
effective time of the merger. At the effective time, each
restricted share shall be exchanged for the same merger
consideration paid for a share of LaBarge common stock. The
following chart sets forth, as of April 13, 2011, for each
of the executive officers, the total number of restricted shares
held by such person or group.
|
|
|
|
|
|
|
No. of
|
|
|
Restricted
|
|
|
Shares Held
|
|
Name of Executive
|
|
|
|
|
Craig E. LaBarge
|
|
|
43,906
|
|
Randy L. Buschling
|
|
|
28,100
|
|
Donald H. Nonnenkamp
|
|
|
18,880
|
|
William D. Bitner
|
|
|
9,484
|
|
Teresa K. Huber
|
|
|
9,484
|
|
John R. Parmley
|
|
|
9,484
|
|
LaBarge
Performance Units
The performance objectives underlying all of LaBarges
outstanding performance units held by executive officers will be
deemed to be achieved at the maximum level of $1.50 per unit at
the effective time and will be converted upon consummation of
the merger, into an unvested right to receive payment, in cash,
equal to the holders outstanding performance units
multiplied by $1.50, payable within ten days following the
vesting of such unvested cash rights. The unvested cash rights
will vest, except as described below for Craig E. LaBarge and
Donald H. Nonnenkamp, on the earlier to occur of the
holders (i) voluntary termination of employment with
LaBarge for good reason, (ii) involuntary termination of
employment with LaBarge for a reason other than cause,
(iii) termination of employment with LaBarge on account of
disability, (iv) death or (v) completion of twelve
consecutive months of service with LaBarge following the
effective time. Except as set forth below regarding
Mr. LaBarge and Mr. Nonnenkamp, if a holders
employment with LaBarge is terminated for cause or voluntarily
terminated before vesting, he or she will forfeit his or her
right to payment with respect to performance units. The terms
good reason, cause and
disability are defined in the LaBarge 2004 Long Term
Incentive Plan and the new employment agreements entered into
with the Senior Executive Officers. Pursuant to new employment
agreements entered into with LaBarge, Mr. LaBarges
and Mr. Nonnenkamps performance units will be paid,
as applicable, upon the earlier of (i) such executive
officers termination of employment with LaBarge for any
reason following the effective time or (ii) March 15,
2012. If the effective time occurs after July 3, 2011,
outstanding performance units with a performance period ending
on July 3, 2011, other than those held by the Senior
Executive Officers shall not be converted into an unvested cash
right as described above, but instead shall be cancelled in
exchange for payment to such holders in cash at $1.50 per unit
within ten days of the effective time. The following chart sets
forth, as of April 12, 2011, for each of LaBarges
Senior Executive Officers the number of performance units held
by such person and the aggregate amount payable to such person
upon vesting.
44
|
|
|
|
|
|
|
|
|
|
|
No. of
|
|
Aggregate
|
|
|
Performance
|
|
Amount
|
|
|
Units
|
|
Payable
|
|
Name of Executive
|
|
|
|
|
|
|
|
|
Craig E. LaBarge
|
|
|
1,525,000
|
|
|
$
|
2,287,500
|
|
Randy L. Buschling
|
|
|
975,000
|
|
|
|
1,462,500
|
|
Donald H. Nonnenkamp
|
|
|
660,000
|
|
|
|
990,000
|
|
William D. Bitner
|
|
|
336,000
|
|
|
|
504,000
|
|
Teresa K. Huber
|
|
|
336,000
|
|
|
|
504,000
|
|
John R. Parmley
|
|
|
336,000
|
|
|
|
504,000
|
|
Employee
Benefits
The merger agreement requires Ducommun to use commercially
reasonable efforts to during the period commencing on the
effective date and ending on December 31, 2011, waive all
pre-existing conditions, exclusions and waiting periods with
respect to participation and coverage requirements for the
LaBarge employees under any employee benefit plan in which such
employees will be eligible to participate following the
effective time. Ducommun will also use commercially reasonable
efforts to credit the LaBarge employees for their prior service
with LaBarge under the new employee benefit plans in which the
employees are eligible to participate. Credit will be given to
the same extent such service was credited under the similar
LaBarge employee benefit plans for purposes of eligibility to
participate and vesting under those plans, but not for purposes
of benefit accrual. No credit will be given to the extent it
would result in the duplication of benefits for the same period
of service.
New
Employment Arrangements
LaBarge has entered into new employment agreements with six
executive officers: Craig E. LaBarge, Donald H. Nonnenkamp,
Randy L. Buschling, Teresa K. Huber, John R. Parmley and William
D. Bitner. These employment agreements set forth the terms of
each officers employment following the effective time and
are attached hereto as Annex E and replace certain
executive severance agreements previously entered into with
LaBarge.
Craig LaBarge has entered into an employment agreement that
provides that he will serve as the Vice Chairman of LaBarge.
Mr. LaBarges employment agreement has a one year
term, and provides both base salary ($571,500) and a lump-sum
bonus ($255,000). Mr. LaBarges employment agreement
also provides that if he remains employed through the first
anniversary of the closing date, he will be paid a single
lump-sum in satisfaction of his performance units, which shall
be reduced by any amount earlier paid under or in respect of the
performance units. Mr. LaBarges employment is
terminable by either party at any time upon at least
90 days written notice. If Mr. LaBarges
employment is terminated without cause within the first three
months of the beginning of his employment term, is terminated by
Mr. LaBarge for good reason within three months of the
beginning of his employment term, or is terminated for any
reason after three months of the beginning of his employment
term, Mr. LaBarge will be entitled to (i) a lump sum
amount equal to any base salary and bonus that would have been
paid had Mr. LaBarge remained employed during the
employment term, (ii) a lump sum amount in satisfaction of
his performance units to the extent not previously paid,
(iii) continuation of those benefits and perquisites that
would have been provided to him had he remained employed by
LaBarge during his employment term, and (iv) accrued but
unpaid salary, expenses, and other benefits. If Mr.
LaBarges employment is terminated during the first three
months of his employment term for cause, death, disability, or
by Mr. LaBarge without good reason, Mr. LaBarge will
be entitled to a lump sum payment in satisfaction of his
performance units and accrued but unpaid salary, expenses, and
other benefits.
Donald Nonnenkamp has entered into an employment agreement that
provides that he will serve as the Vice President of Finance of
LaBarge. Mr. Nonnenkamps employment agreement has a
one year term, and provides both base salary ($327,500) and a
lump-sum bonus ($123,000). Mr. Nonnenkamps employment
is terminable by either party at any time upon at least
90 days written notice. If Mr. Nonnenkamps
employment is terminated without cause within the first three
months of the beginning of his employment term, is terminated by
Mr. Nonnenkamp for good reason within three months of the
beginning of his employment
45
term, or is terminated for any reason after three months of the
beginning of his employment term, Mr. Nonnenkamp will be
entitled to (i) a lump sum amount equal to any base salary
and bonus that would have been paid had he remained employed
during the employment term, (ii) a lump sum amount in
satisfaction of his performance units to the extent not
previously paid, (iii) continuation of those benefits and
perquisites that would have been provided to him had he remained
employed by LaBarge during his employment term, and
(iv) accrued but unpaid salary, expenses, and other
benefits. If Mr. Nonnenkamps employment is terminated
during the first three months of his employment term for cause,
death, disability, or by Mr. Nonnenkamp without good
reason, Mr. Nonnenkamp will be entitled to a lump sum
payment in satisfaction of his performance units and accrued but
unpaid salary, expenses, and other benefits.
Mr. Buschling, Mr. Parmley, Mr. Bitner, and
Ms. Huber have entered into employment agreements to serve
as, respectively, SVP Operations, VP
Sales and Marketing, VP Operations, and
VP Operations of Ducommun LaBarge Technologies, Inc.
These employment agreements have an initial term of one year,
and following that initial term, each employee will be on an
at-will basis. The employment agreements provide for both base
salary ($390,000 for Mr. Buschling, $268,500 for
Mr. Parmley, $253,000 for Mr. Bitner and $260,000 for
Ms. Huber) and bonus payments. These employment agreements
are terminable by either party at any time upon at least
90 days written notice. Bonuses for the period beginning
July 1, 2011 and ending on December 31, 2011 are to be
no less than a guaranteed minimum amount ($88,500 for
Mr. Buschling, $53,500 for Mr. Parmley, $54,500 for
Mr. Bitner and $52,000 for Ms. Huber). Bonuses for
Ducommuns 2012 fiscal year are to be no less than the
above specified respective amounts reduced by the amount by
which each executives actual bonus for the period from
July 1, 2011 until December 31, 2011 exceeds the
guaranteed minimum bonus for that period. In addition, these
employment agreements also provide that if the executive remains
employed through the first anniversary of the closing date, the
executive will be paid a single lump-sum in satisfaction of his
or her performance units, which shall be reduced by any amount
earlier paid under or in respect of the performance units. These
employment agreements also provide that upon termination of
employment during the initial term of the agreement without
cause or by the executive for good reason, the executive will be
entitled to (i) a lump sum amount equal to any base salary
that would have been paid had the executive remained employed
during the employment term, (ii) a lump sum equal to any
minimum guaranteed bonus accruing during the term of the
employment agreement to the extent not previously paid,
(iii) a lump sum amount in satisfaction of the
executives performance units to the extent not previously
paid, (iv) continuation of those benefits and perquisites
that would have been provided to the executive had the executive
remained employed by LaBarge during the executives
employment term, and (v) accrued but unpaid salary,
expenses, and other benefits. If the executives employment
is terminated without cause or the executive terminates
employment for good reason during the first six months following
the initial employment term, the executive is entitled to
payment of the lump-sum minimum bonus payment, to the extent not
previously paid, and payment of accrued but unpaid salary,
expenses, and other benefits. These employment agreements also
provide that if the executives employment is terminated
during the employment term for cause or by the executive without
good reason, the executive is only entitled to accrued but
unpaid salary, expenses, and other benefits. If an
executives employment is terminated for death or
disability, the executive is entitled to a payment in
satisfaction of his or her performance units to the extent not
previously paid and accrued but unpaid salary, expenses, and
other benefits.
For illustrative purposes only, it is currently estimated that,
assuming the closing of the merger will occur on July 3,
2011 and the employment of each of LaBarges executive
officers is terminated by Ducommun, without cause, immediately
following consummation of the merger, LaBarges executive
officers would be entitled to receive, in the aggregate,
approximately $9.3 million in termination payments and
benefits,
46
excluding payments related to equity-based incentive awards
discussed separately above. The following table sets forth,
using the same assumptions, such payments for each of
LaBarges executive officers.
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Termination
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Payments
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Name of Executive
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Craig E. LaBarge
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$
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3,145,460.00
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Randy L. Buschling
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$
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2,059,441.00
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Donald H. Nonnenkamp
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$
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1,467,667.00
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John R. Parmley
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$
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906,557.00
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Teresa K. Huber
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$
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880,405.00
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William D. Bitner
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$
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878,405.00
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The foregoing descriptions of the employment agreements with
executives are not complete and are qualified in their entirety
by reference to the employment agreement for each executive,
copies of which are attached hereto as Annex F and
incorporated herein by reference.
Indemnification
and Insurance
For a period of six years following the effective time, Ducommun
shall cause the surviving corporation to, indemnify and hold
harmless each current and former officer, director, trustee,
member and fiduciary of LaBarge and its affiliates, against any
costs or expenses (including advancing reasonable
attorneys fees and expenses upon receipt of an undertaking
by the person seeking indemnification to repay such amount if it
shall be ultimately determined that the indemnified person is
not entitled to be indemnified), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened action or investigation
in respect of or arising out of acts or omissions occurring or
alleged to have occurred at or prior to the effective time, to
the fullest extent permitted by Delaware law or any other
applicable law or provided under LaBarges organizational
documents in effect on the date of merger agreement.
In addition, Ducommun shall cause the surviving corporation to
continue in full force and effect for a period of six years
following the effective time the provisions in existence under
LaBarges organizational documents in effect on the date of
the merger agreement regarding elimination of liability of
directors, indemnification and exculpation of officers,
directors and employees and advancement of expenses.
For six years after the effective time, Ducommun shall cause the
surviving corporation to provide officers and
directors liability and similar insurance (which we refer
to as D&O insurance) in respect of acts or
omissions occurring prior to the effective time covering each
indemnified person covered as of the date of the merger
agreement by LaBarges D&O insurance policies on terms
with respect to coverage and amount no less favorable than those
of such policy in effect on the date of the merger agreement.
Alternatively, LaBarge may purchase such tail policy
at its option prior to the effective time and pay the premium
due thereon when due, provided that the surviving corporation
shall not be obligated to pay annual premiums in the aggregate
in excess of $250,000 provided that if the annual premium of
such coverage exceeds such amount, the surviving corporation
shall be obligated to obtain the greatest coverage available,
with respect to matters occurring prior to the effective time of
the merger, for a cost not exceeding such amount.
For additional information about the indemnification rights of
LaBarge directors and executive officers under the merger
agreement, see The Merger Agreement Covenants
and Agreements Indemnification and Insurance
beginning on page [ ].
De-listing
and Deregistration of LaBarge Common Stock
If the merger is completed, LaBarge common stock will no longer
be listed on the AMEX, will be deregistered under the Exchange
Act and LaBarge and will no longer file periodic reports with
the SEC.
47
Regulatory
Approvals Required for the Merger
The HSR Act and the regulations promulgated thereunder require
LaBarge and Ducommun to file premerger notification and report
forms with respect to the merger and related transactions with
the Antitrust Division of the U.S. Department of Justice
and the Federal Trade Commission. LaBarge filed its required
premerger notification and report form on April 14, 2011, and
Ducommun filed its required form on April 14, 2011.
Nevertheless, at any time before or after the completion of the
merger, and before or after the expiration of the premerger
waiting period under the HSR Act, the Antitrust Division of the
U.S. Department of Justice or the Federal Trade Commission
or any state could take such action under the antitrust laws as
it deems necessary or desirable in the public interest,
including seeking to enjoin the completion of the merger, to
rescind the merger or to seek divestiture of particular assets.
Private parties also may seek to take legal action under the
antitrust laws under certain circumstances. Although there is no
assurance that they will not do so, we do not expect any
regulatory authority, state or private party to take legal
action under the antitrust laws.
Although we do not expect these regulatory authorities to raise
any significant concerns in connection with their review of the
merger, there is no assurance that we will obtain all required
regulatory approvals, or that those approvals will not include
terms, conditions or restrictions that may have an adverse
effect on LaBarge or, after the completion of the transaction,
on Ducommun or the surviving corporation.
The merger may be subject to certain regulatory requirements of
other municipal, state, federal and foreign governmental and
self-regulatory agencies and authorities, including those
relating to the offer and sale of securities. Together with
Ducommun, we are currently working to evaluate and comply in all
material respects with these requirements, as appropriate, and
do not currently anticipate that they will hinder, delay or
restrict completion of the merger. However, there is no
guarantee that we will be able to obtain all necessary
approvals. Even if we could obtain all necessary approvals, and
the merger agreement is approved by our stockholders, conditions
may be placed on the merger that could cause us to
abandon it.
Litigation
Related to the Merger
LaBarge is aware of five purported class actions against
LaBarge, LaBarges directors and Ducommun filed by
purported stockholders of LaBarge and relating to the merger.
The complaints allege, among other things, that LaBarges
directors breached their fiduciary duties to the LaBarge
stockholders, and that LaBarge and Ducommun aided and abetted
LaBarges directors in such alleged breaches of their
fiduciary duties. Each plaintiff purports to bring his claims on
behalf of himself and a class of LaBarge stockholders. The
actions seek judicial declarations that the merger agreement was
entered into in breach of the directors fiduciary duties,
rescission of the transactions contemplated by the merger
agreement, and the award of attorneys fees and expenses
for the plaintiffs. Three lawsuits challenging the proposed
transaction have been filed in Missouri state court, all in the
Circuit Court of St. Louis County by the same plaintiffs
attorneys. All seek declaratory, rescissory and other,
unspecified, equitable relief against the directors and officers
on a theory of breach of fiduciary duty to the stockholders and
against LaBarge and Ducommun on a theory of aiding and
abetting the individual defendants. No money damages are
sought, except for attorneys fees and costs, and no
injunctive relief is expressly sought. All three Missouri suits
are identical in content, and two were filed on successive days
on behalf of the same named plaintiff.
The three Missouri cases are:
1. John M. Foley, Jr. v. LaBarge, Inc. et al., St.
Louis County Circuit Court Cause No. 11SL-CC01383, filed
April 5, 2011.
48
2. John M. Foley, Jr. v. LaBarge, Inc., et al., St.
Louis County Circuit Court Cause No.
11SL-CC01391,
filed April 6, 2011.
3. William W. Wheeler v. LaBarge, Inc., et al., St.
Louis County Circuit Court Cause No.
11SL-CC01392,
filed April 6, 2011.
Two other nearly identical lawsuits have been filed in the
Chancery Court of the State of Delaware by different attorneys
than the
above-described
matters. Barry P. Borodkin v. Craig E. LaBarge, et al.,
transaction ID 36985939, Case No. 6368- (filed on April 12,
2011) and Insulators and Asbestos Workers Local No. 14
v. Craig LaBarge, et al. (filed on April 15, 2011)
are putative class actions that mirror the claims raised in the
Missouri cases, but also seek injunctive relief to prevent the
proposed transaction with Ducommun in addition to an accounting
and attorneys fees and costs. LaBarge and Ducommun and the
other defendants believe that the lawsuits are without merit and
intend to defend them vigorously.
Financing
Relating to the Merger
In connection with the entry into the merger agreement, Ducommun
received a debt commitment letter, dated April 3, 2011
(such commitment letter and any schedules, exhibits and annexes
thereto, collectively, the Debt Commitment Letter),
from UBS Loan Finance LLC, UBS Securities LLC, Credit Suisse
Securities (USA) LLC and Credit Suisse AG (the
Lenders) for a senior secured term loan facility of
$190,000,000 and a senior secured revolving credit facility of
up to $40,000,000. In the Debt Commitment Letter, the Lenders
also committed to provide a senior unsecured bridge facility of
$200,000,000, to be available to Ducommun if it does not
complete an anticipated offering of senior unsecured notes on or
before the date on which the merger is consummated.
The obligations of the Lenders to provide financing under the
Debt Commitment Letter are subject to a number of customary
closing conditions included in the Debt Commitment Letter,
including, without limitation:
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there shall not have been any material adverse effect (which
term is defined in the same or substantially the same way as in
the merger agreement) on LaBarge and its subsidiaries since
January 2, 2011;
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delivery of certain customary closing documents (including,
among others, a customary solvency certificate or solvency
opinion, know your customer documentation and
similar information);
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delivery of certain customary LaBarge financial statements,
including pro forma financial statements and
information; and
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payment of applicable costs, fees and expenses and other
compensation, as contemplated by the Debt Commitment Letter and
fee arrangements and compliance with certain other provisions
thereof.
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The Debt Commitment Letter is subject to neither a due diligence
nor a market out condition, which would allow the
Lenders not to fund their commitments if the financial markets
are materially adversely affected. There is a risk that the
conditions to the Debt Financing will not be satisfied and the
Debt Financing may not be funded when required. As of the date
of this proxy statement, no alternative financing arrangements
or alternative financing plans have been made in the event the
Debt Financing described in this proxy statement is not
available as anticipated.
In the merger agreement, Ducommun and merger subsidiary have
agreed to use their reasonable best efforts to obtain the Debt
Financing on the terms and conditions described in the Debt
Commitment Letter. Ducommun and merger subsidiary may not amend,
replace or supplement the Debt Commitment Letter if such
amendment, modification or waiver:
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imposes any additional conditions precedent or expands upon the
conditions precedent to the financing as set forth in the Debt
Commitment Letter;
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adversely impacts the rights of Ducommun or merger subsidiary to
enforce its rights against the other parties to the Debt
Commitment Letter; or
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prevents or impedes or delays the consummation of the merger or
the other transactions contemplated by the merger agreement.
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Ducommun has advised LaBarge that it is expected that on or
before the date on which the merger is consummated, senior
unsecured notes will be issued and sold in reliance on
Rule 144A of the Securities Act in lieu of a portion or all
of bridge financing described above. The merger agreement
provides for a marketing period for such notes prior to the
closing of the merger, which is described in more detail under
The Merger Agreement Covenants and Agreements;
Financing Matters beginning on page
[ ].
LaBarge
Stockholders Rights of Appraisal
If the merger is consummated, dissenting holders of LaBarge
common stock who follow the procedures specified in
Section 262 of the DGCL (Section 262)
within the appropriate time periods will be entitled to have
their shares of LaBarge common stock appraised by the Court of
Chancery, and to receive the fair value of such
shares in cash as determined by the Court of Chancery, together
with a fair rate of interest, if any, to be paid on the amount
determined to be the fair value, in lieu of the merger
consideration that such stockholder would otherwise be entitled
to receive pursuant to the merger agreement. The fair value of
LaBarge common stock as determined by the Court of Chancery may
be more or less than, or the same as, the merger consideration
that you are otherwise entitled to receive under the terms of
the merger agreement.
This section provides a brief summary of Section 262, which
sets forth the procedures for dissenting from the merger and
demanding and perfecting appraisal rights. Failure to follow the
procedures set forth in Section 262 precisely will result
in the loss of appraisal rights. This summary is not a complete
statement regarding the appraisal rights of LaBarge stockholders
or the procedures that they must follow in order to seek and
perfect appraisal rights under Delaware law and is qualified in
its entirety by reference to the text of Section 262, a
copy of which is attached to this proxy statement as
Annex C. The following summary does not constitute
any legal or other advice, nor does it constitute a
recommendation that LaBarge stockholders exercise appraisal
rights under Section 262.
IF YOU WISH TO EXERCISE APPRAISAL RIGHTS OR WISH TO PRESERVE
YOUR RIGHT TO DO SO, YOU SHOULD REVIEW ANNEX C
CAREFULLY AND SHOULD CONSULT YOUR LEGAL ADVISOR, AS FAILURE TO
TIMELY COMPLY WITH THE PROCEDURES SET FORTH IN
ANNEX C WILL RESULT IN THE LOSS OF YOUR APPRAISAL
RIGHTS.
Under Section 262, where a merger is to be submitted for
adoption at a meeting of stockholders, such as the LaBarge
special meeting, not less than 20 days prior to the meeting
a constituent corporation, such as LaBarge, must notify each of
its stockholders for whom appraisal rights are available that
such appraisal rights are available and include in each such
notice a copy of Section 262. This proxy statement
constitutes such notice to holders of LaBarge common stock
concerning the availability of appraisal rights under
Section 262. LaBarge stockholders wishing to assert
appraisal rights must hold the shares of LaBarge common stock on
the date of making the written demand for appraisal rights with
respect to such shares and must continuously hold such shares
through the effective time. LaBarge stockholders who desire to
exercise appraisal rights must also satisfy all of the
conditions of Section 262. A written demand for appraisal
of shares must be delivered to LaBarge before the vote on the
merger occurs. This written demand for appraisal of shares must
be in addition to and separate from a vote against the proposal
to adopt the merger agreement, or an abstention or failure to
vote for the proposal to adopt the merger agreement. LaBarge
stockholders electing to exercise their appraisal rights must
not vote FOR the adoption of the merger agreement. A vote
against the adoption of the merger agreement will not constitute
a demand for appraisal within the meaning of Section 262. A
proxy that is submitted and does not contain voting instructions
will, unless revoked, be voted in favor of the proposal to adopt
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
LaBarge stockholder who submits a proxy and who wishes to
exercise appraisal rights must either submit a proxy containing
instructions to vote against the proposal to adopt the merger
agreement or abstain from voting on the proposal to adopt the
merger agreement.
50
To be effective, a demand for appraisal by a LaBarge stockholder
must be made by, or in the name of, the stockholder of record,
fully and correctly, as the stockholders name appears on
the stockholders stock certificate(s) or in the transfer
agents records, in the case of uncertificated shares. The
demand cannot be made by the beneficial owner if he or she does
not also hold the shares of LaBarge common stock of record. The
beneficial holder must, in such cases, have the registered
owner, such as a bank, brokerage firm or other nominee, submit
the required demand in respect of those shares of LaBarge common
stock. If you hold your shares of LaBarge common stock
through a bank, brokerage firm or other nominee and you wish to
exercise appraisal rights, you should consult with your bank,
brokerage firm or the other nominee to determine the appropriate
procedures for the making of a demand for appraisal by the
nominee.
If shares of LaBarge common stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian,
execution of a demand for appraisal should be made in that
capacity. If the shares of LaBarge common stock are owned of
record by more than one person, as in a tenancy or tenancy in
common, the demand should be executed by or for all owners. An
authorized agent, including an authorized agent for two or more
owners, may execute the demand for appraisal for a stockholder
of record; however, the agent must identify the record owner or
owners and expressly disclose the fact that, in executing the
demand, he or she is acting as agent for the record owner. A
record owner, such as a bank, brokerage firm or other nominee,
who holds shares of LaBarge common stock as a nominee for
others, may exercise his or her right of appraisal with respect
to the shares of LaBarge common stock held for one or more
beneficial owners, while not exercising this right for other
beneficial owners. In that case, the written demand should state
the number of shares of LaBarge common stock as to which
appraisal is sought. Where no number of shares of LaBarge common
stock is expressly mentioned, the demand will be presumed to
cover all shares of LaBarge common stock held in the name of the
record owner.
All demands for appraisal should be addressed to LaBarge, 9900
Clayton Road, St. Louis, Missouri 63124, Attention: Donald
H. Nonnenkamp, Corporate Secretary. The demand must reasonably
inform LaBarge of the identity of the LaBarge stockholder as
well as the stockholders intention to demand an appraisal
of the fair value of the shares held by the
stockholder. 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 will constitute a waiver
of appraisal rights.
Within 10 days after the effective time, LaBarge must
provide notice of the effective time to all of its stockholders
who have complied with Section 262 and have not voted
FOR the adoption of the merger agreement. At
any time within 60 days after the effective time, any
LaBarge stockholder who has not commenced an appraisal
proceeding or joined an appraisal proceeding as a named party
will have the right to withdraw his, her or its demand for
appraisal and to accept the merger consideration specified in
the merger agreement. After this period, a LaBarge stockholder
may withdraw his, her or its demand for appraisal and receive
payment for his, her or its shares as provided in the merger
agreement only with the consent of the surviving corporation.
Unless the demand is properly withdrawn by the LaBarge
stockholder within 60 days after the effective time, no
appraisal proceeding in the Court of Chancery will be dismissed
as to any LaBarge stockholder without the approval of the Court
of Chancery, with such approval conditioned upon such terms as
the Court of Chancery deems just. If the surviving corporation
does not approve a request to withdraw a demand for appraisal
when that approval is required, or if the Court of Chancery does
not approve the dismissal of an appraisal proceeding, the
LaBarge 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 offered pursuant to the merger agreement.
Within 120 days after the effective time (but not
thereafter), either the surviving corporation or any LaBarge
stockholder who has complied with the requirements of
Section 262 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 fair
value of the shares of LaBarge common stock owned by
stockholders entitled to appraisal rights. The surviving
corporation has no obligation to file such a petition if demand
for appraisal is made, and holders should not assume that it
will file a petition. If no petition for appraisal is filed with
the Court of Chancery within 120 days after the effective
time, stockholders rights to appraisal (if available) will
cease. Accordingly, it is the obligation of the holders of
LaBarge common stock to initiate all
51
necessary action to perfect their appraisal rights in respect of
shares of LaBarge common stock within the time prescribed in
Section 262.
Within 120 days after the effective time, any LaBarge
stockholder who has complied with Section 262 will be
entitled, upon written request, to receive from the surviving
corporation a statement listing the aggregate number of shares
not voted in favor of the merger and with respect to which
demands for appraisal have been received and the aggregate
number of holders of such shares. The statement must be mailed
within 10 days after a written request therefore has been
received by the surviving corporation. A person who is the
beneficial owner of shares of LaBarge 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 for appraisal or
request from the surviving corporation the statement described
in this paragraph.
Upon the filing of any petition by a LaBarge stockholder in
accordance with Section 262, service of a copy must be made
upon the surviving corporation. The surviving corporation must,
within 20 days after service, file in the office of the
Delaware 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 of
LaBarge common stock and with whom LaBarge has not reached
agreements as to the value of their shares. The Court of
Chancery may require the stockholders who have demanded an
appraisal for their shares (and who hold stock represented by
certificates) to submit their stock certificates to the Register
in Chancery for notation of the pendency of the appraisal
proceedings and the Court of Chancery may dismiss the
proceedings as to any stockholder that fails to comply with such
direction.
After notice to the stockholders as required by the Court of
Chancery, the Court of Chancery is empowered to conduct a
hearing on the petition to determine those stockholders who have
complied with Section 262 and who have become entitled to
appraisal rights thereunder. After the Court of Chancery
determines the holders of LaBarge common stock entitled to
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 of Chancery shall determine the
fair value of shares of LaBarge common stock as of
the effective time, after taking into account all relevant
factors, exclusive of any element of value arising from the
accomplishment or expectation of the merger, together with a
fair rate of interest, if any, to be paid upon the amount
determined to be the fair value. Unless the Court of Chancery in
its discretion determines otherwise for good cause shown,
interest from the effective time 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 time and the date of payment of the
judgment.
LaBarge stockholders considering seeking appraisal of their
shares should note that the fair value of their shares
determined under Section 262 could be more or less than, or
equal to, the consideration they would receive pursuant to the
merger agreement if they did not seek appraisal of their shares
of LaBarge common stock. Stockholders should be aware that an
investment banking opinion as to the fairness from a financial
point of view of the consideration payable in a transaction such
as the merger is not an opinion as to, and does not address,
fair value under Section 262. Although LaBarge 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 Court of Chancery. Moreover, LaBarge does not anticipate
offering more than the merger consideration to any stockholder
exercising appraisal rights and reserves the right to assert, in
any appraisal proceeding, that, for purposes of
Section 262, the fair value of a share of
LaBarge common stock is less than the merger consideration. In
determining fair value, the 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
fair 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 provides
that fair value is to be exclusive of any
52
element of value arising from the accomplishment or expectation
of the merger. In Cede & Co. v.
Technicolor, Inc., the 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 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.
The costs of the appraisal proceeding (which do not include
attorneys fees or the fees and expenses of experts) may be
determined by the Court of Chancery and taxed against the
parties as the Court of Chancery deems equitable under the
circumstances. Upon application of a dissenting stockholder, the
Court of Chancery may order all or a portion of the expenses
incurred by any dissenting stockholder in connection with the
appraisal proceeding, including reasonable attorneys fees
and the fees and expenses of experts, to be charged pro rata
against the value of all shares entitled to appraisal. In the
absence of a contrary determination, each party bears his, her
or its own expenses.
Any LaBarge stockholder who has demanded appraisal will not,
after the effective time, be entitled to vote for any purpose
the shares of LaBarge common stock subject to demand or to
receive payment of dividends or other distributions on such
shares, except for dividends or distributions payable to
stockholders of record at a date prior to the effective time.
Failure by any LaBarge stockholder to comply fully with the
procedures of Section 262 of the DGCL (as reproduced in
Annex C to this proxy statement) may result in
termination of such stockholders appraisal rights and the
stockholder will be entitled to receive the merger consideration
(without interest) for his, her or its shares of LaBarge common
stock pursuant to the merger agreement.
THE PROCESS OF DISSENTING REQUIRES STRICT COMPLIANCE WITH
TECHNICAL PREREQUISITES. THOSE INDIVIDUALS OR ENTITIES WISHING
TO DISSENT AND TO EXERCISE THEIR APPRAISAL RIGHTS SHOULD CONSULT
WITH THEIR OWN LEGAL COUNSEL IN CONNECTION WITH COMPLIANCE UNDER
SECTION 262 OF THE DGCL. TO THE EXTENT THERE ARE ANY
INCONSISTENCIES BETWEEN THE FOREGOING SUMMARY AND
SECTION 262 OF THE DGCL, THE DGCL WILL CONTROL.
MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal
income tax consequences of the merger to U.S. holders and
non-U.S. holders
(as defined below) of LaBarge common stock who hold their stock
as a capital asset (generally, assets held for investment). This
summary is based on the provisions of the Code, Treasury
regulations, administrative rulings and judicial authority, all
as in effect as of the date hereof, and all of which are subject
to change, possibly with retroactive effect. No assurances can
be given that any change in these laws or authorities will not
affect the accuracy of the discussion set forth herein.
This summary is not a complete description of all the tax
consequences of the merger and, in particular, may not address
U.S. federal income tax considerations applicable to
holders of LaBarge common stock who are subject to special
treatment under U.S. federal income tax law, including, for
example certain U.S. expatriates, financial institutions,
an S corporation, partnership, a tax exempt organization,
limited liability company taxed as a partnership, or other
pass-through entity (or an investor in such pass-through
entity), dealers in securities, traders in securities that elect
mark-to-market
treatment, insurance companies, tax-exempt entities, persons
subject to tax under section 897 of the Code, persons whose
functional currency is not the U.S. dollar,
holders who acquired LaBarge common stock pursuant to the
exercise of an employee stock option or right or otherwise as
compensation, holders exercising dissenters rights or
appraisal rights, and holders who hold LaBarge common stock as
part of a hedge, straddle, constructive sale or conversion
transaction.
This summary does not address U.S. federal income tax
considerations applicable to holders of options to purchase
LaBarge common stock. In addition, this summary does not address
any aspect of state, local or
non-U.S. laws
or estate, gift, excise or other non-income tax laws. Neither
Ducommun nor LaBarge has
53
requested a ruling from the Internal Revenue Service
(hereinafter referred to as the IRS) in connection
with the merger. Accordingly, the discussions below neither bind
the IRS nor preclude it from adopting a contrary position.
Furthermore, no opinion of counsel has been, or is expected to
be, rendered with respect to the tax consequences of the merger.
WE URGE HOLDERS TO CONSULT THEIR OWN TAX ADVISORS REGARDING
THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER IN
LIGHT OF THEIR PERSONAL CIRCUMSTANCES AND THE CONSEQUENCES OF
THE MERGER UNDER U.S. FEDERAL
NON-INCOME
TAX LAWS AND STATE, LOCAL AND
NON-U.S. TAX
LAWS.
For purposes of this discussion, the term
U.S. holder means a beneficial holder of
LaBarge common stock that is, for U.S. federal income tax
purposes:
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a citizen or resident of the U.S.;
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a corporation (including any entity treated as a corporation for
U.S. federal income tax purposes) created or organized
under the laws of the U.S. or any of its political
subdivisions;
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a trust that (i) is subject to the supervision of a court
within the U.S. and the control of one or more
U.S. persons or (ii) has a valid election in effect
under applicable U.S. Treasury regulations to be treated as
a U.S. person; or
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an estate that is subject to U.S. federal income tax on its
income regardless of its source.
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If a partnership (including any entity or arrangement, domestic
or foreign, treated as a partnership for U.S. federal
income tax purposes) holds LaBarge common stock, the tax
treatment of a partner will generally depend on the status of
the partners and the activities of the partnership. Partnerships
and partners in such a partnership should consult their tax
advisors about the tax consequences of the merger to them.
U.S.
Holders
Tax Consequences of the Merger. The exchange
of LaBarge common stock for cash in the merger will be a taxable
transaction for U.S. federal income tax purposes. A
U.S. holder whose LaBarge common stock is converted into
the right to receive cash in the merger will recognize capital
gain or loss for U.S. federal income tax purposes equal to
the difference, if any, between (1) the amount of cash
received by such holder in the merger, and (2) the
U.S. holders adjusted tax basis in such LaBarge
common stock. A U.S. holders adjusted tax basis will
generally equal the price the U.S. holder paid for such
LaBarge common stock. Gain or loss will be determined separately
for each block of LaBarge common stock. A block of stock is
generally a group of shares acquired at the same cost in a
single transaction. Such gain or loss will be long-term capital
gain or loss provided that a U.S. holders holding
period for such LaBarge common stock is more than one year at
the time of the completion of the merger. Currently, long-term
capital gain for non-corporate taxpayers is taxed at a maximum
federal income tax rate of 15%. The deductibility of capital
losses is subject to certain limitations.
Non-U.S.
Holders
A
non-U.S. holder
is a beneficial owner of LaBarge common stock (other than an
entity treated as a partnership for U.S. federal income tax
purposes) that is not a U.S. holder.
Tax Consequences of the Merger. Any gain a
non-U.S. holder
recognizes from the exchange of LaBarge common stock for cash in
the merger generally will not be subject to U.S. federal
income tax unless (a) the gain is effectively connected
with a trade or business conducted by the
non-U.S. holder
in the United States (and, if required by an applicable income
tax treaty, is attributable to a U.S. permanent
establishment), or (b) in the case of a
non-U.S. holder
who is an individual, such holder is present in the United
States for 183 days or more in the taxable year of the sale
and other conditions are met or (c) with respect to
non-U.S. holders who hold more than 5 percent of
LaBarge common stock, LaBarge is or has been a United
States real property holding corporation for
U.S. federal income tax purposes at any time within a
specified time period and certain other requirements are
satisfied. LaBarge is not, and has not been, a
U.S. real
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property holding corporation during the specified time
period. Non-U.S. Holders should consult their tax advisors
about the application of the rules generally described in (c) to
their dispositions of stock.
Non-U.S. holders
described in (a) above, will be subject to tax on gain
recognized at applicable U.S. federal income tax rates (or
in the manner specified by an applicable income tax treaty
provided certain certification requirements are satisfied) and,
in addition,
non-U.S. holders
that are corporations (or treated as corporations for
U.S. federal income tax purposes) may be subject to a
branch profits tax equal to 30% (or lesser rate under an
applicable income tax treaty) on your effectively connected
earnings and profits for the taxable year, which would include
such gain.
Non-U.S. holders
described in (b) above, will be subject to a flat 30% tax
(or at a reduced rate under an applicable income tax treaty
provided that certain certification requirements are satisfied)
on any gain recognized, which may be offset by U.S. source
capital losses.
Information
Reporting and Backup Withholding
In general, information reporting requirements may apply to the
amounts paid to U.S. holders and
non-U.S. holders
in connection with the consideration received in connection with
the merger, unless an exemption applies. Backup withholding may
be imposed (currently at a 28% rate) on the above payments if a
U.S. holder or
non-U.S. holder
(1) fails to provide a taxpayer identification number or
appropriate certifications or (2) fails to report certain
types of income in full.
Any amounts withheld under the backup withholding rules are not
additional tax and will be allowed as a refund or credit against
applicable U.S. federal income tax liability provided the
required information is furnished to the IRS.
THE FOREGOING DISCUSSION OF UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT
INTENDED TO CONSTITUTE A COMPLETE DESCRIPTION OF ALL TAX
CONSEQUENCES RELATING TO THE MERGER. TAX MATTERS ARE VERY
COMPLICATED, AND THE TAX CONSEQUENCES OF THE MERGER TO HOLDERS
WILL DEPEND UPON THE FACTS OF THEIR PARTICULAR SITUATION.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, HOLDERS SHOULD
CONSULT THEIR TAX ADVISORS REGARDING THE APPLICABILITY TO THEM
OF THE RULES DISCUSSED ABOVE AND THE PARTICULAR TAX EFFECTS
TO THEM OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL
AND FOREIGN TAX LAWS.
THE
MERGER AGREEMENT
The following is a summary of certain material provisions of the
merger agreement, a copy of which is attached as
Annex A to this proxy statement and is incorporated
into this proxy statement by reference. LaBarge urges you to
read carefully this entire proxy statement, including the
annexes and the other documents which have been referred to you.
You should also review the section titled Where You Can
Find More Information beginning on
page [ ].
This summary does not purport to be complete and may not
contain all of the information about the merger that is
important to you. The merger agreement has been included for
your convenience to provide you with information regarding its
terms, and we recommend that you read it in its entirety. Except
for its status as the contractual document that establishes and
governs the legal relations between LaBarge, Ducommun and merger
subsidiary with respect to the merger, LaBarge does not intend
for the merger agreement to be a source of factual, business or
operational information about LaBarge. The merger agreement
contains representations and warranties that Ducommun and
LaBarge have made to each other for the principal purpose of
establishing the circumstances in which a party to the merger
agreement may have the right not to consummate the merger if the
representations and warranties of the other party prove to be
untrue due to a change in circumstances or otherwise, and
allocating risk between the parties to the merger agreement,
rather than establishing matters as facts. Those representations
and warranties are qualified in several important respects,
which you should consider as you read them in the merger
agreement.
55
First, except for the parties themselves, under the terms of the
merger agreement, only certain other specifically identified
persons are third party beneficiaries of the merger agreement
who may enforce it and rely on its terms.
Second, the representations and warranties are qualified in
their entirety by certain information of LaBarge filed with the
SEC prior to the date of the merger agreement.
Third, certain of the representations and warranties made by
Ducommun, on the one hand, and LaBarge, on the other hand, were
made as of a specified date, may be subject to a contractual
standard of materiality different from what might be viewed as
material to stockholders, and may have been used for the purpose
of allocating risk between the parties to the merger agreement
rather than as establishing matters as facts.
Fourth, none of the representations or warranties will survive
the closing of the merger and they will therefore have no legal
effect under the merger agreement after the closing. The parties
will not be able to assert the inaccuracy of the representations
and warranties as a basis for refusing to close unless all such
inaccuracies individually or in the aggregate have, and would
reasonably be expected to have, a material adverse effect on the
party that made the representations and warranties, except for
certain limited representations and warranties that must be true
and correct in all, or all material respects. Otherwise, for
purposes of the merger agreement, the representations and
warranties will be deemed to have been sufficiently accurate to
require a closing.
For the foregoing reasons, you should not rely on the
representations and warranties as statements of factual
information. Moreover, information concerning the subject matter
of the representations and warranties may have changed since the
date of the merger agreement, and subsequently developed or new
information qualifying a representation or warranty may have
been included in a filing with the SEC made since the date of
the merger agreement (including in this proxy statement.)
The
Merger; Closing
Upon the terms and subject to the conditions of the merger
agreement, and in accordance with Delaware law, at the effective
time, the merger subsidiary will merge with and into LaBarge in
accordance with Delaware law, whereupon the separate existence
of the merger subsidiary shall cease, and LaBarge shall be the
surviving corporation and a wholly-owned subsidiary of Ducommun
and each share of LaBarge common stock shall be converted into
the right to receive $19.25 in cash, without interest.
Unless Ducommun and LaBarge agree otherwise, the closing of the
merger will occur as soon as possible, but no later than the two
business days following the date on which all of the conditions
to the merger, other than conditions that, by their nature are
to be satisfied at the closing (but subject to satisfaction, or,
to the extent permissible, waiver of those conditions at
closing) have been satisfied or, to the extent permissible,
waived that is the earlier of (a) any business day during
the marketing period (as defined on
page [ ]) as may be specified by Ducommun
on no less than three business days prior notice to
LaBarge and (b) the final day of the marketing period, or
at such other place, at such other time or on such date as
Ducommun and LaBarge may mutually agree.
Assuming timely satisfaction of the necessary closing
conditions, LaBarge is targeting a closing of the merger on or
about June 2011. However, we cannot assure you that such timing
will occur or that the merger will be completed as expected.
Upon the closing, the merger subsidiary and LaBarge will file a
certificate of merger with the Secretary of State of the State
of Delaware. The effective time will be the time the certificate
of merger is filed or at a later time as permitted by Delaware
Law as upon which Ducommun and LaBarge shall agree to and
specify in the certificate of merger.
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Certificate
of Incorporation and Bylaws of the Surviving
Corporation
At the effective time, the certificate of incorporation of
LaBarge shall be amended in its entirety as set forth in
Annex I to the merger agreement and, as amended, shall be
the certificate of incorporation of the surviving corporation.
At the effective time, the bylaws of merger subsidiary in effect
at the effective time shall be the bylaws of the surviving
corporation.
Directors
and Officers of the Surviving Corporation
At the effective time, the directors of merger subsidiary shall
be the directors of the surviving corporation and the officers
of merger subsidiary shall be the officers of the surviving
corporation.
Merger
Consideration
At the effective time, each share of LaBarge common stock
outstanding immediately prior to the effective time (other than
shares owned by (i) Ducommun or LaBarge or their respective
wholly-owned subsidiaries (which will be cancelled) or
(ii) stockholders who have properly exercised and perfected
appraisal rights under the DGCL) will be converted into the
right to receive the merger consideration, without interest.
LABARGE STOCK CERTIFICATES SHOULD NOT BE RETURNED WITH THE
ENCLOSED PROXY CARD(S). LaBarge stock certificates should be
returned with a validly executed transmittal letter and
accompanying instructions that will be provided to LaBarge
stockholders following the effective time.
Lost
Stock Certificates
If any stock certificate has been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person
claiming the stock certificate to be lost, stolen or destroyed
and, if reasonably required by the surviving corporation, the
posting by such person of a bond in a reasonable amount as the
surviving corporation (or the exchange agent in accordance with
its standard procedures) may direct as indemnity against any
claim that may be made against it with respect to the stock
certificate, the exchange agent will issue, in exchange for such
lost, stolen or destroyed stock certificate, the merger
consideration in respect of such shares. These procedures will
be described in the letter of transmittal that LaBarge
stockholders will receive, which such stockholders should read
carefully in its entirety.
Effect of
the Merger on LaBarges Equity Awards
Stock
Options
At the effective time, each LaBarge stock option outstanding
immediately prior to such time under any LaBarge equity plan
will be canceled in exchange for the right to receive an amount
of cash equal to $19.25, without interest, over the exercise
price of the option and applicable withholding taxes.
Restricted
Shares
At or immediately prior to the effective time, each LaBarge
restricted share will vest and become free of any other lapsing
restrictions, and the holder will be entitled to receive the
merger consideration for such shares, subject to applicable
withholding for taxes.
Employee
Stock Purchase Plan
The merger agreement provides that as soon as practicable
following the date of the merger agreement, the LaBarge board of
directors or the compensation committee of the LaBarge board of
directors will take all reasonable actions, including adopting
any necessary resolutions, to (a) terminate the ESPP as of
immediately prior to the effective time, (b) ensure that no
new offering period will be commenced after the date of the
merger agreement, (c) for any offering period with an end
date after the effective time, cause a new exercise
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date to be set for the business day immediately prior to the
effective time; (d) prohibit participants in the ESPP from
altering their payroll deductions from those in effect on the
date of the merger agreement (other than to discontinue
participation), (e) provide for the automatic exercise as
of such date for each option outstanding under the ESPP as of
the date the ESPP is terminated, and (f) provide that the
amount of the accumulated contributions of each participant
under the ESPP as of immediately prior to the termination date
of the ESPP will, to the extend not used to purchase shares, be
refunded to such participant as promptly as practicable
following the effective date, without interest. Shares of
LaBarge common stock previously purchased pursuant to the ESPP
will receive the merger consideration, as described above.
Performance
Units
The performance objectives underlying all of LaBarges
outstanding performance units held by executive officers will be
deemed to be achieved at the maximum level of $1.50 per unit at
the effective time. Within ten days of vesting of such units,
the holder will receive a single sum payment of cash equal to
the holders outstanding performance units multiplied by
$1.50. This amount shall vest, except as described below for
Mr. LaBarge and Mr. Nonnenkamp, on the earlier to
occur of the holders (i) voluntary termination of
employment with LaBarge for good reason, (ii) involuntary
termination of employment with LaBarge for other than cause,
(iii) termination of employment with the LaBarge on account
of disability, (iv) death or (v) completion of twelve
consecutive months of service with LaBarge following the
effective time. Except as set forth below regarding
Mr. LaBarge and Mr. Nonnenkamp, if a holders
employment with LaBarge is terminated for cause or voluntarily
terminated before vesting, he or she will forfeit his or her
right to payment with respect to performance units. The terms
good reason, cause and
disability are defined in the LaBarge 2004 Long Term
Incentive Plan and employment contracts with the Senior
Executive Officers. Pursuant to new employment agreements with
LaBarge, Mr. LaBarges and Mr. Nonnenkamps
performance units will be paid upon the earlier of
(i) termination of employment with LaBarge for any reason
following the effective time or (ii) March 15, 2012.
If the effective time occurs after July 3, 2011,
performance units that have not yet been settled for restricted
shares of LaBarge common stock, other than such units held by
the Senior Executive Officers of LaBarge, for the performance
period ending July 3, 2011, shall not be treated as
described above, but instead shall be cancelled in exchange for
payment to such holders in cash at $1.50 per unit within ten
days of the effective time. Such performance units for the
Senior Executive Officers shall be settled in the manner
described above.
Representations
and Warranties
The merger agreement contains customary representations and
warranties made by each party to the other, which are subject,
in some cases, to specified exceptions and qualifications
contained in the merger agreement and the matters contained in
the confidential disclosure schedule that LaBarge prepared and
delivered to the other prior to signing the merger agreement.
These representations and warranties relate to, among other
things:
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due organization, good standing and the requisite corporate
power and authority to carry on their respective businesses;
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capitalization;
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ownership of subsidiaries;
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corporate power and authority to enter into the merger
agreement, the valid and binding nature of the merger agreement
and enforceability of the merger agreement;
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board of directors approval and recommendation to LaBarge
stockholders to adopt the merger agreement;
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the affirmative vote required by two-thirds LaBarge stockholders
to adopt the merger agreement;
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absence of conflicts with organizational documents, breaches of
contracts and agreements, liens upon assets and violations of
applicable law resulting from the execution and delivery of the
merger agreement and consummation of the transactions
contemplated by the merger agreement;
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absence of required governmental or other third party consents
in connection with execution, delivery and performance of the
merger agreement and consummation of the transactions
contemplated by the merger agreement other than governmental
filings specified in the merger agreement;
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timely filing of by LaBarge required documents with the SEC
since June 28, 2009, compliance of such documents with the
requirements of the Securities Act, and the Exchange Act, and
the absence of untrue statements of material facts or omissions
of material facts in those documents;
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compliance of LaBarge financial statements with GAAP;
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absence of any transaction that would be required to be
disclosed under Item 404 of
Regulation S-K
promulgated under the Securities Act;
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absence of any liabilities other than liabilities disclosed and
provided for in the consolidated audited balance sheet of
LaBarge as of January 2, 2011, or the notes thereto,
liabilities incurred since the consolidated audited balance
sheet of LaBarge as of January 2, 2011, in the ordinary
course of business or in connection with the merger agreement
and liabilities or obligations that have not had or would not
reasonably be expected to have, individually or in the
aggregate, a material adverse effect;
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absence since January 2, 2011, of any material adverse
effect or any material loss, damage, destruction or other
casualty affecting any of the material properties or assets of
LaBarge or any of its subsidiaries;
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absence of misleading information contained or incorporated into
this proxy statement or any other filings made by LaBarge with
the SEC in connection with the merger;
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compliance with applicable laws, including regulatory laws, and
holding of all necessary permits;
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employee benefits matters and ERISA compliance;
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labor matters and compliance with labor and employment law;
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absence of litigation;
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tax matters;
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environmental matters and compliance with environmental laws;
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intellectual property;
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insurance;
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government contracts and export controls;
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occupational safety and health matters;
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major suppliers and customers;
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receipt of an opinion from LaBarges financial
advisor; and
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no brokers or finders fees.
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Ducommun made certain representations and warranties to LaBarge
in the merger agreement, including with respect to the following
matters in connection with the Debt Financing arrangements:
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that Ducommun has paid fees due under the Debt Commitment Letter;
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sufficiency of funds;
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validity and enforceability of the Debt Commitment Letter;
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absence of default under the Debt Commitment Letter; and
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absence of contingencies related to the funding of financing
other than as set forth in the Debt Commitment Letter.
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Many of the representations and warranties in the merger
agreement are qualified as to materiality or
material adverse effect. For purposes of the merger
agreement, a material adverse effect on LaBarge
means:
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any change, effect, development or event that (a) has had
or would reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), business,
assets, or results of operations of LaBarge and its
subsidiaries, taken as a whole or (b) materially impairs
the ability of LaBarge and its subsidiaries to consummate, or
prevents or materially delays, the merger or any of the other
transactions, contemplated by the merger agreement or would
reasonably be expected to do so. In making this determination
with respect to clause (a), no change, effect, development or
event resulting from, arising out of or attributable to any of
the following shall be deemed to be or constitute a material
adverse effect or be taken into account when determining whether
a material adverse effect has occurred or may occur:
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any changes, effects, developments or events in the economy or
the financial, credit or securities markets in general
(including changes in interest or exchange rates);
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any changes, effects, developments or events in the industries
in which LaBarge and its subsidiaries operate;
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any changes, effects, developments or events resulting from the
announcement or pendency of the transactions contemplated by the
merger agreement, the identity of Ducommun or the performance or
compliance with the terms of the merger agreement (including, in
each case, any loss of customers, suppliers or employees or any
disruption in business relationships);
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any failure, in and of itself, of LaBarge to meet internal
forecasts, budgets or financial projections or fluctuations, in
and of themselves, in the trading price or volume of LaBarge
common stock (it being understood that the facts, events,
circumstances or occurrences giving rise or contributing to such
failure or fluctuations may be deemed to be, constitute or be
taken into account when determining the occurrence of a material
adverse effect);
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acts of God, natural disasters, calamities, national or
international political or social conditions, including the
engagement by any country in hostility (whether commenced
before, on or after the date hereof, and whether or not pursuant
to the declaration of a national emergency or war), or the
occurrence of a military or terrorist attack; or
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any changes in applicable law or GAAP (or any interpretation
thereof);
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provided that with respect to the first, second, fifth and last
bullet, the impact of such changes, effects, developments or
events is not materially and disproportionately adverse to
LaBarge and its subsidiaries.
The representations and warranties contained in the merger
agreement will expire at the effective time, and not survive the
consummation of the merger, but they form the basis of specified
conditions to the parties obligations to complete the
merger.
Covenants
and Agreements
Operating
Covenants
LaBarge has agreed that from the date of the merger agreement
until the effective time, LaBarge shall, and shall cause each of
its subsidiaries to:
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conduct its business in the ordinary course consistent with past
practice and in compliance with all material applicable laws and
all material authorizations from governmental
authorities; and
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use its commercially reasonable efforts to preserve intact its
present business organization, maintain in effect all material
permits, keep available the services of its directors, officers
and employees, and
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maintain satisfactory relationships with its customers, lenders,
suppliers and others having material business relationships
with it.
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In addition, with specified exceptions set forth in the merger
agreement or with Ducommuns prior consent (not to be
unreasonably withheld, conditioned or delayed), LaBarge has
agreed, among other things, not to, and not to permit its
subsidiaries to:
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amend its organizational documents;
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(i) split, combine or reclassify any shares of its capital
stock, (ii) declare, set aside or pay any dividend or make
any other distribution in respect of any shares of its capital
stock or other securities (other than dividends or distributions
by any of its wholly-owned subsidiaries) or (iii) redeem,
repurchase, cancel or otherwise acquire or offer to redeem,
repurchase, or otherwise acquire, any of its securities or any
securities of any of its subsidiaries, other than the
cancellation of LaBarge stock options in connection with the
exercise thereof;
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(i) grant, issue, deliver or sell, or authorize the grant,
issuance, delivery or sale of, any shares of any of its
securities or any securities of its subsidiaries, other than the
issuance of any shares upon the exercise of outstanding LaBarge
stock options or (ii) amend the terms of any of its
securities or securities of its subsidiaries (in each case,
whether by merger, consolidation or otherwise);
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(i) directly or indirectly (i) acquire all or
substantially all the equity interest or assets of any business
organization, or division thereof, (ii) merge or
consolidate with any other person or (iii) adopt a plan of
complete or partial liquidation, dissolution, recapitalization
or restructuring;
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sell, lease, license or otherwise dispose of any subsidiary or
any material amount of assets, securities or property having in
the aggregate either a book value or fair market value in excess
of $1,000,000, except pursuant to existing contracts or sales of
inventory in the ordinary course consistent with past practice;
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create or incur any lien on any asset other than permitted liens;
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make any loan, advance or investment other than to or in its
wholly-owned subsidiaries, advances to suppliers in the ordinary
course of business consistent with past practice, in each case,
that do not exceed the advance received by LaBarge from its
customer under the order or contract for which such supplier is
providing supplies to LaBarge, or advances in an amount not in
excess of $50,000;
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(i) incur any indebtedness for borrowed money or guarantees
thereof other than under existing credit facilities or new
indebtedness of up to $50,000 in the aggregate or
(ii) amend or refinance any indebtedness other than
indebtedness in an amount not to exceed $50,000 in the aggregate;
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(i) enter into, amend, or terminate any contract that
provides for payments to or from LaBarge or any of its
subsidiaries in excess of $500,000 over any twelve month period
other than with any customer or supplier entered into in the
ordinary course of business consistent with past practices or
(ii) waive any material right thereunder;
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terminate, suspend, abrogate, amend or modify in any material
respect any material permit;
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assign, sell, otherwise transfer or grant any license or other
rights with respect to any LaBarge intellectual property or fail
to prosecute and maintain all patents, registrations and
applications included in the LaBarge intellectual property,
including by paying any related fees when due;
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except as required by the merger agreement, applicable laws or
existing employee plans or contracts (i) grant, increase or
accelerate any severance, termination pay to or benefits to (or
amend any existing arrangement with) any of their respective
directors, officers or employees; (ii) enter into any
employment, deferred compensation or similar agreement (or any
amendment to such existing agreement) with any of their
respective directors, officers, or employees
(iii) establish, adopt or amend (except as required by
applicable law) any collective bargaining arrangement bonus,
profit-sharing, thrift, pension, retirement, deferred
compensation, severance, compensation, stock option restricted
stock other benefit
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plan or arrangement covering any of their respective existing
directors, officers or employees; or (iv) increase or
accelerate the compensation, bonus or other benefits payable to
any of their respective directors, executives, employees or
independent contractors, except, in the case of employees who
are not officers, increases that are not material, are made in
the ordinary course of business consistent with past practice;
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make any material change in any method of accounting or
accounting principles or practice, except for any such change
required by reason of a concurrent change in GAAP or
Regulation S-X
under the Securities Act, as approved by its independent public
accountants;
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settle or compromise any material liability for taxes, amend any
material tax return, make or revoke any material tax election,
adopt or change any material method of accounting for tax
purposes, surrender any right to a claim for refund of material
taxes, or change any material tax reporting method policy or
procedure;
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commence any action or settle, or offer or propose to settle,
any action or other claim involving or against LaBarge or any of
its subsidiaries involving a payment by or to LaBarge or its
subsidiaries in excess of $100,000 or that would impose any
equitable relief on, or the admission of wrongdoing by, LaBarge;
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fail to use reasonable best efforts to maintain existing
material insurance policies or comparable replacement policies
to the extent available for a similar reasonable cost;
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(i) pay, discharge, settle or satisfy any claims,
liabilities or obligations, other than the payment, discharge or
satisfaction in the ordinary course of business consistent with
past practice or as required by their terms as in effect on the
date of the merger agreement of claims, liabilities or
obligations reflected or reserved against in the most recent
audited financial statements (or the notes thereto) of LaBarge
included in all the reports, schedules, forms, statements,
prospectuses, registration statements and other documents
required to be filed with the SEC or incurred since the date of
such financial statements in the ordinary course of business
consistent with past practice, (ii) cancel any material
indebtedness or (iii) waive, release, grant or transfer any
right of material value;
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enter into any material new line of business outside of its
existing business;
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renew or enter into any non-compete, exclusivity,
non-solicitation or similar agreement that would restrict or
limit, in any material respect, the operations of LaBarge or any
of its subsidiaries other than as permitted by the fiduciary out
provision included in the merger agreement;
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enter into any new lease or amend the terms of any existing
lease with respect the leased real property;
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purchase, lease or license or make any commitment to purchase,
lease or license, any real property or personal property
(including any software) or incur or commit to incur any capital
expenditure or authorization or commitment with respect thereto,
in each case, at a cost in excess of $300,000 for any individual
item or $3,000,000 in the aggregate;
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intentionally take any action (or intentionally omit to take any
action) that would, to the knowledge of LaBarge at the time the
action is taken, materially and adversely affect Ducommuns
and merger subsidiarys ability to consummate the Debt
Financing;
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intentionally take any action (or intentionally omit to take any
action) that would, to the knowledge of LaBarge at the time the
action is taken, result in any of the conditions to the merger
not being satisfied; or
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agree, resolve or commit to take, any of the foregoing actions.
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62
No
Solicitation
The merger agreement provides that LaBarge will not, and will
cause its subsidiaries and its and their respective officers,
directors, employees, investment bankers, attorneys,
accountants, consultants, and other authorized agents, advisors
or representatives not to, directly or indirectly:
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solicit, initiate or take any action to facilitate or encourage
the submission of any acquisition proposal as defined on
page [ ];
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enter into or participate in any discussions or negotiations
with, furnish any information relating to LaBarge or any of its
subsidiaries or afford access to the business, properties,
assets, books or records of LaBarge or any of its subsidiaries
to, any party that is seeking to make, or has made, an
acquisition proposal; or
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withdraw or modify in a manner adverse to Ducommun or the merger
or publicly propose to withdraw or modify in a manner adverse to
Ducommun or the merger the LaBarge board of directors
recommendation, or recommend, endorse, adopt or approve or
publicly propose to recommend, endorse, adopt or approve an
acquisition proposal, grant any waiver or release under any
standstill or similar agreement with respect to any voting
securities of LaBarge or its subsidiaries, enter into any
agreement in principle, letter of intent, term sheet, merger
agreement, acquisition agreement or other similar instrument
constituting or relating to an acquisition proposal or resolve,
agree or publicly propose to take any of the foregoing actions.
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LaBarge has agreed, and agreed to cause its subsidiaries and its
and their respective officers, directors, employees and
representatives, to cease all activities with any parties with
respect to an acquisition proposal existing at the time the
merger agreement was entered into.
However, at any time prior to the LaBarge stockholders adopting
the merger agreement, LaBarge or the LaBarge board of directors,
directly or indirectly through its representatives, may
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engage in negotiations or discussions with (including, as a part
thereof, making any counterproposal or counter offer to) any
third party that has made after the date of the merger agreement
a superior proposal (as defined on
page [ ]) or a bona fide unsolicited
written acquisition proposal that did not arise in connection
with any failure of LaBarge to comply with its obligations in
the preceding paragraphs and that the LaBarge board of directors
believes in good faith (after consultation with a financial
advisor of nationally recognized reputation and outside legal
counsel) is reasonably likely to lead to a superior proposal;
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thereafter furnish to any third party that has made after the
date of the merger agreement a superior proposal, nonpublic
information relating to LaBarge or any of its subsidiaries
pursuant to a confidentiality agreement (with terms no less
favorable to LaBarge than those contained in the existing
confidentiality agreement between Ducommun and LaBarge) provided
that all such information (to the extent that such information
has not been previously provided or made available to Ducommun)
is provided or made available to Ducommun prior to or
substantially concurrently with the time it is provided or made
available to such other party;
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terminate, waive, amend, release or modify any provision of any
confidentiality or standstill agreement to which it or any of
its affiliates or representatives is a party with respect to any
superior proposal; and
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make an adverse recommendation change;
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but in each case only if the LaBarge board of directors
determines in good faith, after consultation with outside legal
counsel, that failure to take such action would likely result in
a breach of its fiduciary duties under applicable law, taking
into account all adjustments to the terms of the merger
agreement that may be offered by Ducommun.
63
The board of LaBarge has agreed that it will not take any of the
foregoing actions unless:
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LaBarge delivers to Ducommun at least three business days prior
written notice advising Ducommun that it intends to take such
action and specifying the reasons therefore (it being understood
that any amendment to the financial terms or any other material
term of a superior proposal will require a new two business day
period);
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prior to the expiration of such three business day period (or
two business day period, as applicable), Ducommun does not make
a proposal to adjust the terms and conditions of the merger
agreement that the LaBarge board of directors determines in good
faith, after consultation with outside legal counsel and its
financial advisors, to be at least as favorable as the superior
proposal after giving effect to, among other things the payment
of the termination fee to Ducommun; and
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LaBarge shall continue to advise Ducommun after delivery of such
notice of the status and material terms of any discussions and
negotiations with the third party.
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During the three business day period (or two business day
period, as applicable) LaBarge has agreed to, and will cause its
financial and legal advisors to, negotiate in good faith (to the
extent Ducommun seeks to negotiate) regarding any revisions to
the terms of the transactions contemplated by the merger
agreement.
In addition, LaBarge has agreed to notify Ducommun promptly (but
in no event later than 24 hours) after receipt of any
acquisition proposal, any inquiry that would be reasonably
expected to lead to an acquisition proposal or of any request
for information relating to LaBarge or any of its subsidiaries
or for access to the business, properties, assets, books or
records of LaBarge or any of its subsidiaries by any third party
that to the knowledge of LaBarge, may be considering making, or
has made, an acquisition proposal. The notice shall be in
writing and shall identify the materials terms and conditions of
such acquisition proposal, inquiry or request and shall be
accompanied by a copy of any written acquisition proposal and
any other relevant transaction documents with respect to such
acquisition proposal. LaBarge has agreed to keep Ducommun
informed (in writing) in all material respects on a timely basis
of the status and details (including within 24 hours after
the occurrence of any amendment, modification, development,
discussion or negotiation) of any such acquisition proposal,
request or inquiry, including copies of any additional written
inquiries, correspondence and draft documentation.
The merger agreement does not prohibit LaBarge from complying
with
Rule 14e-2(a)
under the Exchange Act or complying with the requirements of
Rule 14d-9
under the Exchange Act with regard to an acquisition proposal so
long as any action taken or statement made thereunder is in
compliance with LaBarges non-solicitation obligations.
LaBarge agrees that any violation of the non-solicitation
provisions by any representative of LaBarge, whether or not such
person is purporting to act on behalf of LaBarge or otherwise,
shall be deemed to be a breach by LaBarge. The materiality of
any such breach will be determined under applicable law based on
the facts and circumstances of any such breach.
If the LaBarge board of directors changes its recommendation,
Ducommun would have the right to terminate the merger agreement
and be paid a $12,410,000 termination fee. See Termination
of the Merger Agreement beginning on
page [ ] and Termination Fees and
Expenses beginning on page [ ].
An acquisition proposal means any offer or proposal
(other than the transactions contemplated by the merger
agreement) relating to (i) any acquisition or purchase,
direct or indirect of 20% or more of the voting securities of
LaBarge, (ii) any tender offer or exchange offer that, if
consummated, would result in a third party beneficially owning
20% or more of the voting securities of LaBarge, or (iii) a
sale of assets equal to 20% or more of LaBarges
consolidated assets or a merger, consolidation, share exchange,
business combination, reorganization, recapitalization,
liquidation, dissolution, joint venture or similar transaction
involving LaBarge or any of its subsidiaries whose assets,
individually or in the aggregate, constitute 20% or more of the
consolidated assets of LaBarge.
An adverse recommendation change means withdrawing
or modifying in a manner adverse to Ducommun or the merger, or
publicly propose to withdraw or modify in a manner adverse to
Ducommun or
64
the merger, the recommendation by the LaBarge board of
directors, or recommend, endorse, adopt or approve or publicly
propose to recommend, endorse, adopt or approve an acquisition
proposal.
A superior proposal means any unsolicited bona fide,
written acquisition proposal for at least 66.67% of the
outstanding shares of LaBarge common stock or all or
substantially all of the assets of LaBarge and its subsidiaries
on terms that the LaBarge board of directors determines in good
faith, after consultation with a financial advisor of nationally
recognized reputation and outside legal counsel and taking into
account all the terms and conditions of the acquisition proposal
would result in a transaction (i) that if consummated, is
more favorable to the LaBarge stockholders from a financial
point of view than the merger or, if applicable, any binding
proposal by Ducommun capable of being accepted by LaBarge, to
amend the terms of the merger agreement taking into account all
the terms and conditions of the merger agreement and such
binding proposal (including the expected timing and likelihood
of consummation taking into account any governmental and other
approval requirements and any
break-up
fees and expense reimbursement provisions), (ii) that is
reasonably likely to be completed on the terms proposed, taking
into account the identity of the person making the proposal, any
approval requirements and all other financial, legal and other
aspects of such proposal and (iii) for which financing, if
a cash transaction (whether in whole or in part), is then fully
committed or reasonably determined to be available by the
LaBarge board of directors.
Stockholder
Meeting and Board Recommendation
Unless the merger agreement has been validly terminated, LaBarge
is required to take all reasonable action necessary to convene a
meeting of stockholders as promptly as reasonably practicable
after this proxy statement is cleared to be mailed by the SEC to
consider and vote upon the adoption of the merger agreement and
merger. Subject to the provisions of the merger agreement
discussed under Covenants and Agreements No
Solicitation beginning on page [ ],
the LaBarge board of directors will recommend that stockholders
vote to approve the adoption of the merger and merger agreement.
The LaBarge board of directors is required to include such
recommendation in this proxy statement, use its commercially
reasonable efforts to obtain the required stockholder approval
and otherwise comply in all material respects with all legal
requirements applicable to such meeting. The LaBarge board of
directors is required to publicly reaffirm such recommendation
to its stockholders at least two business days prior to the
stockholders meeting after a request to do so by Ducommun or
merger subsidiary, provided that if LaBarge receives an
acquisition proposal and Ducommun requests that LaBarge reaffirm
its recommendation less than seven business days prior to the
stockholders meeting, LaBarge shall have the right to postpone
the stockholders meeting to the seventh business day from the
date of Ducommuns request to reaffirm its recommendation.
Access
to Information; Confidentiality
Except under certain circumstances from the date of the merger
agreement until the effective time, and subject to applicable
law, LaBarge will, and will cause its subsidiaries to, upon
reasonable notice and request to:
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afford to Ducommun, its counsel, financial advisors, auditors,
lenders and other authorized representatives, reasonable access
during normal business hours to all of their offices,
properties, books and records;
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furnish to Ducommun and its counsel such financial and operating
data and other information as such persons may reasonably
request and a copy of each report, schedule, registration
statement and other document filed or received by it during such
period pursuant to the requirements of federal or state
securities law; and
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instruct its representatives to cooperate with Ducommun in its
investigation.
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However, LaBarge is not required to provide Ducommun with any
information that, in its good faith judgment, would constitute a
waiver of the attorney-client or similar privilege or trade
secret protection held by LaBarge or any of its subsidiaries or
violate a confidentiality obligation owed to others; provided
that LaBarge must make a good faith effort to accommodate
Ducommuns request for access to information. The
65
information will be held in confidence to the extent required by
the provisions of the confidentiality agreement between Ducommun
and LaBarge.
Reasonable
Best Efforts; Covenants and Agreements
Ducommun agrees that from and after the date of the merger
agreement and until the effective time, except with
LaBarges prior written consent, it will not, and will
cause merger subsidiary not to:
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intentionally take any action (or intentionally omit to take any
action) that would, to the knowledge of Ducommun at the time the
action is taken, materially and adversely affect its and merger
subsidiarys ability to consummate the Debt
Financing; or
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intentionally take any action (or intentionally omit to take any
action) that would, to the knowledge of Ducommun at the time the
action is taken, result in any of the conditions to the merger
not being satisfied.
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In addition, Ducommun and LaBarge have agreed to use their
reasonable best efforts to take, or cause to be taken, all
actions necessary, proper or advisable under applicable law to
consummate the merger in the most expeditious manner possible.
This includes:
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preparing and filing as promptly as practicable with any
governmental party or other third party all documentation to
effect all necessary filings, notices and other documents;
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taking all appropriate actions, and doing, or causing to be
done, all things necessary, proper or advisable under applicable
law to consummate and make effective the transactions
contemplated by the merger agreement, including using reasonable
best efforts to obtain and maintain all approvals and consents
that are necessary, proper or advisable to consummate the merger
and to fulfill the conditions to the merger;
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defending any proceedings threatened or commenced by any
governmental authority or arbitrator relating to the
transactions contemplated by the merger agreement; and
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cooperating to the extent reasonable with the other party in its
efforts to comply with its obligations under the merger
agreement.
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In connection with the efforts referenced above to obtain all
requisite approvals and authorizations for the transactions
contemplated by the merger agreement, Ducommun and LaBarge
agreed to make a notification pursuant to the HSR Act as
promptly as practicable (and in any event within 15 business
days of the date of the merger agreement), and to obtain all
other approvals and authorizations required under the HSR Act
and any other applicable antitrust law.
In addition, Ducommun has agreed to use its commercially
reasonable efforts to take all necessary actions to obtain any
approval relating to the HSR Act that is required for the
consummation of the merger, which efforts shall include without
limitation, the proffer by Ducommun of its willingness to accept
an order providing for the divestiture by Ducommun of such of
its assets and businesses as are necessary to fully consummate
the transactions contemplated by the merger agreement, and an
offer to hold separate such assets and businesses pending such
divestiture.
For additional information on the regulatory consents and
approvals required to be obtained, see The
Merger Regulatory Approvals Required for the
Merger beginning on page [ ].
Certain
Other Filings
Ducommun and LaBarge shall cooperate with each other (i) in
connection with the preparation of this proxy statement,
(ii) in determining whether any action by, or filing with,
any governmental authority is required, or any action, consents,
approvals or waivers are required to be obtained from parties to
any material contracts in connection with the consummation of
the transactions contemplated by the merger agreement and
(iii) in taking such actions or making any such filings,
furnishing information required in connection therewith or with
this proxy statement and seeking timely to obtain any such
actions, consents, approvals or waivers.
66
Indemnification
and Insurance
The merger agreement contains provisions relating to the
indemnification of and insurance for LaBarges and its
affiliates current and former directors, officers,
trustees, members and fiduciaries. For a period of six years
following the effective time, Ducommun shall cause the surviving
corporation to, indemnify and hold harmless each current and
former director, officer, trustee, member or fiduciary of
LaBarge and its affiliates, against any costs or expenses
(including advancing reasonable attorneys fees and
expenses upon receipt of an undertaking to repay such amount if
it shall be ultimately determined that the indemnified person is
not entitled to be indemnified), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement in
connection with any actual or threatened action or investigation
in respect of or arising out of acts or omissions occurring or
alleged to have occurred at or prior to the effective time, to
the fullest extent permitted by Delaware law or any other
applicable law or provided under LaBarges organizational
documents in effect on the date of the merger agreement, subject
to any limitation imposed under applicable law.
All rights in existence under LaBarges organizational
documents on the date of the merger agreement regarding
elimination of liability of directors, indemnification and
exculpation of officers, directors and employees and advancement
of expenses to them shall survive the merger for a period of six
years from the effective time.
Ducommun shall cause the surviving corporation to, maintain for
a period of six years after the effective time D&O
insurance in respect of acts or omissions occurring prior to the
effective time covering each indemnified person on terms with
respect to coverage and amount no less favorable than those of
such policy in effect on the date of the merger agreement.
Alternatively, LaBarge may purchase such tail policy
at its option prior to the effective time and pay the premium
due thereon when due, provided that the surviving corporation
shall not be obligated to pay annual premiums in the aggregate
in excess of $250,000 provided that, if the annual premiums of
such insurance coverage exceed such amount, the surviving
corporation shall provide a policy with the greatest coverage
available for such amount.
Employee
Benefits Matters
Ducommun will use commercially reasonable efforts to during the
period commencing on the effective date and ending on
December 31, 2011, waive all pre-existing conditions,
exclusions and waiting periods with respect to participation and
coverage requirements applicable to such current LaBarge
employees under any employee benefit plan in which such
employees will be eligible to participate following the
effective time. Ducommun will also use commercially reasonable
efforts to credit the former LaBarge employees for their prior
service with LaBarge under the new employee benefit plans in
which the employees are eligible to participate. Credit will be
given to the same extent such service was credited under the
similar LaBarge employee benefit plans for purposes of
eligibility to participate and vesting under those plans, but
not for purposes of benefit accrual. No credit will be given to
the extent it would result in the duplication of benefits for
the same period of service.
Financing
Matters
In the merger agreement, Ducommun and merger subsidiary have
agreed to use their reasonable best efforts to obtain the Debt
Financing on the terms and conditions described in the Debt
Commitment Letter. See The Merger Financing
Relating to the Merger beginning on
page [ ].
Ducommun and merger subsidiary may not amend, replace or
supplement the Debt Commitment Letter if such amendment,
modification or waiver:
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imposes any additional conditions precedent or expands upon the
conditions precedent to the financing as set forth in the Debt
Commitment Letter;
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adversely impacts the rights of Ducommun or merger subsidiary to
enforce its rights against the other parties to the Debt
Commitment Letter; or
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prevents or impedes or delays the consummation of the merger or
the other transactions contemplated by the merger agreement.
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Ducommun has advised LaBarge that it is expected that on or
before the date on which the merger is consummated, senior
unsecured notes will be issued and sold in a public offering or
in reliance on Rule 144A and Regulation S of the
Securities Act in lieu of a portion or all of bridge financing
described above. The merger agreement provides for a marketing
period for such notes prior to the closing of the merger.
A marketing period means the period of 35
consecutive calendar days commencing on the later of the date
that both (i) Ducommun shall have received the Required
Information (as defined in the merger agreement) from LaBarge
and (ii) LaBarge has mailed to you this proxy statement;
provided, that to the extent Ducommun receives the Required
Information prior to the date that this proxy statement is
mailed to you, such 35 day period shall be reduced, but not
by more than ten days, by the number of days in advance of such
mailing date that the Required Information is delivered to
Ducommun and provided, further, that (A)(1) throughout and at
the end of such 35 day period the Required Information
shall at all times remain compliant with applicable provisions
of
Regulation S-X
and
Regulation S-K
under the Securities Act, (2) throughout and at the end of
such 35 day period nothing has occurred and no condition
exists that would cause any of the conditions to the obligations
of Ducommun and merger subsidiary under the merger agreement to
fail to be satisfied assuming the consummation of the merger
were to be scheduled for any time during such 35 consecutive
calendar day period and (3) at the end of such 35 day
period the conditions to the obligations of LaBarge, Ducommun
and merger subsidiary under the merger agreement shall be
satisfied; provided, that such 35 consecutive calendar day
period must (x) end on or prior to June 30, 2011,
(y) begin on or after July 5, 2011 and end on or prior
to August 19, 2011 or (z) begin on or after
September 3, 2011; provided, further, that if LaBarge has
mailed this proxy statement to you on or prior to June 21,
2011 and the Required Information is delivered by June 18,
2011, the marketing period will be reduced to 15 consecutive
business days solely for the period beginning on July 5,
2011 and ending on July 25, 2011, (B) the marketing
period shall end on any earlier date that is the date on which
the Debt Financing, including the anticipated offering of senior
unsecured notes but excluding any portion of the Debt Financing
that resulted from Ducommuns use of bridge financing
described above, is consummated and (C) the marketing
period shall not be deemed to have commenced if prior to the
completion of such marketing period certain events, as set forth
in the merger agreement, have occurred, including (i) the
withdrawal by LaBarges auditors with respect to any
financial statements contained in the LaBarges most
recently filed audited financial statements contained in the
Required Information, (ii) the issuance by LaBarge of a
public statement indicating that it is restating, or intends to
restate, certain of its historical financial statements and
(iii) if LaBarge is delinquent in filing any
form 10-Q
or
form 10-K.
Additional
Agreements
The merger agreement contains additional agreements between
Ducommun and LaBarge relating to, among other things:
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that LaBarge shall not settle any stockholder litigation
relating to the merger agreement without Ducommuns prior
written consent (not to be unreasonably withheld, delayed or
conditioned) and shall use reasonable best efforts to keep
Ducommun informed with respect to such litigation;
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notifying the other party of any event notice from any
governmental authority in connection with the transactions
contemplated by the merger agreement;
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requiring the parties to consult with each other regarding
public announcements; and
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ensuring exemption of certain transactions by LaBarge directors
and officers in connection with the merger under
Rule 16b-3
of the Exchange Act.
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68
Conditions
to Completion of the Merger
Conditions
to Each Partys Obligations
The obligations of each of Ducommun, LaBarge and merger
subsidiary to complete the merger are subject to the
satisfaction (or, to the extent permissible, waiver) on or prior
to the closing date of the merger of the following conditions:
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the adoption of the merger agreement by the LaBarge stockholders;
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the expiration or termination of the waiting periods applicable
to the consummation of the merger under the HSR Act;
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the absence of any pending or threatened action by any
governmental authority, having a reasonable likelihood of
success, to (i) challenge or make illegal or otherwise
prohibit or materially delay the consummation of the merger or
any of the other transactions contemplated by the merger
agreement, or to make materially more costly the merger, or to
obtain from LaBarge, Ducommun or merger subsidiary any damages
that are material in relation to LaBarge and its subsidiaries
taken as a whole, (ii) to prohibit or limit the ownership,
operation or control by LaBarge, Ducommun or any of their
respective subsidiaries of any material portion of their
respective business or assets, or to compel LaBarge, Ducommun or
any of their respective subsidiaries to dispose of or hold
separate any material portion of the business or assets of
LaBarge, Ducommun or any of their respective subsidiaries or
(iii) to impose limitations on the ability of Ducommun to
acquire or hold, or exercise full rights of ownership of, any
shares; and
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no applicable law shall have been enacted, entered, promulgated,
enforced or deemed applicable by any governmental entity that,
in any case, prohibits the consummation of the merger.
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Conditions
to Obligations of Ducommun and Merger Subsidiary
The obligations of each of Ducommun and merger subsidiary to
complete the merger are subject to the satisfaction (or, to the
extent permissible, waiver) on or prior to the closing date of
the merger of the following conditions:
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LaBarge must have performed in all material respects all of its
obligations under the merger agreement that are required to be
performed by it at or prior to the effective time of the merger;
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the representations and warranties of LaBarge relating to
corporate existence and power, corporate authorization,
non-contravention, capitalization, SEC filings, absence of
certain changes and antitakeover statutes must be true and
correct in all respects;
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the representations and warranties of LaBarge relating to
certain regulatory matters must be true and correct in all
material respects;
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all other representations and warranties of LaBarge
(disregarding all qualifications or limitations as to
materially, material adverse effect and
words of similar import set forth therein) must be true and
correct in all respects at and as of the date of the merger
agreement and as of the effective time as if made at and as of
such time (or, in the case of those representations and
warranties that are made as of a particular date or period, as
of such date or period), except where the failure of such
representations and warranties to be so true and correct would
not reasonably be expected to have, individually or in the
aggregate, a material adverse effect on LaBarge;
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Ducommun must have received a certificate signed by the chief
executive officer or chief financial officer of LaBarge
certifying the satisfaction of the conditions described in the
previous four bullets;
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since the date of the merger agreement, there has not occurred
and there is not continuing as of the effective time any event,
change or circumstance that has had a material adverse effect on
LaBarge; and
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the staff of the SEC shall not have rejected or expressly
disapproved any of the material terms or conditions of that
certain Offer of Settlement of LaBarge, Inc. executed by LaBarge
on March 18, 2011.
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Conditions
to LaBarges Obligations
The obligations of LaBarge to complete the merger are subject to
the satisfaction (or, to the extent permissible, waiver) on or
prior to the closing date of the merger of the following
conditions:
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each of Ducommun and merger subsidiary must have performed in
all material respects all of their obligations under the merger
agreement that are required to be performed by them at or prior
to the effective time of the merger;
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the representations and warranties of Ducommun contained in the
merger agreement must be true and correct (disregarding all
qualifications or limitations as to materially,
material adverse effect and words of similar import
set forth therein) at the date of the merger agreement and as of
the effective time as if made at and as of such time (or, in the
case of those representations and warranties that are made as of
a particular date or period, as of such date or period), except
where the failure of such representations and warranties to be
so true and correct would not reasonably be expected,
individually or in the aggregate, to materially delay or impair
the ability of Ducommun or merger subsidiary to consummate the
transactions contemplated by the merger agreement on a timely
basis; and
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LaBarge must have received a certificate signed by the chief
executive officer or chief financial officer of Ducommun
certifying the satisfaction of the conditions described in the
previous two bullets.
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Termination
of the Merger Agreement
The merger agreement may be terminated and the merger may be
abandoned at any time before the effective time, whether or not
the LaBarge stockholders have adopted the merger agreement:
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by mutual written agreement of Ducommun and LaBarge;
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by either Ducommun or LaBarge if:
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the merger has not been consummated on or before
September 30, 2011 (the end date), unless the
breach of the merger agreement by the party seeking to terminate
resulted in the failure to consummate the merger by the end date;
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any applicable law, judgment or decree that makes consummation
of the merger illegal or otherwise prohibited or enjoins
consummation of the merger and such enjoinment has become final
and non-appealable, provided that the party seeking to terminate
has used all reasonable best efforts to prevent, oppose or
remove such applicable law; or
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the adoption of the merger agreement by the LaBarge stockholders
was not obtained at the LaBarge stockholder meeting (or
adjournment or postponement of the meeting);
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LaBarge breaches its representations or warranties or fails to
perform any covenants or agreements set forth in the merger
agreement, which breach or failure would cause the conditions to
the closing relating to the accuracy of the representations and
warranties of LaBarge or compliance by LaBarge with its
obligations under the merger agreement not to be satisfied and
such breach is not cured by the earlier of the end date or
30 days after the receipt of written notice thereof,
provided that, at the time of the delivery of written notice of
breach, Ducommun is not in material breach of its obligations
under the merger agreement;
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the LaBarge board of directors has effected an adverse
recommendation change;
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LaBarge materially breaches its non-solicitation obligations;
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the LaBarge board of directors fails to publicly reaffirm its
recommendation within 10 business days of a request by Ducommun
that it do so, or at least two business days prior to the
LaBarge stockholder meeting after a request to do so by Ducommun
or merger subsidiary;
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LaBarge or the board of directors of LaBarge (or any committee
thereof) approve or recommend, or cause or permit LaBarge to
enter into, an alternative acquisition agreement relating to an
acquisition proposal; or
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LaBarge or the board of directors of LaBarge (or any committee
thereof) formally resolve or publicly authorize or publicly
propose to take any of the foregoing actions.
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Ducommun breaches its representations or warranties or fails to
perform any covenants or agreements set forth in the merger
agreement, which breach or failure would cause the conditions to
the closing relating to the accuracy of the representations and
warranties of Ducommun or compliance by Ducommun with its
obligations under the merger agreement not to be satisfied and
such breach is not cured by the earlier of the end date or
30 days after the receipt of written notice thereof,
provided that, at the time of the delivery of written notice of
breach, LaBarge is not in material breach of its obligations
under the merger agreement; or
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the LaBarge board of directors authorizes LaBarge, subject to
complying with the terms of the merger agreement, to enter into
a written definitive agreement concerning a superior proposal
provided that LaBarge shall have paid to Ducommun the
termination fee discussed under The Merger
Agreement Termination Fees and Expenses
beginning on page [ ]; or
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Termination
Fees and Expenses
Termination
Fees Payable by LaBarge
LaBarge has agreed to pay Ducommun a termination fee of
$12,410,000 if any of the following payment events occur:
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Ducommun terminates the merger agreement due to the LaBarge
board of directors having made an adverse recommendation change;
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Ducommun terminates the merger agreement after LaBarge or the
board of directors of LaBarge (or any committee thereof)
approves or recommends, or causes or permits LaBarge to enter
into, an alternative acquisition agreement relating to an
acquisition proposal;
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Ducommun terminates the merger agreement after LaBarge or the
board of directors of LaBarge (or any committee thereof) fails
publicly to reaffirm its recommendation of the merger within 10
business days after a request at any time to do so by Ducommun,
or at least two business days prior to LaBarge stockholder
meeting after a request to do so by Ducommun or merger
subsidiary;
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Ducommun terminates the merger agreement due to LaBarge having
materially breached the non-solicitation provisions set forth in
the merger agreement;
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Ducommun terminates the merger agreement after LaBarge or the
board of directors of LaBarge (or any committee thereof)
formally resolves or publicly authorizes or publicly proposes to
take any of the actions set forth in the preceding four bullet
points;
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LaBarge terminates the merger agreement after the board of
directors of LaBarge authorizes LaBarge, subject to complying
with the terms of merger agreement, to enter into a written
definitive agreement concerning a superior proposal;
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LaBarge or Ducommun terminates because the stockholders of
LaBarge have did not adopt the merger agreement at the
stockholder meeting held for such purpose and prior to such
termination, an acquisition proposal shall have been made to
LaBarge and within 18 months following the date of such
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termination LaBarge enters into a definitive agreement with
respect an acquisition proposal or recommends or submits an
acquisition proposal to its stockholders;
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LaBarge or Ducommun terminates because the merger has not been
consummated on or before September 30, 2011 and prior to
such termination, an acquisition proposal shall have been made
to LaBarge and within 18 months following the date of such
termination LaBarge enters into a definitive agreement with
respect an acquisition proposal or recommends or submits an
acquisition proposal to its stockholders; or
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Ducommun terminates because LaBarge intentionally and materially
breaches its representations or warranties or fails to perform
any covenant or agreement set forth in the merger agreement,
which breach or failure would cause the conditions to the
closing relating to the accuracy of the representations and
warranties of LaBarge or compliance by LaBarge with its
obligations under the merger agreement not to be satisfied and
such breach, if curable, is not cured by the earlier of the end
date or 30 days after the receipt of written notice thereof
or is incapable of being cured, provided that, at the time of
the delivery of written notice of breach, Ducommun is not in
material breach of its obligations under the merger agreement,
and prior to such termination, an acquisition proposal shall
have been made to LaBarge and within 18 months following
the date of such termination LaBarge enters into a definitive
agreement with respect an acquisition proposal or recommends or
submits an acquisition proposal to its stockholders.
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For purposes of the last three bullet points, all references to
20% in the definition of acquisition proposal shall
be deemed instead to be 50%.
In addition, in the event LaBarge stockholders fail to adopt the
merger agreement and a termination fee is not otherwise payable
to Ducommun, LaBarge has agreed to reimburse the reasonable
out-of-pocket
expenses and fees (including all fees and expenses of advisors)
incurred by Ducommun and its affiliates in connection with the
merger agreement, the financing of the merger and transactions
contemplated by the merger agreement by Ducommun, merger
subsidiary and their affiliates up to $5,000,000.
Expenses
In general, each of Ducommun and LaBarge will bear its own
expenses in connection with the merger agreement and the related
transactions, except Ducommun and LaBarge shall equally bear the
filing fees of the filings made under applicable antitrust laws.
Specific
Performance; Damages
The parties shall be entitled to an injunction to prevent
breaches of the merger agreement or to enforce specifically the
performance of the merger agreement. Ducommun and LaBarge have
also agreed that damages of a party shall not be limited to
reimbursement of expenses or
out-of-pocket
costs, and may include to the extent proven the benefit of the
bargain lost by a party and its stockholders.
Amendments
and Waivers
The merger agreement may be amended or waived at any time prior
to the effective time by an instrument in writing signed on
behalf of each of the parties in the case of an amendment and by
each party to whom the waiver is to be effective in the case of
a waiver. However, after the adoption of the merger agreement at
the LaBarge special meeting, there will be no amendment to the
merger agreement that pursuant to Delaware Law requires further
approval of the stockholders of Ducommun or stockholders of
LaBarge, as the case may be, without such further approval.
The failure of any party to the merger agreement to assert any
of its rights under the merger agreement or otherwise will not
constitute a waiver of those rights.
Rights
Agreement Amendment
In connection with the merger, LaBarge and Registrar and
Transfer Company (the Rights Agent) entered into an
Amendment No. 2 (the Rights Amendment) to the
Rights Agreement, dated as of
72
November 8, 2001, by and between LaBarge and UMB Bank, N.A.
(as succeeded by the Rights Agent), as amended (the Rights
Agreement). The Rights Amendment provides that none of the
merger, the announcement, approval, adoption, execution,
delivery or performance of the merger agreement, or the
consummation of any other transaction specifically contemplated
by the merger agreement, will (i) cause Ducommun, merger
subsidiary, or any of their respective affiliates or associates
to be deemed to be the beneficial owner of 15% or more of the
common shares then outstanding, or an Acquiring
Person, (as defined therein) (ii) cause (A) the
date upon which the rights will be separately certificated and
transferable, or the Distribution Date (as defined
therein) to occur or (B) the date upon which a person has
become an Acquiring Person or such earlier date as the majority
of the board of directors becomes aware of the existence of an
Acquiring Person, or the Stock Acquisition Date (as
defined therein) to occur, or (iii) trigger an adjustment
of purchase price, number of shares or number of rights as
described in the Rights Agreement or constitute a consolidation,
merger or sale or transfer of assets or earning power for
purposes of the Rights Agreement. The Rights Amendment further
provides that the effective time of the merger triggers the
expiration date (as defined in the Rights Agreement).
The foregoing description of the Rights Amendment is not
complete and is qualified in its entirety by reference to the
Rights Amendment, a copy of which is attached hereto as
Annex G and incorporated herein by reference.
SUBMISSION
OF FUTURE STOCKHOLDER PROPOSALS
LaBarge expects to hold an annual meeting in 2011 only if the
merger is not completed. The deadline for submitting a
stockholder proposal to LaBarge for inclusion in the LaBarge
proxy statement and form of proxy pursuant to
Rule 14a-8
under the Exchange Act for LaBarges 2011 annual meeting of
stockholders is June 17, 2011. However, if the date of
LaBarges 2011 annual meeting is more than 30 days
after November 17, 2011, the proposal must be received, to
be included in LaBarge proxy statement and form of proxy
pursuant to
Rule 14a-8
under the Exchange Act, a reasonable time before LaBarge begins
to print and mail its proxy materials.
All proposals and director nominations, including any
accompanying supporting statement, should be addressed to
LaBarges Corporate Secretary, 9900 Clayton Road,
St. Louis, Missouri 63124.
Householding. If any LaBarge stockholder who
agreed to householding wishes to promptly receive a separate
copy of this proxy statement, or, if applicable, a separate
proxy statement and annual report in the future (or, if multiple
LaBarge stockholders sharing an address wish to receive a single
set of reports in the future), he or she may telephone toll free
(314) 997-0800,
or write to LaBarge, 9900 Clayton Road, St. Louis, Missouri
63124, Attention: Corporate Secretary. LaBarge stockholders
holding LaBarge shares in street name should contact
their banks or brokers to request information about householding.
WHERE YOU
CAN FIND MORE INFORMATION
LaBarge files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy materials that LaBarge has filed with the SEC at the
SECs Public Reference Room located at:
100 F Street,
N.E.
Washington, D.C. 20549
Please call the SEC at
1-800-SEC-0330
for further information on the operation of the public reference
room.
LaBarges SEC filings are also available for free to the
public on the SECs internet website at www.sec.gov,
which contains reports, proxy and information statements and
other information regarding companies that file electronically
with the SEC. LaBarges SEC filings are also available for
free to the public on LaBarges website,
www.labarge.com. Information contained on LaBarges
website is not incorporated by reference into this proxy
statement, and you should not consider information contained on
those websites as part of this proxy statement.
LaBarge incorporates by reference into this proxy statement the
documents listed below, and any filings LaBarge make with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this proxy statement until the LaBarge
special meeting shall be deemed to be incorporated by reference
into this
73
proxy statement. The information incorporated by reference is an
important part of this proxy statement. Any statement in a
document incorporated by reference into this proxy statement
will be deemed to be modified or superseded for purposes of this
proxy statement to the extent that a statement contained in this
or any other subsequently filed document that is incorporated by
reference into this proxy statement modifies or supersedes such
statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a
part of this proxy statement.
Reports on
Form 8-K
filed on: September 2, 2010; September 3, 2010;
September 8, 2010; September 21, 2010;
November 4, 2010; November 17, 2010; November 18,
2010; January 4, 2011; January 13, 2011;
February 3, 2011; February 14, 2011; March 18,
2011; April 4, 2011; and April 6, 2011.
Report on
Form 8-K/A
filed on April 4, 2011.
Report on
Form 10-Q
filed on: November 5, 2010 and February 4, 2011.
Report on
Form 10-K
filed on September 3, 2010.
THIS PROXY STATEMENT DOES NOT CONSTITUTE THE SOLICITATION OF A
PROXY IN ANY JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM
WHOM IT IS UNLAWFUL TO MAKE SUCH PROXY SOLICITATION IN THAT
JURISDICTION. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED
OR INCORPORATED BY REFERENCE IN THIS PROXY STATEMENT TO VOTE
YOUR SHARES OF LABARGE COMMON STOCK AT THE LABARGE SPECIAL
MEETING. 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 APRIL [],
2011. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THAT
DATE, AND THE MAILING OF THIS PROXY STATEMENT TO STOCKHOLDERS
DOES NOT CREATE ANY IMPLICATION TO THE CONTRARY.
74
ANNEX A
EXECUTION
COPY
AGREEMENT
AND PLAN OF MERGER
Annex A
AGREEMENT
AND PLAN OF MERGER
dated as of
April 3, 2011
among
DUCOMMUN INCORPORATED,
DLBMS, INC.
and
LABARGE, INC.
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this Agreement)
dated as of April 3, 2011 among Ducommun Incorporated, a
corporation organized and existing under the laws of Delaware
(Parent), DLBMS, Inc., a Delaware corporation
and a direct, wholly-owned subsidiary of Parent (Merger
Subsidiary) and LaBarge, Inc., a Delaware corporation
(the Company).
WHEREAS, the Boards of Directors of Parent, Merger Subsidiary
and the Company have approved and declared advisable this
Agreement and the Merger (as defined below), on the terms and
subject to the conditions set forth in this Agreement; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, and as a condition and inducement to Parents
willingness to enter into this Agreement, certain stockholders
of the Company are entering into an agreement pursuant to which
each such Person has agreed, among other things, to vote the
shares of Company Capital Stock held by such Person in favor of
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01 Definitions. As
used herein, the following terms have the following meanings:
1933 Act means the Securities Act of
1933, as amended.
1934 Act means the Securities Exchange
Act of 1934, as amended.
Acquisition Proposal means, other than the
transactions contemplated by this Agreement, any offer or
proposal (other than an offer or proposal by Merger Subsidiary
or Parent) relating to (A) any acquisition or purchase,
direct or indirect, of 20% or more of the voting securities of
the Company, (B) any tender offer or exchange offer that,
if consummated, would result in a Third Party beneficially
owning 20% or more of the voting securities of the Company, or
(C) a sale of assets equal to 20% or more of the
Companys consolidated assets, or a merger, consolidation,
share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution, joint venture or
other similar transaction involving the Company or any of its
Subsidiaries whose assets, individually or in the aggregate,
constitute 20% or more of the consolidated assets of the Company.
Affiliate means, with respect to any Person,
any other Person directly or indirectly controlling, controlled
by, or under common control with such Person.
AMEX means the NYSE Amex LLC.
Applicable Law means, with respect to any
Person, any federal, state or local law (statutory, common or
otherwise), constitution, treaty, convention, ordinance, code,
rule, regulation, order, injunction, judgment, decree, ruling or
other similar requirement enacted, adopted, promulgated or
applied by a Governmental Authority that is binding upon or
applicable to such Person, its Subsidiaries or any of their
respective assets, as the same may be amended from time to time
unless expressly specified otherwise herein.
Business Day means a day, other than
Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by Applicable Law to
close.
Code means the Internal Revenue Code of 1986,
as amended.
Company
10-K
means the Companys annual report on
Form 10-K
for the fiscal year ended June 27, 2010.
A-1
Company
10-Q
means the Companys quarterly report on
Form 10-Q
for the fiscal quarter ended January 2, 2011.
Company Balance Sheet means the unaudited
consolidated balance sheet of the Company and its Subsidiaries
as of January 2, 2011 and the footnotes thereto set forth
in the Company
10-Q.
Company Balance Sheet Date means
January 2, 2011.
Company Common Stock means the common stock,
$.01 par value, of the Company.
Company Disclosure Schedule means the
disclosure schedule dated the date hereof regarding this
Agreement that has been provided by the Company to Parent and
Merger Subsidiary.
Company Owned Intellectual Property means all
Intellectual Property owned by or exclusively licensed to the
Company or any of its Subsidiaries and includes all Intellectual
Property listed on Section 4.17 of the Company Disclosure
Schedule.
Company Restricted Share means each
restricted share of Company Common Stock issued under the 2004
LTIP in settlement of Performance Units, and each other share of
Company Common Stock outstanding as of the Effective Time that
is subject to vesting conditions. For avoidance of doubt, the
term Company Restricted Share shall not refer to or
include any Performance Unit prior to its conversion into
restricted shares of Company Common Stock.
Company Rights means the preferred share
purchase rights issued pursuant to the Company Rights Agreement.
Company Rights Agreement means the Rights
Agreement dated November 8, 2001 between the Company and
Registrar and Transfer Company, as amended.
Contract any oral or written contract,
agreement, obligation, commitment, arrangement, instrument,
permit, lease, license, bond, debenture, note, mortgage,
indenture, guarantee, purchase or sale order or other
commitment, instrument, understanding, undertaking, concession
or franchise (in each case, including all amendments thereto).
Delaware Law means the Delaware General
Corporation Law, as amended.
Environmental Law means any Applicable Law
relating to (i) the control of any potential Hazardous
Substance or protection of the air, water or land,
(ii) solid, gaseous or liquid waste generation or the
handling, treatment, storage, disposal or transportation of a
Hazardous Substance, (iii) human health and safety with
respect to exposures to and management of Hazardous Substances,
or (iv) the environment.
Environmental Permits means all permits,
licenses, franchises, certificates, approvals and other similar
authorizations of Governmental Authorities required by
Environmental Laws and affecting, or relating to, the business
of the Company or any of its Subsidiaries as conducted as of the
date of this Agreement.
ERISA means the Employee Retirement Income
Security Act of 1974, as amended.
ERISA Affiliate of any entity means any other
entity that, together with such entity, would be treated as a
single employer under Section 414 of the Code.
Facilities means the facilities,
Improvements, buildings, transportation, and storage facilities
and other structures that are located on Leased Real Property or
Owned Real Property and all fixtures attached or appurtenant
thereto or located thereon, and all licenses, privileges and
rights relating to the foregoing (other than those included in
the Leased Real Property or Owned Real Property), in each case
to the extent predominately used in the operation of the
Companys business.
GAAP means United States generally accepted
accounting principles consistently applied.
A-2
Governmental Authority means any
transnational, domestic or foreign federal, state or local
governmental, regulatory or administrative authority,
department, court, agency, commission or official, including any
political subdivision thereof, or any non-governmental
self-regulatory agency, commission or authority.
Hazardous Substance means any chemical,
substance, waste or material listed or defined as a
pollutant, contaminant,
toxic, radioactive,
ignitable, corrosive,
reactive, or hazardous and regulated by
a Governmental Authority under any Environmental Law.
HSR Act means the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Intellectual Property shall mean
(i) trademarks, service marks, brand names, certification
marks, trade dress, domain names and other indications of
origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any
extension, modification or renewal of any such registration or
application (collectively, Marks);
(ii) inventions and discoveries, whether patentable or not,
in any jurisdiction; patents, applications for patents
(including, without limitation, divisions, continuations,
continuations in part and renewal applications), and any
renewals, extensions or reissues thereof, in any jurisdiction;
(iii) trade secrets and confidential information and rights
in any jurisdiction to limit the use or disclosure thereof by
any person (the Trade Secrets);
(iv) writings and other tangible works, whether
copyrightable or not, in any jurisdiction, and any and all
copyright rights, whether registered or not; and registrations
or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; and
(v) moral rights, database rights, design rights,
industrial property rights, publicity rights and privacy rights.
IT Assets shall mean computers, computer
software, firmware, middleware, servers, workstations, routers,
hubs, switches, data communications lines, and all other
information technology equipment, and all associated
documentation owned by the Company or its Subsidiaries or
licensed or leased by the Company or its Subsidiaries pursuant
to written agreement (excluding any public networks).
knowledge of the Company means the actual
knowledge of the Companys officers.
Lien means, with respect to any property or
asset, any mortgage, lien, pledge, charge, security interest,
encumbrance, option, right of first refusal or other adverse
right of any kind (including any limitation on voting, sale,
transfer or other disposition or exercise of any other attribute
of ownership) in respect of such property or asset. For purposes
of this Agreement, a Person shall be deemed to own subject to a
Lien any property or asset that it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement
relating to such property or asset.
Material Adverse Effect means with respect to
any Person, any change, effect, development or event that
(a) has or would reasonably be expected to have a material
adverse effect on the condition (financial or otherwise),
business, assets or results of operations of such Person and its
Subsidiaries, taken as a whole or (b) materially impairs
the ability of such Person and its Subsidiaries to consummate,
or prevents or materially delays, the Merger or any of the other
transactions contemplated by this Agreement or would reasonably
be expected to do so; provided, however, that, subject to the
last proviso of this sentence, in the case of clause (a)
only, no changes, effects, developments or events resulting
from, arising out of, or attributable to, any of the following
shall be deemed to be or constitute a Material Adverse
Effect or be taken into account when determining whether a
Material Adverse Effect has occurred or may, would
or could occur: (A) any changes, effects, developments or
events in the economy or the financial, credit or securities
markets in general (including changes in interest or exchange
rates), (B) any changes, effects, developments or events in
the industries in which such Person and its Subsidiaries
operate, (C) any changes, effects, developments or events
resulting from the announcement or pendency of the transactions
contemplated by this Agreement, the identity of Parent or the
performance or compliance with the terms of this Agreement
(including, in each case, any loss of customers, suppliers or
employees or any disruption in business relationships),
(D) any failure, in and of itself, of such Person to meet
internal forecasts, budgets or financial projections or
fluctuations, in and of themselves, in the
A-3
trading price or volume of such Persons common stock (it
being understood that the facts, event, circumstances or
occurrences giving rise or contributing to such failure or
fluctuations may be deemed to be, constitute, or be taken into
account when determining the occurrence of, a Material Adverse
Effect), (E) acts of God, natural disasters, calamities,
national or international political or social conditions,
including the engagement by any country in hostility (whether
commenced before, on or after the date hereof, and whether or
not pursuant to the declaration of a national emergency or war),
or the occurrence of a military or terrorist attack, or
(F) any changes in Applicable Law or GAAP (or any
interpretation thereof); provided further, however, that,
with respect to clauses (A), (B), (E), and (F), the impact of
such changes, effects, developments or events is not materially
and disproportionately adverse to such Person and its
Subsidiaries.
Multiemployer Plan means any
multiemployer plan, as defined in Section 3(37)
of ERISA.
Occupational Safety and Health Law means the
federal Occupational Safety and Health Act of 1970, as amended,
20 U.S.C. §§ 651 et seq. and
enforcement policies thereunder, and any similar state or local
law.
Occupational Safety and Health Liabilities
means cost, damage, expense, liability, obligation, or other
responsibility consisting of or relating to (a) fines,
penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, remedial
costs, and expenses arising under Occupational Safety and Health
Law; (b) financial responsibility for corrective action,
including without limitation any investigation, or abatement
action including but not limited to engineering or
administrative controls, or the use of required personal
protective equipment, required by applicable Occupational Safety
and Health Law, or by any final judgment, decree, or order of
any applicable occupational safety and health jurisdiction
pursuant to Occupational Safety and Health Law; and (c) any
other compliance, corrective, or remedial measures required
under Occupational Safety and Health Law.
Organizational Documents means (i) with
respect to any entity that is a corporation, such
corporations certificate or articles of incorporation and
bylaws, (ii) with respect to any entity that is a limited
liability company, such limited liability companys
certificate or articles of formation and operating agreement,
and (iii) with respect to any other entity, such
entitys organizational or charter documents.
Performance Unit means each unit issued under
the 2004 LTIP that vests based upon the level of achievement of
pre-determined performance objectives.
Permitted Liens shall mean any of the
following: (i) Liens for Taxes, assessments and
governmental charges or levies either not yet due and delinquent
or which are being contested in good faith by appropriate
proceedings and for which appropriate reserves have been
established in accordance with GAAP; (ii) mechanics,
carriers, workmens, warehousemans,
repairmens, materialmens or other Liens or security
interests that are not yet due; (iii) Liens to secure
obligations to landlords, lessors or renters under leases or
rental agreements or underlying leased property; (iv) Liens
imposed by Applicable Law; (v) pledges or deposits to
secure obligations under workers compensation laws or
similar legislation or to secure public or statutory
obligations; (vi) pledges and deposits to secure the
performance of bids, trade contracts, leases, surety and appeal
bonds, performance bonds and other obligations of a similar
nature, in each case in the ordinary course of business;
(vii) Liens that do not materially detract from the value
or materially interfere with the present use of the property or
asset subject thereto or affected thereby; (viii) Liens the
existence of which are specifically disclosed in the notes to
the consolidated financial statements of the Company included in
the Company SEC Documents and (ix) Liens on Company Owned
Intellectual Property recorded at the United States Patent and
Trademark Office.
Person means an individual, corporation,
partnership, limited liability company, association, trust or
other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
Sarbanes-Oxley Act means the Sarbanes-Oxley
Act of 2002.
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SEC means the United States Securities and
Exchange Commission.
Severance Agreements means those certain
Executive Severance Agreements entered into by and between the
Company and each of Messrs. LaBarge, Buschling, Nonnenkamp,
and Parmley, and Ms. Huber, executed January 11, 2005,
and Mr. Bitner, executed August 22, 2007, each as
subsequently amended.
Subsidiary means, with respect to any Person,
any entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
any time directly or indirectly owned by such Person.
Third Party means any Person, including as
defined in Section 13(d) of the 1934 Act and the rules
of the SEC thereunder, other than Parent, the Company or any
Affiliate of Parent.
WARN Act means the U.S. Worker
Adjustment and Retraining Notification Act and any state or
local equivalent.
Each of the following terms is defined in the Section set forth
opposite such term:
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Term
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Section
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1993 Option Plan
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Section 4.05(a)
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1995 Option Plan
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Section 4.05(a)
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1999 Option Plan
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Section 4.05(a)
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2004 LTIP
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Section 4.05(a)
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Action
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Section 4.12
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Adverse Recommendation Change
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Section 6.02(a)
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Agreement
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Preamble
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Alternative Acquisition Agreement
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Section 6.02(a)
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Antitrust Filings
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Section 8.02(b)
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Available Financing
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Section 8.09(a)
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Bid
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Section 4.25(a)
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Bridge Financing
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Section 5.06(a)
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Certificate
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Section 2.02(a)
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Certificate of Merger
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Section 2.01(c)
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Closing
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Section 2.01(b)
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Closing Date
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Section 2.01(b)
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Commitment Letter
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Section 5.06(a)
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Company
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Preamble
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Company Board Recommendation
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Section 4.02(b)
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Company Capital Stock
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Section 4.05(a)
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Company Employees
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Section 4.16(m)
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Company Government Contract
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Section 4.25(a)
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Company Government Subcontract
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Section 4.25(a)
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Company Material Contract
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Section 4.14
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Company Payment Event
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Section 11.04(b)
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Company Permits
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Section 4.13
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Company Preferred Stock
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Section 4.05(a)
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Company Proxy Statement
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Section 4.09
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Company SEC Documents
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Section 4.07(a)
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Company Securities
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Section 4.05(b)
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A-5
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Term
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Section
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Company Software
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Section 4.17(a)
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Company Stock Option
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Section 2.05(a)
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Company Stockholder Approval
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Section 4.02(a)
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Company Stockholder Meeting
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Section 8.01
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Company Subsidiary Securities
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Section 4.06(b)
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Company Termination Fee
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Section 11.04(a)
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Confidentiality Agreement
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Section 6.03(a)
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Current Employees
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Section 5.11
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D&O Insurance
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Section 7.04(c)
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Dissenting Shares
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Section 2.04
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Effective Time
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Section 2.01(c)
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Employee Plans
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Section 4.16(a)
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End Date
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Section 10.01(b)(i)
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Engagement Letter
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Section 5.06(a)
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ESPP
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Section 2.05(b)
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Fee Letter
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Section 5.06(a)
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Filed Company SEC Documents
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Article 4
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Financing
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Section 5.06(a)
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Financing Sources
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Section 8.09(a)
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High-Yield Financing
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Section 5.06(a)
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Improvements
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Section 4.18
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Inbound Licenses
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Section 4.17(b)
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Indebtedness
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Section 6.01(h)
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Indemnified Person
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Section 7.04(a)
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Intellectual Property Agreements
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Section 4.17(b)
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Internal Controls
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Section 4.07(f)
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Leased Real Property
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Section 4.18
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Lender
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Section 5.06(a)
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Marketing Period
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Section 8.09(a)
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Marks
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Section 1.01
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Merger
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Section 2.01(a)
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Merger Consideration
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Section 2.02(a)
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Merger Subsidiary
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Preamble
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Order
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Section 4.12
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Outbound Licenses
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Section 4.17(b)
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Owned Real Property
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Section 4.18
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Parent
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Preamble
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Parent Expenses
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Section 11.04(b)
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Parent Plans
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Section 7.05(b)
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Paying Agent
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Section 2.03(a)
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Payment Fund
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Section 2.03(a)
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Representatives
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Section 6.02(a)
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Required Governmental Authorizations
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Section 4.03
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Required Information
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Section 8.09(b)
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Term
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Section
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Section 409A
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Section 2.05(c)
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Significant Customer
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Section 4.24(a)
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Significant Supplier
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Section 4.24(b)
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Solvent
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Section 5.06(b)
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Stock Plans
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Section 4.05(a)
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Superior Proposal
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Section 6.02(c)
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Surviving Corporation
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Section 2.01(a)
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Tax Return
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Section 4.15(n)
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Taxes
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Section 4.15(m)
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Taxing Authority
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Section 4.15(m)
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Trade Secrets
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Section 1.01
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Uncertificated Share
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Section 2.02(a)
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Unvested Cash Right
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Section 2.05(c)
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Section 1.02 Other
Definitional and Interpretative Provisions. The
words hereof , herein and
hereunder and words of like import used in this
Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. The captions herein
are included for convenience of reference only and shall be
ignored in the construction or interpretation hereof. References
to Articles, Sections, Exhibits and Schedules are to Articles,
Sections, Exhibits and Schedules of this Agreement unless
otherwise specified. All Exhibits and Schedules annexed hereto
or referred to herein are hereby incorporated in and made a part
of this Agreement as if set forth in full herein. Any
capitalized terms used in any Exhibit or Schedule but not
otherwise defined therein, shall have the meaning as defined in
this Agreement. Any singular term in this Agreement shall be
deemed to include the plural, and any plural term the singular.
Whenever the words include, includes or
including are used in this Agreement, they shall be
deemed to be followed by the words without
limitation, whether or not they are in fact followed by
those words or words of like import. Writing,
written and comparable terms refer to printing,
typing and other means of reproducing words (including
electronic media) in a visible form. Except as the context may
otherwise require, references to any agreement or contract are
to that agreement or contract as amended, modified or
supplemented from time to time in accordance with the terms
hereof and thereof;
provided that with respect to any
agreement or contract listed on any schedules hereto, all such
amendments, modifications or supplements must also be listed in
the appropriate schedule. Any dollar threshold set forth herein
shall not be used as a benchmark for determination of what is
material or a Material Adverse Effect or
any phrase of similar import under the Agreement. References
from or through any date mean, unless otherwise specified, from
and including or through and including, respectively. References
to law, laws or to a particular statute
or law shall be deemed also to include any Applicable Law. The
parties agree that the terms and language of this Agreement were
the result of negotiations between the parties and their
respective advisors and, as a result, there shall be no
presumption that any ambiguities in this Agreement shall be
resolved against any party.
ARTICLE 2
THE MERGER
Section 2.01 The
Merger.
(a) Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time, Merger Subsidiary
shall be merged (the Merger) with and into
the Company in accordance with Delaware Law, whereupon the
separate existence of Merger Subsidiary shall cease, and the
Company shall be the surviving corporation (the
Surviving Corporation).
(b) Subject to the provisions of Article 9, the
closing of the Merger (the Closing) shall
take place in St. Louis, Missouri at the offices of
Armstrong Teasdale LLP, 7700 Forsyth Blvd., Suite 1800,
St. Louis,
A-7
Missouri 63105, as soon as possible, but in any event no later
than two Business Days after the conditions set forth in
Article 9 (other than conditions that by their nature are
to be satisfied at the Closing, but subject to the satisfaction
or, to the extent permissible, waiver of those conditions at the
Closing) have been satisfied or, to the extent permissible,
waived by the party or parties entitled to the benefit of such
conditions, that is the earlier of (a) any Business Day
during the Marketing Period as may be specified by Parent on no
less than three Business Days prior notice to the Company
and (b) the final day of the Marketing Period, or at such
other place, at such other time or on such other date as Parent
and the Company may mutually agree (the Closing
Date); provided, that notwithstanding the satisfaction
or waiver of the conditions set forth in Article 9, this
Agreement may be terminated pursuant to and in accordance with
Section 10.01 such that the parties shall not be required
to effect the Closing, regardless of whether the final day of
the Marketing Period shall have occurred prior to such
termination.
(c) Upon the Closing, the Company and Merger Subsidiary
shall cause the Merger to be consummated by filing a certificate
of merger (the Certificate of Merger) with
the Secretary of State of the State of Delaware, in such form as
is required by, and executed in accordance with, the relevant
provisions of Delaware Law. The Merger shall become effective at
such time (the Effective Time) as the
Certificate of Merger is duly filed with the Secretary of State
of the State of Delaware (or at such later time as permitted by
Delaware Law as Parent and the Company shall agree and shall be
specified in the Certificate of Merger).
(d) The effects of the Merger shall be as provided in this
Agreement and in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing and subject
thereto, at the Effective Time, the Surviving Corporation shall
possess all the properties, rights, powers, privileges and
franchises and be subject to all of the obligations,
liabilities, restrictions and disabilities of the Company and
Merger Subsidiary, all as provided under Delaware Law.
Section 2.02 Conversion
of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent,
Merger Subsidiary, the Company or the holders of any shares of
Company Common Stock or any shares of capital stock of Parent or
Merger Subsidiary:
(a) except as otherwise provided in Section 2.02(b) or
Section 2.04, each share of Company Common Stock (including
each Company Restricted Share) outstanding immediately prior to
the Effective Time (together with the Company Rights attached to
each such share), shall be converted into the right to receive
$19.25 in cash, without interest (such per share amount, the
Merger Consideration). As of the Effective
Time, all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be canceled and shall cease
to exist, and each certificate which immediately prior to the
Effective Time represented any such shares of Company Common
Stock (each, a Certificate) and each
uncertificated share of Company Common Stock (an
Uncertificated Share) which immediately prior
to the Effective Time was registered to a holder on the stock
transfer books of the Company, shall thereafter represent only
the right to receive the Merger Consideration. For avoidance of
doubt, no Merger Consideration shall be paid under this
Section 2.02(a) on account of any Performance Unit or any
right or security into which such Performance Unit converts as a
result of the transactions contemplated by this Agreement, and
the settlement of Performance Units hereunder shall be governed
solely by the provisions of Section 2.05 hereof.
(b) each share of Company Common Stock held by the Company
or any of its Subsidiaries or owned by Parent or any of its
Subsidiaries immediately prior to the Effective Time together
with the Company Rights attached to each such share shall be
canceled, and no payment shall be made with respect
thereto; and
(c) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the
Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the
only outstanding shares of capital stock of the Surviving
Corporation.
A-8
Section 2.03 Surrender
and Payment.
(a) Prior to the Effective Time, Parent shall appoint a
commercial bank or trust company that is reasonably satisfactory
to the Company (the Paying Agent) for the
purpose of paying the Merger Consideration to the holders of
Company Common Stock and shall enter into a Paying Agent
Agreement with the Paying Agent. At or prior to the Effective
Time, Parent shall deposit, or cause Merger Subsidiary to
deposit, with the Paying Agent, for the benefit (from and after
the Effective Time) of the holders of shares of Company Common
Stock, for payment in accordance with this Section 2.03
through the Paying Agent, cash sufficient to pay the aggregate
Merger Consideration pursuant to Section 2.02. All cash
deposited with the Paying Agent pursuant to this
Section 2.03(a) shall herewith be referred to as the
Payment Fund. Promptly after the Effective
Time (and in any event within two Business Days following the
Closing Date), Parent shall send, or shall cause the Paying
Agent to send, to each Person who was, immediately prior to the
Effective Time, a holder of record of shares of Company Common
Stock entitled to receive payment of the Merger Consideration
pursuant to Section 2.02(a) a letter of transmittal and
instructions (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon
proper delivery of the Certificates or transfer of the
Uncertificated Shares to the Paying Agent) for use in such
payment.
(b) Each holder of shares of Company Common Stock that have
been converted into the right to receive the Merger
Consideration shall be entitled to receive, upon
(i) surrender to the Paying Agent of a Certificate,
together with a properly completed letter of transmittal, or
(ii) receipt of an agents message by the
Paying Agent (or such other evidence, if any, of transfer as the
Paying Agent may reasonably request) in the case of a book-entry
transfer of Uncertificated Shares, the Merger Consideration in
respect of the Company Common Stock represented by a Certificate
or Uncertificated Share. Until so surrendered or transferred, as
the case may be, each such Certificate or Uncertificated Share
shall represent after the Effective Time for all purposes only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be
paid to a Person other than the Person in whose name the
surrendered Certificate or the transferred Uncertificated Share
is registered, it shall be a condition to such payment that
(i) either such Certificate shall be properly endorsed or
shall otherwise be in proper form for transfer or such
Uncertificated Share shall be properly transferred and
(ii) the Person requesting such payment shall pay to the
Paying Agent any transfer or other taxes required as a result of
such payment to a Person other than the registered holder of
such Certificate or Uncertificated Share or establish to the
satisfaction of the Paying Agent that such tax has been paid or
is not payable.
(d) The stock transfer books of the Company shall be closed
immediately upon the Effective Time and there shall be no
further registration of transfers of shares of Company Common
Stock thereafter on the records of the Company. If, after the
Effective Time, Certificates or Uncertificated Shares are
presented to Parent, the Surviving Corporation or the Paying
Agent for any reason, they shall be canceled and converted into
the right to receive only the Merger Consideration to the extent
provided for, and in accordance with the procedures set forth,
in this Article 2.
(e) Any portion of the Merger Consideration made available
to the Paying Agent pursuant to Section 2.03(a) that
remains unclaimed by the holders of shares of Company Common
Stock six (6) months after the Effective Time shall be
delivered to Parent or otherwise on the instruction of Parent,
and any such holder who has not exchanged shares of Company
Common Stock for the Merger Consideration in accordance with
this Section 2.03 prior to that time shall thereafter look
only to Parent for payment of the Merger Consideration, in
respect of such shares without any interest thereon.
Notwithstanding the foregoing, Parent shall not be liable to any
holder of shares of Company Common Stock for any amounts paid to
a public official pursuant to applicable abandoned property,
escheat or similar laws. Any amounts remaining unclaimed by
holders of shares of Company Common Stock immediately prior to
such time when the amounts would otherwise escheat to or become
property of any Governmental Authority shall become, to the
extent permitted by Applicable Law, the property of Parent free
and clear of any claims or interest of any Person previously
entitled thereto.
Section 2.04 Dissenting
Shares. Notwithstanding any provision in this
Agreement to the contrary, shares of Company Common Stock
outstanding immediately prior to the Effective Time and held by
a holder
A-9
who has not voted in favor of the Merger or consented thereto in
writing and who has properly demanded appraisal for such shares
in accordance with Section 262 of Delaware Law
(collectively, the Dissenting Shares) shall
not be converted into the right to receive the Merger
Consideration. From and after the Effective Time, a holder of
Dissenting Shares shall not have, and shall not be entitled to
exercise, any of the voting rights or other rights of a holder
of shares of the Surviving Corporation. If, after the Effective
Time, such holder fails to perfect, withdraws or loses the right
to appraisal under Section 262 of Delaware Law, such shares
shall be treated as if they had been converted as of the
Effective Time into the right to receive the Merger
Consideration. The Company shall give Parent prompt notice of
any demands received by the Company for appraisal of shares, and
Parent shall have the right to direct all negotiations and
proceedings with respect to such demands. Except with the prior
written consent of Parent, the Company shall not make any
payment with respect to, or offer to settle or settle, any such
demands.
Section 2.05 Stock
Options and Other Equity Awards.
(a) Options. At the Effective Time, each
outstanding Company Stock Option under any Stock Plan, including
without limitation the 1993 Option Plan, the 1995 Option Plan
and the 1999 Option Plan, whether or not then exercisable or
vested, shall become fully vested and be cancelled in exchange
for the right to receive, within ten (10) Business Days
after the Effective Time, an amount in cash equal to the product
of (A) the total number of shares of Company Common Stock
subject to such Company Stock Option immediately prior to the
Effective Time, multiplied by (B) the excess, if any, of
the Merger Consideration over the exercise price per share of
Company Common Stock under such Company Stock Option, less any
applicable taxes required to be withheld with respect to such
payment. As used herein, the term Company Stock
Option shall mean any outstanding option to purchase
shares of capital stock of the Company under any Stock Plan. As
of the Effective Time, all Company Stock Options shall no longer
be outstanding and shall automatically cease to exist and shall
become only the right to receive the option consideration
described in this Section 2.05(a), and, without limiting
the foregoing, the Board of Directors of the Company or the
appropriate committee thereof shall take all necessary action to
effect such cancellation, including but not limited to adopting
any required amendment to any of the Stock Plans, and obtaining
any required participant consents.
(b) Employee Stock Purchase Plan. As soon
as practicable following the date of this Agreement, the Board
of Directors of the Company or the compensation committee of the
Board of Directors of the Company will adopt such resolutions
and take such other reasonable actions as may be required to
provide that with respect to the Companys Employee Stock
Purchase Plan (the ESPP):
(A) participants in the ESPP may not alter their payroll
deductions from those in effect on the date of this Agreement
(other than to discontinue their participation in the ESPP),
(B) no offering period will be commenced after the date of
this Agreement (it being understood that the current offering(s)
in progress as of the date hereof shall continue, and shares of
Company Common Stock shall be issued to participants thereunder
on the next currently scheduled purchase date thereunder
occurring after the date hereof as provided under, and subject
to the terms and conditions of, the ESPP), (C) in
accordance with the terms of the ESPP, any offering in progress
as of the Effective Time shall be shortened, and the
Offering Termination Date (as defined in the ESPP)
shall be the Business Day immediately preceding the Effective
Time, (D) each then outstanding option under the ESPP shall
be exercised automatically on such Offering Termination Date,
(E) the ESPP shall be terminated effective immediately
prior to the Effective Time and (F) the amount of the
accumulated contributions of each participant under the ESPP as
of immediately prior to the Effective Time shall, to the extent
not used to purchase shares of capital stock of the Company in
accordance with the ESPP, be refunded to such participant as
promptly as practicable following the Effective Time (without
interest). Notwithstanding any restrictions on transfer of stock
in the ESPP, the treatment in the Merger of any stock purchased
pursuant to the ESPP as described under this provision shall be
in accordance with Section 2.02(a).
(c) Performance Units. At the Effective
Time, the performance objectives underlying all Performance
Units that are outstanding as of immediately prior to the
Effective Time shall be deemed to be achieved at the maximum
level, pursuant to the terms of the 2004 LTIP as described in
Section 4.27, as amended prior to the date upon which the
Companys Board of Directors approved this Agreement. At
such time, such Performance Units shall not be converted into
Company Restricted Shares, but rather shall be converted into
the unvested right (the Unvested Cash Right)
to receive, upon vesting, an amount in cash equal to
(i) the number of
A-10
Performance Units multiplied by (ii) $1.50. The
Unvested Cash Rights shall vest on the
12-month
anniversary of the Closing Date, provided that the holder
thereof has been continuously employed by Parent or its
Affiliates (including the Surviving Corporation) through such
date, or shall vest on such earlier date as may be provided
under the terms of the 2004 LTIP as described in
Section 4.27, as amended prior to the date upon which the
Companys Board of Directors approves this Agreement. The
amount of cash to which the holder of any such Unvested Cash
Right is entitled shall be paid, without interest, within ten
(10) calendar days after the vesting thereof. All amounts
payable pursuant to the Unvested Cash Rights are intended to be
short-term deferrals within the meaning of Treasury
Regulation Section 1.409A-1(b)(4),
and accordingly, are intended to be exempt from the application
of Section 409A of the Internal Revenue Code, the
regulations and other guidance of general applicability
thereunder, and any state law of similar effect (collectively,
Section 409A), and accordingly, no
payment of the cash underlying Unvested Cash Rights will be
subject to the additional income tax under Section 409A,
and any ambiguities herein will be interpreted to be so exempt.
If the Closing Date occurs after July 3, 2011, in no event
will Performance Units (other than Performance Units held by an
employee with an employment agreement described in
Section 4.27) with a performance period which ends on such
date be converted into an Unvested Cash Right under this
Section 2.05(c). Instead, to the extent such Performance
Units are outstanding immediately prior to the Effective Time
due to the fact that the Company has not had sufficient time
after the end of such fiscal year to convert such Performance
Units into Company Restricted Shares in accordance with the
terms of the 2004 LTIP, such Performance Units shall be
cancelled in exchange for the right to receive, within ten
(10) Business Days after the Effective Time, an amount in
cash equal to the product of (a) the number of Performance
Units subject to an award and (B) $1.50. Notwithstanding
anything in this Section 2.05(c) (except for the first
sentence of this Section 2.05(c)) to the contrary,
Performance Units, including those Performance Units which are
fully earned as of July 3, 2011, held by an employee with
an employment agreement described in Exhibit C, D, E or F
to Section 4.27, which have not been converted into Company
Restricted Shares as of Closing, shall be considered outstanding
and converted into Unvested Cash Rights pursuant to this
Section 2.05. Notwithstanding anything in this
Section 2.05(c) (except for the first sentence of this
Section 2.05(c)) to the contrary, Performance Units,
including those Units which are fully earned as of July 3,
2011, held by an employee with an employment agreement described
in Exhibit A or B to Section 4.27, which have not been
converted into Company Restricted Shares as of Closing, shall be
settled in accordance with the terms of such employment
agreement.
Section 2.06 Adjustments. If,
during the period between the date of this Agreement and the
Effective Time, any change in the outstanding shares of Company
Common Stock shall occur, as a result of any reclassification,
recapitalization, stock split (including reverse stock split),
merger, combination, exchange or readjustment of shares,
subdivision or other similar transaction, or any stock dividend
thereon with a record date during such period, the Merger
Consideration and any other amounts payable pursuant to this
Agreement shall be appropriately adjusted to eliminate the
effect of such event on the Merger Consideration or any such
other amounts payable pursuant to this Agreement.
Section 2.07 Withholding
Rights. Each of the Paying Agent, Parent and
the Surviving Corporation shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person
pursuant to this Agreement such amounts as it is required to
deduct and withhold with respect to the making of such payment
under any provision of any Applicable Law, including federal,
state, local or foreign Tax law, and if any such amounts are
deducted and withheld, Parent shall, or shall cause the
Surviving Corporation to, as the case may be, timely pay such
amounts to the appropriate Government Authority. If the Paying
Agent, Parent or the Surviving Corporation, as the case may be,
so withholds amounts, such amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which the
Paying Agent, Parent or the Surviving Corporation, as the case
may be, made such deduction and withholding.
Section 2.08 Lost
Certificates. If any Certificate shall have
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 reasonably required by the Surviving
Corporation, the posting by such Person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with
respect to such Certificate, the Paying Agent will issue, in
exchange for such lost, stolen or destroyed
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Certificate, the Merger Consideration to be paid in respect of
the shares of Company Common Stock represented by such
Certificate, as contemplated by this Article 2.
ARTICLE 3
THE
SURVIVING CORPORATION
Section 3.01 Articles
of Incorporation. The certificate of
incorporation of the Company shall be amended in its entirety as
set forth on Annex I and, as amended, shall be the
certificate of incorporation of the Surviving Corporation until
amended in accordance with Applicable Law.
Section 3.02 Bylaws. The
bylaws of Merger Subsidiary in effect at the Effective Time
shall be the bylaws of the Surviving Corporation until amended
in accordance with Applicable Law.
Section 3.03 Directors
and Officers. From and after the Effective
Time, until successors are duly elected or appointed and
qualified in accordance with Applicable Law, (i) the
directors of Merger Subsidiary at the Effective Time shall be
the directors of the Surviving Corporation and (ii) the
officers of the Merger Subsidiary at the Effective Time shall be
the officers of the Surviving Corporation.
ARTICLE 4
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except (i) as disclosed in the Company SEC Documents filed
with or furnished to the SEC by the Company since June 28,
2009 and publicly available prior to the date of this Agreement
(Filed Company SEC Documents) (other than any
disclosures set forth in any risk factor section, any
disclosures of risks included in any forward-looking
statements disclaimer or any other statements that are
similarly predictive or forward-looking in nature), or
(ii) as set forth in the Company Disclosure Schedule (it
being agreed that disclosure of any information in a particular
section or subsection of the Company Disclosure Schedule shall
be deemed disclosure with respect to any other section or
subsection of this Agreement to which the relevance of such
information is readily apparent on its face), the Company
represents and warrants to Parent that:
Section 4.01 Corporate
Existence and Power. Each of the Company and
its Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction
of its formation and has all corporate powers required to carry
on its business as conducted as of the date hereof. Each of the
Company and its Subsidiaries is duly qualified to do business as
a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary, except for
those jurisdictions where failure to be so qualified has not had
and would not reasonably be expected to have a Material Adverse
Effect on the Company. Prior to the date of this Agreement, the
Company has made available to Parent true and complete copies of
the certificate of incorporation and bylaws of the Company and
each of its Subsidiaries as in effect on the date of this
Agreement, and each as so delivered is in full force and effect.
The Company is not in violation of any provision of its
certificate of incorporation or bylaws.
Section 4.02 Corporate Authorization.
(a) The Company has all requisite corporate power and
authority to execute and deliver this Agreement and, subject to
receipt of the affirmative vote of the holders of two-thirds of
the outstanding shares of Company Common Stock in connection
with the consummation of the Merger (the Company
Stockholder Approval), to perform its obligations
under this Agreement and to consummate the Merger and the other
transactions contemplated hereby. This Agreement has been duly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger
Subsidiary, constitutes a valid and binding agreement of the
Company enforceable against the Company in accordance with its
terms (subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws affecting
creditors rights generally and general principles of
equity). The Company Stockholder Approval is the only vote of
the holders of any class or series of the Companys capital
stock or other securities required in connection with the
consummation of the Merger. No vote of the holders of any class
or series of the
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Companys capital stock or other securities is required in
connection with the consummation of any of transactions
contemplated hereby to be consummated by the Company other than
the Merger.
(b) At a meeting duly called and held, the Companys
Board of Directors (or a duly appointed committee thereof) has
(i) determined that this Agreement and the transactions
contemplated hereby are fair to and in the best interests of the
Companys stockholders, (ii) approved, adopted and
declared advisable this Agreement and the transactions
contemplated hereby, (iii) approved and adopted all actions
necessary to render the Company Rights inapplicable to the
Merger, this Agreement and the transactions contemplated hereby
and (iv) resolved to recommend approval and adoption of
this Agreement by the Companys stockholders (such
recommendation, the Company Board
Recommendation).
Section 4.03 Governmental
Authorization. The execution, delivery and
performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated
hereby require no action by or in respect of, or filing with,
any Governmental Authority other than (i) the filing of the
Certificate of Merger with the Delaware Secretary of State and
appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business,
(ii) compliance with any applicable requirements of the HSR
Act and under any comparable merger control laws of foreign
jurisdictions, if applicable (the consents, approvals orders,
authorizations, registrations, declarations and filings required
under or in connection with any of the foregoing
clauses (i) and (ii) above, the
Required
Governmental Authorizations), (iii) compliance
with any applicable requirements of the 1933 Act, the
1934 Act, and any other applicable U.S. state or
federal securities laws, (iv) compliance with any
requirements of the AMEX and (v) any actions or filings the
absence of which would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company.
Section 4.04 Non-contravention. Except
as set forth on Section 4.04 of the Company Disclosure
Schedule, the execution, delivery and performance by the Company
of this Agreement and the consummation of the transactions
contemplated hereby do not and will not (i) contravene,
conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of the
Company, (ii) assuming compliance with the matters referred
to in Section 4.03, contravene, conflict with or result in
a violation or breach of any provision of any Applicable Law
that is material to the Company and its Subsidiaries, taken as a
whole, (iii) assuming compliance with the matters referred
to in Section 4.03, require any consent or other action by
any Person under, constitute a default, or an event that, with
or without notice or lapse of time or both, would constitute a
default, under, or cause or permit the termination,
cancellation, acceleration or other change of any right or
obligation or the loss of any benefit to which the Company or
any of its Subsidiaries is entitled under any provision of any
Contract binding upon the Company or any of its Subsidiaries or
any license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the
assets or business of the Company and its Subsidiaries or
(iv) result in the creation or imposition of any Lien
(other than Permitted Liens) on any asset of the Company or any
of its Subsidiaries, with such exceptions, in the case of each
of clauses (iii) and (iv), as would not be reasonably
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.05 Capitalization.
(a) The authorized capital stock of the Company consists of
(i) 40,000,000 shares of Company Common Stock, par
value $.01 per share (the Company Capital
Stock) and (ii) 2,000,000 shares of
preferred stock, par value $1.00 per share (Company
Preferred Stock), of which 300,000 are designated
Series C Junior Participating Preferred Stock, of which
Series C Junior Participating Preferred Stock
300,000 shares are reserved for issuance upon the exercise
of the Company Rights issued pursuant to the Company Rights
Agreement. As of March 25, 2011, there were outstanding
(A) 15,958,839 shares of Company Common Stock (of
which (i) 132,912 shares are held in the
Companys treasury and (ii) 119,338 shares are
Company Restricted Shares), (B) no shares of Company
Preferred Stock and (C) outstanding Company Stock Options
to purchase an aggregate of 411,565 shares of Company
Common Stock (all of which Company Stock Options are vested and
exercisable). As of March 25, 2011, other than
496,821 shares of Company Common Stock reserved for
issuance in the form of Company Restricted Shares upon future
settlement of outstanding Performance Units under the
Companys 2004 Long Term Incentive Plan (as amended from
time to time, the
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2004 LTIP), and pursuant to outstanding
Company Stock Options under the 1993 Incentive Stock Option Plan
(the 1993 Option Plan), 1995 Incentive Stock
Option Plan (as amended from time to time, the 1995
Option Plan), and the 1999 Non-Qualified Stock Option
Plan (as amended from time to time, the 1999 Option
Plan and, together with the 2004 LTIP, the 1993 Option
Plan, the 1995 Option Plan and the 1999 Option Plan, the
Stock Plans), no Shares are committed to be
issued or are otherwise covered by or subject to any Company
Security. All outstanding shares of Company Capital Stock have
been, and all shares of Company Capital Stock that may be issued
pursuant to any Stock Plan or other compensation plan or
arrangement will be, when issued in accordance with the
respective terms thereof, duly authorized and validly issued and
are fully paid and nonassessable and are not subject to any
preemptive rights. No Subsidiary of the Company owns any shares
of capital stock of the Company. Section 4.05 of the
Company Disclosure Schedule contains a complete and correct list
of (i) each Company Stock Option outstanding as of the date
of this Agreement, including with respect to each such option
the holder, the Stock Plan under which such Company Stock Option
was granted, date of grant, exercise price, vesting schedule and
number of shares of Company Common Stock subject thereto and
(ii) all outstanding Company Restricted Shares, including
with respect to each such share the holder, date of grant and
vesting schedule. A true and complete copy of the Company Rights
Agreement as in effect as of the date of this Agreement has been
made available to Parent prior to the date of this Agreement.
(b) There are outstanding no bonds, debentures, notes,
other indebtedness or other securities of the Company having the
right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as set forth in
this Section 4.05 and for changes since March 25, 2011
resulting from the exercise of Company Stock Options outstanding
on such date, there are no issued, reserved for issuance or
outstanding (i) shares of capital stock or other voting
securities of or other ownership interest in the Company,
(ii) securities of the Company convertible into or
exchangeable for shares of capital stock or other voting
securities of or other ownership interest in the Company,
(iii) warrants, calls, options or other rights to acquire
from the Company, or other obligations of the Company to issue,
any capital stock, other voting securities or securities
convertible into or exchangeable for capital stock or other
voting securities of or other ownership interest in the Company
or (iv) restricted shares, stock appreciation rights,
performance units, contingent value rights, phantom
stock or similar securities or rights issued by the Company that
are derivative of, or provide economic benefits based, directly
or indirectly, on the value or price of, any capital stock of,
or other voting securities of or ownership interests in, the
Company (the items in clauses (i) though (iv) being
referred to collectively as the Company
Securities). There are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities. Neither the
Company nor any of its Subsidiaries is a party to any voting
agreement with respect to the voting of any Company Securities.
Section 4.06 Subsidiaries.
(a) Each Subsidiary of the Company is a corporation or
other entity duly incorporated or organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation or organization and has all corporate or other
organizational powers, as applicable, required to carry on its
business as conducted as of the date hereof. Each such
Subsidiary is duly qualified to do business as a foreign
corporation or other entity, as applicable, and is in good
standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so
qualified has not had a Material Adverse Effect on the Company.
Section 4.06 of the Company Disclosure Schedule lists all
of the Subsidiaries of the Company.
(b) Except as set forth in Section 4.06(b) of the
Company Disclosure Schedule, all of the outstanding capital
stock of, or other voting securities or ownership interests in,
each Subsidiary of the Company, is owned by the Company or
another Subsidiary of the Company, if applicable, directly or
indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock
or other voting securities or ownership interests). All the
outstanding shares of capital stock or other voting securities
or equity interests of each Subsidiary of the Company have been
duly authorized and validly issued, are fully paid,
nonassessable and not subject to any preemptive rights. There
are no issued, reserved for issuance or outstanding
(i) shares of capital stock or other voting securities of
or other ownership interest in the Subsidiaries of the Company
other than those owned by the Company,
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(ii) securities of the Company or any of its Subsidiaries
convertible into or exchangeable for shares of capital stock or
other voting securities of or ownership interests in any
Subsidiary of the Company, (iii) warrants, calls, options
or other rights to acquire from the Company or any of its
Subsidiaries, or other obligations of the Company or any of its
Subsidiaries to issue, any capital stock or other voting
securities of or ownership interests in, or any securities
convertible into or exchangeable for any capital stock or other
voting securities of or ownership interests in, any Subsidiary
of the Company or (iv) restricted shares, stock
appreciation rights, performance units, contingent value rights,
phantom stock or similar securities or rights issued
by any Subsidiary of the Company that are derivative of, or
provide economic benefits based, directly or indirectly, on the
value or price of, any capital stock of, or other voting
securities of or ownership interests in, any Subsidiary of the
Company (the items in clauses (i) through (iv) being
referred to collectively as the Company Subsidiary
Securities). There are no outstanding obligations of
the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Subsidiary Securities.
Except as set forth in Section 4.06 of the Company
Disclosure Schedule, all of the outstanding Company Subsidiary
Securities are owned, directly or indirectly, by the Company,
free and clear of all Liens.
Section 4.07 SEC Filings and the Sarbanes-Oxley Act.
Except as set forth in Section 4.07 of the Company
Disclosure Schedule:
(a) The Company has filed with or furnished to the SEC all
reports, schedules, forms, statements, prospectuses,
registration statements and other documents required to be filed
or furnished by the Company since June 28, 2009
(collectively, together with any exhibits and schedules thereto
and other information incorporated therein, the Company
SEC Documents).
(b) As of its filing date (or, if amended or superseded by
a filing prior to the date of this Agreement, on the date of
such subsequent filing), each Company SEC Document complied in
all material respects with the applicable requirements of the
1933 Act, the 1934 Act and the Sarbanes-Oxley Act, as
the case may be, and the rules and regulations promulgated
thereunder, as the case may be (including, without limitation,
all disclosure requirements thereunder).
(c) As of its respective filing date (or, if amended or
superseded by a filing prior to the date of this Agreement, on
the date of such filing), each Company SEC Document filed
pursuant to the 1934 Act did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
(d) Each Company SEC Document that is a registration
statement, as amended or supplemented, if applicable, filed
pursuant to the 1933 Act, as of the date such registration
statement or amendment became effective, did not contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading.
(e) The Company has established and maintains disclosure
controls and procedures (as defined in
Rule 13a-15
under the 1934 Act). Such disclosure controls and
procedures are reasonably designed to ensure that all
information required to be disclosed by the Company in the
reports it files or submits under the 1934 Act is recorded,
processed, summarized and reported within the time periods
specified in the rules and forms of the SEC and all such
information is made known to the Companys principal
executive officer and principal financial officer to allow
timely decisions regarding required disclosures as required
under the 1934 Act. The principal executive officer and
principal financial officer of the Company have evaluated the
effectiveness of the Companys disclosure controls and
procedures and, to the extent required by Applicable Law,
presented in any applicable Company SEC Document that is a
report on Form 10 K or Form 10 Q, or any amendment
thereto, its conclusions about the effectiveness of the
disclosure controls and procedures as of the end of the period
covered by such report or amendment based on such evaluation.
(f) The Company and its Subsidiaries have established and
maintained a system of internal control over financial reporting
(as defined in
Rule 13a-15
under the 1934 Act) (internal controls)
sufficient to provide reasonable assurance regarding the
reliability of the Companys financial reporting and the
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preparation of the Companys financial statements for
external purposes in accordance with GAAP, and the Company has
disclosed, based on its most recent evaluation of internal
controls prior to the date of this Agreement, to the
Companys auditors and audit committee (x) any
significant deficiencies and material weaknesses in the design
or operation of internal controls known to the Company which
would be reasonably expected to materially adversely affect the
Companys ability to record, process, summarize and report
financial information and (y) any fraud, whether or not
material, known to management, that involves management or other
employees who have a significant role in internal controls.
(g) Since June 29, 2008, (i) neither the Company
nor any of its Subsidiaries nor, to the knowledge of the
Company, any director, officer, employee, auditor, accountant or
representative 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, including any material complaint, allegation,
assertion or claim that the Company or any of its Subsidiaries
has engaged in questionable accounting or auditing practices and
(ii) to the knowledge of the Company, 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 by the Company or
any of its Subsidiaries or any of their respective officers,
directors, employees or agents to the Board of Directors of the
Company or any committee thereof or to any director or officer
of the Company or any of its Subsidiaries.
(h) As of the date of this Agreement, there are no
outstanding or unresolved comments in the comment letters
received from the SEC staff with respect to the Company SEC
Documents. Except as set forth on Section 4.07(h) of the
Company Disclosure Schedule, to the knowledge of the Company,
none of the Company SEC Documents is subject to ongoing review
or outstanding SEC comment or investigation.
(i) Neither the Company nor any of its Subsidiaries is a
party to, or has any commitment to become a party to, any joint
venture, off balance sheet partnership or any similar Contract
(including any Contract or arrangement relating to any
transaction or relationship between or among the Company and any
of its Subsidiaries, on the one hand, and any unconsolidated
Affiliate, including any structured finance, special purpose or
limited purpose entity or Person, on the other hand, or any
off balance sheet arrangements (as defined in
Item 303(a) of Regulation S K under the
1934 Act)), where the result, purpose or intended effect of
such Contract is to avoid disclosure of any material transaction
involving, or material liabilities of, the Company or any of its
Subsidiaries in the Companys or such Subsidiarys
published financial statements or other Company SEC Documents.
(j) The Company is in compliance in all material respects
with the applicable listing and corporate governance rules and
regulations of the AMEX.
(k) No Subsidiary of the Company is subject to the periodic
reporting requirements of the 1934 Act.
Section 4.08 Financial
Statements. The audited consolidated
financial statements and unaudited consolidated interim
financial statements of the Company included or incorporated by
reference in the Company SEC Documents (a) have been
prepared in a manner consistent with the books and records of
the Company and its Subsidiaries, (b) have been prepared in
accordance with GAAP (except, in the case of unaudited
statements, as permitted by Form 10 Q of the SEC) applied
on a consistent basis during the periods involved (except as may
be indicated in the notes thereto, (c) comply as to form in
all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect
thereto and (d) fairly present in all material respects, in
conformity with GAAP, the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates
thereof and their consolidated results of operations and cash
flows for the periods then ended (subject to normal and
recurring year-end audit adjustments in the case of any
unaudited interim financial statements). Since January 1,
2010, the Company has not made any change in the accounting
practices or policies applied in the preparation of its
financial statements, except as required by GAAP, SEC rule or
policy or Applicable Law. The books and records of the
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Company and its Subsidiaries have been, and are being,
maintained in all material respects in accordance with GAAP (to
the extent applicable).
Section 4.09 Disclosure
Documents. The proxy statement of the Company
to be filed with the SEC in connection with the Merger (together
with the letter to stockholders, notice of meeting and form of
proxy and any other soliciting material to be distributed to
stockholders in connection with the Merger (including any
amendments or supplements) and any schedules required to be
filed with the SEC in connection therewith, the
Company
Proxy Statement) and any amendments or supplements
thereto will, when filed, comply in all material respects with
the applicable requirements of the 1934 Act. At the time
the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company, and at
the time such stockholders vote on adoption of this Agreement
and at the Effective Time, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties
contained in this Section 4.09 will not apply to statements
or omissions included in the Company Proxy Statement based upon
information furnished to the Company by Parent or Merger
Subsidiary specifically for use therein.
Section 4.10 Absence
of Certain Changes. Since the Company Balance
Sheet Date, except as expressly contemplated by this Agreement,
the business of the Company and its Subsidiaries has, in all
material respects, been conducted in the ordinary course
consistent with past practices, and there has not been
(i) any Material Adverse Effect on the Company and its
Subsidiaries, (ii) any material loss, damage, destruction
or other casualty affecting any of the material properties or
assets of the Company or any of its Subsidiaries, whether or not
covered by insurance or (iii) any action taken by the
Company or any of its Subsidiaries that, if taken during the
period from the date of this Agreement through the Effective
Time without Parents consent, would constitute a material
breach of Section 6.01.
Section 4.11 No
Undisclosed Material Liabilities. Except as
set forth in Section 4.11 of the Company Disclosure
Schedule, there are no liabilities or obligations of any nature,
whether accrued, absolute, contingent or otherwise, known or
unknown, whether due or to become due of the Company or any of
its Subsidiaries whether or not required under GAAP to be set
forth on a consolidated balance sheet other than
(i) liabilities disclosed and provided for in the Company
Balance Sheet or in the notes thereto, (ii) liabilities
incurred since the Company Balance Sheet Date in the ordinary
course of business or in connection with the negotiation,
execution, delivery or performance of this Agreement or
consummation of the transactions contemplated hereby, and
(iii) liabilities or obligations that have not had or would
not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole.
Section 4.12 Litigation. Except
as set forth on Section 4.12 of the Company Disclosure
Schedule, as of the date of this Agreement, there is no claim,
action, suit, arbitration, investigation or proceeding (each, an
Action) pending against, or, to the knowledge
of the Company, threatened against the Company or any of its
Subsidiaries, any of their respective properties or assets, or
any present or former officer or director of the Company or any
of its Subsidiaries in such individuals capacity as such
or any employee of the Company or any of its Subsidiaries in
such individuals capacity as such for which the Company is
obligated to indemnify such employee, before (or, in the case of
threatened Actions, would be before) any arbitrator or
Governmental Authority, that (a) involves an amount in
controversy in excess of $250,000, (b) seeks material
injunctive or other non-monetary relief or (c) individually
or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect on the Company, nor is there any
judgment, decree, injunction, rule or order of any arbitrator or
Governmental Authority outstanding against, or, to the knowledge
of the Company, investigation by any Governmental Authority
(each, an
Order) involving, the Company or
any of its Subsidiaries, any of their respective properties or
assets, or any present or former officer, director or employee
of the Company or any of its Subsidiaries in such
individuals capacity as such, that would reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries, taken as a
whole. As of the date of this Agreement, there is no Action
pending or, to the knowledge of the Company, threatened seeking
to prevent, hinder, modify, delay or challenge the transactions
contemplated by this Agreement.
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Section 4.13 Compliance
with Applicable Laws. Except as set forth on
Section 4.13 of the Company Disclosure Schedule, the
Company and each of its Subsidiaries is and, at all times since
June 29, 2008 has been, in compliance with Applicable Laws
except for failures to comply or violations that have not had or
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The Company
and its Subsidiaries hold all material governmental licenses,
authorizations, permits, consents, approvals, variances,
exemptions and orders necessary for the operation of the
businesses of the Company and its Subsidiaries, taken as a whole
(the
Company Permits). The Company and each
of its Subsidiaries is in compliance with the terms of the
Company Permits, except for failures to comply or violations
that have not had or would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company, and there has occurred no violation or breach of,
default (with or without notice or lapse of time, or both) under
or event giving to others any right of revocation, non-renewal,
adverse modification or cancellation of, with or without notice
or lapse of time or both, any such Company Permit, except for
violations, breaches, defaults or events that would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. The
consummation of the transactions contemplated hereby will not
result in any such revocation, non-renewal, adverse modification
or cancellation that would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company and its Subsidiaries, taken as a whole.
Section 4.14 Material
Contracts. Each (a) material
contract (as such term is defined in Item 601(b)(10)
of
Regulation S-K
promulgated by the SEC) to which the Company or any of its
Subsidiaries is a party or by which they are bound as of the
date of this Agreement, (b) each Contract with a
Significant Customer or Significant Supplier, (c) any
Contract with respect to the formation, creation, operation,
management or control of a joint venture, partnership, limited
liability or other similar agreement or arrangement,
(d) any Contract involving the acquisition or disposition,
directly or indirectly (by merger or otherwise), of assets or
capital stock or other equity interests for aggregate
consideration (in one or a series of transactions) under such
Contract of $500,000 or more (other than acquisitions or
dispositions of inventory in the ordinary course of business
consistent with past practice), (e) any Contract that
limits the ability of the Company or any of its Subsidiaries to
compete in any line of business or with any Person or in any
geographic area, or that restricts the right of the Company and
its Subsidiaries to sell to or purchase from any Person or to
hire any Person, or that grants the other party or any third
Person most favored nation status and (f) any
Contract that by its terms calls for aggregate payment or
receipt by the Company and its Subsidiaries under such Contract
of more than $500,000 over the remaining term of such Contract
(other than purchase orders with customers and suppliers entered
into in the ordinary course of business consistent with past
practice) (each such Contract described in clauses (a)
through (f), a
Company Material Contract) is
set forth on Section 4.14 of the Company Disclosure
Schedule and is valid and binding on the Company or one of its
Subsidiaries, as applicable, and to the knowledge of the
Company, each other party thereto and in full force and effect
and enforceable in accordance with its terms (except those which
are cancelled, rescinded or terminated after the date of this
Agreement in accordance with their terms and subject to
applicable bankruptcy, insolvency, fraudulent transfers,
reorganization, moratorium and other laws, affecting
creditors rights generally and general principles of
equity ), except where the failure to be valid, binding and in
full force and effect has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, and no written notice to
terminate, in whole or part, any of the same has been served.
The Company and each of its Subsidiaries, and, to the knowledge
of the Company, each other party thereto, has performed all
obligations required to be performed by it under each Company
Material Contract, except where failure to perform such
obligations have not had or would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect on the Company. There is no default under any Company
Material Contract by the Company or any of its Subsidiaries or,
to the knowledge of the Company, any other party thereto, except
for such defaults that have not had or would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. No event or condition has
occurred that constitutes, or, after notice or lapse of time or
both, would constitute, a breach or default on the part of the
Company or any of its Subsidiaries or, to the knowledge of the
Company, any other party thereto under any such Company Material
Contract, nor has the Company or any of its Subsidiaries
received any written, or, to the knowledge of the Company, oral
notice of any such breach, default, event or
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condition, except for such breaches or defaults that have not
had or would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company. To
the knowledge of the Company, the Company has made available to
Parent true and complete copies of all Company Material
Contracts, including any amendments thereto (other than purchase
orders with customers and suppliers entered into in the ordinary
course of business consistent with past practice).
Section 4.15 Taxes.
(a) Except as set forth on Section 4.15(a) of the
Company Disclosure Schedule, all material Tax Returns required
by Applicable Law to be filed with any Taxing Authority by, or
on behalf of, the Company or any of its Subsidiaries have been
filed on a timely basis in accordance with all Applicable Law,
and all such Tax Returns are true and complete in all material
respects.
(b) The Company and each of its Subsidiaries has paid (or
caused to be paid) or has withheld and remitted to the
appropriate Taxing Authority all material Taxes due and payable
or where payment is not yet due, has established in accordance
with GAAP an adequate accrual on the financial statements of the
Company and its Subsidiaries included in the Company SEC
Documents for all material Taxes through the date thereof.
Except as set forth on Section 4.15(b) of the Company
Disclosure Schedule, the Company and its Subsidiaries have no
present or contingent liability for any material Taxes, other
than as reflected as liabilities for Taxes on the most recent
financial statements, contained in the Company SEC Documents,
incurred in the ordinary course of business since the date of
such financial statements in amounts consistent with prior years
(adjusted solely for changes in ordinary course business
operations).
(c) Except as set forth on Section 4.15(c) of the
Company Disclosure Schedule, there is no claim, audit, action,
suit, proceeding or investigation now pending or, to the
knowledge of the Company, threatened against or with respect to
the Company or its Subsidiaries in respect of any material Tax.
None of the Company nor any of its Subsidiaries has received
written notice since January 1, 2005, from a taxing
authority in any jurisdiction in which the Company or any
Subsidiary has not filed a Tax Return for any period that the
Company or such Subsidiary is required to file a Tax Return in
such jurisdiction.
(d) Neither the Company nor any of its Subsidiaries has, or
has ever had, a permanent establishment in any country which
would subject the Company or its Subsidiaries to material Tax in
such country, other than the country in which it is organized,
or has engaged in a trade or business in any country other than
the country in which it is organized that subjected it to
material Tax in such country.
(e) Neither the Company nor any of its Subsidiaries will be
required to include any item of income in, or exclude any item
of deduction from, taxable income for any taxable period (or
portion thereof) ending on or after the Closing Date as a result
of any (i) change in method of accounting for a taxable
period ending on or prior to the Closing Date (including
pursuant to Section 481(a) of the Code or any similar
provision of Law), (ii) closing agreement as
described in Section 7121 of the Code (or any corresponding
or similar provision of state, local or foreign income Tax Law)
executed on or prior to the Closing Date, (iii) installment
sale or open transaction disposition made on or prior to the
Closing Date, (iv) except as disclosed on the financial
statements of the Company and its Subsidiaries included in the
Company SEC Documents or incurred in the ordinary course of
business since the date of the last filed Company SEC Documents,
prepaid amount received on or prior to the Closing Date, or
(v) elections made under Section 108(i) of the Code on
or prior to the Closing Date.
(f) No Liens for Taxes exist with respect to any assets or
properties of the Company or any of its Subsidiaries, except for
Permitted Liens.
(g) Neither the Company nor any of its Subsidiaries has
participated in any listed transaction as defined in
Treas. Reg. § 1.6011-4(b)(2).
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(h) To the knowledge of the Company, the Company has not
been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(l)(A)(ii) of
the Code.
(i) Neither the Company nor any of its Subsidiaries has
granted (or is subject to) any waiver or extension that is
currently in effect, of the statute of limitations for the
assessment or payment of any material Tax.
(j) During the five-year period ending on the date of this
Agreement, neither the Company nor any of its Subsidiaries was a
distributing corporation or a controlled corporation in a
transaction intended to be governed by Section 355 of the
Code.
(k) Except as set forth on Section 4.15(k) of the
Company Disclosure Schedule, (i) neither the Company nor
any of its Subsidiaries is liable for a material amount of Taxes
of any person (other than the Company and its Subsidiaries) as a
result of (A) being a transferee or successor of such
person, (B) being a member of an affiliated, consolidated,
combined or unitary group that includes such person as a member,
or (C) contract, agreement, assumption or operation of law,
(ii) neither the Company nor any Subsidiary the stock of
which has been acquired by the Company since January 1,
2003, has been a member of any affiliated, consolidated,
combined, or unitary group for any Tax purposes other than a
group in which the Company is the common parent or
(iii) neither the Company nor any Subsidiary is a party to
a Tax sharing, Tax allocation, or Tax indemnity agreement. For
purposes of (i)(C) and (iii) of this Section 4.15(k),
(I) agreements with customers, vendors, lessors or the like
entered into in the ordinary course of business,
(II) employment agreements listed in Section 4.15(k)
of the Company Disclosure Schedule, credit agreements or other
commercial agreements, and (III) agreements solely among
the Company or any of its Subsidiaries shall be excluded.
(l) The Company and its Subsidiaries have (i) filed or
caused to be filed with the appropriate Governmental Authority
all unclaimed property reports required to be filed and have
remitted to the appropriate Governmental Authority all unclaimed
property required to be remitted, or (ii) delivered or paid
all unclaimed property to its original or proper recipient.
(m) Taxes means (A) all taxes,
charges, fees, levies, or other like assessments, including
without limitation, all federal, possession, state, city, county
and
non-U.S. (or
governmental unit, agency, or political subdivision of any of
the foregoing) income, profits, employment (including Social
Security, unemployment insurance and employee income Tax
withholding), franchise, gross receipts, sales, use, transfer,
stamp, occupation, estimated, property, capital, severance,
premium, windfall profits, customs, duties, ad valorem, value
added and excise taxes, PBGC premiums, and any other
Governmental Authority (a Taxing Authority)
charges of the same or similar nature; including any interest,
penalty, or addition thereto, whether disputed or not, and
(B) liability for the payment of any amounts of the type
described in clause (A) as a result of being a member of an
affiliated, consolidated, combined or unitary group. Any one of
the foregoing shall be referred to sometimes as a
Tax.
(n) Tax Return means any report, return,
document, declaration or other information or similar filing
supplied or required to be supplied to any Taxing Authority with
respect to Taxes, including information returns, amended
returns, refund claims, any documents with respect to or
accompanying payments of estimated Taxes, or accompanying
requests for the extension of time in which to file any such
report, return, document, declaration or other information.
Section 4.16 Employees
and Employee Benefit Plans.
(a) Section 4.16 of the Company Disclosure Schedule
contains a correct and complete list identifying each
employee benefit plan, as defined in
Section 3(3) of ERISA (whether or not subject to ERISA),
each employment, severance or similar Contract with the
Companys executive officers, directors, employees, or
independent contractors, and each other plan, policy, agreement
or arrangement (written or oral) providing for compensation,
bonuses, profit-sharing, stock option or other stock related
rights or other forms of incentive or deferred compensation,
vacation benefits, insurance (including any self-insured
arrangements), health or medical benefits, employee assistance
program, disability or sick leave benefits, workers
compensation, supplemental unemployment benefits, severance
benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance
benefits) or other form of benefits which is
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maintained, administered or contributed to by the Company or any
ERISA Affiliate of the Company and covers any current or former
executive officer, director, employee or independent contractor
of the Company or any of its Subsidiaries, or with respect to
which the Company or any of its Subsidiaries has any liability.
Copies of such plans (and, if applicable, related trust or
funding agreements or insurance policies) and all amendments
thereto and summary plan descriptions and written
interpretations thereof have been furnished to Parent together
with the two most recent annual reports (Form 5500
including, if applicable, Schedule B thereto) and tax
returns (Form 990) prepared in connection with any
such plan or trust. Such plans are referred to collectively
herein as the Employee Plans.
(b) Neither the Company nor any ERISA Affiliate of the
Company nor any predecessor thereof sponsors, maintains or
contributes to, or has within six years prior to the date hereof
sponsored, maintained or contributed to, any Employee Plan
subject to Title IV of ERISA, Section 302 of ERISA, or
Sections 412 or 4971 of the Code, or a Multiemployer Plan.
(c) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code utilizes a volume
submitter pre-approved plan for which the volume submitter
sponsor has received a favorable opinion letter that the volume
submitter document is so qualified. Each Employee Plan has been
maintained, operated and administered in substantial compliance
with its terms, the requirements prescribed by any and all
statutes, orders, rules and regulations, including ERISA and the
Code, and the terms of any collective bargaining agreement which
are applicable to such Employee Plan. No events have occurred
with respect to any Employee Plan that could reasonably be
expected to result in payment or assessment by or against the
Company of any excise taxes under Sections 4972, 4975,
4976, 4977, 4979, 4980B, 4980D, 4980E or 5000 of the Code.
(d) Except as set forth in Section 4.16(d) of the
Company Disclosure Schedule, with respect to each current or
former employee or independent contractor of the Company or any
of its Subsidiaries, the consummation of the transactions
contemplated by this Agreement will not, either alone or
together with any other event: (i) entitle any such person
to severance pay, bonus amounts, retirement benefits, job
security benefits or similar benefits, (ii) trigger or
accelerate the time of payment or funding (through a grantor
trust or otherwise) of any compensation or benefits payable to
any such person, (iii) accelerate the vesting of any
compensation or benefits of any such person (including any stock
options or other equity-based awards, any incentive compensation
or any deferred compensation entitlement) or (iv) trigger
any other material obligation to any such person. Except as set
forth in Section 4.16(d) of the Company Disclosure
Schedule, there is no Contract or plan (written or otherwise)
covering any employee or former employee of the Company or any
of its Subsidiaries that, individually or collectively, could
give rise to the payment of any amount that would not be
deductible pursuant to the terms of Section 280G or 162(m)
of the Code. Section 4.16(d) of the Company Disclosure
Schedule lists (i) all the agreements, arrangements and
other instruments which give rise to an obligation to make or
set aside amounts payable to or on behalf of the officers of the
Company and its Subsidiaries as a result of the transactions
contemplated by this Agreement (either alone or in connection
with any subsequent employment termination, whether by the
Company or the officer), true and complete copies of which have
been provided to Parent prior to the date of this Agreement and
(ii) the maximum aggregate amounts so payable to each such
individual as a result of the transactions contemplated by this
Agreement
and/or any
subsequent employment termination (whether by the Company or the
officer).
(e) Except as set forth on Section 4.16(e) of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has any liability in respect of post-retirement
health, medical or life insurance benefits for retired, former
or current employees of the Company or its Subsidiaries except
as required to avoid excise tax under Section 4980B of the
Code.
(f) Except as set forth on Section 4.16(f) of the
Company Disclosure Schedule, there has been no amendment to,
written interpretation or announcement (whether or not written)
by the Company or any of its Affiliates relating to, or change
in employee participation or coverage under, an Employee Plan
which would materially increase the annual expense of
maintaining such Employee Plan above the level of the annual
expense incurred in respect thereof for the fiscal year ended
June 27, 2010. No condition exists that would
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prevent the Company from amending or terminating any Employee
Plan without liability, other than the obligation for ordinary
benefits accrued prior to the termination of such plan.
(g) There are no Actions pending or, to the knowledge of
the Company, threatened on behalf of or against any Employee
Plan, the assets of any trust under any Employee Plan, or the
plan sponsor, plan administrator or any fiduciary of any
Employee Plan that could reasonably be expected to result in a
Material Adverse Effect on the Company. No event has occurred
and there currently exists no condition or set of circumstances
in connection with which the Company or any of its Subsidiaries
could be subject to any liability (other than routine claims for
benefits) under the terms of any Employee Plan, ERISA, the Code
or any other applicable Law that could reasonably be expected to
result in a Material Adverse Effect on the Company.
(h) No fiduciary or party in interest of any Employee Plan
has participated in, engaged in or been a party to any
transaction that is prohibited under Section 4975 of the
Code or Section 406 of ERISA and not exempt under
Section 4975 of the Code or Section 408 of ERISA,
respectively, and that could reasonably be expected to result in
any material liability to the Company. With respect to any
Employee Plan, (i) neither the Company nor any of its ERISA
Affiliates has had asserted against it any claim for Taxes under
Chapter 43 of Subtitle D of the Code and Section 5000
of the Code, or for penalties under ERISA Section 502(c),
502(i) or 502 (l), nor, to the knowledge of the Company, is
there a basis for any such claim that could reasonably be
expected to result in any material liability to the Company, and
(ii) no officer, director or employee of the Company or any
Subsidiary has committed a breach of any fiduciary
responsibility or obligation imposed by Title I of ERISA
that could reasonably be expected to result in any material
liability to the Company.
(i) Except as set forth in Section 4.16(i) of the
Company Disclosure Schedule, neither the Company nor any of its
Subsidiaries has been a party to or subject to, or is currently
negotiating in connection with entering into, any collective
bargaining agreement or other labor agreement with any union or
labor organization, and to the knowledge of the Company, there
has not been any activity or proceeding of any labor
organization or employee group to organize any such employees.
In addition, (i) there are no unfair labor practice charges
or complaints against Company or any of its Subsidiaries pending
before the National Labor Relations Board; (ii) there are
no labor strikes, slowdowns or stoppages actually pending or, to
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries; (iii) there are no representation
claims or petitions pending before the National Labor Relations
Board with respect to the employees of the Company or its
Subsidiaries; (iv) there are no grievance or pending
arbitration proceedings against the Company or any of its
Subsidiaries that arose out of or under any collection
bargaining agreement and (v) there are no discrimination
charges or complaints pending before the Equal Employment
Opportunity Commission or any other Governmental Authority or
arbitrator.
(j) The Company and its Subsidiaries are and during the
past four years have been in compliance in all material respects
with all Applicable Laws relating to labor and employment,
including, but not limited to, those relating to wages, hours,
collective bargaining, unemployment compensation, workers
compensation, occupational safety and health, discrimination,
immigration, employee classification, information privacy and
security, payment and withholding of taxes and continuation
coverage with respect to group health plans.
(k) To the knowledge of the Company, no current employee or
officer of the Company or any of its Subsidiaries intends, or is
expected, to terminate his employment relationship with such
entity following the consummation of the transactions
contemplated hereby.
(l) Except as set forth in Section 4.16(l) of the
Company Disclosure Schedule, there is no Action pending or, to
the knowledge of the Company, threatened against the Company or
any of its Subsidiaries relating to any labor or employment
matter.
(m) Schedule 4.16(m) of the Company Disclosure
Schedule contains a complete and accurate list of all employees
of the Company or its Subsidiaries as of the date hereof whose
base salary exceeds $100,000 (the Company
Employees) showing for each Company Employee, the
name, job title, location, date of hire, whether each individual
is treated as exempt or non-exempt, annual salary or wages as of
the date hereof and aggregate annual compensation (including
bonus information) for the year ended December 31, 2010.
A-22
(n) Since the Balance Sheet Date, neither the Company nor
any of its Subsidiaries has effectuated (i) a plant
closing (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within
any site of employment or facility of the Company or any of its
Subsidiaries; (ii) a mass layoff (as defined in
the WARN Act); or (iii) such other transaction, layoff,
reduction in force or employment terminations sufficient in
number to trigger application of any similar state or local law.
Section 4.17 Intellectual
Property.
(a) Section 4.17(a)(i) of the Company Disclosure
Schedule contains a list of all United States or foreign:
patents, registered Marks, registered copyrights and
applications for any of the foregoing. Section 4.17(a)(ii)
of the Company Disclosure Schedule lists all items of material
software that are covered by or embodiments of copyrights that
are included in the Company Owned Intellectual Property
(Company Software). Except as has not had and
would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company:
(i) with respect to all Company Owned Intellectual Property
(other than Company Owned Intellectual Property specified on
Section 4.17(a)(i) of the Company Disclosure Schedule as
exclusively licensed to the Company or its Subsidiaries), the
Company or its Subsidiaries, as the case may be, owns such
Company Owned Intellectual Property (in each case, free and
clear of any Liens except Permitted Liens) except as identified
in Section 4.06(b) of the Company Disclosure Schedule,
(ii) to the knowledge of the Company, the Company possesses
sufficient enforceable legal rights to Company Owned
Intellectual Property as is necessary for the operation of the
Companys business as now conducted, (iii) to the
knowledge of the Company, neither the Company nor its
Subsidiaries is, as of the date of this Agreement, infringing,
misappropriating, or otherwise violating, or since June 28,
2009 has infringed, misappropriated or otherwise violated, the
Intellectual Property rights of any Person, and, to the
knowledge of the Company, no Person is, as of the date of this
Agreement, infringing, misappropriating, or otherwise violating,
or since June 28, 2009 has infringed, misappropriated or
otherwise violated, any Company Owned Intellectual Property;
(iv) since June 28, 2009, the Company has not received
any written communications alleging that the Company has
infringed or, by conducting the Companys business, would
infringe any third party Intellectual Property, nor, to the
Companys knowledge, is there a reasonable basis for any
such allegation; (v) the consummation of the transactions
contemplated by this Agreement will not alter, encumber, impair
or extinguish any Company Owned Intellectual Property right or
impair the right of Surviving Corporation to use, sell, license,
dispose of or otherwise commercialize or exploit any Company
Owned Intellectual Property; (vi) the Company and its
Subsidiaries have exercised reasonable care to maintain the
confidentiality of all Trade Secrets that are Company Owned
Intellectual Property or which the Company or any Subsidiary
thereof is obligated to maintain in confidence; (vii) to
the knowledge of the Company, no material Trade Secrets that are
Company Owned Intellectual Property or which the Company or any
Subsidiary thereof is obligated to maintain in confidence have
been disclosed other than to employees, representatives and
agents of the Company or any of its Subsidiaries all of whom are
bound by written confidentiality agreements, or to third parties
under a written agreement imposing obligations of
confidentiality that the Company reasonably believes is
sufficient to maintain the trade secret status of such Trade
Secrets; (viii) the IT Assets shall operate and perform in
all material respects in a manner that permits the Company and
its Subsidiaries to conduct their respective businesses as
currently conducted and, to the knowledge of the Company, no
person has gained unauthorized access to the IT Assets; and
(ix) the Company and its Subsidiaries have implemented
reasonable backup and disaster recovery technology and practices
consistent with industry practices and with the description
thereof set forth on Section 4.17(a)(iv) of the Company
Disclosure Schedule.
(b) Section 4.17(b)(i) of the Company Disclosure
Schedule lists all Contracts pursuant to which the Company or
any Subsidiary thereof has the right under any Intellectual
Property owned or controlled by any third party to use,
duplicate, manufacture, sell, distribute or otherwise
commercialize or exploit in any way (the Inbound
Licenses) (except such Schedule does not list standard
end user license agreements for
off-the-shelf
desktop software not in excess of $1,000 per seat; although
excluded from such Schedule, such agreements are included in the
definition of Inbound Licenses). Section 4.17(b)(ii) of the
Company Disclosure Schedule lists all Contracts to which the
Company or any Subsidiary thereof is a party and pursuant to
which any Person is authorized under any of the Company Owned
Intellectual Property to duplicate, manufacture, sell,
distribute or otherwise commercialize or exploit that include
any grant of exclusive rights or that involve
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payments in excess of $100,000 (the Outbound
Licenses and, collectively with the Inbound Licenses,
the Intellectual Property Agreements). With
respect to the Intellectual Property Agreements, except as had
not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Company: (i) all are valid and binding on the Company
or one of its Subsidiaries, as applicable, and to the knowledge
of the Company, each other party thereto and in full force and
effect in accordance with their terms (except those which are
cancelled, rescinded or terminated after the date of this
Agreement in accordance with their terms and subject to
applicable bankruptcy, insolvency, fraudulent transfers,
reorganization, moratorium and other laws, affecting
creditors rights generally and general principles of
equity ), and no written notice to terminate, in whole or part,
any of the same has been served; and (ii) neither the
Company nor any of its Subsidiaries nor, to the knowledge of the
Company, any other party thereto is in default or breach
thereunder. Except as has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company, the consummation of the
transactions contemplated by this Agreement will not alter,
encumber, modify, impair or extinguish any right or remedy of
Surviving Corporation or any of its Subsidiaries under any
Intellectual Property Agreement or give rise to any right in the
other party thereto to terminate any Intellectual Property
Agreement or to change material economic terms of any
Intellectual Property Agreement.
(c) Neither the Company nor any Subsidiary thereof has
received, since June 28, 2009 or, to the Companys
knowledge, before then, any written claim or notice that alleges
or asserts any fact or circumstance that would, if true,
constitute a breach of this Section 4.17, including any
allegation or assertion (i) that any Registered IP is
invalid or unenforceable, (ii) challenging the
Companys or any of its Subsidiaries sole,
unencumbered ownership of any Registered IP, (iii) that the
Company, any Subsidiary thereof or any other party has breached
any Intellectual Property Agreement, except such claim or notice
that has not had or would not reasonably be expected to have a
Material Adverse Effect on the Company.
(d) There are no claims or actions pending or, to
Companys knowledge, threatened that relate to or involve
any Company Owned Intellectual Property (other than Company
Owned Intellectual Property specified on Section 4.17(a)(i)
of the Company Disclosure Schedule as exclusively licensed to
the Company or its Subsidiaries), including any action before
any court or the International Trade Commission and any
interference, reissue, reexamination, opposition or cancellation
proceeding, except such claims that have not had or would not
reasonably be expected to have a Material Adverse Effect on the
Company. No Company Owned Intellectual Property (other than
Company Owned Intellectual Property specified on
Section 4.17(a)(i) of the Company Disclosure Schedule as
exclusively licensed to the Company or its Subsidiaries) is
subject to any outstanding order, judgment, injunction, decree,
stipulation or agreement restricting the use or other practice,
commercialization or exploitation thereof by the Company or any
of its Subsidiaries, except for such orders, judgments,
injunctions, decrees, stipulations or agreements that have not
had or would not reasonably be expected to have a Material
Adverse Effect on the Company. To the knowledge of the Company,
no Company Owned Intellectual Property specified on
Section 4.17(a)(i) of the Company Disclosure Schedule as
exclusively licensed to the Company or its Subsidiaries is
subject to any outstanding order, judgment, injunction, or
decree restricting the use or other practice, commercialization
or exploitation thereof by the Company or any of its
Subsidiaries, except for such orders, judgments, injunctions or
decrees that have not had or would not reasonably be expected to
have a Material Adverse Effect on the Company.
Section 4.18 Properties. (a) With
respect to the real property owned by the Company or its
Subsidiaries and the Improvements (as defined below) thereon
(collectively,
Owned Real Property), the
Company or one of its Subsidiaries, as applicable, has good and
marketable title to the Owned Real Property, free and clear of
any Lien (other than Permitted Liens); (b) with respect to
the real property leased, subleased or licensed to the Company
or its Subsidiaries and the Improvements (as defined below)
thereon (collectively,
Leased Real Property),
the Company or one of its Subsidiaries, as applicable, has a
good and valid leasehold interest, free and clear of any Lien
(other than Permitted Liens) in all such Leased Real Property
and the lease, sublease or license with respect to such Leased
Real Property is valid, and binding on the Company or its
Subsidiaries, as applicable, and to the knowledge of the
Company, each other party thereto, and in full force and effect,
and none of the Company or any of its Subsidiaries is in breach
of or default under such lease, sublease or license, and no
event has occurred which, with notice, lapse of time or both,
A-24
would constitute a breach or default by any of the Company or
its Subsidiaries or permit termination, modification or
acceleration by any third party thereunder; (c) with
respect to tangible assets, the Company or one of its
Subsidiaries, as applicable, has a good and valid fee title or
leasehold interest, free and clear of any Lien (other than
Permitted Liens) in all such tangible assets that are necessary
for the Company and its Subsidiaries to conduct their respective
businesses as currently conducted, except as has not had or
would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company;
(d) all buildings, structures, fixtures and improvements
included within the Owned Real Property and Leased Real Property
(the Improvements) are in good repair and
operating condition, subject only to ordinary wear and tear, and
are adequate and suitable for the purposes for which they are
presently being used or held for use, and to the knowledge of
the Company, there are no facts or conditions affecting any of
the Improvements that, in the aggregate, would substantially
interfere with the current use, occupancy or operation thereof;
and (e) the Company has not received written notice with
respect to the Owned Real Property or the Leased Real Property
from any Governmental Entity pertaining to any violation of any
law, ordinance, rule or regulation, which would have or would
reasonably be expected to have a Material Adverse Effect on the
Company. Section 4.18 of the Company Disclosure Schedule
contains a true and complete list of all Owned Real Property or
Leased Real Property. The applicable Tenant with respect to any
Leased Real Property enjoys peaceful and undisturbed possession
of such Leased Real Property, except for any such failure to do
so that, individually or in the aggregate, would not have or
reasonably be expected to have a Material Adverse Effect.
Section 4.19 Environmental
Matters. (i) Since June 28, 2009,
no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has
been filed, no penalty has been assessed, and as of the date of
this Agreement, no investigation, action, claim, suit,
proceeding or review (or any basis therefor) is pending or, to
the knowledge of the Company, is threatened by any Governmental
Authority or other Person relating to the Company or any
Subsidiary and relating to or arising out of any Environmental
Law, except as has not had or would not reasonably be expected
to have a Material Adverse Effect on the Company; (ii) the
Company and its Subsidiaries are and, since July 2, 2006
have been in compliance with all Environmental Laws and have
obtained all Environmental Permits necessary for their
operations as currently conducted, except to the extent
non-compliance would not have or be reasonably be expected to
have, either individually or in the aggregate, a Material
Adverse Effect; (iii) there are no currently accrued
liabilities of the Company or any of its Subsidiaries arising
under or relating to any violation of any Environmental Law or
any Hazardous Substance; (iv) there have been no releases
of any Hazardous Substances that could be reasonably likely to
form the basis of a claim against the Company or any of its
Subsidiaries, except to the extent such releases would not have
or be reasonably expected to have, either individually or in the
aggregate, a Material Adverse Effect; (v) neither the
Company nor any of its Subsidiaries is currently subject or
party to any agreement, order, judgment or decree by or with any
Governmental Authority, arbitrator or third party pursuant to
which the Company or any of its Subsidiaries has assumed,
incurred or suffered any liability under any Environmental Law;
(vi) neither the Company nor any of it Subsidiaries has
manufactured for sale, marketed or distributed any product
incorporating asbestos or asbestos-containing materials;
(vii) neither the Company nor any of it Subsidiaries has
received notice of any potential liability under any
Environmental Law for the transport and disposal of any
Hazardous Substance to any site; (viii) to the Knowledge of
the Company, the transactions contemplated by this Agreement
will not require the Company or any of its Subsidiaries to
transfer or amend any Environmental Permit or require any
submissions to a Governmental Authority; and (ix) to the
knowledge of the Company, complete and accurate copies of all
final environmental site assessment reports (including any Phase
I or Phase II reports), investigation, remediation or
compliance studies or audits which are in the possession,
custody or control of either the Company or its Subsidiaries and
relate to the environmental conditions at any property currently
or formerly owned or leased by either the Company or its
Subsidiaries have been provided to Parent.
Section 4.20 Antitakeover
Statutes. Assuming the accuracy of
Section 5.09, the Company has taken all action necessary to
exempt or exclude the Merger, this Agreement and the
transactions contemplated hereby from any takeover statute, and,
accordingly, none of the restrictions in such Sections or any
other antitakeover or similar statute or regulation applies to
any such transactions. The Company has taken all action
necessary to render the Company Rights inapplicable to the
Merger, this Agreement and the transactions contemplated hereby.
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Section 4.21 Insurance. Section 4.21
of the Company Disclosure Schedule sets forth, as of the date
hereof, a true and complete list of all material insurance
policies issued in favor of the Company or any of its
Subsidiaries, or pursuant to which the Company or any of its
Subsidiaries is a named insured or otherwise a beneficiary, as
well as any historic incurrence-based policies still in force.
With respect to each such insurance policy, (a) such policy
is in full force and effect and all premiums due thereon have
been paid, (b) neither the Company nor any of its
Subsidiaries is in breach or default, and has not taken any
action or failed to take any action which (with or without
notice or lapse of time, or both) would constitute such a breach
or default, or would permit termination or modification of, any
such policy, except for such actions or failure to take such
actions that have not had or would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect on the Company and (c) to the knowledge of the
Company, no insurer issuing any such policy has been declared
insolvent or placed in receivership, conservatorship or
liquidation. No written notice of cancellation or termination
has been received with respect to any such policy and at the
Closing, to the knowledge of the Company after reasonable
inquiry, the consummation of the transactions contemplated
hereby will not result in cancellation or termination of such
policies.
Section 4.22 Related
Party Transactions. Since June 28, 2009
through the date of this Agreement, there have been no
transactions, agreements, arrangements or understandings between
the Company or any of its Subsidiaries, on the one hand, and the
Affiliates of the Company, on the other hand (other than the
Companys Subsidiaries) that would be required to be
disclosed under Item 404 of Regulation S K under the
1934 Act and that have not been so disclosed in the Company
SEC Documents.
Section 4.23 Certain
Payments. Neither the Company nor any of its
Subsidiaries (nor, to the knowledge of the Company, any of their
respective directors, executives, representatives, agents or
employees) (a) has used or is using any corporate funds for
any unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (b) has
used or is using any corporate funds for any direct or indirect
unlawful payments to any foreign or domestic governmental
officials or employees, (c) has violated or is violating
any provision of the Foreign Corrupt Practices Act of 1977,
(d) has established or maintained, or is maintaining, any
unlawful fund of corporate monies or other properties or
(e) has made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment of any nature.
Section 4.24 Customers
and Suppliers.
(a) Section 4.24(a) of the Company Disclosure Schedule
lists the ten largest customers of the Company measured in terms
of sales volume since June 27, 2010 (each a
Significant Customer). Since June 27,
2010, the Company has not received written, or to the knowledge
of the Company, oral notice from a Significant Customer
indicating its intention to terminate or materially reduce its
future long term business relationship with the Company from
recent historical levels.
(b) Section 4.24(b) of the Company Disclosure Schedule
lists the ten largest suppliers of the Company since
June 27, 2010 (each a Significant
Supplier). Since June 27, 2010, the Company has
not received written or, to the knowledge of the Company, oral
notice from a Significant Supplier indicating its intention to
terminate or materially reduce its future long term business
relationship with the Company from recent historical levels.
Section 4.25 Regulatory
Matters.
(a) With respect to each Contract between the Company or
any Subsidiary of the Company, on the one hand, and any
Governmental Authority (excluding any non-governmental entity),
on the other hand, for which performance is ongoing as of the
date hereof, and each outstanding bid, quotation or proposal by
the Company or any of its Subsidiaries (each, a
Bid) that if accepted or awarded could lead
to a Contract between the Company or a Subsidiary of the
Company, on the one hand, and any Governmental Authority
(excluding any non-governmental entity), on the other hand (each
such Contract or Bid, a Company Government
Contract) and each Contract between the Company or any
of its Subsidiaries, on the one hand, and any prime contractor
or upper-tier subcontractor, on the other hand, that, to the
knowledge of the Company, constitutes a subcontract under a
Contract between such Person and any Governmental Authority
(excluding any non-governmental entity) for which performance is
ongoing as of the date hereof, and each outstanding
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Bid that if accepted or awarded could lead to a Contract between
the Company or any of its Subsidiaries, on the one hand, and a
prime contractor or upper-tier subcontractor, on the other hand,
that, to the knowledge of the Company, would constitute, a
subcontract under a Contract between such Person and any
Governmental Authority (excluding any non-governmental entity)
(each such Contract or Bid, a Company Government
Subcontract):
(i) to the knowledge of the Company, each such Company
Government Contract or Company Government Subcontract was
legally awarded, is binding on the parties thereto, and is in
full force and effect, except where the failure to be in full
force and effect has not had or would not reasonably be expected
to have a Material Adverse Effect on the Company; provided that
for purposes of this clause (i), the terms Company Government
Contract and Company Government Subcontract shall not include
any Bids;
(ii) to the knowledge of the Company, no reasonable basis
exists to give rise to a material claim by a Governmental
Authority (excluding any non-governmental entity) for fraud (as
such concept is defined under the state or federal Laws of the
United States) in connection with the award or performance of
any such Company Government Contract or Company Government
Subcontract, except such claims that have not had or would not
reasonably be expected to have a Material Adverse Effect on the
Company;
(iii) since June 29, 2008, neither any Governmental
Authority (excluding any non-governmental entity) nor any prime
contractor, subcontractor or other Person or entity has notified
the Company, in writing, that the Company has, or may have,
breached or violated in any material respect any Applicable Law,
certification or representation pertaining to any such Company
Government Contract or Company Government Subcontract, except
for such breaches or violations that have not had or would not
reasonably be expected to have a Material Adverse Effect on the
Company;
(iv) to the knowledge of the Company, since January 1,
2008, all facts set forth in or acknowledged by any
representations, claims or certifications submitted by or on
behalf of the Company or any of its Subsidiaries in connection
with any such Company Government Contract or Company Government
Subcontract were current, accurate and complete in all respects
as of their effective date, except where failure to be current,
accurate and complete has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company;
(v) the Company and its Subsidiaries have not received any
written notice of termination, show cause or cure
notice pertaining to any such Company Government Contract or
Company Government Subcontract, except for such notices that
have not had or would not reasonably be expected to have a
Material Adverse Effect on the Company; provided that this
clause (v) shall not apply to any notice received more than
three years prior to the date hereof, which notice is related to
a Company Government Contract or Company Government Subcontract
that is no longer ongoing as of the date hereof;
(vi) with respect to any ongoing Company Government
Contract or Company Government Subcontract or completed Company
Government Contract or Company Government Subcontract under
which final payment was received by the Company within three
years prior to the date hereof, the Company and its Subsidiaries
do not, to the knowledge of the Company, have credible evidence
that a Principal, Employee, Agent, or Subcontractor (as such
terms are defined by Federal Acquisition Regulation (FAR)
52.203-13(a)) of the Company or any of its Subsidiaries has
committed a violation of Federal criminal Law involving fraud,
conflict of interest, bribery, or gratuity violations found in
Title 18 of the United States Code or a violation of the
civil False Claims Act and the Company, except for such
violations which have not had or would not reasonably be
expected to have a Material Adverse Effect on the Company, and
its Subsidiaries have not conducted and are not conducting an
investigation to determine whether credible evidence exists that
a Principal, Employee, Agent, or Subcontractor (as such terms
are defined by FAR 52.203-13(a)) of the Company or any of its
Subsidiaries has committed a violation of Federal criminal Law
involving fraud, conflict of interest, bribery, or gratuity
violations found in Title 18 of the United States Code or a
violation of the civil False Claims Act; and
A-27
(vii) with respect to any ongoing Company Government
Contract or Company Government Subcontract or completed Company
Government Contract or Company Government Subcontract under
which final payment was received by the Company or any of its
Subsidiaries within three (3) years prior to the date of
this Agreement, the Company and its Subsidiaries do not to the
knowledge of the Company have credible evidence of any
significant overpayment(s) on such Company Government Contract
or Company Government Subcontract, other than overpayments
resulting from contract financing payment as defined in FAR
32.001, except for such overpayments that have not had or would
not reasonably be expected to have a Material Adverse Effect on
the Company, and the Company and its Subsidiaries have not
conducted and are not conducting an investigation to determine
whether credible evidence exists of any significant
overpayment(s) on such Company Government Contract or Company
Government Subcontract, other than overpayments resulting from
contract financing payment as defined in FAR 32.001.
(b) The Company and its Subsidiaries are not, nor have any
of them ever been, suspended or debarred from doing business
with a Governmental Authority (excluding any non-governmental
entity) or, to the knowledge of the Company, proposed for
suspension or debarment by a Governmental Authority (excluding
any non-governmental entity) and, to the knowledge of the
Company, has not been the subject of a finding of
nonresponsibility or ineligibility for contracting with a
Governmental Authority (excluding any non-governmental entity).
(c) (i) Neither the Company, its Subsidiaries, nor, to
the knowledge of the Company, any of their respective directors
or officers or Principals (as such term is defined by
FAR 52.209-5(a)(2))
is (or since June 29, 2008 has been) under indictment with
respect to any alleged irregularity, misstatement or omission
arising under or relating to any Contract or bid with a
Governmental Authority (excluding any non-governmental entity)
that would reasonably be expected to result in a Material
Adverse Effect and (ii) since June 29, 2008, the
Company and its Subsidiaries have not entered into any consent
order or administrative agreement relating directly or
indirectly to any such Contract or bid that has had or would
reasonably be expected to result in a Material Adverse Effect.
(d) The Company and each of its Subsidiaries are in
compliance in all material respects with all statutory and
regulatory requirements relating to export controls and trade
sanctions under Applicable Laws of the United States, as well as
Applicable Laws of each jurisdiction in which the Company or its
Subsidiaries are doing business, including, without limitation,
the Export Administration Regulations administered by the United
States Department of Commerce (including their anti-boycott
provisions), the International Traffic in Arms Regulations
administered by the United States Department of State, the
economic and trade sanctions administered by the Office of
Foreign Assets Control of the United States Department of the
Treasury, and the international boycott provisions of the
Internal Revenue Code except where such failure to be in
compliance has not had and would not reasonably be expected to
have a Material Adverse Effect on the Company.
(e) The Company and its Subsidiaries have an export control
and trade sanctions compliance program designed to assure
compliance with applicable government export control and trade
sanction statutes, regulations, and other obligations, including
obtaining licenses or other authorizations as required for
access by foreign nationals to controlled technology.
(f) In the past five years, as regards to export controls
compliance, the Company has not (i) received written notice
from any Governmental Authority of deficiencies in its
compliance efforts; (ii) made any voluntary disclosures to
any Governmental Authority or other Person of facts that could
result in any adverse action being taken by a Governmental
Authority against the Company, except for such disclosures that
have not had or would not reasonably be expected to have a
Material Adverse Effect on the Company; (iii) been notified
in writing that it is in violation of any obligation, regulation
or license authorization, except for such violations that have
not had or would not reasonably be expected to have a Material
Adverse Effect on the Company; (iv) been under indictment,
or, to the knowledge of the Company, civil or criminal
investigation for false claims or other impropriety relating to
export activity, except for such indictments, or civil or
criminal investigations that have not or would not be reasonably
be expected to have a Material Adverse Effect on the Company.
A-28
(g) Neither the Company nor any of its Subsidiaries has
undergone or is undergoing any audit inspection or to the
knowledge of the Company, any other review regarding export
activity that would reasonably be expected to affect adversely
its future export activity or otherwise result in government
sanctions, except for such audit inspections or other reviews
that have not had or would not reasonably be expected to have a
Material Adverse Effect on the Company.
Section 4.26 Occupational
Safety and Health Matters.
(a) Since July 2, 2006, the Company is in compliance
with, and is not in violation of, or liable under, any
applicable Occupational Safety and Health Laws, except as has
not had or would not reasonably be expected to have a Material
Adverse Effect on the Company, and to the knowledge of the
Company, no reason, including the presence of an imminent danger
as that term is defined under Occupational Safety and Health
Law, exists why the Company would not be capable of continued
operation of the business in compliance with applicable
Occupational Safety and Health Law without undue expense or
burden;
(b) Since July 2, 2006, the Company has not received
any written notice from any Governmental Authority or any other
Person regarding (i) any failure to comply in any material
respect with any applicable Occupational Safety and Health Law,
or (ii) any obligation to undertake or bear any material
cost of any Occupational Safety and Health Liabilities,
including, without limitation, any Occupational Safety and
Health Liabilities with respect to any of the Facilities, with
respect to any Leased Real Property or Owned Real Property at,
to, or from which Hazardous Substances have been generated,
manufactured, refined, transferred, used or processed,
transported, treated, stored, handled, transferred, disposed of,
recycled, or received by the Company; and
(c) The Company has made available to the Parent copies of
any written occupational and safety assessment or audit reports
relating to the Company or the Facilities that has been prepared
on behalf of the Company since July 2, 2006.
Section 4.27 Long
Term Incentive Plan. The Company or its Board
of Directors, as applicable, has, prior to the time at which the
Companys Board of Directors approved this Agreement, taken
all actions necessary to amend the 2004 LTIP, and has so amended
it, to provide that, in respect of the Merger and any antecedent
events relating to such Merger, a Change in Control
as defined under the 2004 LTIP shall be deemed to occur only
upon the consummation of the Merger, and not upon any antecedent
event relating to the Merger including but not limited to
approval, adoption, or recommendation of this Agreement or any
other agreement relating to the Merger by the Companys
Board of Directors or stockholders. In addition, the Company or
its Board of Directors, as applicable, has, prior to the time at
which the Companys Board of Directors approved this
Agreement, taken all actions necessary to approve the employment
agreements attached hereto as Exhibits A through F.
Section 4.28 Opinion
of Financial Advisor. Stifel,
Nicolaus & Company, Incorporated has delivered to the
Companys Board of Directors its written opinion, dated the
date hereof, to the effect that, as of the date hereof and based
upon and subject to the qualifications, considerations,
assumptions and limitations set forth therein, the Merger
Consideration to be received by holders of Company Shares in
connection with the Merger pursuant to the Merger Agreement is
fair to such holders of Company Shares, from a financial point
of view, a signed true and complete copy of which opinion will
promptly be provided to Parent.
Section 4.29 Finders
Fees. Except for Stifel, Nicolaus &
Company, Incorporated, the terms of whose engagement have been
provided to Parent prior to the date of this Agreement, there is
no investment banker, broker, finder or other intermediary that
has been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries who is entitled to any fee or
commission in connection with the transactions contemplated by
this Agreement.
Section 4.30 No
Other Representations or Warranties. Except
for the representations and warranties contained in this
Article 4, the Company expressly disclaims any other
representations or warranties of any kind or nature, express or
implied, as to liabilities, operations of the facilities, the
title, condition, value or quality of the Company. No exhibit to
this Agreement, nor any other material or information provided
by or communications made by the Company or any of its
Affiliates, or by any advisor thereof, whether by use of a
A-29
data room, or in any information memorandum or
otherwise, or by any broker or investment banker, will cause or
create any warranty, express or implied, as to the title,
condition, value or quality of the Company.
ARTICLE 5
REPRESENTATIONS
AND WARRANTIES OF PARENT
Parent represents and warrants to the Company that:
Section 5.01 Corporate
Existence and Power. Each of Parent and
Merger Subsidiary is (a) a corporation duly incorporated,
validly existing and in good standing under the laws of its
jurisdiction of incorporation and (b) has all corporate
powers required to carry on its business as now conducted,
except in the case of clause (b) as, individually, or in
the aggregate, has not had and would not reasonably be expected
to materially delay or impair the ability of Parent or Merger
Subsidiary to consummate the transactions contemplated hereby on
a timely basis. Since the date of its incorporation, Merger
Subsidiary has not engaged in any activities other than in
connection with or as contemplated by this Agreement.
Section 5.02 Corporate
Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement
and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby are within the corporate powers
of Parent and Merger Subsidiary and have been duly authorized by
all necessary corporate action on the part of Parent and Merger
Subsidiary. Assuming the due authorization, execution and
delivery of this Agreement by the Company, this Agreement
constitutes a valid and binding agreement of each of Parent and
Merger Subsidiary enforceable against each of Parent and Merger
Subsidiary in accordance with its terms (subject to applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws affecting creditors rights
generally and general principles of equity).
Section 5.03 Governmental
Authorization. The execution, delivery and
performance by Parent and Merger Subsidiary of this Agreement
and the consummation by Parent and Merger Subsidiary of the
transactions contemplated hereby require no action by or in
respect of, or filing with, any Governmental Authority, other
than (a) the Required Governmental Authorizations,
(b) compliance with any applicable requirements of the
1933 Act, the 1934 Act, and any other applicable
U.S. state or federal securities laws, (c) compliance
with any requirements of the Nasdaq Global Market, (d) the
filing of the Certificate of Merger with the Secretary of State
of the State of Delaware as required by Delaware Law and
(e) any actions or filings the absence of which will not,
individually or in the aggregate, materially delay or impair the
ability of Parent or Merger Subsidiary to consummate the
transactions contemplated hereby on a timely basis.
Section 5.04 Non-contravention. The
execution, delivery and performance by Parent and Merger
Subsidiary of this Agreement and the consummation by Parent and
Merger Subsidiary of the transactions contemplated hereby do not
and will not (i) contravene, conflict with, or result in
any violation or breach of any provision of the articles of
incorporation or bylaws of Parent or Merger Subsidiary,
(ii) assuming compliance with the matters referred to in
Section 5.03, contravene, conflict with or result in a
violation or breach of any provision of any Applicable Law,
(iii) assuming compliance with the matters referred to in
Section 5.03, require any consent or other action by any
Person under, constitute a default, or an event that, with or
without notice or lapse of time or both, could become a default,
under, or cause or permit the termination, cancellation,
acceleration or other change of any right or obligation or the
loss of any benefit to which Parent or any of its Subsidiaries
is entitled under any provision of any agreement or other
instrument binding upon Parent or any of its Subsidiaries or any
license, franchise, permit, certificate, approval or other
similar authorization affecting, or relating in any way to, the
assets or business of the Parent and its Subsidiaries or
(iv) result in the creation or imposition of any Lien on
any asset of the Parent or any of its Subsidiaries, except for
such contraventions, conflicts and violations referred to in
clause (ii) and for such failures to obtain any such
consent or other action, defaults, terminations, cancellations,
accelerations, changes, losses or Liens referred to in
clauses (iii) and (iv) that will not, individually or
in the aggregate, materially delay or impair the ability of
Parent or Merger Subsidiary to consummate the transactions
contemplated hereby on a timely basis.
A-30
Section 5.05 Disclosure
Documents. None of the information provided
by Parent for inclusion in the Company Proxy Statement or any
amendment or supplement thereto, at the time the Company Proxy
Statement or any amendment or supplement thereto is first mailed
to stockholders of the Company and at the time the stockholders
vote on adoption of this Agreement, will contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, neither Parent nor
Merger Subsidiary makes any representation or warranty with
respect to statements made by the Company included or
incorporated by reference in the Company Proxy Statement, which
are based on information not provided by or on behalf of Parent
or Merger Subsidiary for the inclusion in the Company Proxy
Statement or any amendment